SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
UNIONBANCORP, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: NA
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(2) Aggregate number of securities to which transaction applies: NA
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): NA
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(4) Proposed maximum aggregate value of transaction: NA
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(5) Total fee paid: NA
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: NA
(2) Form, Schedule or Registration Statement No.: NA
(3) Filing Party: NA
(4) Date Filed: NA
Notes:
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March 17, 2003
Dear Fellow Stockholder:
You are cordially invited to attend UnionBancorp, Inc.'s annual meeting
of stockholders at the Starved Rock Lodge and Conference Center located in
Utica, Illinois, on Tuesday, April 22, 2003, at 10:00 a.m. At the meeting, we
will report to you on the progress of UnionBancorp and respond to your comments
or questions. Moreover, several members of our management team will be available
to speak with you individually about our record of achievement and plans for the
future.
Your board of directors has nominated three persons to serve as Class
II directors on the board of directors. Their names appear in the enclosed proxy
materials. All three of the nominees are incumbent directors. The board of
directors has also recommended the approval by our stockholders of the adoption
of the UnionBancorp, Inc. 2003 Stock Option Plan, which is described in the
proxy materials. We recommend that you vote your shares for the nominees and in
favor of the 2003 Stock Option Plan.
We encourage you to attend the meeting in person. Because it is
important that your shares be represented at the meeting, please sign and return
the enclosed proxy, whether or not you plan to attend the meeting.
We look forward with pleasure to seeing and visiting with you at the
meeting.
With best personal wishes,
/s/ CHARLES J. GRAKO
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Charles J. Grako
President and
Chief Executive Officer
321 West Main Street o Ottawa Illinois o (815) 431-2720
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 2003
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TO HOLDERS OF COMMON STOCK:
The annual meeting of stockholders of UnionBancorp, Inc., a Delaware
corporation, will be held at the Starved Rock Lodge and Conference Center
located in Utica, Illinois, on Tuesday, April 22, 2003, at 10:00 a.m., local
time, for the purpose of considering and voting upon the following matters:
1. to elect three Class II directors.
2. to approve the adoption of the UnionBancorp, Inc. 2003 Stock
Option Plan.
3. to transact such other business as may properly come before
the meeting or any adjournments or postponements of the
meeting.
We are not aware of any other business to come before the meeting. Only
those stockholders of record as of the close of business on March 3, 2003, shall
be entitled to notice of the meeting and to vote at the meeting and any
adjournments or postponements of the meeting. In the event there are not
sufficient votes for a quorum or to approve or ratify any of the foregoing
proposals at the time of the meeting, the meeting may be adjourned or postponed
in order to permit our further solicitation of proxies.
By Order of the Board of Directors
/s/ CHARLES J. GRAKO
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Charles J. Grako
President and
Chief Executive Officer
Ottawa, Illinois
March 17, 2003
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON. IT IS HOPED THAT YOU WILL BE ABLE TO ATTEND THE MEETING, AND IF YOU DO
YOU MAY VOTE YOUR STOCK IN PERSON IF YOU WISH. THE PROXY MAY BE REVOKED AT ANY
TIME PRIOR TO ITS EXERCISE.
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PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation
by the board of directors of UnionBancorp, Inc. of proxies to be voted at the
annual meeting of stockholders to be held at the Starved Rock Lodge and
Conference Center located in Utica, Illinois, on Tuesday, April 22, 2003, at
10:00 a.m., local time, or at any adjournments or postponements of the meeting.
UnionBancorp, a Delaware corporation, is a regional financial services
company based in Ottawa, Illinois which has four bank subsidiaries and one
non-bank subsidiary. Our banks serve communities throughout Central, Northern
and Western Illinois through twenty-four locations. UnionFinancial Services &
Trust Company, our non-bank subsidiary, is an insurance/brokerage agency and
trust company and also serves as an owner and lessor of banking offices to
several of our banks.
The proxy statement and the accompanying notice of meeting and proxy
are first being mailed to holders of shares of our common stock, par value $1.00
per share, on or about March 17, 2003. Our 2002 annual report, including
financial statements, is enclosed.
Voting Rights and Proxy Information
The board of directors has fixed the close of business on March 3,
2003, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the annual meeting. Our transfer books will not be
closed between the record date and the date of the annual meeting. The board of
directors hopes that all stockholders can be represented at the annual meeting.
Whether or not you expect to be present, please sign and return your proxy in
the enclosed self-addressed, stamped envelope. Stockholders giving proxies
retain the right to revoke them at any time before they are voted by written
notice of revocation to the Secretary of UnionBancorp, and stockholders present
at the meeting may revoke their proxy and vote in person.
