THIS PROSPECTUS SUPPLEMENT RELATES TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, BUT IS NOT COMPLETE AND MAY BE CHANGED.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED APRIL 3, 2002
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 29, 2000)
3,000,000 PREFERRED SECURITIES
ONB CAPITAL TRUST II
[ ]% TRUST PREFERRED SECURITIES (TRUPS(R))
FULLY, IRREVOCABLY AND UNCONDITIONALLY GUARANTEED BY
[LOGO TO COME]
OLD NATIONAL BANCORP
A brief description of the [ ]% Trust Preferred Securities (TruPS(R)), or
the preferred securities, can be found under "Summary Information--Q&A" in this
prospectus supplement.
------------------
Old National Bancorp will apply to list the preferred securities on the New
York Stock Exchange. If approved, Old National Bancorp expects trading of the
preferred securities to begin within 30 days after they are first issued.
YOU ARE URGED TO CAREFULLY READ THE "RISK FACTORS" SECTION BEGINNING ON
PAGE S-7 OF THIS PROSPECTUS SUPPLEMENT, WHERE SPECIFIC RISKS ASSOCIATED WITH
THESE PREFERRED SECURITIES ARE DESCRIBED, ALONG WITH THE OTHER INFORMATION IN
THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS AND THE DOCUMENTS
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS SUPPLEMENT BEFORE YOU MAKE YOUR
INVESTMENT DECISION. IF ANY INFORMATION IN THIS PROSPECTUS SUPPLEMENT DIFFERS IN
ANY WAY FROM THE INFORMATION IN THE PROSPECTUS OR ANY DOCUMENT INCORPORATED BY
REFERENCE, YOU SHOULD RELY ON THIS PROSPECTUS SUPPLEMENT.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
These securities are not savings accounts, deposits or other obligations of
a bank, are not guaranteed by Old National Bank or any other bank, are not
insured by the Federal Deposit Insurance Corporation or any other governmental
agency and involve investment risks, including possible loss of principal.
------------------
PER PREFERRED SECURITY TOTAL
---------------------- ----------
Public offering price $ $
Underwriting commissions to be paid by Old National Bancorp See below. See below.
Proceeds to ONB Capital Trust II $ $
------------------
Underwriting commissions of $[ ] per preferred security (or $[ ] for
all preferred securities) will be paid by Old National Bancorp.
The underwriters have an option to purchase a maximum of 450,000 additional
preferred securities at the public offering price within 30 days from the date
of this prospectus supplement to cover over-allotments of the preferred
securities.
The public offering price set for the above does not include accumulated
distributions. Distributions on the preferred securities will accrue from
[ ], 2002 and will be included in the public offering price if
settlement occurs after that date.
Old National Bancorp expects that the preferred securities will be ready for
delivery in book-entry form only through The Depository Trust Company on or
about April [ ], 2002.
"TruPS(R)" is a registered service mark of Salomon Smith Barney Inc.
------------------
SALOMON SMITH BARNEY
------------------
MERRILL LYNCH & CO.
MORGAN STANLEY
STIFEL, NICOLAUS & COMPANY
INCORPORATED
UBS WARBURG
CREDIT SUISSE FIRST BOSTON
JP MORGAN
LEGG MASON WOOD WALKER, INCORPORATED
LEHMAN BROTHERS
April [ ], 2002
ABOUT THIS PROSPECTUS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND, TO THE EXTENT THAT THEY DO NOT DIFFER FROM OR CONFLICT WITH THIS
PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS AND EACH DOCUMENT
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT. OLD NATIONAL BANCORP
HAS NOT, AND THE UNDERWRITERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO PROVIDE
YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR
INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. OLD NATIONAL BANCORP IS
NOT, AND THE UNDERWRITERS ARE NOT, MAKING AN OFFER TO SELL THESE SECURITIES IN
ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME
THAT THE INFORMATION APPEARING IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT OF THIS
PROSPECTUS SUPPLEMENT ONLY. OLD NATIONAL BANCORP'S BUSINESS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED MATERIALLY SINCE
THAT DATE.
STABILIZATION, OVER-ALLOTMENT AND PASSIVE MARKET MAKING
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES INCLUDING OVER-ALLOTMENT, BIDDING FOR OR PURCHASING SUCH SECURITIES
TO STABILIZE THEIR MARKET PRICE, PURCHASING SUCH SECURITIES TO COVER SOME OR ALL
OF A SHORT POSITION IN SUCH SECURITIES MAINTAINED BY THE UNDERWRITERS, AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN PERSONS PARTICIPATING IN THE
OFFERING MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE PREFERRED
SECURITIES ON THE NEW YORK STOCK EXCHANGE IN ACCORDANCE WITH RULE 103 UNDER
REGULATION M OF THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
S-2
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Summary Information-Q&A..................................... S-4
Risk Factors................................................ S-7
Where You Can Find More Information......................... S-11
Description of Old National................................. S-12
Use of Proceeds............................................. S-12
Selected Financial Data..................................... S-13
Capitalization.............................................. S-14
Ratio of Earnings to Fixed Charges.......................... S-15
Accounting Treatment........................................ S-15
Description of Securities................................... S-15
Certain Terms of the Preferred Securities................... S-15
Certain Terms of the Junior Subordinated Debentures......... S-17
United States Federal Income Taxation....................... S-19
ERISA Considerations........................................ S-23
Underwriting................................................ S-27
Legal Matters............................................... S-28
PROSPECTUS
About this Prospectus....................................... 2
Forward-Looking Statements and Cautionary Factors........... 2
Where You Can Find More Information......................... 3
Old National Bancorp........................................ 4
The ONB Trusts.............................................. 5
Use of Proceeds............................................. 6
Capitalization.............................................. 7
Ratio of Earnings to Fixed Charges.......................... 7
Description of Debt Securities.............................. 7
Description of Capital Securities........................... 18
Description of Guarantees................................... 28
Relationship Among the Capital Securities, the Corresponding
Junior Subordinated Debentures and the Guarantees......... 31
Book-Entry Issuance......................................... 32
Underwriting................................................ 35
Certain Legal Matters....................................... 36
Experts..................................................... 37
S-3
SUMMARY INFORMATION-Q&A
The following information supplements, and should be read together with,
the information contained in other parts of this prospectus supplement and in
the accompanying prospectus (to the extent the prospectus is not superseded by
the information contained in this prospectus supplement). This summary
highlights selected information from this prospectus supplement and the
accompanying prospectus to help you understand the preferred securities, which
are referred to as the capital securities in the accompanying prospectus. You
should carefully read this prospectus supplement and the accompanying prospectus
to understand fully the terms of the preferred securities as well as the tax and
other considerations that are important to you in making a decision about
whether to invest in the preferred securities. You should pay special attention
to the "Risk Factors" section beginning on page S-7 of this prospectus
supplement to determine whether an investment in the preferred securities is
appropriate for you.
WHAT ARE THE PREFERRED SECURITIES?
Each preferred security represents an undivided beneficial ownership
interest in the assets of ONB Capital Trust II. Each preferred security will
entitle the holder to receive quarterly cash distributions as described in this
prospectus supplement. ONB Capital Trust II is offering 3,000,000 preferred
securities at a price of $25 for each preferred security.
The underwriters have an option to purchase a maximum of 450,000 additional
preferred securities at the public offering price within 30 days from the date
of this prospectus supplement to cover over-allotments of preferred securities.
WHO IS ONB CAPITAL TRUST II?
ONB Capital Trust II is a Delaware statutory business trust. The principal
executive office of ONB Capital Trust II is 420 Main Street, Evansville, Indiana
47708. Its telephone number is (812) 464-1434.
ONB Capital Trust II will sell its preferred securities to the public and
its common securities to Old National Bancorp, which we refer to as Old
National. ONB Capital Trust II will use the proceeds from these sales to buy
from Old National a series of [ ]% junior subordinated debentures due April
[ ], 2032, with the same financial terms as the preferred securities. Old
National will guarantee payments made on the preferred securities as described
below.
Bank One Trust Company, NA will act as property trustee of ONB Capital
Trust II. Bank One Delaware, Inc. will be the Delaware trustee. Bank One Trust
Company, NA will act as trustee under the indenture pursuant to which the junior
subordinated debentures will be issued and will act as trustee under the
guarantee of Old National. The property trustee and Delaware trustee are
sometimes referred to as the issuer trustees. In addition, two officers,
employees or affiliates of Old National will act as administrators of ONB
Capital Trust II.
WHO IS OLD NATIONAL?
Old National is a financial holding company that operates more than 140
banking centers in Indiana, Illinois, Kentucky, Tennessee and Ohio. Old National
also owns non-bank subsidiaries that provide fiduciary, trust, securities
brokerage, investment and insurance services and products. Old National's
principal office is at 420 Main Street, Evansville, Indiana and its telephone
number is (812) 464-1434. See "Old National Bancorp" in the accompanying
prospectus.
WHEN WILL YOU RECEIVE QUARTERLY DISTRIBUTIONS?
If you purchase the preferred securities, you are entitled to receive
cumulative cash distributions at an annual rate of [ ]% of the liquidation
amount of $25 per preferred security. Distributions will accumulate from the
date ONB Capital Trust II issues the preferred securities and will be paid
quarterly in arrears on [ ], [ ], [ ]
and [ ] of each year, beginning [ ], 2002.
S-4
ONB Capital Trust II's only source of cash to make distributions on the
preferred securities is the quarterly payments ONB Capital Trust II will receive
on the junior subordinated debentures it purchases from Old National.
WHEN CAN PAYMENT OF YOUR DISTRIBUTIONS BE DEFERRED?
So long as no event of default under the junior subordinated debentures has
occurred and is continuing, Old National may, on one or more occasions, defer
interest payments on the junior subordinated debentures for up to 20 consecutive
quarterly periods. A deferral of interest payments cannot extend, however,
beyond the maturity date of the junior subordinated debentures, which is April
[ ], 2032.
If Old National defers interest payments on the junior subordinated
debentures, ONB Capital Trust II will also defer distributions on the preferred
securities. During this deferral period, distributions will continue to accrue
on the preferred securities at an annual rate of [ ]% of the liquidation
amount of $25 per preferred security. Also, the deferred distributions will
themselves accrue interest at an annual rate of [ ]% to the extent permitted
by law. Once Old National makes all interest payments on the junior subordinated
debentures, with accrued interest, it can again defer interest payments on the
junior subordinated debentures if no event of default under the junior
subordinated debentures has occurred and is continuing.
During any period in which Old National defers interest payments on the
junior subordinated debentures, with limited exceptions, Old National will not
be permitted to:
- pay a dividend or make any distributions on its capital stock or redeem,
purchase, acquire or make a liquidation payment on its capital stock, or
make any guarantee payments with respect to the foregoing; or
- make an interest, principal or premium payment on, or repay, repurchase
or redeem, any of Old National's debt securities (including any other
junior subordinated debentures) that rank equal or junior to the junior
subordinated debentures.
If Old National defers payments of interest on the junior subordinated
debentures, the preferred securities will, from the time of the deferral, be
treated as being issued with original issue discount for United States federal
income tax purposes. This means you will be required to recognize interest
income with respect to distributions and include those amounts in your gross
income for United States federal income tax purposes even though you will not
have received any cash distributions relating to that interest income. See
"United States Federal Income Taxation -- Interest Income and Original Issue
Discount."
WHEN CAN ONB CAPITAL TRUST II REDEEM THE PREFERRED SECURITIES?
ONB Capital Trust II must redeem all of the outstanding preferred
securities and common securities when the junior subordinated debentures are
paid at maturity on April [ ], 2032. In addition, if Old National redeems any
junior subordinated debentures before their maturity date, ONB Capital Trust II
will use the cash it receives from that redemption to redeem, on a pro rata
basis, preferred securities and common securities having a combined liquidation
amount equal to the principal amount of the junior subordinated debentures
redeemed.
Old National can redeem some or all of the junior subordinated debentures
before their maturity on one or more occasions at any time on or after April
[ ], 2007. Old National also has the option to redeem the junior subordinated
debentures, in whole, but not in part, at any time if certain changes in tax,
investment company or bank regulatory law occur and other specified conditions
are satisfied, as more fully described under "Certain Terms of the Preferred
Securities -- Redemption -- Special Event Redemption." In each case, the
redemption price will be equal to $25 per preferred security plus accrued and
unpaid distributions to the date of redemption. Prior to any redemption, Old
National will obtain any required regulatory approvals.
S-5
WHAT IS OLD NATIONAL'S GUARANTEE OF THE PREFERRED SECURITIES?
Old National's guarantee of the distributions on the preferred securities
will be based on:
- its obligations to make payments on the junior subordinated debentures;
- its obligations under the guarantee; and
- its obligations under the amended and restated trust agreement of ONB
Capital Trust II.
Old National has irrevocably guaranteed that if a payment on the junior
subordinated debentures is made to ONB Capital Trust II but ONB Capital Trust
II, for any reason, does not make the corresponding distribution or redemption
payment to the holders of the preferred securities, then Old National will make
the payments directly to the holders of the preferred securities. To avoid a
double payment to a holder of the preferred securities, if Old National makes a
payment under the guarantee, the holder will no longer have a right to receive
the corresponding payment from ONB Capital Trust II.
The payment of distributions on the preferred securities is guaranteed by
Old National under the guarantee only to the extent ONB Capital Trust II has
funds legally and immediately available to make distributions.
Old National's obligations under the guarantee are subordinated as
described on page 29 of the accompanying prospectus.
WHEN COULD THE JUNIOR SUBORDINATED DEBENTURES BE DISTRIBUTED TO YOU?
Old National has the right to terminate ONB Capital Trust II at any time.
If Old National terminates ONB Capital Trust II, ONB Capital Trust II, after
satisfaction of any liabilities to its creditors, as provided by applicable law,
will liquidate by distributing the junior subordinated debentures to holders of
the preferred securities and the common securities on a pro rata basis. Any
distribution of the junior subordinated debentures may require regulatory
approvals. If the junior subordinated debentures are distributed, Old National
will use its best efforts to list the junior subordinated debentures on the New
York Stock Exchange (or any other exchange on which the preferred securities are
then listed) in place of the preferred securities.
WILL THE PREFERRED SECURITIES BE LISTED ON A STOCK EXCHANGE?
Application will be made to list the preferred securities on the New York
Stock Exchange. If approved, trading of the preferred securities is expected to
begin within 30 days after they are first issued.
WILL HOLDERS OF THE PREFERRED SECURITIES HAVE ANY VOTING RIGHTS?
Generally, the holders of the preferred securities will not have any voting
rights. See "Description of Capital Securities -- Voting Rights; Amendment of
Each Trust Agreement" in the accompanying prospectus.
IN WHAT FORM WILL THE PREFERRED SECURITIES BE ISSUED?
The preferred securities will be represented by one or more global
securities that will be deposited with and registered in the name of The
Depository Trust Company, or DTC, or its nominee. This means that you will not
receive a certificate for your preferred securities and that your broker will
maintain your position in the preferred securities. Old National expects that
the preferred securities will be ready for delivery through DTC on or about
April [ ], 2002.
S-6
RISK FACTORS
Your investment in the preferred securities will involve certain risks. You
should carefully consider the following discussion of risks and the other
information in this prospectus supplement and, to the extent not superseded by
this prospectus supplement, the accompanying prospectus and each document
incorporated by reference in this prospectus supplement and the prospectus,
before deciding whether an investment in the preferred securities is suitable
for you.
OLD NATIONAL'S OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBENTURES AND THE
GUARANTEE ARE DEEPLY SUBORDINATED.
Old National's obligations under the junior subordinated debentures are
unsecured and will rank junior in priority of payment to all of Old National's
Senior Debt as described on page 9 of the accompanying prospectus. Old
National's obligations under the guarantee will rank in priority of payment as
follows:
- subordinate and junior in right of payment to all its other liabilities,
except those that rank equally with or subordinate to the junior
subordinated debentures by their terms;
- equally with all other guarantees relating to preferred securities issued
by any ONB Trust, including the preferred securities issued by ONB
Capital Trust I; and
- senior to its common stock.
This means that Old National cannot make any payments on the junior
subordinated debentures or the guarantee if it defaults on a payment of Senior
Debt and does not cure the default within the applicable grace period or if the
Senior Debt becomes immediately due because of a default and has not yet been
paid in full. In addition, in the event of the bankruptcy, liquidation or
termination of Old National, its assets would be available to pay obligations
under the guarantee only after Old National made all payments on its Senior
Debt.
OLD NATIONAL'S RESULTS OF OPERATIONS DEPEND UPON THE RESULTS OF OPERATIONS OF
ITS SUBSIDIARIES
Because Old National is a holding company, dividends and fees from
subsidiaries are Old National's principal source of revenues from which to repay
the junior subordinated debentures. Old National's subsidiaries engaged in the
banking, trust, insurance or securities business can only pay dividends if they
are in compliance with applicable U.S. federal and state regulatory
requirements. Old National's right to participate in any asset distribution of
any of its subsidiaries, on liquidation, reorganization or otherwise, will rank
junior to the rights of all creditors of that subsidiary, except to the extent
that Old National may itself be a creditor of that subsidiary. The rights of
holders of the preferred securities or junior subordinated debentures to benefit
from those distributions will also be junior to those prior claims.
Consequently, the junior subordinated debentures and, therefore, the preferred
securities, will be effectively subordinated to all liabilities of Old
National's subsidiaries. You should look only to the assets of Old National for
payments on the junior subordinated debentures and, consequently, the preferred
securities.
At December 31, 2001, Old National had total liabilities of approximately
$8.4 billion, all of which, other than the junior subordinated debentures issued
by Old National to ONB Trust I, effectively ranks senior to the junior
subordinated debentures.
None of the preferred securities, the junior subordinated debentures nor
the guarantee limit the ability of Old National or its subsidiaries to incur
additional debts, including debts that rank senior in priority of payment to the
junior subordinated debentures and the guarantee. See "Description of
Guarantees -- Status of the Guarantees" and "Description of the Debt Securities"
in the accompanying prospectus.
S-7
THE GUARANTEE ONLY COVERS PAYMENTS IF ONB CAPITAL TRUST II HAS CASH AVAILABLE,
BUT YOU MAY PROCEED AGAINST OLD NATIONAL DIRECTLY.
The ability of ONB Capital Trust II to pay scheduled distributions on the
preferred securities, the redemption price of the preferred securities and the
liquidation amount of each preferred security is solely dependent upon Old
National making the related payments on the junior subordinated debentures when
due.
If Old National defaults on its obligations to pay principal or interest on
the junior subordinated debentures, ONB Capital Trust II will not have
sufficient funds to pay distributions, the redemption price or the liquidation
amount of each preferred security. In those circumstances, you will not be able
to rely upon the guarantee for payment of these amounts.
Instead, you:
- may proceed directly against Old National to collect your pro rata share
of payments owed; or
- may rely on the property trustee to enforce ONB Capital Trust II's rights
against Old National under the junior subordinated debentures.
DEFERRAL OF DISTRIBUTIONS WOULD HAVE TAX CONSEQUENCES FOR YOU AND MAY AFFECT THE
TRADING PRICE OF THE PREFERRED SECURITIES.
So long as no event of default under the junior subordinated debentures has
occurred and is continuing, Old National may, on one or more occasions, defer
interest payments on the junior subordinated debentures for up to 20 consecutive
quarterly periods. If Old National defers interest payments on the junior
subordinated debentures, ONB Capital Trust II will defer distributions on the
preferred securities during any deferral period. However, distributions would
still accumulate and the deferred distributions would themselves accrue interest
at the rate of [ ]% per annum, to the extent permitted by law.
If Old National defers interest payments on the junior subordinated
debentures, you will be required to recognize interest income in your gross
income for United States federal income tax purposes in the form of original
issue discount, based on your pro rata share of the accrued interest on the
junior subordinated debentures held by ONB Capital Trust II, before you receive
any cash relating to that interest. In addition, you will not receive the cash
if you sell the preferred securities before the end of any deferral period or
before the record date relating to distributions that are paid.
Old National has no current intention of deferring interest payments on the
junior subordinated debentures. However, if Old National exercises its deferral
right in the future, the preferred securities may trade at a price that does not
fully reflect the value of accrued but unpaid interest on the junior
subordinated debentures. If you sell the preferred securities during an interest
deferral period, you may not receive the same return on investment as someone
else who continues to hold the preferred securities. In addition, the existence
of Old National's right to defer payments of interest on the junior subordinated
debentures may mean that the market price for the preferred securities may be
more volatile than other securities that do not have these rights.
See "United States Federal Income Taxation" for more information regarding
the tax consequences of purchasing, holding and selling the preferred
securities.
YOU SHOULD NOT RELY ON DISTRIBUTIONS FROM THE PREFERRED SECURITIES THROUGH THE
MATURITY DATE OF THE JUNIOR SUBORDINATED DEBENTURES -- THE JUNIOR SUBORDINATED
DEBENTURES, AND, CONSEQUENTLY, THE PREFERRED SECURITIES, MAY BE REDEEMED AT ANY
TIME IF CERTAIN CHANGES IN TAX, INVESTMENT COMPANY OR BANK REGULATORY LAW OCCUR.
If certain changes in tax, investment company or bank regulatory law occur
and are continuing, and other conditions are satisfied, the junior subordinated
debentures may be redeemed by Old National, in whole but not in part, at any
time within 90 days of the event at a redemption price equal to $25 per
S-8
junior subordinated debenture plus any accrued and unpaid interest payments to
the redemption date. See "Certain Terms of the Junior Subordinated
Debentures -- Redemption." Prior to any such redemption, Old National will
obtain any required regulatory approvals. Any such redemption will cause a
mandatory redemption of preferred securities and common securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
junior subordinated debentures redeemed, which redemption would be a taxable
event to you. In the event the preferred securities are redeemed, you may not be
able to reinvest the redemption proceeds at a rate that equals or exceeds the
rate of return on the preferred securities. See "Description of Debt
Securities -- Certain Provisions Relating to the Junior Subordinated Debentures
Issued to the ONB Trusts -- Redemption" and "Description of Preferred
Securities -- Redemption or Exchange" in the accompanying prospectus.