On March 3, 2003, we had 3,986,046 issued and outstanding shares of
common stock. For the election of directors, and for all other matters to be
voted upon at the annual meeting, each share of common stock is entitled to one
vote. A majority of the outstanding shares of the common stock must be present
in person or represented by proxy to constitute a quorum for purposes of the
annual meeting. Abstentions and broker non-votes will be counted for purposes of
determining a quorum. Directors will be elected by a plurality of the votes
present in person or represented by proxy at the meeting and entitled to vote.
In all other matters, the affirmative vote of the majority of shares of common
stock present in person or represented by proxy at the annual meeting and
entitled to vote on the subject matter shall be required to constitute
stockholder approval. Abstentions will be treated as votes against a proposal
and broker non-votes will have no effect on the vote.
1.
I. ELECTION OF DIRECTORS
We have a staggered board of directors, divided into three classes. One
class is elected annually to serve for three years. At the annual meeting, our
stockholders will be entitled to elect three Class II directors for terms of
three years or until their successors are elected and qualified. Each of the
nominees for election as Class II directors are incumbent directors.
The proxy provides instructions for voting for all director nominees or
for withholding authority to vote for one or more director nominees. Unless
instructed to the contrary, the persons acting under the proxy which we are
soliciting will vote for the nominees listed below. In the event, however, that
any nominee shall be unable to serve, which is not now contemplated, the proxy
holders reserve the right to vote at the annual meeting for a substitute
nominee.
Information About Directors and Nominees
Set forth below is information, current as of March 3, 2003, concerning
the nominees for election and for the other directors whose terms of office will
continue after the meeting, including the age, year first elected a director and
business experience of each during the previous five years. Unless otherwise
indicated, each person has held the positions shown for at least five years. The
three nominees, if elected at the annual meeting, will serve as Class II
directors for three-year terms, expiring in 2006. We recommend that you vote
your shares FOR all three nominees.
NOMINEES
Name Position with UnionBancorp
(Age) Director Since and Principal Occupation
----- -------------- ------------------------
Class II
(term expires 2006)
Robert J. Doty 1996 Director of UnionBancorp; Chairman
(Age 75) of Prairie Bancorp, Inc.
(1989-1996); Consultant, Farm
Management
Charles J. Grako 2000 Director of UnionBancorp; President
(Age 49) (since 1999) and Chief Executive
Officer (since 2000) of
UnionBancorp; Chief Financial
Officer of UnionBancorp (1990-2000)
I. J. Reinhardt, Jr. 1991 Director of UnionBancorp; Director
(Age 65) and General Manager, St. Louis
Beverage Company
2.
CONTINUING DIRECTORS
Name Position with UnionBancorp
(Age) Director Since and Principal Occupation
----- -------------- ------------------------
Class I
(term expires 2005)
Richard J. Berry 1985 Director of UnionBancorp; Attorney,
(Age 50) Myers, Berry, O'Conor & Kuzma, Ltd.
Walter E. Breipohl 1993 Director of UnionBancorp; Owner,
(Age 49) Kaszynski/BreipohlRealtors/
Developers
John A. Trainor 1985 Director of UnionBancorp; Chairman
(Age 72) of UnionBancorp (2000-2002); Owner,
Trainor Grain & Supply Company,
Inc.
Class III
(term expires 2004)
Dennis J. McDonnell 2000 Chairman of the Board (since 2002)
(Age 60) and Director of UnionBancorp;
Chairman of McDonnell Investment
Management, LLC (2001-present);
Director of Global Decisions Group;
President and Chief Operating
Officer of Van Kampen Investment
Advisory Corporation (1983-2000)
John A. Shinkle 1997 Director of UnionBancorp; Executive
(Age 51) Vice President and Director,
Synovus Securities, Inc.
(1986-present)
Scott C. Sullivan 1996 Director of UnionBancorp; Attorney,
(Age 48) Williams & McCarthy
All of our directors will hold office for the terms indicated, or until
their respective successors are duly elected and qualified. There are no
arrangements or understandings between UnionBancorp and any person pursuant to
which any director has been selected. No member of the board of directors is
related to any other member of the board of directors.
Board Committees and Meetings
Our board of directors generally meets on a quarterly basis. The board
of directors met six times during 2002. During 2002, all directors attended at
least 75 percent of the meetings of the board and the committees on which they
served. Our board of directors has standing executive, audit and compensation
committees.
The executive committee is comprised of Messrs. Grako, McDonnell
(Chair), Sullivan and Trainor. The executive committee meets on an as needed
basis and exercises the power of the board of directors between board meetings.
This committee met three times in 2002.
The audit committee recommends independent auditors to the board,
reviews the results of the auditors' services, reviews with management and the
internal auditor the systems of internal control and internal audit reports and
3.
seeks to assure that our books and records are kept in accordance with
applicable accounting principles and standards. The audit committee charter,
which sets forth the duties and responsibilities of the committee, was attached
as an exhibit to the proxy statement for the 2001 Annual Meeting of
Stockholders. The members of the audit committee are Messrs. Reinhardt (Chair),
Berry and Doty. During 2002, the audit committee met four times.
The compensation committee establishes compensation and benefits for
the chief executive officer and reviews and recommends compensation and benefits
for the other executive officers and employees of UnionBancorp and our
subsidiaries. The committee also administers and oversees our stock-based
incentive compensation plans. The members of the compensation committee are
Messrs. Shinkle (Chair), Breipohl, McDonnell and Lansford (ex officio). The
compensation committee met three times in 2002.
Compensation of Directors
Each of our directors was paid a fee of $1,000 for each board meeting
attended and $250 for each committee meeting attended. In addition, each
director was paid an annual retainer of $2,500. Each of our directors may also
receive an annual grant of options to purchase shares of common stock under the
UnionBancorp, Inc. 1993 Stock Option Plan. The UnionBancorp, Inc. 1993 Stock
Option Plan provides for annual formula grants to each of our directors of
options to purchase shares of common stock with an exercise price of not less
than 75% of the then current market price of the common stock on the date of the
grant. Such options become exercisable over five years. During 2002, each
director was granted options to purchase 3,750 shares of common stock at a price
of $14.25 per share and 2,500 shares of common stock at a price of $15.09 per
share. Beginning in 2003, directors will be eligible to receive an annual grant
of options to purchase shares of common stock under the UnionBancorp, Inc. 2003
Stock Option Plan, if approved. The UnionBancorp, Inc. 2003 Stock Option Plan
will permit directors to purchase shares of common stock at an exercise price of
not less than 100% of the then current market price of the common stock on the
date of the grant.
II. Approval of Stock Option Plan
At the annual meeting, stockholders will be asked to approve the
adoption of the UnionBancorp, Inc. 2003 Stock Option Plan (the "2003 Stock
Option Plan"). The board of directors unanimously adopted the 2003 Stock Option
Plan on December 19, 2002, subject to stockholder approval. Awards of stock
options may not be granted after December 19, 2012. The following summary is
subject to and limited in its entirety by the terms of the 2003 Stock Option
Plan, the complete text of which is included as Exhibit A to this proxy
statement.
The aggregate number of shares of the Company's common stock that may
be issued and outstanding pursuant to the exercise of options under the Plan
(the "Option Pool") will not exceed 200,000 shares. Shares of the Company's
common stock which would have been issued pursuant to the exercise of a stock
option, but are withheld as payment of the option price may be added back into
the Option Pool and reissued. Common shares covered by terminated and expired
options may also be added back to the Option Pool. In the event of any change in
the outstanding common shares of the Company as a result of a merger,
reorganization, stock split, reverse stock split, stock dividend,
recapitalization, combination, reclassification, appropriate proportionate
adjustments will be made to both the terms of the Plan and any awards granted
under the Plan which are determined on a per share basis, including, but not
limited to, the amount of common shares in the Option Pool, the exercise price,
and number of common shares associated with an outstanding option. No such
adjustments will be required by reason of the issuance or sale by the Company
for cash or other consideration of additional shares of the Company's common
stock or securities convertible into or exchangeable for shares of the Company's
common stock.
4.
Purpose and Eligibility
The purpose of the Plan is to advance the interests of the Company and
its stockholders by helping the Company and its subsidiaries attract and retain
the services of highly qualified employees, officers and directors, upon whose
judgment, initiative and efforts the Company is substantially dependent, and to
provide those persons with further incentives to advance the interests of the
Company. The Plan is also established with the objective of encouraging stock
ownership by such employees, officers and directors and aligning their interests
with those of stockholders.
The objectives of the Plan will be accomplished by the granting of
stock option awards and stock appreciation rights awards to selected key
employees, officers and directors. Key employees and officers selected to
participate in the Plan may be eligible for the grant of incentive stock options
("ISOs"), non-qualified stock options ("NSOs") and Stock Appreciation Rights
("SARs"). Directors who are not also employees of the Company or a subsidiary of
the Company shall only be eligible for the grant of NSOs and SARs.
Eligible participants are defined in the Plan to mean employees,
officers or directors of the Company or its subsidiaries. Eligible participants
may be granted ISOs (except in the case of directors who are not also employees
of the Company or a subsidiary of the Company), NSOs or SARs under the Plan if
so selected by the Committee. Approximately 20 persons qualify as eligible
participants at this time. The Committee currently anticipates that up to
approximately 20 employees may be awarded stock option grants or stock
appreciation rights under the Plan in 2003. With respect to ISOs only, this
definition does not include persons who have been on leave of absence for
greater than 90 days, unless re-employment is guaranteed by law or contract.