YOU SHOULD NOT RELY ON DISTRIBUTIONS FROM THE PREFERRED SECURITIES THROUGH THE
MATURITY DATE OF THE JUNIOR SUBORDINATED DEBENTURES -- THE JUNIOR SUBORDINATED
DEBENTURES AND, CONSEQUENTLY, THE PREFERRED SECURITIES, MAY BE REDEEMED AT THE
OPTION OF OLD NATIONAL AS EARLY AS FIVE YEARS AFTER ISSUANCE.
At the option of Old National, on or after April [ ], 2007, the junior
subordinated debentures may be redeemed, in whole or in part, at any time, at a
redemption price equal to $25 per junior subordinated debenture plus any accrued
and unpaid interest payments to the redemption date. See "Certain Terms of the
Junior Subordinated Debentures -- Redemption." Prior to any such redemption, Old
National will obtain any required regulatory approvals. You should assume that
Old National will exercise its redemption option if Old National is able to
refinance at a lower interest rate or it is otherwise in Old National's interest
to redeem the junior subordinated debentures. If the junior subordinated
debentures are redeemed, ONB Capital Trust II must redeem the preferred
securities and the common securities having an aggregate liquidation amount
equal to the aggregate principal amount of junior subordinated debentures
redeemed, which redemption would be a taxable event to you. In the event the
preferred securities are redeemed, you may not be able to reinvest the
redemption proceeds at a rate that equals or exceeds the rate of return on the
preferred securities. See "Description of the Capital Securities -- Redemption
or Exchange" in the accompanying prospectus.
OLD NATIONAL MAY TERMINATE ONB CAPITAL TRUST II AT ANY TIME.
Old National has the right to terminate ONB Capital Trust II at any time,
so long as it obtains any required regulatory approval. If Old National decides
to exercise its right to terminate ONB Capital Trust II, ONB Capital Trust II,
after satisfaction of any liabilities to its creditors, as provided by
applicable law, will liquidate by distributing the junior subordinated
debentures to holders of the preferred securities and the common securities on a
pro rata basis. Under current law, such a distribution would not be a taxable
event for United States federal income tax purposes.
Old National has no current intention of causing the termination of ONB
Capital Trust II and the distribution of the junior subordinated debentures. Old
National anticipates that it would consider exercising this right in the event
that expenses associated with maintaining ONB Capital Trust II were
substantially greater than currently expected, for example if unfavorable
changes in tax law or investment company law occur. See "Description of Debt
Securities -- Certain Provisions Relating to Junior Subordinated Debentures
Issued to the ONB Trusts -- Redemption" in the accompanying prospectus. Old
National cannot predict the other circumstances under which this right would be
exercised.
FEDERAL BANKING AUTHORITIES MAY RESTRICT ONB CAPITAL TRUST II'S ABILITY TO MAKE
DISTRIBUTIONS ON OR REDEEM THE PREFERRED SECURITIES.
Federal banking authorities will have the right to examine ONB Capital
Trust II and its activities because ONB Capital Trust II is Old National's
subsidiary. Under certain circumstances, including any determination that Old
National's relationship to ONB Capital Trust II would result in an unsafe and
unsound banking practice, these banking authorities have the authority to issue
orders which could restrict ONB Capital Trust II's ability to make distributions
on or to redeem preferred securities.
S-9
THERE CAN BE NO ASSURANCE AS TO THE MARKET PRICES FOR THE PREFERRED SECURITIES
OR THE JUNIOR SUBORDINATED DEBENTURES; THEREFORE, YOU MAY SUFFER A LOSS.
Old National and ONB Capital Trust II cannot give you any assurance as to
the market prices for the preferred securities or the junior subordinated
debentures distributed to you upon the termination of ONB Capital Trust II.
Accordingly, the preferred securities that an investor may purchase, whether
pursuant to the offer made by this prospectus supplement or in the secondary
market, or the junior subordinated debentures that a holder of preferred
securities would receive upon a termination of ONB Capital Trust II, may trade
at a discount to the price that the investor paid to purchase the preferred
securities offered by this prospectus supplement. As a result of Old National's
right to defer interest payments on the junior subordinated debentures, the
market price of the preferred securities may be more volatile than the market
prices of other securities that are not subject to similar optional deferrals.
Under current United States federal income tax law, a distribution of
junior subordinated debentures to you on the termination of ONB Capital Trust II
should not be a taxable event to you. However, if ONB Capital Trust II is
characterized for United States federal income tax purposes as an association
taxable as a corporation at the time it is terminated or if there is a change in
law, the distribution of junior subordinated debentures to you may be a taxable
event to you.
IF YOU SELL THE PREFERRED SECURITIES BETWEEN RECORD DATES FOR DISTRIBUTIONS, YOU
WILL HAVE TO INCLUDE ACCRUED BUT UNPAID DISTRIBUTIONS IN YOUR TAXABLE INCOME.
The preferred securities may trade at prices that do not fully reflect the
value of accrued but unpaid interest on the underlying junior subordinated
debentures.
If you dispose of your preferred securities before the record date for a
distribution, you will not receive the distribution for that period. However,
you will have to treat a portion of your proceeds from the disposition as
ordinary income for United States federal income tax purposes in an amount equal
to the accrued but unpaid interest on your proportionate share of the junior
subordinated debentures through the date of your disposition.
When you sell your preferred securities you will recognize a capital loss
if the amount you receive is less than your adjusted tax basis in the preferred
securities. The amount you receive for your preferred securities may not fully
reflect the value of any accrued but unpaid interest at the time of the sale
while your adjusted tax basis will include any accrued but unpaid interest.
Normally, you may not apply capital losses to offset ordinary income for United
States federal income tax purposes.
See "United States Federal Income Taxation -- Sales of Preferred
Securities" on page S-19 for more information.
THERE MAY BE NO TRADING MARKET FOR THE PREFERRED SECURITIES.
Before this offering, there has been no market for the preferred
securities. Although Old National has applied to list the preferred securities
on the New York Stock Exchange, a listing does not guarantee that a trading
market for the preferred securities will develop or, if a trading market does
develop, the depth of that market or the ability of the holders to easily sell
their preferred securities.
YOU HAVE VOTING RIGHTS ONLY UNDER LIMITED CIRCUMSTANCES.
You will have limited voting rights. In particular, subject to certain
exceptions, only Old National can appoint or remove any of the issuer trustees.
See "Description of the Capital Securities -- Voting Rights; Amendment of Each
Trust Agreement" in the accompanying prospectus. The holders of preferred
securities will have no voting rights except those described in the prospectus
or as otherwise required by law or the declaration of trust.
S-10
THERE MAY BE NO TRADING MARKET FOR THE JUNIOR SUBORDINATED DEBT SECURITIES IF WE
DISTRIBUTE THEM TO YOU
If the junior subordinated debentures are distributed to you, Old National
has agreed to use its best efforts to list the junior subordinated debentures on
the New York Stock Exchange (or any other exchange on which the preferred
securities are then listed). However, Old National cannot assure you that the
New York Stock Exchange (or any other exchange) will approve the junior
subordinated debentures for listing or that a trading market will exist for the
junior subordinated debentures.
WHERE YOU CAN FIND MORE INFORMATION
Old National files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission, or SEC. Old
National's SEC filings are available to the public over the Internet at the
SEC's web site at http://www.sec.gov. and through Old National's own web site at
http://oldnational.com under the heading "SEC Filings." You may also read and
copy any document Old National files at the SEC's public reference room and at
the SEC's regional office as follows:
Public Reference Room Chicago Regional Office
450 Fifth Street, N.W Citicorp Center
Room 1024 500 West Madison Street
Washington, D.C. 20549 Suite 1400
Chicago, Illinois 60661-2551
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. Further information on the operation of the
SEC's public reference room in Washington, D.C. can be obtained by calling the
SEC at 1-800-SEC-0330. These documents can also be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
The SEC allows Old National to "incorporate by reference" information into
this prospectus supplement. This means that Old National can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is considered to be a part of
this prospectus supplement. Information that Old National files with the SEC
after the date of this prospectus supplement but prior to the termination of the
offering are incorporated by reference and will automatically update and
supersede information contained or incorporated by reference in this prospectus
supplement and the accompanying prospectus. These documents may include periodic
reports, such as Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Old National's SEC file number is 001-15817.
The following document contains important information about Old National
and its financial condition. Old National has previously filed this document
with the SEC and incorporates it by reference into this prospectus supplement:
- its Annual Report on Form 10-K for the fiscal year ended December 31,
2001, filed on March 14, 2002.
Documents incorporated by reference are available from Old National without
charge, excluding any exhibits to those documents. You can obtain documents
incorporated by reference in this prospectus supplement by requesting them in
writing or by telephone from Old National at Old National Bancorp, Attn:
Shareholder Relations, 420 Main Street, Evansville, Indiana 47708. Its telephone
number is (812) 464-1434.
You should rely on the information incorporated by reference or provided in
the prospectus only to the extent that such information is not superseded by the
information contained in this prospectus supplement.
S-11
DESCRIPTION OF OLD NATIONAL
Old National is a financial holding company incorporated in the State of
Indiana in 1982 and is headquartered in Evansville, Indiana. Old National
continues a 168 year old banking tradition and since 1982 has acquired more than
40 financial institutions and financial services companies and may acquire
additional financial institutions and financial services companies in the
future. Old National operates over 140 banking offices in Indiana, Illinois,
Kentucky, Tennessee and Ohio and owns non-bank subsidiaries that provide
fiduciary, trust, securities brokerage, investment and insurance services and
products.
At December 31, 2001, Old National had, on a consolidated basis, total
assets of U.S. $9.1 billion, total deposits of U.S. $6.6 billion, net loans of
U.S. $6.1 billion and total shareholders equity of U.S. $639.2 million and
employed 2,741 employees. Its common stock is listed on the New York Stock
Exchange under the symbol "ONB."
USE OF PROCEEDS
ONB Capital Trust II will use all of the proceeds it receives from the sale
of its preferred securities and common securities to purchase junior
subordinated debentures from Old National. Old National intends to use the
proceeds from the sale of the junior subordinated debt securities to ONB Capital
Trust II for repayment of debt, repurchases of its common stock in connection
with its announced stock repurchase program and general corporate purposes,
including possible future acquisitions. Old National may temporarily invest any
funds not required immediately for those purposes in short-term marketable
securities.
S-12
SELECTED FINANCIAL DATA
SUMMARY FINANCIAL DATA
The following financial data are derived from the consolidated financial
statements of Old National. This information should be read in conjunction with,
and is qualified by reference to, the more detailed information contained in the
consolidated financial statements and the accompanying notes thereto
incorporated by reference in this prospectus supplement. See "Where You Can Find
More Information" in this prospectus supplement.
YEAR ENDED DECEMBER 31,
------------------------------------------------
2001 2000 1999
-------------- -------------- --------------
(IN THOUSANDS OF DOLLARS, EXCEPT FOR PER SHARE)
RESULTS OF OPERATIONS(1)
Interest Income........................................ $ 651,028 $ 657,914 $ 583,736
Interest expense....................................... 338,408 368,404 284,571
---------- ---------- ----------
Net interest income.................................... 312,620 289,510 299,165
Provision for loan losses(2)........................... 28,700 26,002 14,798
---------- ---------- ----------
Net interest income after provision for loan losses.... 283,920 263,508 284,367
Noninterest income..................................... 112,967 101,713 83,150
Noninterest expense.................................... 245,109 228,034 223,897
---------- ---------- ----------
Income before income taxes............................. 151,778 137,187 143,620
Income taxes........................................... 52,814 49,766 50,363
---------- ---------- ----------
Operating earnings..................................... 98,964 87,421 93,257
Merger and restructuring costs (after-tax)............. (5,920) (25,725) --
Discontinued operations (after-tax).................... -- -- 4,101
Net income............................................. $ 93,044 $ 61,696 $ 97,358
========== ========== ==========
PERIOD-END BALANCES
Total assets........................................... $9,080,473 $8,767,748 $8,086,012
Investment securities.................................. 2,248,385 1,811,563 1,821,438
Loans, net of unearned income.......................... 6,132,854 6,348,313 5,714,688
Deposits............................................... 6,616,440 6,583,906 5,962,069
Shareholders' equity................................... 639,235 626,341 584,995
PER SHARE DATA (on continuing operations)(3)
Net income-basic....................................... $ 1.49 $ 0.98 $ 1.48
Net income-diluted(4).................................. 1.49 0.98 1.44
Cash dividends paid.................................... 0.65 0.62 0.57
Book value at year-end................................. 10.45 9.90 9.39
SELECTED PERFORMANCE RATIOS (on operating earnings)
Return on assets....................................... 1.12% 1.03% 1.20%
Return on equity(5).................................... 15.86 14.33 15.13
Net Interest Margin(1)................................. 3.77 3.65 4.09
Efficiency ratio(1).................................... 57.59 58.29 58.56
Dividend payout........................................ 40.66 44.33 38.68
Net charge-offs to average loans....................... 0.45 0.39 0.17
End of period allowance for loan losses to end of
period loans........................................ 1.21 1.16 1.15
Under-performing assets to total loans and foreclosed
properties.......................................... 1.39 0.52 0.50
Leverage ratio......................................... 6.58 6.68 7.46
Tier 1 capital to risk adjusted assets................. 9.28 9.24 10.64
Average equity to average assets....................... 7.27 6.92 7.90
-------------------------
(1) Tax equivalent basis
(2) Excludes portion related to merger and restructuring
(3) Restated for all stock dividends
(4) Assumes the conversion of Old National's subordinated debentures and stock
options
(5) Excludes other comprehensive income
S-13
CAPITALIZATION
The following table summarizes Old National's historical capitalization as
of December 31, 2001, and Old National's capitalization as adjusted to reflect
the assumed issuance and sale of an aggregate of $86,250,000 liquidation amount
of preferred securities and the related common securities of ONB Capital Trust
II, assuming the exercise in full of the underwriters' over-allotment option.
DECEMBER 31, 2001
--------------------------
ACTUAL AS ADJUSTED
----------- ------------
(IN THOUSANDS OF DOLLARS)
LONG-TERM DEBT
Senior debt
Old National Bancorp................................... $ 82,300 $ 82,300
Subsidiaries(1)........................................ 767,746 767,746
---------- ----------
Total senior debt.................................... $ 850,046 $ 850,046
---------- ----------
Subordinated debt
Old National Bancorp................................... -- --
Subsidiaries(1)........................................ 150,000 150,000
---------- ----------
Total subordinated debt.............................. 150,000 150,000
---------- ----------
Total long-term debt.............................. $1,000,046 $1,000,046
---------- ----------
Guaranteed preferred beneficial interests in subordinated
debentures(2)............................................. 50,000 136,250
SHAREHOLDERS' EQUITY
Preferred stock, 2,000,000 shares authorized, no shares
issued or outstanding.................................. $ -- $ --
Common stock ($1 stated par value per share, 150,000,000
shares authorized, and 61,173,935 shares issued and
outstanding............................................ 61,174 61,174
Capital surplus........................................... 472,467 472,467
Retained earnings......................................... 91,062 91,062
Accumulated other comprehensive income, net of tax........ 14,532 14,532
---------- ----------
Total shareholders' equity............................. $ 639,235 $ 639,235
---------- ----------
Total Capitalization........................................ $1,689,281 $1,775,531
========== ==========
Short-term debt............................................. $ 685,312 $ 685,312
-------------------------
(1) These obligations are direct obligations of our subsidiaries and, as such,
constitute claims against those subsidiaries prior to our equity interests.
(2) This line item reflects $50 million of guaranteed preferred beneficial
interests in Old National's subordinated debentures and the issuance of
$86,250,000 of junior subordinated debentures being offered hereby, assuming
the exercise in full of the underwriters' over-allotment option.
S-14
RATIO OF EARNINGS TO FIXED CHARGES
Old National's historical ratios of earnings to fixed charges are described
below for the periods indicated.
YEAR ENDED DECEMBER 31,
------------------------
2001 2000 1999
------ ------ ------
Ratio of Earnings to Combined Fixed Charges
Excluding interest on deposits............................ 2.79x 2.36x 3.00x
Including interest on deposits............................ 1.45x 1.37x 1.50x
The ratio of earnings to fixed charges for Old National has been computed
by dividing earnings by fixed charges. "Earnings" include pretax income from
continuing operations plus fixed charges. "Fixed charges" include the total of
interest expense, capitalized interest, expensed or capitalized amortization of
debt expense and any related discount or premium, and such portion of rental
expense that is representative of the interest factor of each such rental.
ACCOUNTING TREATMENT
ONB Capital Trust II will be treated as a subsidiary of Old National, and
the accounts of ONB Capital Trust II will be included in its consolidated
financial statements. The preferred securities will be presented as a separate
line item in Old National's balance sheet entitled "Guaranteed Preferred
Beneficial Interests in Subordinated Debentures," and disclosures concerning the
preferred securities, the guarantee and the junior subordinated debentures will
be included in the notes to the financial statements.
DESCRIPTION OF SECURITIES
This prospectus supplement discloses the specific terms and provisions of
the preferred securities and the junior subordinated debentures and supplements
the general description of the terms and provisions of these securities in the
accompanying prospectus. These summaries are not meant to be a complete
description of each security. However, this prospectus supplement and the
accompanying prospectus contain the material terms and conditions for each
security. For more information, please refer to the trust agreement, the
indenture and the guarantee. Forms of these documents are filed as exhibits to
the registration statement of which this prospectus supplement and the
accompanying prospectus are a part. All terms used in this prospectus supplement
have the meanings given to them in these documents.
CERTAIN TERMS OF THE PREFERRED SECURITIES
DISTRIBUTIONS
The preferred securities represent undivided beneficial ownership interests
in the assets of ONB Capital Trust II. Distributions on the preferred securities
are cumulative and will accumulate from the date they are first issued at the
annual rate of [ ]% of the $25 per preferred security liquidation
amount. Distributions will be payable quarterly in arrears on [ ],
[ ], [ ] and [ ] of each year,
beginning [ ], 2002. Distributions not paid when due will
themselves accumulate additional distributions, compounded quarterly, at the
annual rate of [ ]% on the amount of unpaid distributions, to the
extent permitted by law. The term "distributions" includes any of these
distributions. The amount of distributions payable for any period will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
So long as no event of default has occurred and is continuing under the
junior subordinated debentures, Old National may, at any time and from time to
time, defer interest payments on the junior subordinated debentures for up to 20
consecutive quarters. A deferral of interest payments cannot extend, however,
beyond the maturity date of the junior subordinated debentures. Before a
deferral period ends,
S-15
Old National may extend it if that deferral period does not exceed 20
consecutive quarters or extend beyond the stated maturity of the junior
subordinated debentures. When a deferral period ends and Old National has paid
all accrued and unpaid interest on the junior subordinated debentures, Old
National may begin a new deferral period, subject to the terms described above.
There is no limit on the number of deferral periods that Old National may begin.
If Old National defers interest payments on the junior subordinated
debentures, ONB Capital Trust II will similarly defer quarterly distributions on
the preferred securities during the deferral period. During a deferral period
the amount of distributions due to you will continue to accumulate at the rate
stated above, and these deferred distributions will themselves accrue interest,
to the extent permitted by law.
Old National has no current intention to exercise its right to defer
interest payments on the junior subordinated debentures issued to ONB Capital
Trust II. If Old National defers interest payments on the junior subordinated
debentures, it would be subject to certain restrictions relating to the payment
of dividends on or purchases of its capital stock and payments on its debt
securities ranking equal with or junior to the junior subordinated debentures.
See "Description of Debt Securities -- Certain Provisions Relating to Junior
Subordinated Debentures Issued to the ONB Trusts -- Option to Defer Interest
Payment Date" in the accompanying prospectus.
See the accompanying prospectus for additional terms of the preferred
securities, including provisions relating to the deferral of distributions, the
payment of distributions and the subordination of the common securities.
If distributions are payable on a date that is not a business day, payment
will be made on the next business day, without any interest or other payment in
respect of the delay in payment. However, if the next business day is in the
next calendar year, payment of distributions will be made on the preceding
business day. A "business day" means each Monday, Tuesday, Wednesday, Thursday
or Friday which is not a day on which banking institutions in New York City are
authorized or obligated by law, regulation or executive order to close, or a day
on which the corporate trust office of either the property trustee or the
indenture trustee is closed for business.
REDEMPTION
General. ONB Capital Trust II must redeem all of the outstanding preferred
securities when the junior subordinated debentures are paid at maturity on April
[ ], 2032. Old National can redeem the junior subordinated debentures prior to
maturity (a) in whole or in part at any time on or after April [ ], 2007, or
(b) in whole, but not in part, if a Special Event as described below has
occurred and is continuing. Prior to any such redemption, Old National will
obtain any required regulatory approval. When Old National redeems the junior
subordinated debentures, the property trustee will use the proceeds to redeem a
like amount of the preferred securities and common securities. The property
trustee will give you at least 30 days, but not more than 60 days, notice before
the redemption date. The preferred securities and (unless there is a default
under the junior subordinated debentures) common securities will be redeemed at
a price equal to the liquidation amount of $25 per security plus accrued and
unpaid distributions to the date of redemption.
If less than all of the preferred securities and common securities are
redeemed, then the aggregate liquidation amount of preferred securities and
common securities to be redeemed will be allocated 3% to the common securities
holders, subject to the exceptions as described in "Description of Capital
Securities -- Subordination of Common Securities" in the accompanying prospectus
and 97% to the holders of preferred securities. The preferred securities and
(unless there is a default under the junior subordinated debentures) common
securities to be redeemed will be selected by the property trustee by a method
determined to be fair and appropriate by it subject to the subordination
provisions of the common securities.
See the accompanying prospectus for other redemption provisions and for
redemption procedures.
S-16
Special Event Redemption. If a Tax Event, an Investment Company Event or a
Regulatory Capital Event, each as defined in the accompanying prospectus and
which we refer to as a Special Event, has occurred and is continuing, Old
National may redeem the junior subordinated debentures, in whole but not in
part. This will cause a mandatory redemption of the preferred securities and the
common securities, in whole but not in part, within 90 days following the
occurrence of the Special Event, at the $25 per security liquidation amount plus
unpaid distributions to the date of redemption. See "Description of Debt
Securities -- Certain Provisions Relating to Junior Subordinated Debentures
Issued to the ONB Trusts -- Redemption" in the accompanying prospectus.
However, in the case of an occurrence of a Special Event, if Old National
can eliminate, within the 90 day period, the Special Event by taking some
action, such as filing a form or making an election, or pursuing some other
similar reasonable measure which has no adverse effect on Old National, ONB
Capital Trust II or the holders of the preferred securities or the common
securities, Old National will pursue that action instead of redemption. Old
National will have no right to redeem the junior subordinated debentures while
ONB Capital Trust II or the property trustee is pursuing any similar action
based on its obligations under the trust agreement.
If a Tax Event is continuing and Old National does not redeem the junior
subordinated debentures or liquidate ONB Capital Trust II, Old National will pay
additional amounts, if any, to the holders of the junior subordinated debentures
so that, notwithstanding any additional taxes, duties or charges imposed on ONB
Capital Trust II because of the Tax Event, ONB Capital Trust II will have
sufficient funds to pay the full amount of distributions due on the outstanding
preferred securities. For a discussion of other additional amounts that Old
National will pay to ONB Capital Trust II, see "Description of Capital
Securities -- Additional Amounts" in the accompanying prospectus.
FORM OF PREFERRED SECURITIES
The preferred securities will be issued in book-entry form only. This means
that we will not issue actual certificates to each holder of preferred
securities. Instead, the preferred securities will be in the form of one or more
global certificates registered in the name of Cede & Co., as nominee of DTC. In
order to own a beneficial interest in a preferred security, you must be an
institution that has an account with DTC or have a direct or individual account
with such an institution.
Preferred securities will not be issued in certificated form unless:
- DTC notifies us that it is unwilling or unable to continue as depository
or it otherwise ceases to be a qualified clearing agency and we do not
appoint a successor depository; or
- ONB Capital Trust II, with our consent, makes a decision to permit
preferred securities to be issued in certificated form.
Accordingly, you must rely on the procedures of DTC and its participants to
exercise any rights under the preferred securities. So long as DTC or its
nominee is the registered owner of a global certificate, DTC or its nominee will
be considered the sole holder of the preferred securities represented by that
global certificate for all purposes, including the payment of distributions and
the delivery of notices. See "Description of the Book-Entry Only Issuance -- The
DTC System" on page 34 of the attached prospectus for a detailed description of
DTC and its procedures.
CERTAIN TERMS OF THE JUNIOR SUBORDINATED DEBENTURES
ONB Capital Trust II will use the proceeds of the issuance of the preferred
securities and the common securities to purchase junior subordinated debentures
issued by Old National. Old National will issue junior subordinated debentures
to ONB Capital Trust II in an aggregate principal amount of $[ ].
The junior subordinated debentures will be issued as a series pursuant to a
securities resolution dated as of August 25, 1999, under the indenture. The
junior subordinated debentures will be unsecured and will rank subordinate and
junior in right of payment to all of the Senior Debt.
S-17
The defeasance and sinking fund provisions of the indenture will not apply
to the junior subordinated debentures. In addition, any indebtedness which by
its terms is not superior to or equal in right of payment to the junior
subordinated debentures will comply with the standards (or receive the approval)
of the Board of Governors of the Federal Reserve for such indebtedness.
INTEREST RATE AND MATURITY
The junior subordinated debentures will mature on April [ ],
2032, and will bear interest at the annual rate of [ ]% of the
principal amount thereof, payable quarterly in arrears on [ ],
[ ], [ ] and [ ] of each year,
beginning [ ], 2002. Interest payments not paid when due will
themselves accrue additional interest compounded quarterly at the annual rate of
[ ]% on the amount of unpaid interest to the extent permitted by
law. The term "interest payments" includes this additional interest. The amount
of interest payable for any period will be computed based on a 360-day year
consisting of twelve 30-day months. The interest payment provisions for the
junior subordinated debentures correspond to the distribution provisions of the
preferred securities.
So long as no event of default has occurred and is continuing under the
junior subordinated debentures, Old National may, at any time and from time to
time, defer interest payments on the junior subordinated debentures for up to 20
consecutive quarters. A deferral of interest payments cannot extend, however,
beyond the maturity date of the junior subordinated debentures. Before a
deferral period ends, Old National may extend it if that deferral period does
not exceed 20 consecutive quarters or extend beyond the stated maturity of the
junior subordinated debentures. When a deferral period ends and Old National has
paid all accrued and unpaid interest on the junior subordinated debentures, Old
National may begin a new deferral period, subject to the terms described above.
There is no limit on the number of deferral periods that Old National may begin.
Old National has no current intention to exercise its right to defer
interest payments on the junior subordinated debentures issued to ONB Capital
Trust II. If Old National defers interest payments on the junior subordinated
debentures, it would be subject to certain restrictions relating to the payment
of dividends on or purchases of its capital stock and payments on its debt
securities ranking equally with or junior to the junior subordinated debentures.
See "Description of Debt Securities -- Certain Provisions Relating to Junior
Subordinated Debentures Issued to the ONB Trusts -- Option to Defer Interest
Payment Date" in the accompanying prospectus.
See the accompanying prospectus for additional terms of the junior
subordinated debentures.
REDEMPTION
Old National has the option to redeem the junior subordinated debentures
prior to maturity at a redemption price equal to [ ]% of the
principal amount plus accrued and unpaid interest to the redemption date (a) in
whole or in part at any time on or after April [ ], 2007, or (b) in whole but
not in part if a Special Event has occurred and is continuing.
The defeasance and sinking fund provisions of the indenture will not apply
to the junior subordinated debentures. In addition, any indebtedness which by
its terms is not superior to or equal in right of payment to the junior
subordinated debentures will comply with the standards (or receive the approval)
of the Board of Governors of the Federal Reserve for such indebtedness.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
If the property trustee distributes the junior subordinated debentures to
the holders of the preferred securities and the common securities upon the
termination and liquidation of ONB Capital Trust II, the junior subordinated
debentures will be issued in denominations of $25 and integral multiples
thereof. Old National anticipates that the junior subordinated debentures would
be distributed in the form of one or more global securities and DTC, or any
successor depositary for the preferred securities, would act as
S-18
depositary for the junior subordinated debentures. The depositary arrangements
for the junior subordinated debentures would be substantially similar to those
in effect for the preferred securities.
For a description of DTC and the terms of the depository arrangements
relating to payments, transfers, voting rights, redemption and other notices and
other matters, see "Book-Entry Issuance" in the accompanying prospectus.
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following summary of U.S. federal income tax consequences material to
the purchase, ownership and disposition of the preferred securities is based on
the views of Krieg DeVault LLP, tax counsel to Old National and ONB Capital
Trust II. It does not purport to be a comprehensive description of all of the
tax consequences that may be relevant to a decision to purchase preferred
securities by any particular investor, including tax consequences that arise
from rules of general application to all taxpayers or to certain classes of
taxpayers or that are generally assumed to be known by investors. This summary
is based on (1) the Internal Revenue Code of 1986, as amended, or the Code, (2)
income tax regulations issued under the Code and (3) associated administrative
and judicial interpretations, all as they currently exist as of the date of this
prospectus supplement. These income tax laws and regulations, however, may
change at any time, and any change could be retroactive to the issuance date of
the preferred securities.
These income tax laws and regulations are also subject to various
interpretations, and the Internal Revenue Service, or the IRS, or the courts
could later disagree with what Old National explains in this summary. The IRS
has not formally ruled (and Old National does not intend to seek a ruling) on
the tax consequences material to the purchase, ownership and disposition of the
preferred securities. Accordingly, the IRS could challenge the opinions
expressed in this prospectus supplement concerning such consequences, and a
court could agree with the IRS.
Except where this summary states otherwise, the summary deals only with
preferred securities held as a capital asset (as defined in section 1221 of the
Code) by a holder who (a) purchases the preferred securities at their original
offering price when ONB Capital Trust II originally issues them, an Initial
Holder, and (b) is a U.S. Holder (as defined below).
This summary does not address, except as stated below, any of the tax
consequences to holders that are not U.S. Holders or to holders that may be
subject to special tax treatment such as banks, thrift institutions, real estate
investment trusts, regulated investment companies, insurance companies, brokers
and dealers in securities or currencies, tax-exempt investors or persons that
will hold the preferred securities as a position in a "straddle," as part of a
"hedge," or as part of a "conversion transaction" or other integrated
investment, or persons having a functional currency other than the U.S. dollar.
Further, this summary does not address:
- the United States federal income tax consequences to shareholders in, or
partners or beneficiaries of, a holder of the preferred securities;
- the United States federal alternative minimum tax consequences material
to the purchase, ownership or disposition of the preferred securities; or
- any state, local or foreign tax consequences material to the purchase,
ownership or disposition of the preferred securities.
A "U.S. Holder" is a preferred securities holder who or which is:
- a United States citizen or resident individual (or someone treated as a
citizen or resident individual for United States federal income tax
purposes);
S-19
- a corporation (including an entity treated as a corporation for United
States federal income tax purposes) created or organized (or treated as
created or organized) in or under the laws of the United States or any
state or other political subdivision thereof; or
- any other person that is subject to United States federal income taxation
on a net income basis in respect of the investment in the preferred
securities.
A "Non-U.S. Holder" is a preferred securities holder that is a nonresident alien
or a foreign corporation.
CHARACTERIZATION OF THE JUNIOR SUBORDINATED DEBENTURES AND ONB CAPITAL TRUST II
In connection with the issuance of the junior subordinated debentures,
Krieg DeVault LLP, tax counsel to Old National and ONB Capital Trust II, will
render its opinion that, under then current law, and assuming full compliance
with the terms of the trust agreement, the underwriting agreement governing the
sale of the preferred securities by Old National to the underwriters and the
indenture (and other relevant documents), and based on certain facts and
assumptions contained in such opinion, the junior subordinated debentures will
be classified for United States federal income tax purposes as indebtedness of
Old National. By acceptance of a preferred security, you agree to treat the
junior subordinated debentures as indebtedness and the preferred securities as
an undivided beneficial ownership interest in the junior subordinated
debentures.
In connection with the issuance of the preferred securities, Krieg DeVault
LLP will render its opinion that, under current law and assuming full compliance
with the terms of the trust agreement, the underwriting agreement governing the
sale of the preferred securities by Old National to the underwriters and the
indenture (and other relevant documents), and based on certain facts and
assumptions contained in such opinion, ONB Capital Trust II will be
characterized for United States federal income tax purposes as a grantor trust
and not as an association that is taxable as a corporation. Accordingly, for
United States federal income tax purposes, you will be considered the owner of
an undivided beneficial ownership interest in the junior subordinated
debentures, and you will be required to include in your gross income any
interest (or original issue discount accrued) with respect to your allocable
share of those junior subordinated debentures. See "-- Interest Income and
Original Issue Discount," below.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under applicable income tax regulations, if there is only a remote
likelihood that a company will not make its interest payments on time, then the
debt will be considered to be issued without original issue discount, or OID.
Old National believes that the likelihood that it will exercise its option to
defer interest payments is remote, since this would prevent Old National from
declaring dividends on any of its capital stock or making payments on its debt
securities that rank equal with or junior to the junior subordinated debentures
until it paid in full all of the missed interest payments. Accordingly, Old
National will take the position that the junior subordinated debentures will not
be issued with OID. Under this approach, the interest payments on the junior
subordinated debentures (which are used to make distributions on the preferred
securities) generally will be taxable to you as ordinary income when they are
paid or accrued depending on your method of United States federal income tax
accounting.
If, however, the possibility that Old National would exercise its option to
defer payments of interest were determined not to be "remote," or if Old
National were to exercise its option to defer payments of interest, the junior
subordinated debentures would be treated as issued with OID at the time of
issuance, or as re-issued with OID at the time of such exercise, as the case may
be, and all stated interest on the junior subordinated debentures would
thereafter be treated as OID as long as the junior subordinated debentures
remained outstanding. In that case, all of your taxable interest income with
respect to the junior subordinated debentures would have to be accounted for as
OID using a constant yield method regardless of your method of United States
federal income tax accounting, and actual distributions of stated interest would
not be reported as taxable income. Consequently, you would be required to
include OID in your gross income even though Old National would not make any
actual cash payments during the deferral period.
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The IRS has not issued any rulings or interpretations that define the
meaning of the term "remote" as used in the applicable income tax regulations.
The IRS could take a position that differs from what is stated in this
prospectus supplement.
CORPORATE U.S. HOLDERS
Because the income from the preferred securities will not be considered to
be dividends for United States federal income tax purposes, corporate U.S.
Holders of the preferred securities will not be entitled to a dividends-received
deduction for any income from the preferred securities.
MARKET DISCOUNT AND ACQUISITION PREMIUM
Holders of the preferred securities other than Initial Holders may be
considered to have acquired their undivided interests in the junior subordinated
debentures with "market discount" or "acquisition premium" (as each phrase is
defined for United States federal income tax purposes). Such holders are urged
to consult with their own tax advisors concerning the tax consequences of
purchasing, owning and selling the preferred securities.
SALES OF PREFERRED SECURITIES
If you sell your preferred securities, you will recognize a gain or loss
equal to the difference between the amount realized from the sale of the
preferred securities (generally, your selling price minus any portion
attributable to accrued but unpaid interest not otherwise includible as OID) and
your adjusted tax basis in the preferred securities. If Old National does not
defer interest on the junior subordinated debentures and the debentures are not
treated as issued with OID, your adjusted tax basis in the preferred securities
generally will equal the initial purchase price that you paid for the preferred
securities. If, however, Old National elects to defer interest payments on the
junior subordinated debentures, or if the debentures were treated as issued with
OID, your adjusted tax basis in the preferred securities generally will equal
(1) the initial purchase price that you paid for the preferred securities plus
(2) any OID accrued to the date of disposition, less (3) all distributions since
and including the date of the first deferral period or the date or issuance, as
the case may be.
Except to the extent of any accrued market discount, a gain or loss on the
sale of preferred securities generally will be a capital gain or loss if the
preferred securities are held as capital assets. With certain exceptions, the
maximum regular United States federal income tax rate on capital gains for
individual taxpayers is currently 20% for sales and exchanges of capital assets
held for more than one year. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
If you use the accrual method of accounting for tax purposes (or the cash
method, if the junior subordinated debentures are deemed to have been issued
with OID) and you dispose of the preferred securities between record dates for
payments of distributions thereon, you will be required to include in gross
income for United States federal income tax purposes accrued but unpaid interest
on the junior subordinated debentures through the date of disposition (i.e.,
interest or, possibly, OID), and to add such amount to your adjusted tax basis
in accordance with your pro rata share of the underlying junior subordinated
debentures deemed disposed of. To the extent the selling price is less than your
adjusted tax basis (which will include all accrued but unpaid interest), you
will recognize a capital loss.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF ONB
CAPITAL TRUST II
Under certain circumstances, as described in the accompanying prospectus
under "Description of Capital Securities -- Liquidation Distribution upon
Termination," the property trustee may distribute the junior subordinated
debentures to you in exchange for your preferred securities after satisfaction
of any liabilities to creditors as may be provided by applicable law. This will
result in the liquidation and termination of ONB Capital Trust II. Except as set
forth below, such a distribution will not be a taxable event for United States
federal income tax purposes, and you will have an aggregate adjusted tax basis
in
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the junior subordinated debentures you receive equal to your aggregate adjusted
tax basis in your preferred securities. For a description of adjusted tax basis,
see the discussion above in "-- Sales of Preferred Securities."
Further, the holding period of the junior subordinated debentures you
receive will be the same as the period for which you held your preferred
securities. If, however, the distribution were caused by a Tax Event because ONB
Capital Trust II was taxable as a corporation, the distribution would be a
taxable event for United States federal income tax purposes. In that case, you
could recognize a gain or loss, your adjusted tax basis in the junior
subordinated debentures could differ from your adjusted tax basis in the
preferred securities, and your holding period for the junior subordinated
debentures would not include the period during which you held the preferred
securities.
The junior subordinated debentures may be redeemed for cash under certain
circumstances, and the proceeds would be used by the property trustee to redeem
a like amount of preferred securities. Such a redemption of preferred securities
would be a taxable event for United States federal income tax purposes, and you
would recognize gain or loss as if you had sold the preferred securities for
cash. See "-- Sales of Preferred Securities," above.
NON-U.S. HOLDERS
Payments to a Non-U.S. Holder will generally not be subject to United
States federal withholding tax, provided the holder:
- does not own (directly or indirectly, actually or constructively) 10% or
more of the total combined voting power of all classes of stock of Old
National entitled to vote; and
- is not a controlled foreign corporation that is related to Old National
actually or constructively through stock ownership.
To qualify for this exemption from withholding, the last United States
payer in the chain of payment prior to payment to a Non-U.S. Holder, or the
Withholding Agent, must have received a statement that:
- is signed by the holder of the preferred securities under penalties of
perjury;
- certifies that such holder is not a U.S. Holder; and
- provides the name and address of the holder.
The statement may be made on an appropriate IRS Form W-8BEN or a
substantially similar form. If the preferred securities are held through a
securities clearing organization or certain other financial institutions, the
organization or institution may provide a signed statement to the Withholding
Agent along with a copy of the form provided by the holder.
A Non-U.S. Holder will generally not be subject to United States federal
withholding or income tax on any gain realized upon the sale or other
disposition of the preferred securities. However, if a Non-U.S. Holder holds the
preferred securities in connection with a trade or business conducted in the
United States, or is present in the United States in certain circumstances, the
holder may be subject to income tax on income and gains recognized. Non-U.S.
Holders who may be described in the prior sentence should refer to the
discussion applicable to U.S. Holders, above, and should consult their own tax
advisors.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid and OID accrued on the preferred
securities held of record by U.S. Holders (other than corporations and other
exempt U.S. Holders) will be reported to the IRS. "Backup" withholding
(currently at a rate of 30%) will apply to payments of interest to nonexempt
U.S. Holders unless the U.S. Holder furnishes its taxpayer identification number
in the manner prescribed in applicable tax regulations, certifies that such
number is correct, certifies as to no loss of exemption from backup withholding
and meets certain other conditions.
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Payment of the proceeds from the disposition of preferred securities to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the holder or beneficial owner establishes an
exemption from information reporting and backup withholding.
Any amounts withheld from a U.S. Holder under the backup withholding rules
will be allowed as a refund or a credit against such U.S. Holder's United States
federal income tax liability, provided the required information is furnished to
the IRS.
It is anticipated that income on the preferred securities will be reported
to holders on Form 1099-INT or, if Old National exercises its option to defer
any payment of interest, Form 1099-OID, and mailed to holders of the preferred
securities by January 31 following each calendar year.
POSSIBLE TAX LAW CHANGES
Legislation has been introduced that, if enacted, would deny a deduction
for interest paid on financial instruments similar to the junior subordinated
debentures if they are not shown as part of total liabilities on the issuer's
certified annual report. This legislation is proposed to be effective for
instruments issued on or after the date of enactment for such legislation.
Consequently, as drafted, this legislation would not affect the preferred
securities or junior subordinated debentures or otherwise result in a Tax Event.
Because Old National will treat the junior subordinated debentures as part of
total liabilities on its certified annual report, the legislation as currently
drafted would not deny interest deductions in respect of the junior subordinated
debentures. There can be no assurance, however, that legislation will not
ultimately be enacted into law, or that other developments will not occur on or
after the date of this prospectus supplement, that would adversely affect the
tax treatment of the junior subordinated debentures and, as a result, the tax
treatment of ONB Capital Trust II. Such changes could also give rise to a Tax
Event.
The tax information above is intended only as a summary of material United
States federal tax consequences of an investment in ONB Capital Trust II. Old
National urges you to consult with your own tax advisors as to the United States
federal, state and local, and foreign and other tax consequences material to the
purchase, ownership or disposition of preferred securities. The statements of
United States tax laws described above are based on the laws in force as of the
date of this prospectus supplement and are subject to any changes in United
States law occurring after that date.
ERISA CONSIDERATIONS
Each fiduciary of an employee benefit plan subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended, or ERISA, a plan
subject to Section 4975 of the Code, including an individual retirement
arrangement or a Keogh plan, a plan subject to provisions under applicable
federal, state, local, non-U.S. or other laws or regulations that are similar to
the provisions of Title I of ERISA or Section 4975 of the Code, or Similar Laws,
and any entity whose underlying assets include "plan assets" by reason of any
such employee benefit plan's or plan's investment in such entity, each a Plan,
should consider the fiduciary responsibility and prohibited transaction
provisions of ERISA, applicable Similar Laws and Section 4975 of the Code in the
context of the Plan's particular circumstances before authorizing an investment
in the preferred securities. Accordingly, such a fiduciary should consider,
among other factors, that each Plan investing in the preferred securities will
be deemed to have represented that the Plan's purchase of the preferred
securities is covered by one or more prohibited transaction exemptions. Plan
fiduciaries should also consider whether the Plan's investment in the preferred
securities would satisfy the prudence and diversification requirements of ERISA
and would be consistent with the documents and instruments governing their Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans subject to
such Sections engaging in certain transactions involving "plan assets" with
persons who are "parties in interest" under ERISA or "disqualified persons"
under the Code, or Parties in Interest, regarding such a Plan. A violation of
these "prohibited transaction" rules may result in an excise tax, penalty or
other liabilities under ERISA and/or Section 4975 of the Code for such persons
and, in the case of an individual retirement account, or IRA,
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the occurrence of a prohibited transaction involving the individual who
established the IRA, or his or her beneficiaries, would cause the IRA to lose
its tax-exempt status, unless exemptive relief is available under an applicable
statutory or administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA), certain church plans
(as defined in Section 3(33) of ERISA or Section 4975(g)(3) of the Code) and
foreign plans (as described in Section 4(b)(4) of ERISA) are not subject to the
requirements of ERISA or Section 4975 of the Code, but may be subject to Similar
Laws.
ERISA and the Code do not define "plan assets." However, regulations, which
we refer to as the Plan Assets Regulations, promulgated under ERISA by the
United States Department of Labor, or the DOL, generally provide that when a
Plan subject to Title I of ERISA or Section 4975 of the Code acquires an equity
interest in an entity that is neither a "publicly-offered security" nor a
security issued by an investment company registered under the Investment Company
Act, the Plan's assets include both the equity interest and an undivided
interest in each of the underlying assets of the entity unless it is established
either that equity participation in the entity by "benefit plan investors" is
not "significant" or that the entity is an "operating company," in each case as
defined in the Plan Assets Regulations. The ONB Capital Trust II is not expected
to qualify as an operating company and will not be an investment company
registered under the Investment Company Act. For purposes of the Plan Assets
Regulations, equity participation in an entity by benefit plan investors will
not be significant if benefit plan investors hold, in the aggregate, less than
25% of the value of any class of such entity's equity, excluding equity
interests held by persons (other than a benefit plan investor) with
discretionary authority or control over the assets of the entity or who provide
investment advice for a fee (direct or indirect) with respect to such assets,
and any affiliates thereof. For purposes of this 25% test, or the Benefit Plan
Investor Test, "benefit plan investors" include all employee benefit plans,
whether or not subject to ERISA or the Code, including governmental plans,
"Keogh" plans, IRAs and pension plans maintained by foreign corporations, as
well as any entity whose underlying assets are deemed to include plan assets
under the Plan Assets Regulations. No assurance can be given that the value of
the preferred securities held by "benefit plan investors" will not be
"significant" at the completion of the initial offering of the preferred
securities or thereafter, and no monitoring or other measures will be taken
regarding the satisfaction of the conditions to this exception. All of the
common securities of ONB Capital Trust II will be purchased and held by Old
National.
For purposes of the Plan Assets Regulations, a "publicly-offered security"
is a security that is (a) "freely transferable," (b) part of a class of
securities that is "widely held," and (c)(i) sold to the Plan as part of an
offering of securities to the public pursuant to an effective registration
statement under the Securities Act and registered under the Securities Exchange
Act of 1934, as amended, or the Exchange Act, within 120 days (or such later
time as may be allowed by the SEC) after the end of the fiscal year of the
issuer during which the offering of such securities to the public occurred or
(ii) is part of a class of securities that is registered under Section 12(b) or
12(g) of the Exchange Act, or the Registration Requirement. It is anticipated
that the preferred securities will be offered in a manner which satisfies the
Registration Requirement. The Plan Assets Regulations provide that a security is
"widely held" only if it is part of a class of securities that is owned by 100
or more investors independent of the issuer and of one another. A security will
not fail to be "widely held" because the number of independent investors falls
below 100 subsequent to the initial offering as a result of events beyond the
control of the issuer. It is anticipated that the preferred securities will be
"widely held" within the meaning of the Plan Assets Regulations, although no
assurance can be given in this regard. The Plan Assets Regulations provide that
whether a security is "freely transferable" is a factual question to be
determined on the basis of all relevant facts and circumstances. The Plan Assets
Regulations further provide that when a security is part of an offering in which
the minimum investment in $10,000 or less, certain restrictions described in the
Plan Assets Regulations ordinarily will not, alone or in combination, affect the
finding that such securities are "freely transferable." It is anticipated that
the preferred securities will be "freely transferable" within the meaning of the
Plan Assets Regulations, although no assurance can be given in this regard.
As indicated above, while there can be no assurance that any of the
exceptions set forth in the Plan Assets Regulations will apply to the preferred
securities, the preferred securities should qualify as "publicly
S-24
offered securities" and, as a result, under the terms of the Plan Assets
Regulations, an investing Plan's assets should not be considered to include an
undivided interest in the assets held by ONB Capital Trust II (including the
junior subordinated debentures).
However, if the assets of ONB Capital Trust II were to be deemed to be
"plan assets" under ERISA, this would result, among other things, in (i) the
application of the prudence and other fiduciary responsibility standards of
ERISA to investments made by ONB Capital Trust II and (ii) the possibility that
certain transactions in which ONB Capital Trust II might seek to engage could
constitute "prohibited transactions" under ERISA and the Code. If a prohibited
transaction occurs for which no exemption is available, any fiduciary that has
engaged in the prohibited transaction could be required (i) to restore to the
Plan any profit realized on the transaction and (ii) to reimburse the Plan for
any losses suffered by the Plan as a result of the investment. In addition, each
Party in Interest involved could be subject to an excise tax equal to 15% of the
amount involved in the prohibited transaction for each year the transaction
continues and, unless the transaction is corrected within statutorily required
periods, to an additional tax of 100%. Plan fiduciaries who decide to invest in
ONB Capital Trust II could, under certain circumstances, be liable for
non-exempt prohibited transactions or other violations as a result of their
investment in ONB Capital Trust II or as co-fiduciaries for actions taken by or
on behalf of ONB Capital Trust II. With respect to an IRA that invests in ONB
Capital Trust, the occurrence of a non-exempt prohibited transaction involving
the individual who established the IRA, or his or her beneficiaries, would cause
the IRA to lose its tax-exempt status.
Regardless of whether the assets of ONB Capital Trust II are deemed to be
"plan assets" of Plans investing in ONB Capital Trust II, as discussed above,
the acquisition and holding of the preferred securities with "plan assets" of a
Plan could be deemed to constitute direct or indirect prohibited transactions.
For example, if Old National is a Party in Interest with respect to an investing
Plan (either directly or by reason of its ownership of its subsidiaries), an
indirect extension of credit prohibited by section 406(a)(1)(B) of ERISA and
section 4975(c)(1)(B) of the Code between Old National and the investing Plan
may be deemed to occur, unless exemptive relief were available under an
applicable administrative exemption. The DOL has issued five prohibited
transaction class exemptions, or PTCEs, that may provide exemptive relief for
direct or indirect prohibited transactions resulting from the purchase and/or
holding of the preferred securities by a Plan. These class exemptions are:
- PTCE 96-23 (for certain transactions determined by "in-house asset
managers");
- PTCE 95-60 (for certain transactions involving insurance company general
accounts);
- PTCE 91-38 (for certain transactions involving bank collective investment
funds);
- PTCE 90-1 (for certain transactions involving insurance company pooled
separate accounts); and
- PTCE 84-14 (for certain transactions determined by independent "qualified
professional asset managers").
Such class exemptions may not, however, apply to all of the transactions that
could be deemed prohibited transactions in connection with a Plan's investment
in the preferred securities.
Any purchaser of the preferred securities that is an insurance company
using assets of its general account should note that, based on the reasoning of
the United States Supreme Court set forth in John Hancock Mutual Life Insurance
Company v. Harris Trust & Savings Bank, 114 S. Ct. 517 (1993), and amendments to
ERISA Section 401(c), an insurance company's general account may be deemed to
include assets of Plans investing in such general account (e.g., through the
purchase of an annuity contract).
Because of ERISA's prohibitions and those of section 4975 of the Code,
discussed above and the potential application of Similar Laws to Plans not
subject to Title I of ERISA or section 4975 of the Code, Non-ERISA Plan, the
preferred securities, or any interest therein, should not be purchased or held
by any Plan or any person investing "plan assets" of any Plan, unless such
purchase and holding is covered by the exemptive relief available under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 (or some other
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applicable class or individual exemption) (or, in the case of a Non-ERISA Plan,
a similar exemption applicable to the transaction). Accordingly, each purchaser
or holder of the preferred securities or any interest therein will be deemed to
have represented by its purchase and holding thereof that either:
- it is not a Plan and no part of the assets to be used by it to purchase
and/or hold such preferred securities or any interest therein constitutes
"plan assets" of any Plan; or
- such purchase and holding of such preferred securities or any interest
therein either (i) satisfies the requirements of, and is entitled to full
exemptive relief under, PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 (or some
other applicable class or individual exemption) (or, in the case of a
Non-ERISA Plan, a similar exemption applicable to the transaction) or
(ii) will not result in a prohibited transaction under ERISA or the Code
or its equivalent under applicable Similar Laws.
Although, as noted above, governmental plans and certain other plans are
not subject to ERISA, including the prohibited transaction provisions thereof,
or of section 4975 of the Code, Similar Laws governing the investment and
management of the assets of such plans may contain fiduciary and prohibited
transaction provisions similar to those under ERISA and section 4975 of the Code
discussed above. Similarly, fiduciaries of other plans not subject to ERISA may
be subject to other legal restrictions under applicable Similar Laws.
Accordingly, fiduciaries of governmental plans or other plans not subject to
ERISA, in consultation with their advisors, should consider the impact of their
respective Similar Laws on their investment in preferred securities, and the
considerations discussed above, to the extent applicable.
The foregoing discussion is general in nature and is not intended to be
inclusive. Consequently, and due to the complexity of the fiduciary
responsibility and prohibited transaction rules described above and the
penalties that may be imposed upon persons involved in non-exempt prohibited
transactions, it is particularly important that fiduciaries or other persons
considering purchasing the preferred securities on behalf of or with "plan
assets" of any Plan consult with their counsel, prior to any such purchase,
regarding the potential applicability of ERISA, section 4975 of the Code and any
Similar Laws to such investment and whether any exemption would be applicable
and determine on their own whether all conditions of such exemption or
exemptions have been satisfied such that the acquisition and holding of
preferred securities by the purchaser Plan are entitled to full exemption relief
thereunder.
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UNDERWRITING
Subject to the terms and conditions of the underwriting agreement dated
April [ ], 2002, each underwriter named below has severally agreed to purchase,
and ONB Capital Trust II has agreed to sell to such underwriter, the number of
preferred securities set forth opposite the name of such underwriter.
NUMBER OF
PREFERRED
NAME SECURITIES
---- ----------
Salomon Smith Barney Inc. ..................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........
Morgan Stanley & Co. Incorporated...........................
Stifel, Nicolaus & Company, Incorporated....................
UBS Warburg LLC.............................................
Credit Suisse First Boston Corporation......................
J.P. Morgan Securities Inc. ................................
Legg Mason Wood Walker, Incorporated........................
Lehman Brothers Inc. .......................................
---------
Total.................................................. 3,000,000
=========
The underwriting agreement provides that the obligations of the several
underwriters to purchase the preferred securities included in this offering are
subject to approval of certain legal matters by counsel and to certain other
conditions. The underwriters are obligated to purchase all of the preferred
securities if they purchase any of the preferred securities, other than those
preferred securities covered by the over-allotment option described below.
We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to 450,000 additional trust preferred securities at the initial
public offering price less the underwriting discounts and commissions. The
option may be exercised only to cover any over-allotments in the sale of the
preferred securities.
The underwriters, for whom Salomon Smith Barney Inc. is acting as
representative, propose to offer some of the preferred securities directly to
the public at the initial public offering price set forth on the cover page of
this prospectus supplement, and some of the preferred securities to certain
dealers at the initial public offering price less a concession of $[ ]
per preferred security. The underwriters may allow, and such dealers may
reallow, a concession not in excess of $[ ] per preferred security to
certain brokers and dealers. After the initial offering of the preferred
securities to the public, the public offering price and other selling terms may
be changed by the representative.
In view of the fact that the proceeds of the sale of the preferred
securities will ultimately be used to purchase the junior subordinated
debentures, the underwriting agreement provides that Old National will pay as
compensation to the underwriters $[ ] per preferred security for the
accounts of the several underwriters ($[ ] in the aggregate).
In connection with the offering, Salomon Smith Barney, Inc., on behalf of
the underwriters, may purchase and sell preferred securities in the open market.
These transactions may include over-allotment, syndicate covering transactions
and stabilizing transactions. Over-allotment involves syndicate sales of
preferred securities in excess of the principal amount of preferred securities
to be purchased by the underwriters in the offering, which creates a syndicate
short position. Syndicate covering transactions involve purchases of the
preferred securities in the open market after the distribution has been
completed in order to cover syndicate short positions. Stabilizing transactions
consist of certain bids or purchases of preferred securities made for the
purpose of preventing or retarding a decline in the market price of the
preferred securities while the offering is in progress.
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The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney, Inc., in covering syndicate short positions or making
stabilizing purchases, repurchases preferred securities originally sold by that
syndicate member.
Any of these activities may cause the price of the preferred securities to
be higher than the price that otherwise would exist in the open market in the
absence of such transactions. These transactions may be effected in the
over-the-counter market or otherwise and, if commenced, may be discontinued at
any time.
The expenses associated with the offer and sale of the preferred securities
are estimated to be $[ ].
Certain of the underwriters and their affiliates have in the past provided,
and may in the future provide, investment banking services to Old National and
its affiliates in the ordinary course of business.
Old National and ONB Capital Trust II have agreed to indemnify the several
underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the underwriters
may be required to make in respect of any of those liabilities.
Application will be made to list the preferred securities on the New York
Stock Exchange. If approved, trading of the preferred securities on the New York
Stock Exchange is expected to commence within a 30-day period after the initial
delivery of the preferred securities. Prior to this offering, there has been no
public market for the preferred securities. In order to meet one of the
requirements for listing the preferred securities on the New York Stock
Exchange, the underwriters will undertake to sell lots of 100 or more preferred
securities to a minimum of 400 beneficial holders.
Old National and ONB Capital Trust II have agreed, during the period of 15
days from the date of the underwriting agreement, not to sell, offer to sell,
grant any option for the sale of, or otherwise dispose of any of the preferred
securities, any security convertible into or exchangeable into or exercisable
for the preferred securities or the junior subordinated debentures or any debt
securities substantially similar to the junior subordinated debentures or equity
securities substantially similar to the preferred securities (except for the
junior subordinated debentures and the preferred securities issued pursuant to
the underwriting agreement), without the prior written consent of the
representatives.
It is expected that delivery of the preferred securities will be made on or
about the date specified on the cover page of this prospectus supplement, which
will be the fifth business day following the date of this prospectus supplement.
Under Rule 15c6-1 of the SEC under the Exchange Act, trades in the secondary
market generally are required to settle in three business days, unless the
parties to any such trade expressly agree otherwise. Accordingly, the purchasers
who wish to trade the preferred securities on the date of this prospectus
supplement or the next succeeding business day will be required to specify an
alternative settlement cycle at the time of any such trade to prevent failed
settlement and should consult their own advisor.
LEGAL MATTERS
Matters of Delaware law relating to the validity of the preferred
securities will be passed upon on behalf of Old National and ONB Capital Trust
II by Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware
counsel to Old National and ONB Capital Trust II. The validity of the junior
subordinated debentures and the guarantee and certain matters relating to United
States federal income tax considerations will be passed upon on behalf of Old
National and ONB Capital Trust II by Krieg DeVault LLP. Certain legal matters
will be passed upon for the underwriters by Cleary, Gottlieb, Steen & Hamilton,
Washington, D.C.
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PROSPECTUS
$200,000,000
OLD NATIONAL BANCORP
DEBT SECURITIES
-------------------------
ONB CAPITAL TRUST I
ONB CAPITAL TRUST II
ONB CAPITAL TRUST III
ONB CAPITAL TRUST IV
CAPITAL SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
OLD NATIONAL BANCORP
THE ONB TRUSTS:
- will issue and sell capital securities (representing undivided beneficial
interests in a trust) to the public;
- will issue and sell common securities to Old National; and
- will use the proceeds from these sales to buy a series of junior subordinated
debentures from Old National with terms that correspond to the capital
securities.
OLD NATIONAL:
- will pay principal and interest on the junior subordinated debentures, subject
to payment on its more senior debt;
- may choose to terminate a trust and distribute the junior subordinated
debentures pro rata to the holders of capital securities and common
securities;
- will fully and unconditionally guarantee the capital securities on a junior
subordinated level based on:
- its obligations to make payments on the corresponding junior subordinated
debentures;
- its obligations under the capital securities guarantee (its payment
obligations are subordinated to payment on all of its Senior Debt); and
- its obligations under the trust agreement; and
- may also issue and sell other debt securities to the public.
Old National urges you to read this prospectus and the prospectus supplement
carefully before you make your investment decision.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is February 29, 2000.
ABOUT THIS PROSPECTUS
In this prospectus, "Old National" refers to Old National Bancorp, a
"trust" or an "ONB Trust" refers to either ONB Capital Trust I, ONB Capital
Trust II, ONB Capital Trust III or ONB Capital Trust IV, which are the Delaware
statutory business trusts that Old National has formed to issue the capital
securities, and "we" or "us" refers to both Old National and the ONB Trusts.
This prospectus is part of a registration statement that we file with the
SEC utilizing a "shelf" registration process. Under this shelf process, Old
National or the ONB Trusts may issue and sell to the public any combination of
the securities described in this prospectus in one or more offerings up to a
total dollar amount of $200,000,000.
This prospectus provides you with only a general description of the
securities we may issue and sell. Each time Old National or an ONB Trust issues
and sells securities, we will provide a prospectus supplement that will contain
specific information about the particular securities and terms of that offering.
In the prospectus supplement, we will describe the interest rate, payment dates,
maturity and other terms of any debt securities that Old National issues and
sells, and the rights to periodic cash distributions, payments on liquidation
and other terms of a trust's capital securities. The prospectus supplement will
also describe the proceeds and uses of proceeds from the securities, together
with the names and compensation of the underwriters through whom the securities
are being issued and sold, and other important considerations for investors. It
may also add to, update or change information contained in this prospectus.
Unless we say otherwise in the prospectus supplement, Old National may
redeem its debt securities for cash, or cause the trusts to liquidate and give
investors Old National's debt securities in place of the ONB Trusts' capital
securities.
FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS
We have included or may include statements in this prospectus and any
prospectus supplement (including documents incorporated by reference described
under the heading "Where You Can Find More Information" below) that constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. You will be able to recognize a forward-looking
statement because it contains the words "anticipate," "believe," "estimate,"
"expect," "project," "objective" or a similar expression to identify it as a
forward-looking statement.
WE CAUTION YOU THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES
OF FUTURE PERFORMANCE AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE OLD NATIONAL'S ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS TO DIFFER MATERIALLY FROM THE FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS OLD NATIONAL HAS ANTICIPATED IN SUCH FORWARD-LOOKING STATEMENTS.
In addition to the assumptions and other factors referred to specifically
in connection with their statements, factors that could cause Old National's
actual results to differ materially from those contemplated in the
forward-looking statements include factors Old National has described in the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" section of Old National's Annual Report on Form 10-K or in the other
documents Old National has incorporated by reference.
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WHERE YOU CAN FIND MORE INFORMATION
Old National files annual, quarterly and special reports, proxy statements
and other information with the SEC. Old National's SEC filings are available to
the public over the Internet at the SEC's web site at http://www.sec.gov. and
through Old National's own web site at http://oldnational.com. You may also read
and copy any document Old National files at the SEC's public reference rooms and
at the SEC's regional offices as follows:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2551
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. Further information on the operation of the
SEC's public reference room in Washington, D.C. can be obtained by calling the
SEC at 1-800-SEC-0330.
The SEC allows Old National to "incorporate by reference" the information
Old National files with them, which means Old National is assumed to have
disclosed important information to you when Old National refers you to documents
that are on file with the SEC. The information Old National has incorporated by
reference is an important part of this prospectus, and information that Old
National files later with the SEC will automatically update and supersede this
information. Old National incorporates by reference the documents listed below
and any future documents Old National files with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until Old National
sells all of the securities covered by this prospectus.
- Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999.
- Current Report on Form 8-K filed on July 29, 1999, as amended.
- Current Report on Form 8-K filed on December 1, 1999.
You may request a copy of these documents at no cost by writing to Old
National at the following address:
Old National Bancorp
420 Main Street
Evansville, Indiana 47708
Attn: Corporate Controller
Telephone: (812) 464-1434
You should rely only on the information provided in or incorporated by
reference (and not later changed) in this prospectus or any prospectus
supplement. Old National has not authorized anyone else to provide you with
additional or different information. Old National is not making an offer of any
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any prospectus supplement is accurate
as of any date other than the date on the front of those documents.
3
OLD NATIONAL BANCORP
Overview. Old National is a bank holding company that operates 119 banking
offices and 174 ATM locations in Indiana, Illinois and Kentucky through its bank
subsidiaries. These banks provide a wide range of financial services, including:
- commercial, consumer and real estate loans;
- deposit products;
- issuing and servicing credit cards;
- leasing;
- letters of credit; and
- safe deposit facilities.
Old National also owns non-bank subsidiaries that provide additional
financial services incidental to its operations, including:
- securities brokerage services;
- fiduciary and trust services;
- investment services; and
- issuance and reinsurance of credit life, accident, health, life, property
and casualty insurance.
Old National was incorporated in 1982 in the State of Indiana as the
holding company of the Old National Bank in Evansville, Indiana. Old National
Bank has provided banking services since 1834. Old National began an acquisition
program in 1985 and has acquired 38 financial institutions since that time. Old
National continues to explore opportunities to acquire banks, savings
associations and non-bank companies and is currently reviewing and analyzing
potential acquisitions, as well as engaging in discussions or negotiations
concerning potential acquisitions. There can be no assurance that any of these
discussions or negotiations will result in definitive agreements or consummated
acquisitions. Any acquisitions may be pending or completed during the period
that the capital securities are being offered.
As a legal entity separate and distinct from its bank and non-bank
subsidiaries, Old National's principal sources of revenues are dividends and
fees from its bank and non-bank subsidiaries. The subsidiaries that operate in
the banking, insurance and securities business can pay dividends only if they
are in compliance with the applicable regulatory requirements imposed on them by
federal and state regulatory authorities. Old National currently believes that
none of these regulatory restrictions on the ability of its subsidiaries to pay
dividends will affect Old National's ability to service its debt.
Old National's principal office is located at 420 Main Street, Evansville,
Indiana 47708, and its telephone number is (812) 464-1434.
Supervision and Regulation. As a bank holding company, Old National is
subject to regulation, supervision and examination by the Board of Governors of
the Federal Reserve System under the Bank Holding Company Act of 1956, as
amended. For a discussion of certain of the material elements of the regulatory
framework applicable to bank holding companies and their subsidiaries and
certain specific information relevant to Old National, see Old National's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 which is
incorporated by reference into this prospectus.
This regulatory framework is intended primarily for the protection of
depositors and the federal deposit insurance funds and not for the protection of
security holders or creditors. The various government rules, regulations and
requirements that apply to Old National impact its business and activities. A
change in applicable statutes, rules, regulations or regulatory policies may
have a material effect on Old National's
4
business and earnings. In addition, Old National's business and earnings are
affected by general economic conditions, legislation and actions of regulatory
authorities.
Under policy of the Federal Reserve, a bank holding company is expected to
act as a source of financial strength for its bank subsidiaries and to commit
resources to support such banks. As a result, the Federal Reserve may require
Old National to commit resources to its bank subsidiaries.
THE ONB TRUSTS
Each ONB Trust is a statutory business trust that Old National has formed
under Delaware law. For each trust there is a trust agreement signed by Old
National as depositor, by Bank One Trust Company, NA, as property trustee, and
by Bank One Delaware, Inc., as Delaware trustee. For each trust there is also a
certificate of trust filed with the Delaware Secretary of State. When Old
National is ready to issue and sell securities through the trust, the trust
agreement will be amended to read substantially like the form of amended and
restated trust agreement that is filed with the SEC as an exhibit to the
registration statement of which this prospectus is a part. Each trust agreement
will be qualified as an indenture under the Trust Indenture Act of 1939.
THE ISSUANCE AND SALE OF THE CAPITAL SECURITIES AND COMMON SECURITIES
Old National has created each ONB Trust solely to:
- issue and sell its capital securities and common securities, which
represent proportionate beneficial ownership interests in that ONB Trust
and its assets;
- use the proceeds from the sale of the capital securities and common
securities to buy from Old National a series of Old National's junior
subordinated debentures, which will be the only assets of that ONB Trust;
- maintain its status as a grantor trust for federal income tax purposes;
and
- engage in only those other activities necessary or convenient to
accomplish the purposes listed above.
Because the ONB Trusts' only assets will be junior subordinated debentures
that Old National issues to them, Old National's payments on the junior
subordinated debentures will be the only source of funds to be paid to
purchasers or owners of the capital securities and common securities. Each of
the ONB Trusts is a separate legal entity, so the assets of one will not be
available to satisfy the obligations of any other similar trust Old National may
create.
Old National will acquire and own all of the common securities of each ONB
Trust. The common securities will have an aggregate liquidation amount of at
least 3% of the total capital of each ONB Trust. The remainder, representing up
to 97% of the ownership interests in the ONB Trust, will be capital securities
of the ONB Trust that may be sold to the public. The common securities and the
capital securities will have substantially the same terms, including the same
priority of payment and liquidation amount, and will receive proportionate
payments from the ONB Trust in respect of distributions and payments upon
liquidation, redemption or otherwise at the same times, with one exception: if
Old National defaults on the junior subordinated debentures that it issues to
that ONB Trust and does not cure the default within the times specified in the
indenture governing the issuance of the junior subordinated debentures, Old
National's rights to payments as holder of the common securities will be
subordinated to the rights of the holders of the capital securities. See
"Description of Capital Securities -- Subordination of Common Securities."
Unless Old National says otherwise in the applicable prospectus supplement,
each ONB Trust will have a term of approximately 50 years. However, an ONB Trust
may terminate earlier as provided in the applicable trust agreement and the
prospectus supplement.
5
Each ONB Trust's business and affairs will be conducted by its trustees,
whom Old National, as holder of the common securities, will appoint. Unless Old
National says otherwise in the applicable prospectus supplement, the trustees
for each ONB Trust will be:
- Bank One Trust Company, NA, as the property trustee; and
- Bank One Delaware, Inc., as the Delaware trustee.
Old National refers to the property trustee and the Delaware trustee
together as the "issuer trustees." Bank One Trust Company, NA, as property
trustee, will act as sole indenture trustee under each trust agreement for
purposes of compliance with the Trust Indenture Act. Unless Old National says
otherwise in the applicable prospectus supplement, Bank One Trust Company, NA
will also act as trustee under Old National's guarantee agreement relating to
the capital securities. See "Description of Guarantees" and "Description of Debt
Securities -- Certain Provisions Relating to Junior Subordinated Debentures
Issued to the ONB Trusts."
As the holder of the common securities of each ONB Trust, Old National will
ordinarily have the right to appoint, remove or replace either issuer trustee
for each ONB Trust. However, if Old National is in default with respect to the
corresponding junior subordinated debentures issued to that ONB Trust (and Old
National has not cured that default within the time specified in the indenture),
then the holders of a majority in liquidation amount of that ONB Trust's
outstanding capital securities will be entitled to appoint, remove or replace
either or both issuer trustees. In no event will the holders of the capital
securities have the right to vote to appoint, remove or replace the
administrators. Old National retains that right exclusively as the holder of the
common securities. The duties and obligations of each issuer trustee are
governed by the applicable trust agreement.
Pursuant to the indenture and the trust agreements, Old National promises
to pay all fees and expenses related to each ONB Trust and the offering of the
capital securities and will pay, directly or indirectly, all ongoing costs,
expenses and liabilities of each ONB Trust, except obligations under the capital
securities and the common securities.
The ONB Trusts have no separate financial statements. Separate financial
statements would not be material to holders of the capital securities because
the ONB Trusts have no independent operations. They exist solely for the limited
functions summarized above. Old National will guarantee the capital securities
as described later in this prospectus.
The principal executive office of each ONB Trust is c/o Old National
Bancorp, 420 Main Street, Evansville, Indiana 47708, and its telephone number is
(812) 464-1434.
USE OF PROCEEDS
Each ONB Trust will use all of the proceeds it receives from the sale of
its capital securities and common securities to purchase from Old National the
junior subordinated debentures that will provide the funds for that ONB Trust's
payments to purchasers of its capital securities and common securities. Except
as otherwise described in the applicable prospectus supplement, Old National
intends to use the net proceeds from the sale of Old National's debt securities
(either to the ONB Trusts or directly to the public) for repayment of debt,
repurchases of its common stock, investments in and advances to its
subsidiaries, and general corporate purposes, including possible future
acquisitions. Old National may temporarily invest any funds not required
immediately for those purposes in short-term marketable securities. Old National
expects to borrow money or sell securities in the future, but Old National
cannot predict the precise amounts or timing of doing so. For current
information, look at Old National's current filings with the SEC. See "Where You
Can Find More Information."
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CAPITALIZATION
The following table summarizes Old National's historical capitalization as
of September 30, 1999, and Old National's capitalization as adjusted to reflect
the assumed issuance and sale of an aggregate of $200 million liquidation amount
of capital securities and the related common securities of the trusts.
SEPTEMBER 30, 1999
--------------------------
ACTUAL AS ADJUSTED
----------- ------------
(IN THOUSANDS OF DOLLARS)
Long term debt.............................................. $ 774,259 $ 774,259
Guaranteed Preferred Beneficial Interests in Company's
Subordinated Debentures................................... -- 200,000
Shareholders' Equity
Preferred stock, 2,000,000 shares authorized, no shares
issued or outstanding.................................. -- --
Common stock (no par value per share -- 75,000,000 shares
authorized, and approximately 45,635,000 shares issued
and outstanding)....................................... $ 45,635 $ 45,635
Capital surplus........................................... 331,711 331,711
Retained earnings......................................... 154,632 154,632
Accumulated other comprehensive income, net of tax........ (17,043) (17,043)
---------- ----------
Total shareholders' equity................................ $ 514,938 $ 514,938
---------- ----------
Total capitalization........................................ $1,289,194 $1,489,194
========== ==========
Short term debt............................................. $ 560,673 $ 560,673
RATIO OF EARNINGS TO FIXED CHARGES
Old National's historical ratios of earnings to fixed charges are described
below for the periods indicated.
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- -------------------------------------
1999 1998 1997 1996 1995 1994
------------- ----- ----- ----- ----- -----
Ratio of Earnings to Fixed Charges
Excluding interest on deposits.......... 2.94x 3.26x 3.68x 4.71x 4.38x 4.90x
Including interest on deposits.......... 1.53x 1.51x 1.51x 1.52x 1.48x 1.54x
The ratio of earnings to fixed charges for Old National has been computed
by dividing earnings by fixed charges. "Earnings" include pretax income from
continuing operations plus fixed charges. "Fixed charges" include the total of
interest expense, capitalized interest, expensed or capitalized amortization of
debt expense and any related discount or premium, and such portion of rental
expense that is representative of the interest factor of each such rental.
DESCRIPTION OF DEBT SECURITIES
The debt securities, including any junior subordinated debentures that Old
National issues to an ONB Trust, will be Old National's direct unsecured general
obligations. The debt securities will be junior subordinated debt securities,
including the junior subordinated debentures that are issued to the ONB Trusts.
The debt securities will be issued in one or more series under the indenture
between Old National and Bank One Trust Company, NA, as trustee and under a
securities resolution of Old National authorizing the particular series.
Old National has summarized selected provisions of the indenture below. The
summary is not complete. The form of the indenture and a form of amended and
restated trust agreement are filed as exhibits to the registration statement of
which this prospectus is a part. The amended and restated trust agreement for
each series also has been or will be filed or incorporated by reference as an
exhibit to the
7
registration statement. You should read the indenture and the applicable amended
and restated trust agreement for provisions that may be important to you. In the
summary below, Old National has included references to section numbers in the
indenture so that you can easily find those provisions. The particular terms of
any debt securities Old National offers will be described in the related
prospectus supplement, along with any applicable modifications of or additions
to the general terms of the debt securities described below and in the
indenture. For a description of the terms of any series of debt securities, you
should also review both the prospectus supplement relating to that series and
the description of the debt securities set forth in this prospectus before
making an investment decision.
GENERAL
The indenture does not significantly limit Old National's operations. In
particular, it does not:
- limit the amount of debt securities that Old National can issue under the
indenture;
- limit the number of series of debt securities that Old National can issue
from time to time;
- restrict the total amount of debt that Old National or its subsidiaries
may incur; or
- contain any covenant or other provision that is specifically intended to
afford any holder of the debt securities special protection in the event
of highly leveraged transactions or any other transactions resulting in a
decline in Old National's ratings or credit quality.
As of the date of this prospectus, there are no debt securities outstanding
under the indenture. The ranking of a series of debt securities with respect to
all of Old National's indebtedness will be established by the securities
resolution creating the series.
Although the indenture permits the issuance of debt securities in other
forms or currencies, the debt securities covered by this prospectus will only be
denominated in U.S. dollars in registered form without coupons, unless otherwise
indicated in the applicable prospectus supplement.
TERMS
A prospectus supplement and a securities resolution relating to the
offering of any series of debt securities will include specific terms relating
to the offering. The terms will include some or all of the following:
- the designation, aggregate principal amount, currency or composite
currency (if other than U.S. dollars) and denominations of the debt
securities;
- the price at which the debt securities will be issued and, if an index,
formula or other method is used, the method for determining amounts of
principal or interest;
- the maturity date and other dates, if any, on which the principal of the
debt securities will be payable;
- the interest rate or rates, if any, or method of calculating the interest
rate or rates which the debt securities will bear;
- the date or dates from which interest will accrue and on which interest
will be payable, and the record dates for the payment of interest; the
manner of paying principal and interest on the debt securities; the place
or places where principal and interest will be payable;
- the terms of any mandatory or optional redemption of the debt securities
by Old National, including any sinking fund, the terms of any conversion
or exchange right; the terms of any redemption of debt securities at the
option of holders; any tax indemnity provisions;
- the portion of principal payable upon acceleration of the maturity date
of any debt security;
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- whether and upon what terms debt securities may be defeased (which means
that Old National would be discharged from its obligations by depositing
sufficient cash or government securities to pay the principal, interest,
any premiums and other sums due to the stated maturity date or a
redemption date of the debt securities of the series);
- whether any events of default or covenants in addition to or instead of
those set forth in the indenture apply; provisions for electronic
issuance of debt securities or for debt securities in uncertificated
form;
- any provisions relating to extending or shortening the date on which the
principal and premium, if any, of the debt securities of the series is
payable;
- any provisions relating to the deferral of payment of any interest;
- the terms of any right to convert or exchange the debt securities into
any other securities or property of Old National;
- if the series of debt securities is to be issued to an ONB Trust, the
forms of the related trust agreement and guarantee agreement;
- the additions or changes, if any, to the indenture with respect to that
series of debt securities to permit or facilitate the issuance of that
series of debt securities to an ONB Trust; and
- any other terms not inconsistent with the provisions of the indenture,
including any covenants or other terms that may be required or advisable
under United States or other applicable laws or regulations, or advisable
in connection with the marketing of the debt securities. (Section 3.1).
Old National may issue debt securities of any series in such form and in
such denominations as Old National specifies in the securities resolution and
prospectus supplement for the series. (Section 2.1).
A holder of registered debt securities may request registration of a
transfer upon surrender of the debt security being transferred at any agency or
office that Old National maintains for that purpose and upon fulfillment of all
other requirements of the agent.
CERTAIN COVENANTS
Any restrictive covenants that may apply to a particular series of debt
securities will be described in the related prospectus supplement.
SUBORDINATION
The indenture provides that the debt securities will be subordinated and
junior in right of payment to all Senior Debt (as defined below) of Old
National. This means that no payment of principal, including redemption
payments, premium, if any, or interest on the debt securities may be made if:
- any Senior Debt of Old National has not been paid when due and any
applicable grace period relating to such default has ended and such
default has not been cured or waived or ceased to exist; or
- the maturity of any Senior Debt of Old National has been accelerated
because of a default.
Upon any distribution of Old National's assets to creditors upon any
termination, winding-up, liquidation or reorganization, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings,
all principal, premium, if any, and interest due or to become due on all Senior
Debt of Old National must be paid in full before the holders of debt securities
are entitled to receive or retain any payment. Upon satisfaction of all claims
related to all Senior Debt of Old National then outstanding, the rights of the
holders of the debt securities will be subrogated to the rights of the holders
of Senior Debt of Old National to receive payments or distributions applicable
to Senior Debt until all amounts owing on the debt securities are paid in full.
9
The term "Senior Debt" means:
(1) the principal, premium, if any, and interest in respect of (a)
indebtedness for money borrowed and (b) indebtedness evidenced by
securities, notes, debentures, bonds or other similar instruments issued by
Old National;
(2) all capital lease obligations of Old National;
(3) all obligations of Old National issued or assumed as the deferred
purchase price of property, all conditional sale obligations of Old
National and all obligations of Old National under any conditional sale or
title retention agreement, but excluding trade accounts payable arising in
the ordinary course of business;
(4) all obligations, contingent or otherwise, of Old National in
respect of any letters of credit, banker's acceptance, security purchase
facilities or similar credit transactions;
(5) all obligations in respect of interest rate swap, cap or other
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements;
(6) any indebtedness between or among Old National and its affiliates,
except as provided in 8(b) below;
(7) all obligations of the type referred to in clauses (1) through (6)
above of other persons for the payment of which Old National is responsible
or liable as obligor, guarantor or otherwise; and
(8) all obligations of the type referred to in clauses (1) through (7)
above of other persons secured by any lien on any property or asset of Old
National, whether or not such obligation is assumed by such obligor, except
for
(a) any such indebtedness that by its terms ranks equally with, or
junior to, the debt securities; and
(b) any indebtedness between or among Old National and its
affiliates relating to other debt securities and guarantees in respect
of those debt securities issued to (i) any ONB Trust or a trustee of
such ONB Trust or (ii) any other trust, or a trustee of such trust,
partnership or other entity affiliated with Old National that is a
financing vehicle of Old National in connection with the issuance by
such financing vehicle of preferred securities or other securities
guaranteed by Old National pursuant to an instrument that ranks equally
with, or junior to, the guarantee.
Such Senior Debt shall continue to be Senior Debt and be entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Debt.
SUCCESSOR OBLIGOR
The indenture provides that, unless otherwise specified in the securities
resolution establishing a series of debt securities, Old National will not
consolidate with or merge into, or transfer all or substantially all of Old
National's assets to, another company, unless:
- that company is organized under the laws of the United States or any
state or the District of Columbia;
- that company assumes by supplemental indenture all of Old National's
obligations under the indenture and the debt securities;
- all required approvals of any regulatory body having jurisdiction over
the transaction shall have been obtained; and
- immediately after the transaction no default exists under the indenture.
(Section 8.1).
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The successor shall be substituted for Old National as if it had been an
original party to the indenture, the trust agreements and the debt securities.
Thereafter the successor may exercise Old National's rights and powers under the
indenture, the trust agreements and the debt securities, and all of Old
National's obligations under those documents will terminate. (Section 8.2)
EXCHANGE OF DEBT SECURITIES
Registered debt securities may be exchanged for an equal principal amount
of registered debt securities of the same series and date of maturity in
authorized denominations requested by the holders upon surrender of the
registered debt securities at an office or agency Old National maintains for
that purpose and upon fulfillment of all other requirements set forth in the
indenture. (Section 3.6)
DEFAULTS
Unless the securities resolution establishing the series provides for
different events of default, in which event the prospectus supplement will
describe the change, an event of default with respect to a series of debt
securities will occur if:
- Old National defaults in any payment of interest on any debt securities
of that series when the payment becomes due and payable and the default
continues for a period of 30 days;
- Old National defaults in the payment of the principal and premium, if
any, of any debt securities of the series when those payments become due
and payable at maturity or upon redemption, acceleration or otherwise;
- Old National defaults in the payment or satisfaction of any sinking fund
obligation with respect to any debt securities of the series as required
by the securities resolution establishing the series and the default
continues for a period of 30 days;
- Old National defaults in the performance of any of Old National's other
agreements applicable to the series and the default continues for 90 days
after the notice specified below;
- Old National files for bankruptcy or other specified events in
bankruptcy, insolvency, receivership or reorganization occur; or
- any other event of default specified in the prospectus supplement occurs.
(See Section 5.1)
A default under the indenture means any event which is, or after notice or
passage of time would be, an event of default under the indenture. A default
under the fourth bullet point above is not an event of default until the trustee
or the holders of at least 25% in principal amount of the debt securities of a
series notify Old National of the default and Old National does not cure the
default within the time specified after receipt of the notice. (Section 5.1)
REMEDIES
If an event of default occurs under the indenture with respect to any
series of debt securities and is continuing, the trustee by notice to Old
National or (except as provided in the next sentence) the holders of at least
25% in principal amount of the series by notice both to Old National and to the
trustee, may declare the principal of and accrued interest on all the debt
securities of the series to be due and payable immediately. In the case of a
series of junior subordinated debentures issued to an ONB Trust, if, upon an
event of default, the trustee or the other holders, if any, together holding not
less than 25% in aggregate principal amount of that series, fail to declare the
principal of all the debt securities of that series to be immediately due and
payable, then the holders of 25% in aggregate liquidation amount of the capital
securities issued by the ONB Trust then outstanding shall have the right to do
so by notice to Old National and to the trustee.
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Except as provided in the next sentence, the holders of a majority in
principal amount of a series of debt securities, by notice to the trustee, may
rescind an acceleration and its consequences if certain conditions are met,
including:
(a) Old National pays or deposits with the indenture trustee a sum
sufficient to pay:
(i) all overdue interest,
(ii) the principal of and any premium which have become due other
than by the declaration of acceleration and overdue interest on those
amounts,
(iii) any overdue sinking fund payments and overdue interest on
such payments,
(iv) interest on overdue interest to the extent lawful, and
(v) all amounts otherwise due to the indenture trustee under the
indenture;
(b) the rescission would not conflict with any judgment or decree;
(c) all existing events of default on the series have been cured or
waived except nonpayment of principal or interest that has become due
solely because of the acceleration.
In the case of a series of junior subordinated debentures issued to an ONB
Trust, the holders of a majority in aggregate liquidation amount of the capital
securities issued by that ONB Trust then outstanding shall also have the right
to rescind the acceleration and its consequences with respect to such series,
subject to the same conditions set forth above. (Section 5.2)
If an event of default occurs and is continuing on a series, the trustee
may pursue any available remedy to collect principal or interest then due on the
series, to enforce the performance of any provision applicable to the series, or
otherwise to protect the rights of the trustee and holders of the series.
(Section 5.3)
In the case of a series of junior subordinated debentures issued to an ONB
Trust, any holder of the outstanding capital securities issued by that ONB Trust
shall have the right, upon the occurrence and continuance of an event of default
with respect to that series following Old National's failure to pay timely
interest, principal or premium as described above, to sue Old National directly.
In that lawsuit the holder of the capital securities can force Old National to
pay to the holder (instead of the ONB Trust) the principal of, and premium, if
any, and interest on, junior subordinated debentures held by the ONB Trust
having a principal amount equal to the aggregate principal amount of the capital
securities held by that holder. (Section 5.8)
The trustee may require an indemnity satisfactory to it before it performs
any duty or exercises any right or power under the indenture or the debt
securities which it reasonably believes may expose it to any risk of loss or
liability. (Section 6.1) With some limitations, holders of a majority in
principal amount of the debt securities of a series may direct the trustee in
its exercise of any trust or power with respect to that series. (Section 5.12)
Except in the case of default in payment on a series, the trustee may withhold
notice of any continuing default with respect to the debt securities of that
series if it determines that withholding the notice is in the interest of
holders of the series. (Section 6.2) Old National is required to furnish the
trustee annually a brief certificate as to Old National's compliance with all
terms and conditions of the indenture. (Section 10.4)
The events of default specified in the indenture do not include a
cross-default provision. Thus, except to the extent provided in the securities
resolution establishing a series, a default by Old National on any other debt,
including any other series of debt securities, would not constitute an event of
default under the indenture (or in the case of an event of default as to any
series, an event of default as to any other series outstanding under the
indenture). If a securities resolution provides for a cross-default provision,
the prospectus supplement will describe the terms of that provision.
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AMENDMENTS
Without the consent of any debt security holder, subject to certain
limitations, Old National may amend the indenture by entering into one or more
supplemental indentures for any of the following purposes:
- to cure any ambiguity, omission, defect or inconsistency;
- to provide for the assumption of Old National's obligations to debt
security holders by the surviving company in the event of a merger or
consolidation requiring such assumption as described above under
"-- Successor Obligor";
- to provide that specific provisions of the indenture shall not apply to a
series of debt securities not previously issued;
- to create a series of debt securities and establish its terms;
- to provide for a separate trustee for one or more series of debt
securities; or
- to make any change that does not materially adversely affect the rights
of any debt security holder. (Section 9.1)
Unless the securities resolution provides otherwise, in which event the
prospectus supplement will describe the revised provision, Old National and the
trustee may amend the indenture by entering into one or more supplemental
indentures with the written consent of the holders of a majority in principal
amount of the debt securities of all series affected voting as one class.
However, without the consent of each debt security holder affected, no amendment
may:
- reduce the principal amount of debt securities whose holders must consent
to an amendment or waiver;
- reduce the interest on or change the time for payment of interest on any
debt security (but this does not affect Old National's right to elect to
defer one or more payments of interest as described below under
"-- Certain Provisions Relating to Junior Subordinated Debentures Issued
to the ONB Trusts -- Option to Defer Interest Payment Date");
- change the stated maturity of any debt security (subject to any right Old
National may have retained in the securities resolution and described in
the prospectus supplement);
- reduce the principal of any debt security or, if less than the principal
amount thereof, reduce the amount that would be due on acceleration of
any debt security thereof;
- change the currency in which the principal or interest on a debt security
is payable;
- make any change that materially adversely affects the right to convert or
exchange any debt security; or
- waive any default in payment of interest on or principal of a debt
security. (Section 9.2)
In the case of a series of junior subordinated debentures issued to an ONB
Trust, Old National is not permitted to amend the indenture if such amendment
adversely affects the holders of the capital securities of that ONB Trust in any
material respect, and no termination of the indenture shall occur, without the
prior consent of the holders of not less than a majority in aggregate
liquidation amount of the capital securities then outstanding unless and until
the principal (and premium, if any) of the junior subordinated debentures of
that series and all accrued and unpaid interest thereon have been paid in full.
Furthermore, in the case of a series issued to an ONB Trust, no amendment can be
made to the provisions of the indenture allowing holders of capital securities
of that ONB Trust to sue directly following Old National's failure to make
timely payments on the junior subordinated debentures as described above without
the prior consent of the holder of each capital security then outstanding unless
and until the principal (and
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premium, if any) of the junior subordinated debentures of that series and all
accrued and unpaid interest thereon have been paid in full. (Section 9.2)
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Debt securities of a series may be defeased at any time in accordance with
their terms and as set forth in the indenture and described briefly below,
unless the securities resolution establishing the terms of the series provides
otherwise. Any defeasance may terminate all of Old National's obligations (with
limited exceptions) with respect to a series of debt securities and the
indenture ("legal defeasance"), or it may terminate only Old National's
obligations under any restrictive covenants which may be applicable to a
particular series ("covenant defeasance").
Old National may exercise Old National's legal defeasance option even
though Old National has also exercised Old National's covenant defeasance
option. If Old National exercises the legal defeasance option with respect to a
series of debt securities, that series may not be accelerated because of an
event of default. (Section 4.2) If Old National exercises the covenant
defeasance option, that series of debt securities may not be accelerated by
reference to any restrictive covenants which may be applicable to that
particular series. (Section 4.3)
To exercise either defeasance option as to a series of debt securities, Old
National must:
- irrevocably deposit in trust (the "defeasance trust") with the trustee or
another trustee money or U.S. government obligations;
- deliver a certificate from a nationally recognized firm of independent
accountants expressing their opinion that the payments of principal and
interest when due on the deposited U.S. government obligations, without
reinvestment, plus any deposited money without investment, will provide
cash at the times and in the amounts necessary to pay the principal and
interest when due on all debt securities of the series to maturity or
redemption, as the case may be; and
- comply with certain other conditions. In particular, Old National must
obtain an opinion of tax counsel that the defeasance will not result in
recognition of any gain or loss to holders for federal income tax
purposes.
U.S. government obligations are direct obligations of (a) the United States
or (b) an agency or instrumentality of the United States, the payment of which
is unconditionally guaranteed by the United States, and which, in either case
(a) or (b), have the full faith and credit of the United States of America
pledged for payment and which are not callable at the issuer's option. It also
includes certificates representing an ownership interest in such obligations.
(Section 4.4)
CERTAIN PROVISIONS RELATING TO JUNIOR SUBORDINATED DEBENTURES ISSUED TO THE ONB
TRUSTS
General. The junior subordinated debentures that Old National issues to an
ONB Trust may be issued in one or more series under the indenture with terms
corresponding to the terms of a series of capital securities issued by that ONB
Trust. The principal amount of the junior subordinated debentures that Old
National issues to an ONB Trust will be equal to the aggregate stated
liquidation amount of the capital securities and common securities of that ONB
Trust. Concurrently with the issuance of each ONB Trust's capital securities,
each ONB Trust will invest the proceeds from the sale of the capital securities
and the consideration Old National pays for the common securities in a series of
corresponding junior subordinated debentures that Old National will issue to
that ONB Trust.
The prospectus supplement will describe specific terms relating to the
offering of each series of junior subordinated debentures. See "Description Of
Debt Securities -- Terms."
14
Unless otherwise specified in the applicable securities resolution, Old
National will covenant, as to each series of junior subordinated debentures:
- to maintain, directly or indirectly, 100% ownership of the common
securities of the ONB Trust to which the corresponding junior
subordinated debentures have been issued (provided that certain
successors which are permitted pursuant to the indenture may succeed to
Old National's ownership of the common securities);
- not to voluntarily terminate, wind-up or liquidate any ONB Trust, except:
-- in connection with a distribution of the junior subordinated debentures
to the holders of the capital securities in liquidation of the ONB
Trust; or
-- in connection with certain mergers, consolidations or amalgamations
permitted by the related trust agreement; and
- to use Old National's reasonable efforts, consistent with the terms and
provisions of the related trust agreement, to cause such ONB Trust to
remain classified as a grantor trust and not as an association taxable as
a corporation for United States federal income tax purposes.
For additional covenants relating to payment of expenses of the ONB Trusts,
see "Description of Capital Securities -- Payment of Expenses."
Option to Defer Interest Payment Date. Unless otherwise stated in the
applicable prospectus supplement, Old National will have the right at any time
and from time to time during the term of any series of junior subordinated
debentures issued to an ONB Trust to defer payments of interest by extending the
interest payment period for a specified number of consecutive periods. No
deferral period may extend beyond the maturity date of that series of junior
subordinated debentures. Old National may pay at any time all or any portion of
the interest accrued to that point during a deferral period. At the end of the
deferral period or at a redemption date, Old National will be obligated to pay
all interest accrued and unpaid (together with interest on the unpaid interest
to the extent permitted by applicable law). United States federal income tax
consequences and special considerations applicable to any junior subordinated
debentures issued to an ONB Trust for which a deferral period has been elected
will be described in the applicable prospectus supplement. During any deferral
period, or while Old National is in default, Old National will be restricted in
its ability to make payments or incur obligations related to its capital stock
or debt securities ranking equal to or below the junior subordinated debentures.
See "-- Restrictions on Certain Payments."
Prior to the termination of any deferral period, Old National may extend
the interest payment period, and, after the termination of any deferral period
and the payment of all amounts due, Old National may decide to begin a new
deferral period. However, the deferral period may not extend beyond the maturity
date of the junior subordinated debentures.
If the trustee is the sole holder of the series of junior subordinated
debentures held by the ONB Trust, Old National will give the trustee and the
issuer trustees of the ONB Trust notice of Old National's selection of any
deferral period one business day prior to the earlier of:
- the next date distributions on the capital securities are payable; or
- the date the ONB Trust is required to give notice to the New York Stock
Exchange (or other applicable self-regulatory organization) or to holders
of its capital securities of the record date or the date any distribution
on the capital securities is payable.
15
If the property trustee is not the sole holder of the series of junior
subordinated debentures, Old National will give the holders of the junior
subordinated debentures notice of Old National's selection of any deferral
period ten business days prior to the earliest of:
- the next interest payment date; or
- the date upon which Old National is required to give notice to the New
York Stock Exchange (or other applicable self-regulatory organization) or
to holders of the junior subordinated debentures of the record or payment
date of any related interest payment.
Redemption. The junior subordinated debentures and the applicable
securities resolution will provide the terms upon which Old National can redeem
the junior subordinated debentures at Old National's option, and will specify a
date prior to which Old National will not be allowed to redeem the junior
subordinated debentures, and after which Old National will have the right to
redeem the junior subordinated debentures, in whole or in part, upon not less
than 30 days nor more than 60 days notice to the holder of the junior
subordinated debentures at a redemption price or prices stated in the applicable
prospectus supplement. In order to redeem the junior subordinated debentures of
any series held by an ONB Trust, Old National may need to obtain the prior
approval of the Board of Governors of the Federal Reserve System.
If the junior subordinated debentures are redeemed only in part, they will
be redeemed pro rata or by lot or by any other method selected by the trustee.
If a partial redemption of the junior subordinated debentures would result in
delisting from any national securities exchange or other self-regulatory
organization on which the capital securities of the ONB Trust holding the junior
subordinated debentures are then listed, Old National will not be permitted to
effect a partial redemption and may only redeem the junior subordinated
debentures as a whole.
Except as otherwise specified in the applicable prospectus supplement and
subject to the provisions of the applicable securities resolution, if a Tax
Event (as defined below), an Investment Company Event (as defined below) or a
Regulatory Capital Event (as defined below) in respect of an ONB Trust occurs
and is continuing, Old National has the option to redeem the junior subordinated
debentures held by that ONB Trust, in whole, but not in part, at any time within
90 days thereafter. If the applicable ONB Trust is the holder of all outstanding
junior subordinated debentures, the proceeds of the redemption will be used by
the ONB Trust to redeem its capital securities and common securities in
accordance with their terms.
However, in the case of an occurrence of a Tax Event, an Investment Company
or a Regulatory Capital Event, if Old National can eliminate, within the 90 day
period, such event by taking some action, such as filing a form or making an
election, or pursuing some other similar reasonable measure which has no adverse
effect on Old National, the relevant ONB Trust or the holders of the capital
securities or the common securities, Old National will pursue that action
instead of redemption. Old National will have no right to redeem the junior
subordinated debentures while such ONB Trust or the property trustee is pursuing
any similar action based on its obligations under the trust agreement.
"Tax Event" means that the applicable ONB Trust will have received an
opinion of counsel (which may be counsel to Old National or an affiliate)
experienced in such matters to the effect that, as a result of any
- amendment to, or change (including any announced proposed change) in the
laws or any regulations under the laws of the United States or any
political subdivision or taxing authority, or
- official administrative pronouncement or judicial decision interpreting
or applying the laws or regulations stated above whether or not the
pronouncement or decision is issued to or in connection with a proceeding
involving Old National or the ONB Trust,
16
in each case which amendment or change is effective or which proposed change,
pronouncement, action or decision is announced on or after the date of issuance
of the applicable series of junior subordinated debentures pursuant to the
applicable securities resolution, there is more than an insubstantial risk that:
- the ONB Trust is, or will be within 90 days of the date of the opinion of
counsel, subject to United States Federal income tax with respect to
income received or accrued on the junior subordinated debentures;
- interest Old National pays on the corresponding junior subordinated
debentures is not, or will not be within 90 days of the date of the
opinion of counsel, deductible, in whole or in part, for United States
Federal income tax purposes; or
- the ONB Trust is, or will be within 90 days of the date of the opinion of
counsel, subject to more than a de minimis amount of other taxes, duties
or other governmental charges.
"Investment Company Event" means that the applicable ONB Trust will have
received an opinion of counsel experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
courts, governmental agency or regulatory authority on or after the date of
original issuance of the capital securities by the ONB Trust, the ONB Trust is
or will be considered an "investment company" that is required to be registered
under the Investment Company Act of 1940, as amended.
"Regulatory Capital Event" means that if Old National determines, based on
an opinion of counsel experienced in such matters, who may be an employee of Old
National or any of Old National's affiliates, that, as a result of:
- any amendment to, clarification of or change in applicable laws or
regulations or official interpretations thereof or policies with respect
thereto, or
- any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
there is more than an insubstantial risk that the capital securities will not
longer constitute Tier I Capital of Old National or any bank holding company of
which Old National is a subsidiary for purposes of the capital adequacy
guidelines or policies of the Board of Governors of the Federal Reserve System
or its successor as Old National's primary federal banking regulator.
Restrictions on Certain Payments. Unless otherwise provided in the
applicable prospectus supplement, Old National will promise, as to each series
of junior subordinated debentures issued to an ONB Trust, that it will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of its
capital stock;
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any of its debt securities (including other junior
subordinated debentures) that rank equally with or junior in interest to
the junior subordinated debentures; or
- make any guarantee payments with respect to any of the debt securities of
any of its subsidiaries if the guarantee ranks equally with or junior in
interest to the junior subordinated debentures;
other than:
- dividends or distributions payable in its common stock;
- payments under any guarantee relating to the capital securities of an ONB
Trust;
- purchases of common stock related to the issuance of common stock under
any benefit plans for its directors, officers or employees; and
17
- obligations under any dividend reinvestment plan or stock purchase plan.
These restrictions apply only if:
- at that time an event has occurred that (a) with the giving of notice or
the lapse of time, or both, would constitute an event of default under
the indenture with respect to the junior subordinated debentures of that
series and (b) Old National shall not have taken reasonable steps to cure
the event;
- the junior subordinated debentures are held by an ONB Trust and Old
National is in default with respect to payment of any obligations under
the guarantee relating to the capital securities of that ONB Trust; or
- Old National shall have given notice of its intention to begin an
interest deferral period and have not rescinded the notice, or any
deferral period is continuing.
REGARDING THE TRUSTEE
Bank One Trust Company, NA will act as trustee and registrar for
registration and transfer of debt securities issued under the indenture.
(Section 3.6) The trustee, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for Old National or its
affiliates, and may otherwise deal with Old National or its affiliates, as if it
were not the trustee.
DESCRIPTION OF CAPITAL SECURITIES
The following section describes the general terms and provisions of the
capital securities to which any prospectus supplement may relate. The particular
terms of the capital securities offered by any ONB Trust and the extent to which
any of these general provisions do not apply to its capital securities will be
described in the prospectus supplement relating to that ONB Trust and its
capital securities.
The capital securities will represent undivided beneficial ownership
interests in the assets of an ONB Trust. The holders of the capital securities
of an ONB Trust will be entitled to a preference over holders of the common
securities of such ONB Trust in certain circumstances with respect to
distributions and amounts payable on redemption or liquidation. Holders of
capital securities will also have certain other benefits as described in the
corresponding trust agreement.
Old National has summarized selected provisions of the capital securities
and each trust agreement below. This summary is not complete. The form of trust
agreement has been filed as an exhibit to the registration statement of which
this prospectus forms a part. You should read the form of trust agreement for
provisions that may be important to you. You should also consider applicable
provisions of the Trust Indenture Act. Each of the ONB Trusts is a legally
separate entity, and the assets of one are not available to satisfy the
obligations of the other.
GENERAL
The capital securities of a ONB Trust will rank equally, and payments on
the capital securities will be made pro rata, with the common securities of that
ONB Trust except as described under "-- Subordination of Common Securities."
Legal title to the junior subordinated debentures issued to an ONB Trust will be
held by the property trustee in trust for the benefit of the holders of the
capital securities of that ONB Trust and for Old National as holder of the
common securities of that ONB Trust. Each guarantee agreement Old National
executes for the benefit of the holders of an ONB Trust's capital securities
will be a guarantee on a junior subordinated basis with, but will not guarantee
payment of distributions or amounts payable on redemption or liquidation of,
such capital securities if the ONB Trust does not have funds available to make
such payments. See "Description of Guarantees."
18
DISTRIBUTIONS
Distributions on the capital securities will be cumulative, will accumulate
from the date of original issuance and will be payable on the dates specified in
the applicable prospectus supplement. Except as specified in the applicable
prospectus supplement, in the event that any date on which distributions are
payable on the capital securities is not a business day, payment of the
distribution will be made on the next succeeding day that is a business day
(without any interest or other payment in respect of the delay), with the same
force and effect as if made on the originally specified date. However, if the
next business day is in the next calendar year, payment of distributions will be
made on the preceding business day. Each date on which distributions are payable
is referred to in this prospectus as a distribution date.
An ONB Trust's capital securities represent undivided beneficial ownership
interests in the assets of that ONB Trust. The distributions on each capital
security will be payable at a rate specified in the prospectus supplement for
that capital security. The amount of distributions payable for any period will
be computed on the basis of a 360-day year of twelve 30-day months unless
otherwise specified in the applicable prospectus supplement. Distributions to
which holders of capital securities are entitled will accumulate interest at the
rate per annum specified in the applicable prospectus supplement. Distributions
on capital securities as used in this prospectus includes these additional
distributions unless otherwise stated.
The revenue of each ONB Trust available for distribution to holders of its
capital securities will be limited to payments it receives from Old National
under the junior subordinated debentures it owns. Each ONB Trust will invest the
proceeds from the issuance and sale of its common securities and capital
securities in the corresponding junior subordinated debentures, and it will have
no other assets. See "Description of Debt Securities -- Certain Provisions
Relating to Junior Subordinated Debentures Issued to the ONB Trusts." If Old
National does not make interest payments on the junior subordinated debentures
held by an ONB Trust, the property trustee will not have funds available to pay
distributions on the capital securities of that ONB Trust. Old National has
guaranteed the payment of distributions (if and to the extent the ONB Trust has
funds legally available for the payment of distributions and cash sufficient to
make the payments) on a limited basis as set forth herein under "Description of
Guarantees."
Old National may defer interest on any series of junior subordinated
debentures for a specified number of consecutive interest payment periods. See
"Description of Debt Securities -- Certain Provisions Relating to Junior
Subordinated Debentures Issued to the ONB Trustee -- Option to Defer Interest
Payment Date." If Old National defers interest payments on the corresponding
junior subordinated debentures held by an ONB Trust, the ONB Trust will defer
payments on its capital securities.
Distributions on the capital securities will be payable to the holders as
they appear on the register of the ONB Trust on the relevant record dates,
which, as long as the capital securities remain in book-entry form, will be one
business day prior to the relevant distribution date. Subject to any applicable
laws and regulations and to the provisions of the applicable trust agreement,
each distribution payment will be made as described under "Book-Entry Issuance."
In the event any capital securities are not in book-entry form, the relevant
record date for such capital securities shall be a date at least 15 days prior
to the relevant distribution date, as specified in the applicable prospectus
supplement.
PAYMENT OF EXPENSES
Pursuant to the indenture, Old National has agreed to pay all debts and
obligations (other than distributions on the common securities and capital
securities) and all costs and expenses of the ONB Trusts and to pay any and all
taxes, duties, assessments or other governmental charges (other than United
States withholding taxes) imposed by the United States or any other taxing
authority. This includes, but is not limited to, all costs and expenses relating
to the organization of the ONB Trusts, the fees and expenses of the property
trustee, the Delaware trustee and the administrators and all costs and expenses
relating to the operation of the ONB Trusts. As a result, the net amounts
received and retained by an ONB Trust after paying these fees, expenses, debts
and obligations will be equal to the amounts the ONB Trust would have received
and retained had no fees, expenses, debts and obligations been incurred
19
by or imposed on it. Old National's promise to pay these obligations is for the
benefit of, and shall be enforceable by, any creditor to whom the fees,
expenses, debts and obligations are owed, whether or not the creditor has
received notice of the promise. Any creditor may enforce these obligations
directly against Old National, and Old National has agreed to irrevocably waive
any right or remedy that would otherwise require that any creditor take any
action against the ONB Trust or any other person before proceeding against Old
National. Old National will execute such additional agreements as may be
necessary to give full effect to these promises.
REDEMPTION OR EXCHANGE
If Old National repays or redeems, in whole or in part, any junior
subordinated debentures that have been issued to an ONB Trust, whether at
maturity or earlier, the proceeds from the repayment or redemption shall be
applied by the property trustee to redeem a like amount of the capital
securities and the common securities of that ONB Trust. The property trustee
will give you at least 30 but no more than 60 days notice, and the redemption
price will be equal to the sum of:
- the aggregate liquidation amount of the capital securities and common
securities being redeemed; plus
- accumulated but unpaid distributions on to the redeemed capital
securities and common securities to the date of redemption; plus
- the related amount of the premium, if any, that Old National pays upon
the concurrent redemption of corresponding junior subordinated
debentures.
See "Description of Debt Securities -- Certain Provisions Relating to
Junior Subordinated Debentures Issued to the ONB Trusts -- Redemption."
If Old National is repaying or redeeming less than all of any series of
junior subordinated debentures held by an ONB Trust on a redemption date, then
the proceeds from the repayment or redemption shall be allocated to redeem the
capital securities and common securities issued by that ONB Trust, pro rata. The
amount of premium, if any, that Old National pays to redeem all or any part of
any series of junior subordinated debentures held by an ONB Trust will also be
allocated pro rata to the redemption of the capital securities and common
securities issued by that ONB Trust.
Old National will have the right to redeem any series of junior
subordinated debentures:
- subject to the conditions described under "Description of Debt
Securities -- Certain Provisions Relating to Junior Subordinated
Debentures Issued to the ONB Trusts -- Redemption"; or
- as may be otherwise specified in the applicable prospectus supplement.
Old National has the right to terminate an ONB Trust at any time and, after
satisfaction of any liabilities to creditors of that ONB Trust as provided by
applicable law, to cause the junior subordinated debentures owned by that ONB
Trust to be distributed to the holders of the capital securities and common
securities in liquidation of that ONB Trust.
If provided in the applicable prospectus supplement, Old National will have
the right to extend or shorten the maturity of any series of junior subordinated
debentures at the time that Old National exercises Old National's right to elect
to terminate an ONB Trust and cause the junior subordinated debentures held by
that ONB Trust to be distributed to the holders of the capital securities and
common securities in liquidation of that ONB Trust. However, Old National can
extend the maturity only if the conditions specified in the applicable
prospectus supplement are met at the time the election is made and at the time
of the extension.
20
After the liquidation date fixed for any distribution of junior
subordinated debentures to the holders of any series of capital securities:
- that series of capital securities will no longer be deemed to be
outstanding;
- The Depository Trust Company ("DTC") or its nominee, as the record holder
of the capital securities, will receive a registered global certificate
or certificates representing the junior subordinated debentures to be
delivered in the distribution;
- Old National shall use its reasonable efforts to list the junior
subordinated debentures on the New York Stock Exchange or on such other
exchange, interdealer quotation system or self-regulatory organization as
such capital securities are then listed; and
- any certificates representing that series of capital securities not held
by DTC or its nominee will be deemed to represent the junior subordinated
debentures having a principal amount equal to the stated liquidation
amount of that series of capital securities, bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid distributions on
that series of capital securities until the certificates are presented to
the administrators or their agent for transfer or reissuance.
Old National cannot predict the market prices for the capital securities or
the junior subordinated debentures that may be distributed in exchange for
capital securities. As a result, the capital securities that an investor may
purchase, or the junior subordinated debentures that an investor may receive on
termination and liquidation of an ONB Trust, may trade at a lower price than the
investor paid to purchase the capital securities.
REDEMPTION AND EXCHANGE PROCEDURES
Any capital securities that are redeemed on any redemption date will be
redeemed with the proceeds received by the ONB Trust from the contemporaneous
redemption of the junior subordinated debentures held by that ONB Trust.
Redemptions of the capital securities will be made and the redemption price will
be payable on each redemption date only to the extent that the related ONB Trust
has cash on hand available for the payment of such redemption price. See
"-- Subordination of Common Securities."
If an ONB Trust gives a notice of redemption in respect of its capital
securities, then, by 12:00 noon, New York City time, on the redemption date, the
property trustee will deposit irrevocably with DTC funds sufficient to pay the
applicable redemption price to the extent funds are available. The property
trustee will give DTC irrevocable instructions and authority to pay the
redemption price to the holders of such capital securities. See "Book-Entry
Issuance." If the capital securities are no longer in book-entry form, the
property trustee, to the extent funds are available, will irrevocably deposit
with the paying agent for the capital securities funds sufficient to pay the
applicable redemption price and will give the paying agent irrevocable
instructions and authority to pay the redemption price to the holders of the
capital securities upon surrender of the certificates evidencing their capital
securities.
Except as specified in the applicable prospectus supplement, in the event
that any date fixed for redemption of capital securities is not a business day,
then payment of the redemption price payable on such date will be made on the
next succeeding day which is a business day (and without any interest or other
payment in respect of any delay). However, if the next business day is in the
next calendar year, the redemption price will be payable on the preceding
business day. In the event that payment of the redemption price in respect of
capital securities called for redemption is improperly withheld or refused and
not paid either by the ONB Trust or by Old National pursuant to the guarantee as
described under "Description of Guarantees," then:
- distributions on those capital securities will continue to accrue at the
then applicable rate from the redemption date originally established by
the ONB Trust for those capital securities to the date the redemption
price is actually paid; and
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- the actual payment date will be the date fixed for redemption for
purposes of calculating the redemption price.
Payment of the redemption price on the capital securities and any
distribution of corresponding junior subordinated debentures to holders of
capital securities will be made to the applicable record holders thereof as they
appear on the register for the capital securities on the relevant record date.
The record date will be one business day prior to the relevant redemption date
or liquidation date, as applicable, except that if any capital securities are
not in book-entry form, the relevant record date for those capital securities
shall be a date at least 15 days prior to the redemption date or liquidation
date, as applicable, as specified in the applicable prospectus supplement.
If an ONB Trust redeems less than all of its capital securities and common
securities, then the aggregate liquidation amount of capital securities and
common securities to be redeemed will be allocated pro rata between the capital
securities and the common securities based upon their respective aggregate
liquidation amounts. Within 60 days of the redemption date, the property trustee
will select the capital securities to be redeemed from among the outstanding
capital securities not previously called for redemption. The property trustee
may use any method of selection it deems to be fair and reasonable.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of capital securities or
common securities to be redeemed at the holder's registered address.
Unless Old National defaults in payment of the redemption price on the
junior subordinated debentures, on and after the redemption date, interest
ceases to accrue on the junior subordinated debentures or portions thereof (and
distributions cease to accrue on the capital securities or portions thereof
issued by the ONB Trust that holds such junior subordinated debentures) called
for redemption.
If notice of redemption has been given and funds deposited as required,
then upon the date of such deposit all rights of the holders of the capital
securities called for redemption will cease, except the right to receive the
redemption price, but without interest on the redemption price, and the capital
securities will cease to be outstanding.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, each ONB Trust's
capital securities and common securities, as applicable, generally shall be made
pro rata based upon their respective aggregate liquidation amounts. However, if
on any distribution date or redemption date an event of default with respect to
any junior subordinated debenture held by an ONB Trust has occurred and is
continuing, then:
- We shall not pay any distribution on, or redemption price of, any of the
ONB Trust's common securities, and we can not make any other payment on
account of the redemption, liquidation or other acquisition of such
common securities, unless
-- all accumulated and unpaid distributions on all of the ONB Trust's
outstanding capital securities are paid in full in cash for all
distribution periods terminating on or prior to any payment on the
common securities,
-- in the case of a payment of the redemption price, the full amount of
the redemption price on all of the ONB Trust's outstanding capital
securities then called for redemption shall have been paid or provided
for, and
-- all funds available to the property trustee shall first be applied to
the payment in full in cash of all distributions on, or redemption
price of, the ONB Trust's capital securities then due and payable.
In the case of any event of default with respect to any junior subordinated
debentures held by an ONB Trust, Old National (as holder of the ONB Trust's
common securities) will be deemed to have
22
waived any right to act with respect to the event of default under the
applicable trust agreement until the effect of all events of default with
respect to such capital securities has been cured, waived or otherwise
eliminated. Until any events of default under the applicable trust agreement
with respect to the capital securities have been cured, waived or otherwise
eliminated, the property trustee is required to act solely on behalf of the
holders of the capital securities and not on Old National's behalf as holder of
the ONB Trust's common securities, and only the holders of such capital
securities will have the right to direct the property trustee to act on their
behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to its respective trust agreement, each ONB Trust will
automatically terminate upon the expiration of its term or on the first to occur
of:
- specified events relating to Old National's bankruptcy, dissolution or
liquidation;
- Old National's written direction to the property trustee, as depositor,
to dissolve the ONB Trust and distribute the corresponding junior
subordinated debentures to the holders of the capital securities in
exchange for the capital securities (which direction is optional and
wholly within Old National's discretion as depositor);
- the redemption of all of the ONB Trust's capital securities and common
securities; and
- the entry of an order for the dissolution of the ONB Trust by a court of
competent jurisdiction.
If an early termination occurs for any reason other than the redemption of
all of the capital securities and common securities, the ONB Trust will be
liquidated by the property trustee as expeditiously as the issuer trustees
determine to be possible. Except as provided in the next sentence, the issuer
trustees will distribute (after satisfaction of any liabilities to creditors of
such ONB Trust as provided by applicable law) to the holders of such capital
securities and common securities a like amount of the corresponding junior
subordinated debentures. However, if such a distribution is determined by the
property trustee not to be practical, the holders of the capital securities will
be entitled to receive out of the assets of the ONB Trust available for
distribution to holders (after satisfaction of any liabilities to creditors of
the ONB Trust as provided by applicable law) a liquidation distribution in an
amount equal to the aggregate of the liquidation amount plus accrued and unpaid
distributions thereon to the date of payment. If the liquidation distribution
can be paid only in part because the ONB Trust has insufficient assets available
to pay in full the aggregate liquidation distribution, then the amounts payable
directly by the ONB Trust on its capital securities will be paid on a pro rata
basis.
As the holder of the ONB Trust's common securities, Old National will be
entitled to receive distributions upon any liquidation pro rata with the holders
of its capital securities. However, if an event of default relating to the
junior subordinated debentures held by an ONB Trust has occurred and is
continuing, that ONB Trust's capital securities will have a priority over its
common securities.
ADDITIONAL AMOUNTS
If at any time an ONB Trust is required to pay any taxes, duties,
assessments or governmental charges of whatever nature, other than withholding
taxes, imposed by the United States, or any other taxing authority, then Old
National will be required to pay additional amounts on the junior subordinated
debt securities. The additional amounts will be sufficient so that the net
amounts received and retained by the ONB Trust after paying any such taxes,
duties, assessments or other governmental charges will be not less than the
amounts the ONB Trust would have received had no such taxes, duties, assessments
or other governmental charges been imposed. This means that the ONB Trust will
be in the same position it would have been if it did not have to pay such taxes,
duties, assessments or other charges.
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EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes a "trust event of default"
under each trust agreement with respect to the capital securities issued by an
ONB Trust thereunder (whatever the reason for the trust event of default):
- an event of default with respect to the junior subordinated debentures
issued under the indenture to the ONB Trust occurs (see "Description of
Debt Securities -- Defaults");
- the property trustee does not pay any distribution within 30 days of its
due date, provided that no deferral period is continuing;
- the property trustee does not pay any redemption price of any trust
security when it becomes due and payable;
- the default by an issuer trustee in the performance, or breach, in any
material respect, of any covenant or warranty of the issuer trustees in
the trust agreement (other than a default in the payment of any
distribution or any redemption price as provided above), and continuation
of that default or breach for a period of 90 days after there has been
given, by registered or certified mail, to the defaulting issuer trustee
by the holders of at least 25% in aggregate liquidation preference of the
outstanding capital securities of the applicable ONB Trust, a written
notice specifying the default or breach and requiring it to be remedied
and stating that the notice is a "notice of default" under the trust
agreement; or
- the property trustee files for bankruptcy or certain other events in
bankruptcy or insolvency occur and a successor property trustee is not
appointed within 60 days.
Within 90 days after learning of the occurrence of any trust event of
default, the property trustee is required to transmit notice of the trust event
of default to the holders of the ONB Trust's capital securities, to the
administrators and to Old National, as depositor, unless the trust event of
default has been cured or waived.
If an event of default with respect to a corresponding junior subordinated
debenture has occurred and is continuing, the capital securities shall have a
preference over the common securities upon termination of the ONB Trust as
described above. See "-- Liquidation Distribution upon Termination." The
existence of a trust event of default with respect to an ONB Trust does not
entitle the holders of capital securities issued by that ONB Trust to cause the
redemption of the capital securities.
REMOVAL OF ISSUER TRUSTEES
Old National as the holder of the common securities of an ONB Trust may
remove either issuer trustee at any time, unless an event of default with
respect to junior subordinated debentures held by that ONB Trust has occurred
and is continuing. If a trust event of default resulting from an event of
default with respect to junior subordinated debentures held by that ONB Trust
has occurred and is continuing, the property trustee and the Delaware trustee
may be removed by the holders of a majority in liquidation amount of the
outstanding capital securities of that ONB Trust. In no event will the holders
of the capital securities have the right to vote to appoint, remove or replace
the administrators: that right belongs exclusively to Old National as the holder
of the common securities. No resignation or removal of an issuer trustee and no
appointment of a successor trustee will be effective until the successor trustee
accepts its appointment in accordance with the provisions of the applicable
trust agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any corporation into which the property trustee or the Delaware trustee
that is not a natural person may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which such trustee shall be a party, or any corporation
succeeding
24
to all or substantially all the corporate trust business of such trustee, shall
be the successor of such trustee under each trust agreement, provided such
corporation shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, CONVERSIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ONB
TRUSTS
An ONB Trust may not merge or consolidate with or into, convert into,
amalgamate or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other person, except
as described below, as described in "-- Liquidation Distribution upon
Termination" or as described in the prospectus supplement with respect to the
capital securities. An ONB Trust may, at Old National's request, with the
consent the holders of a majority of its capital securities, merge or
consolidate with or into, convert into, amalgamate or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to a
trust organized as such under the laws of any state; provided, that:
- the successor entity either (a) expressly assumes all of the obligations
of the ONB Trust with respect to its capital securities or (b)
substitutes for the capital securities other successor securities having
substantially the same terms as the capital securities so long as the
successor securities rank the same as the capital securities rank in
priority with respect to distributions and payments upon liquidation,
redemption and otherwise;
- Old National expressly appoints a trustee of such successor entity
possessing the same powers and duties as the property trustee as the
holder of the corresponding junior subordinated debentures;
- the successor securities are listed, or any successor securities will be
listed upon notification of issuance, on any national securities exchange
or other organization on which the capital securities are then listed, if
any;
- the merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease does not cause the capital securities
(including any successor securities) to be downgraded by a nationally
recognized statistical rating organization;
- the merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the capital securities
(including any successor securities) in any material respect;
- the successor entity has a purpose substantially similar to that of the
ONB Trust;
- prior to the merger, consolidation, conversion, amalgamation,
replacement, conveyance, transfer or lease, the property trustee has
received an opinion from independent counsel to the ONB Trust experienced
in such matters to the effect that:
-- the merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the capital securities
(including any successor securities) in any material respect, and
-- following the merger, consolidation, conversion, amalgamation,
replacement, conveyance, transfer or lease, neither the ONB Trust nor
such successor entity will be required to register as an investment
company under the Investment Company Act; and
- Old National or any permitted successor or assignee owns all of the
common securities of the successor entity and guarantees the obligations
of the successor entity under the successor securities at least to the
extent provided by the guarantee.
Notwithstanding the general provisions described above, an ONB Trust shall not,
except with the consent of holders of 100% in liquidation amount of the capital
securities, merge with or into, consolidate, convert into, amalgamate, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such merger, consolidation,
conversion, amalgamation, replacement, conveyance, transfer or
25
lease would cause the ONB Trust or the successor entity to be classified as
other than a grantor trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
The holders of the capital securities will have only the voting rights
described below and under "Description of Guarantees -- Amendments and
Assignment," plus any voting rights required by law.
Each trust agreement may be amended from time to time by Old National and
the property trustee, without the consent of the holders of the capital
securities:
- to cure any ambiguity, correct or supplement any provisions in the trust
agreement that may be inconsistent with any other provision, or to
address matters or questions arising under the trust agreement in a way
which is consistent with the other provisions of the trust agreement; or
- to modify, eliminate or add to any provisions of the trust agreement if
necessary to ensure that the ONB Trust will be classified for United
States federal income tax purposes as a grantor trust or to ensure that
the ONB Trust will not be required to register as an "investment company"
under the Investment Company Act.
However, in the case of the first clause, the action must not adversely
affect in any material respect the interests of any holder of capital securities
and common securities. Any amendment of the trust agreement becomes effective
when Old National gives notice of the amendment to the holders of the capital
securities and common securities.
Each trust agreement may be amended by Old National and the property
trustee with:
- the consent of holders representing not less than a majority (based upon
liquidation amounts) of the outstanding capital securities and common
securities; and
- receipt by the property trustee of an opinion of counsel experienced in
such matters to the effect that the amendment or the exercise of any
power granted to the issuer trustees in accordance with the amendment
will not affect the ONB Trust's status as a grantor trust for United
States federal income tax purposes or the ONB Trust's exemption from
status as an "investment company" under the Investment Company Act.
However, without the consent of each holder of capital securities and
common securities, no amendment may:
- change the amount or timing of any distribution on the capital securities
and common securities or otherwise adversely affect the amount of any
distribution required to be made in respect of the capital securities and
common securities as of a specified date; or
- restrict the right of a holder of capital securities and common
securities to sue for the enforcement of any distribution payment.
The property trustee is required to notify each holder of capital
securities whenever the property trustee is notified of a default with respect
to the corresponding junior subordinated debentures. Furthermore, so long as any
junior subordinated debentures are held by the property trustee, the issuer
trustees are not permitted to:
- direct the time, method and place of conducting any proceeding for any
remedy available to the trustee under the indenture, or execute any trust
or power conferred on the property trustee with respect to the junior
subordinated debentures;
- waive any past default that is waivable under the indenture governing the
junior subordinated debentures;
26
- exercise any right to rescind or annul a declaration that the principal
of all the junior subordinated debentures shall be due and payable; or
- give a required consent to any amendment, modification or termination of
the indenture, the applicable securities resolution or the junior
subordinated debentures
unless, in each case, they first obtain the approval of the holders of a
majority in aggregate liquidation amount of all outstanding capital securities.
However, where the indenture requires the consent of each affected holder of
junior subordinated debentures, the property trustee cannot give the consent
without first obtaining the consent of each holder of the capital securities.
The property trustee cannot revoke any action previously authorized or approved
by a vote of the holders of the capital securities except by subsequent vote of
the holders of the capital securities.
In addition to obtaining approval of the holders of the capital securities
as described above, the issuer trustees are required to obtain an opinion of
counsel to the effect that the proposed action will not cause the ONB Trust to
be classified as a corporation for United States federal income tax purposes.
Any required approval of holders of capital securities may be given either
at a meeting of holders of capital securities or pursuant to a written consent.
The property trustee must notify record holders of capital securities of any
meeting in the manner set forth in each trust agreement.
No vote or consent of the holders of capital securities will be required
for an ONB Trust to redeem and cancel its capital securities in accordance with
the applicable trust agreement.
Whenever holders of capital securities are entitled to vote or consent
under any of the circumstances described above, neither Old National nor the
issuer trustees will be permitted to vote. For purposes of any vote or consent,
any of the capital securities that Old National owns (or that are owned by the
issuer trustees or Old National's affiliates) will be treated as if they were
not outstanding.
PAYMENT AND PAYING AGENCY
The depositary for the capital securities will make payments in respect of
the capital securities by crediting the relevant accounts at the depositary on
the applicable distribution dates. If any capital securities of an ONB Trust are
not held by the depositary, then the paying agent will mail checks to registered
holders of the capital securities as their addresses appear on its register.
Unless otherwise specified in the applicable prospectus supplement, the paying
agent shall initially be the property trustee and any co-paying agent chosen by
the property trustee and acceptable to the administrators and to Old National.
The paying agent can resign upon 30 days' written notice to the property trustee
and to Old National. If the property trustee resigns as paying agent, the
property trustee will appoint a bank or trust company acceptable to the
administrators to act as paying agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable prospectus supplement, the
property trustee will act as registrar and transfer agent for the capital
securities.
Each ONB Trust will register transfers of its capital securities without
charge, but will require payment of any tax or other governmental charges that
may be imposed in connection with any transfer or exchange. The ONB Trusts will
not register transfers of their capital securities after the relevant capital
securities are called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee undertakes to perform only the duties that are
specifically set forth in each trust agreement, other than during the
continuance of a trust event of default. After a trust event of default, the
property trustee is required to exercise the same degree of care and skill as a
prudent person would exercise or use in the conduct of his or her own affairs.
Subject to this provision, the property trustee has
27
no obligation to exercise any of its powers under the applicable trust agreement
at the request of any holder of capital securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that it might
incur by doing so. If no trust event of default has occurred and is continuing
and the property trustee is required to decide between alternative courses of
action, construe ambiguous provisions in the applicable trust agreement or is
unsure of the application of any provision of the applicable trust agreement,
then Old National will have the right to tell the property trustee which action
to take unless the matter is one on which holders of capital securities are
entitled to vote. If Old National doesn't give any directions, the property
trustee will take whatever action it deems advisable and in the best interests
of the holders of the capital securities and common securities. The property
trustee will have no liability except for its own bad faith, negligence or
willful misconduct.
MISCELLANEOUS
The property trustee and the administrators are authorized and directed to
operate the ONB Trusts in such a way that:
- no ONB Trust will be:
-- deemed to be an "investment company" required to be registered under
the Investment Company Act or
-- classified as an association taxable as a corporation for United States
federal income tax purposes; and
- the junior subordinated debentures will be treated as Old National's
indebtedness for United States federal income tax purposes.
Holders of the capital securities have no preemptive or similar rights.
No ONB Trust may borrow money or issue debt or mortgage or pledge any of
its assets.
DESCRIPTION OF GUARANTEES
When the capital securities and common securities of any series are issued
by an ONB Trust, Old National will execute and deliver a guarantee agreement for
the benefit of the holders of the capital securities of that series. The
guarantee agreement will be qualified as an indenture under the Trust Indenture
Act. Bank One Trust Company, NA will act as guarantee trustee under each
guarantee for the purposes of compliance with the Trust Indenture Act, and will
hold the guarantee for the benefit of the holders of the related ONB Trust's
capital securities.
Old National has summarized certain provisions of the guarantees below.
This summary is not complete. The form of the guarantee agreement has been filed
as an exhibit to the registration statement of which this prospectus forms a
part, and you should read the guarantee agreement for provisions that may be
important to you. Reference in this summary to capital securities means that ONB
Trust's capital securities to which a guarantee relates.
GENERAL
Old National will promise to pay the guarantee payments to the holders of
the capital securities, as and when due, regardless of any defense, right of
set-off or counterclaim that the ONB Trust may have or assert other than the
defense of payment. Old National's obligations under the guarantee will rank
equal to the corresponding junior subordinated debentures and will be junior and
subordinated to the Senior Debt.
28
The guarantee payments include the following, to the extent not paid by or on
behalf of the related ONB Trust:
- any accumulated and unpaid distributions required to be paid on the
capital securities, but only if and to the extent that the applicable ONB
Trust has funds on hand available for the distributions at that time;
- the redemption price with respect to any capital securities called for
redemption, if and to the extent that the applicable ONB Trust has funds
on hand available to pay the redemption price at that time; or
- upon a voluntary or involuntary termination, winding up or liquidation of
an ONB Trust (unless the corresponding junior subordinated debentures are
distributed to the holders of the capital securities), the lesser of:
-- the liquidation distribution; and
-- the amount of assets of the applicable ONB Trust remaining available
for distribution to holders of capital securities.
Old National's obligation to make a guarantee payment may be satisfied
either by Old National's direct payment of the required amounts to the holders
of the applicable capital securities or by causing the ONB Trust to pay them.
Each guarantee will be an irrevocable guarantee on a junior subordinated
basis of the related ONB Trust's obligations in respect of the capital
securities, but will apply only to the extent that the related ONB Trust has
funds sufficient to make the required payments. If Old National does not make
interest payments on the junior subordinated debentures held by an ONB Trust,
the ONB Trust will not be able to pay distributions on its capital securities.
Old National has also agreed to guarantee the obligations of the ONB Trusts
with respect to the common securities to the same extent as the guarantee to
holders of the capital securities. However, if there is an event of default with
respect to a corresponding junior subordinated debenture, holders of capital
securities issued by that ONB Trust will have priority over holders of common
securities issued by that ONB Trust.
STATUS OF THE GUARANTEES
Each guarantee will constitute Old National's unsecured obligation and will
rank subordinate and junior in right of payment to all of Old National's Senior
Debt.
Each guarantee will rank equally with all other guarantees Old National
issues relating to capital securities issued by the ONB Trusts. Each guarantee
will constitute a guarantee of payment and not of collection (i.e., the
guaranteed party may institute a legal proceeding directly against Old National
as the guarantor to enforce its rights under the guarantee without first suing
anyone else). Each guarantee will be held for the benefit of the holders of the
related capital securities. Each guarantee will be discharged only by payment of
the guarantee payments in full (to the extent not paid by the ONB Trust) or by
distribution of the corresponding junior subordinated debentures to the holders
of the capital securities. None of the guarantees places a limitation on the
amount of additional Senior Debt or subordinated debt that Old National may
incur. Old National expects from time to time to incur additional indebtedness
constituting Senior Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of the related capital securities in any material respect (in which
case no vote will be required), no guarantee may be amended without the prior
approval of the holders of not less than a majority of the aggregate liquidation
amount of the related outstanding capital securities. The manner of obtaining
any required approval will be
29
as set forth under "Description of Capital Securities -- Voting Rights;
Amendment of Each Trust Agreement." All guarantees and agreements contained in
each guarantee agreement will bind Old National's successors, assigns,
receivers, trustees and representatives and will benefit the holders of the
related capital securities then outstanding.
EVENTS OF DEFAULT
Old National will be in default under any guarantee agreement if (a) Old
National doesn't make required payments or (b) Old National is notified that it
has not performed some other obligation and have not cured that failure within
90 days.
The holders of a majority in aggregate liquidation amount of the related
capital securities have the right:
- to direct the time, method and place of conducting any proceeding for any
remedy available to the guarantee trustee in respect of the guarantee
agreement; or
- to direct the exercise of any power conferred upon the guarantee trustee
under the guarantee agreement.
Holders of a majority in aggregate liquidation amount of the related capital
securities also have the right to waive any past event of default and its
consequences.
Any holder of the capital securities may institute a legal proceeding
directly against Old National to enforce the ONB Trust's rights under the
guarantee agreement without first instituting a legal proceeding against the ONB
Trust, the guarantee trustee or anyone else.
As guarantor, Old National is required to file annually with the guarantee
trustee a certificate stating whether or not Old National is in compliance with
all the conditions and covenants applicable to Old National under the guarantee
agreement.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee will perform only the duties that are specifically
set forth in each guarantee agreement, other than during the occurrence and
continuance of a default by Old National in performance of any guarantee. After
Old National defaults and while the default continues, the guarantee trustee
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision and so long as no default under the applicable guarantee agreement has
occurred and is continuing, the guarantee trustee is under no obligation to
exercise any of the powers vested in it by any guarantee agreement at the
request of any holder of any capital securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that it might incur by
doing so.
TERMINATION OF THE GUARANTEES
Each guarantee will terminate upon full payment of the redemption price of
the related capital securities, upon full payment of the amounts payable upon
liquidation of the related ONB Trust or upon distribution of corresponding
junior subordinated debentures to the holders of the related capital securities.
Each guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of the related capital securities must restore
payment of any sums paid under the capital securities or the guarantee.
30
RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Old National irrevocably guarantees payments of distributions and other
amounts due on the capital securities (to the extent the applicable ONB Trust
has funds available for the payment of the distributions) as and to the extent
set forth under "Description of Guarantees." Taken together, Old National's
obligations under each series of junior subordinated debentures, the related
securities resolution, the indenture, the related trust agreement and the
related guarantee agreement provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the related series of capital securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
the full guarantee. It is only the combined operation of these documents that
has the effect of providing a full, irrevocable and unconditional guarantee of
the ONB Trust's obligations under the capital securities. See "The ONB Trusts,"
"Description of Capital Securities," and "Description of Debt
Securities -- Certain Provisions Relating to Junior Subordinated Debentures
Issued to the ONB Trusts."
If and to the extent that Old National does not make payments on any series
of corresponding junior subordinated debentures, the ONB Trust will not pay
distributions or other amounts due on its capital securities. The guarantees do
not cover payment of distributions when the related ONB Trust does not have
sufficient funds to pay the distributions. In that event, the remedy for a
holder of the capital securities issued by that trust is to institute a legal
proceeding directly against Old National for enforcement of payment of the
distributions to such holder. Old National's obligations under each guarantee
are subordinate and junior in right of payment to all of Old National's Senior
Debt.
SUFFICIENCY OF PAYMENTS
As long as Old National makes payments when due on each series of junior
subordinated debentures, those payments will be sufficient to cover
distributions and other payments due on the related capital securities. This is
primarily because:
- the aggregate principal amount of each series of junior subordinated
debentures will be equal to the sum of the aggregate stated liquidation
amount of the related capital securities and related common securities;
- the interest rate and interest and other payment dates on each series of
junior subordinated debentures will match the distribution rate and
distribution and other payment dates for the related capital securities;
- Old National, as issuer of the junior subordinated debentures, has
promised to pay any and all costs, expenses and liabilities of each ONB
Trust except the ONB Trust's obligations under its capital securities;
and
- each trust agreement provides that the ONB Trust will not engage in any
activity that is not consistent with the limited purposes of the ONB
Trust.
Old National has the right to set-off any payment Old National is otherwise
required to make under the indenture if and to the extent Old National has
already made, or is concurrently making, a payment under the related guarantee
agreement.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of any capital security may institute a legal proceeding directly
against Old National to enforce its rights under the related guarantee agreement
without first instituting a legal proceeding against the guarantee trustee, the
related ONB Trust or anyone else.
31
Old National's default or event of default under any other senior or
subordinated indebtedness would not necessarily constitute a trust event of
default. However, in the event of payment defaults under, or acceleration of,
Old National's Senior Debt, the subordination provisions of the applicable
securities resolution will provide that no payments may be made in respect of
the corresponding junior subordinated debentures until the Senior Debt has been
paid in full or any payment default thereunder has been cured or waived. Old
National's failure to make required payments on any series of corresponding
junior subordinated debentures would constitute a trust event of default.
LIMITED PURPOSE OF ONB TRUSTS
Each ONB Trust's capital securities evidence undivided beneficial ownership
interests in the assets of that ONB Trust, and each ONB Trust exists for the
sole purposes of issuing its capital securities and common securities, investing
the proceeds in junior subordinated debentures and engaging in only those other
activities necessary, convenient or incidental to those purposes. A principal
difference between the rights of a holder of a capital security and a holder of
a corresponding junior subordinated debenture is that the holder of a junior
subordinated debenture is entitled to receive from Old National the principal
amount of and interest accrued on the junior subordinated debenture held, while
the holder of a capital security is entitled to receive distributions from the
ONB Trust (or from Old National under the applicable guarantee agreement) if and
to the extent the ONB Trust has funds available for the payment of the
distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination of any ONB Trust involving
the liquidation of the junior subordinated debentures held by that ONB Trust,
the holders of the related capital securities will be entitled to receive the
liquidation distribution in cash, out of assets of the ONB Trust (and after
satisfaction of creditors of the ONB Trust as provided by applicable law). See
"Description of Capital Securities -- Liquidation Distribution upon
Termination." If Old National becomes subject to any voluntary or involuntary
liquidation or bankruptcy, the property trustee, as holder of the corresponding
junior subordinated debentures, would be one of Old National's junior
subordinated creditors. The property trustee would be subordinated in right of
payment to all of Old National's Senior Debt, but it would be entitled to
receive payment in full of principal and interest before Old National's
stockholders receive payments or distributions. Old National is the guarantor
under each guarantee agreement and pursuant to the indenture, as borrower, has
agreed to pay all costs, expenses and liabilities of each ONB Trust (other than
the ONB Trust's obligations to the holders of its capital securities).
Accordingly, in the event of Old National's liquidation or bankruptcy, the
positions of a holder of capital securities and of a holder of corresponding
junior subordinated debentures are expected to be substantially the same
relative to Old National's other creditors and to Old National's stockholders.
BOOK-ENTRY ISSUANCE
"STREET NAME" AND OTHER INDIRECT HOLDERS
Investors who hold capital securities in accounts at banks or brokers will
generally not be recognized as legal holders of capital securities. This is
called holding in "Street Name." Instead, the applicable ONB Trust would
recognize only the bank or broker that directly holds, or the financial
institution the bank or broker uses to hold, its capital securities. These
intermediary banks, brokers and other financial institutions pass along
distributions and other payments on the capital securities, either because they
agree to do so in their customer agreements or because they are legally required
to. If you hold capital securities in "Street Name," you should check with your
own institution to find out:
- how it handles securities payments and notices,
- whether it imposes fees or charges,
32
- how it would handle voting if ever required,
- whether and how you can instruct it to send you capital securities
registered in your own name so you can be a direct holder as described
below, and
- how it would pursue rights under the capital securities if there were a
default or other event triggering the need for holders to act to protect
their interests.
DIRECT HOLDERS
An ONB Trust's obligations, as well as the obligations of Old National, the
trustees and those of any third parties employed by an ONB Trust, or the issuer
trustees, run only to individuals, corporations or other entities who are
registered as holders of capital securities. As noted above, an ONB Trust does
not have obligations to a holder of capital securities who holds in "Street
Name" or other indirect means, either because the holder chooses to hold capital
securities in that manner or because the capital securities are issued in the
form of global securities as described below. For example, once an ONB Trust
makes payment to the registered holder, the ONB Trust has no further
responsibility for the payment even if that holder is legally required to pass
the payment along to a holder as a "Street Name" customer but does not do so.
GLOBAL SECURITIES
The capital securities will be issued in the form of global securities,
and, therefore, the ultimate beneficial owners can only be indirect holders. The
global securities will be registered in the name of DTC or its nominee and the
capital securities included in the global security may not be transferred in the
name of any other direct holder unless the special circumstances described below
occur. Any person wishing to own capital securities must do so indirectly by
virtue of an account with a broker, bank or other financial institution that in
turn has an account with DTC.
Special Investor Considerations for Global Securities. As an indirect
holder, an investor's rights relating to a global security will be governed by
the account rules of the investor's financial institution and of DTC, as well as
the general laws relating to securities transfers. An investor should be aware
that because the capital securities are issued only in the form of global
securities:
- the investor will not be able to get the capital securities registered in
his or her own name,
- the investor will not be able to receive physical certificates for his or
her interest in the capital securities,
- the investor will be a "Street Name" holder and must look to his or her
own bank or broker for payments on the capital securities and protection
of his or her legal rights relating to the capital securities (see
"-- 'Street Name' and Other Indirect Holders" above),
- the investor may not be able to sell interests in the capital securities
to some insurance companies and other institutions that are required by
law to own their securities in the form of physical certificates,
- DTC's policies will govern payments, transfers, exchange and other
matters relating to the investor's interest in the global security (see
"-- The DTC System" below; Old National, the ONB Trusts and the issuer
trustees have no responsibility for any aspect of DTC's actions or for
its records of ownership interests in the global security, nor do they
supervise DTC in any way), and
- payment for purchases and sales in the market for corporate bonds and
notes is generally made in next-day funds. In contrast, DTC will usually
require that interests in a global security be purchased or sold within
its system using same-day funds. This difference could have some effect
on how global security interests trade, but neither Old National nor any
ONB Trust knows what the effect will be.
33
Special Situations When Global Security Will Be Terminated. In a few
special situations, the global security will terminate and interests in it will
be exchanged for physical certificates representing capital securities. After
the exchange, the choice of whether to hold capital securities directly or in
"Street Name" will be up to the investor. Investors must consult their own bank
or brokers to find out how to have their interests in capital securities
transferred to their own name, so that they will be direct holders. The rights
of "Street Name" investors and direct holders in the capital securities are
described above under "-- 'Street Name' and Other Indirect Holders" and
"-- Direct Holders."
The special situations for termination of a global security are:
- DTC notifies Old National or an ONB Trust that it is unwilling, unable or
no longer qualified to continue as the depositary for the capital
securities;
- Old National in its sole discretion determines that the global security
will be exchangeable for certificated capital securities; or
- an event of default under the trust agreement has occurred and has not
been cured and the holders of a majority in liquidation amount of the
outstanding capital securities determine that the global security will be
exchangeable for certificated capital securities.
When a global security terminates, DTC (and not Old National or the issuer
trustees) is responsible for deciding the names of the institutions that will be
the initial direct holders.
THE DTC SYSTEM
DTC has advised Old National that it is a limited-purpose trust company
created to hold securities for its participating organizations (the
"Participations"). DTC also facilitates the clearance and settlement between
Participants in transactions of securities deposited with DTC through changes in
the account records of its Participants. The Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. The Underwriters are Participants in the DTC System. Access
to DTC's system is also available to other entities such as securities brokers
and dealers, banks and trust companies that work through a Participant (the
"Indirect Participants").
When you purchase capital securities through the DTC system, the purchases
must be made by or through a Participant, who will receive credit for the
capital securities on DTC's records. Since you actually own the capital
securities, you are the beneficial owner and your ownership interest will only
be recorded on the Participants' or Indirect Participants' records. DTC has no
knowledge of your individual ownership of the capital securities. DTC's records
only show the identity of the Participants and the amount of the capital
securities held by or through them. You will not receive a written confirmation
of your purchase or sale or any periodic statement directly from DTC. You will
receive these from your Participant or Indirect Participant. Thus the
Participants or Indirect Participants are responsible for keeping accurate
account of the holdings of their customers like you.
Any redemption notices will be sent by Old National and the applicable ONB
Trust directly to DTC, who will in turn inform the Participants, who will then
contact you as a beneficial holder. If less than all of the capital securities
are being redeemed, DTC's current practice is to choose by lot the amount of the
interest of each Participant to be redeemed. The Participant will then use an
appropriate method to allocate the redemption price among its beneficial holders
like you.
It is DTC's current practice, upon receipt of any payment of distributions
or liquidation amount, to credit Participants' accounts on the payment date
based on their holdings of beneficial interests in the global securities as
shown on DTC's records. In addition, it is DTC's current practice to assign any
consenting or voting rights to Participants whose accounts are credited with
capital securities on a record date by using an omnibus proxy. Payments by
Participants to owners of beneficial interests in the global securities, and
voting by Participants, will be based on the customary practices between the
Participants and owners of beneficial interests, as is the case with the capital
securities held for the account of
34
customers registered in "Street Name." However, payments will be the
responsibility of the Participants and not of DTC, the issuer trustees, the ONB
Trusts or Old National.
Old National has obtained the information concerning DTC and DTC's
book-entry system from sources that Old National believes to be accurate, but
Old National is not responsible for the accuracy of this information. In
addition, Old National is not responsible for the performance by DTC, its
Participants or any Indirect Participants of any of their obligations.
REGISTRATION OF JUNIOR SUBORDINATED DEBENTURES
The junior subordinated debentures initially will be issued in certificated
form and registered in the name of the property trustee. If in the future the
junior subordinated debentures are distributed to the holders of capital
securities in exchange for the capital securities and at that time the capital
securities are represented by a global security, the junior subordinated
debentures would also be represented by a global security. In this event, Old
National expects that the book-entry arrangements applicable to the capital
securities would be similar to those applicable to the junior subordinated
debentures.
UNDERWRITING
The distribution of the securities may be effected from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. Each
prospectus supplement will describe the method of distribution of the debt
securities offered therein.
Old National or an ONB Trust may sell the securities in any one or more of
the following ways from time to time:
- to or through underwriters or dealers;
- directly to one or more purchasers; or
- through agents otherwise indicated in the prospectus supplement acting on
a best efforts basis for the period of its appointment.
Each prospectus supplement will set forth the terms of the offering of the
securities being offered thereby, including the name or names of any
underwriters or agents with whom Old National or an ONB Trust has entered into
arrangements for the sale of the securities, the public offering or purchase
price of those securities, the proceeds to Old National or an ONB Trust from
such sale, any underwriting discounts and other items constituting underwriters'
compensation, any discounts or concessions allowed or reallowed or paid to
dealers, any commissions allowed or paid to agents, and the name of any
securities exchange on which those securities may be listed. Only underwriters
so named in the applicable prospectus supplement are deemed to be underwriters
in connection with the securities offered thereby.
The obligations of the underwriters to purchase those securities will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all the securities of the series offered by any of us and described
in the applicable prospectus supplement if they purchase any of those
securities. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
Securities may also be offered and sold, if so indicated in the prospectus
supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, by one or more firms
("remarketing firms") acting as principals for their own accounts or as agents
for either of us. Any remarketing firm will be identified and the terms of its
agreement, if any, with us and its compensation will be described in the
prospectus supplement. Remarketing firms may be deemed to be underwriters in
connection with the securities remarketed thereby.
35
If so indicated in the prospectus supplement, Old National or an ONB Trust
will authorize agents, underwriters or dealers to solicit offers by certain
institutions to purchase securities pursuant to delayed delivery contracts
providing for payment and delivery on a future date. There may be limitations on
the minimum amount which may be purchased by any such institutions or on the
amount of the securities which may be sold pursuant to such contracts.
Institutions with which such contracts may be made include:
- commercial and savings banks,
- insurance companies,
- pension funds,
- investment companies and
- educational and charitable institutions.
In each case, such institutions must be approved by Old National and/or an
ONB Trust. The obligations of any such purchasers pursuant to such delayed
delivery contracts will not be subject to any conditions except (a) the purchase
by an institution of the particular securities shall not at the time of delivery
be prohibited under the laws of any jurisdiction in the United States to which
such institution is subject, and (b) if the particular securities are being sold
to underwriters, we shall have sold to such underwriters all of those securities
other than the securities covered by such arrangements. Underwriters will not
have any responsibility in respect of the validity or performance of such
contracts.
If any underwriter or any selling group member intends to engage in
stabilizing, syndicate short covering transactions, penalty bids or any other
transaction in connection with the offering of securities that may stabilize,
maintain, or otherwise affect the price of those securities, such intention and
a description of such transactions will be described in the prospectus
supplement.
Agents and underwriters may be entitled under agreements entered into with
Old National and/or the applicable ONB Trust to indemnification by Old National
against certain civil liabilities, including liabilities under the Securities
Act of 1933, or to contribution with respect to payments which the agents or
underwriters may be required to make in respect thereof. Certain of any such
agents and underwriters, including their associates, may be customers of, engage
in transactions with, or perform services for, Old National and its subsidiaries
in the ordinary course of business.
CERTAIN LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplements,
certain legal matters in connection with the securities will be passed upon (a)
for Old National by Krieg DeVault Alexander & Capehart, LLP, Old National's
legal counsel, (b) for the ONB Trusts (with respect to the validity of the
capital securities under Delaware law) by Richards, Layton & Finger, P.A.,
Wilmington, Delaware, special Delaware counsel to Old National and the ONB
Trusts, and (c) for any underwriters by Cleary, Gottlieb, Steen & Hamilton,
Washington, D.C.
36
EXPERTS
The consolidated financial statements of Old National as of December 31,
1998 and December 31, 1997 and for each of the years ended December 31, 1998,
1997 and 1996 incorporated in this prospectus by reference to Old National's
Annual Report on Form 8-K filed on December 1, 1999, have been so incorporated
in reliance on the report of Arthur Andersen LLP, independent accountants, given
on the authority of that firm as experts in auditing and accounting.
Future audited financial statements incorporated in this prospectus by
reference to future filings under the Exchange Act, as provided under "Where You
Can Find More Information," will be so incorporated in reliance on the related
report or reports of the firm of independent accountants auditing such financial
statements, given on such authority of such firm, if and to the extent such
filings include the consent of such firm to the incorporation of such report or
reports herein.
37
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[ ] TRUST PREFERRED SECURITIES (TRUPS(R))
ONB CAPITAL TRUST II
[ ]% TRUST PREFERRED SECURITIES (TRUPS(R))
FULLY, IRREVOCABLY AND UNCONDITIONALLY GUARANTEED BY
OLD NATIONAL BANCORP
[LOGO TO COME]
------------
PROSPECTUS SUPPLEMENT
APRIL [ ], 2002
(INCLUDING PROSPECTUS DATED FEBRUARY 29, 2000)
------------
SALOMON SMITH BARNEY
------------
MERRILL LYNCH & CO.
MORGAN STANLEY
STIFEL, NICOLAUS & COMPANY
INCORPORATED
UBS WARBURG
CREDIT SUISSE FIRST BOSTON
JP MORGAN
LEGG MASON WOOD WALKER, INCORPORATED
LEHMAN BROTHERS
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