Existing Equity Compensation Plans
The Company currently maintains the UnionBancorp, Inc. 1993 Stock
Option Plan (the "1993 Stock Option Plan"), which the Company's Board of
Directors adopted on February 18, 1993 and the stockholders of the Company
approved on April 12, 1993. The following table provides information regarding
the number of shares of common stock subject to each of these plans as well as
information regarding outstanding options to purchase the Company's common stock
under the plans as of December 31, 2002.
Equity Compensation Plan Information (1)
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Plan category Number of securities to Weighted-average Number of securities remaining
be issued upon exercise exercise price of available for future issuance under
of outstanding options, outstanding options, equity compensation plans
warrants and rights warrants and rights (excluding securities in column (a))
(a) (b) (c)
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Equity compensation 338,099 $ 12.33 109,794
plans approved by
stockholders
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Equity compensation
plans not approved by 22,450 $ 16.06 9,250
stockholders (2)
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Total 360,549 $ 12.57 119,044
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5.
(1) This table does not include any shares that may become issuable under the
2003 Stock Option Plan following stockholder approval. The Board of Directors
has not granted any options to purchase shares of common stock under the 2003
Stock Option Plan.
(2) In 1999, the Company adopted the UnionBancorp, Inc. Non-qualified Stock
Option Plan ("the 1999 Option Plan"), a broadly based compensation plan. Under
the 1999 Option Plan, non-qualified options may be granted to employees and
eligible directors of the Company and its subsidiaries to purchase the Company's
common stock at 100% of the fair market value on the date the option is granted.
The Company has authorized 50,000 shares for issuance under the 1999 Option
Plan. During 1999, 40,750 of these shares were granted and are exercisable in
three years. The options have an exercise period of ten years from the date of
grant.
Administration of 2003 Stock Option Plan
The UnionBancorp, Inc. Stock Option Plan Administrative Committee (the
"Committee) of the Board of Directors of the Company, provided that it is
comprised solely of Non-Employee Directors, shall generally serve as the
administrative committee for the 2003 Stock Option Plan and the Board of
Directors of the Company shall have the authority to independently review and
approve all decisions made by the Committee. The Committee may delegate such
powers or duties to employees of the Company or its subsidiaries, as it deems
appropriate. The Company's Board of Directors may from time-to-time remove
members from the Committee and appoint their successors.
The Committee or the Board of Directors of the Company, as the case may
be, will have full and final authority in its discretion, at any time subject
only to the express terms, conditions and other provisions of the Company's
articles of incorporation, bylaws and the 2003 Stock Option Plan, and the
specific limitations on such discretion set forth in the 2003 Stock Option Plan:
1. to select and approve the persons to whom options will be granted under
the 2003 Stock Option Plan from among the eligible participants,
including the number of options and the amount of common stock
available for purchase under such options so granted to each person;
2. to determine the period or periods of time during which options may be
exercised or become exercisable, the option price and the duration of
such options, the date on which options are granted, and other matters
to be determined by the Committee in connection with specific option
grants and option agreements as specified under the 2003 Stock Option
Plan;
3. to select and approve the persons to whom SARs will be granted under
the 2003 Stock Option Plan from among the eligible participants and the
terms of the SARs; and
4. to interpret the 2003 Stock Option Plan, to prescribe, amend and
rescind rules and regulations relating to the 2003 Stock Option Plan,
and to make all other determinations necessary or advisable for the
operation and administration of the 2003 Stock Option Plan.
Except as otherwise provided in the 2003 Stock Option Plan, the
Committee will designate any option granted as either an ISO or as an NSO (as
such terms are defined in the 2003 Stock Option Plan). To the extent that the
fair market value of common stock (as defined in the 2003 Stock Option Plan),
determined at the time the option is granted, with respect to which all ISOs are
exercisable for the first time by any individual during any calendar year
(pursuant to the 2003 Stock Option Plan and all other plans of the Company
and/or its subsidiaries) exceeds $100,000, such option will be treated as an
NSO.
Options and SARs will be deemed granted under the 2003 Stock Option
Plan only upon the execution and delivery of an option agreement by the option
holder and a duly authorized officer of the Company. Options and SARs will not
be deemed granted under the 2003 Stock Option Plan merely upon the authorization
of such grant by the Committee.
6.
Amendment and Termination
The Committee may amend, and the Board of Directors of the Company may
suspend or discontinue the 2003 Stock Option Plan at any time, provided that:
(i) no such action may, without the approval of the stockholders of the Company,
materially increase (other than by reason of an adjustment as discussed above)
the maximum aggregate number of common stock shares issuable under the 2003
Stock Option Plan, or increase the maximum total number of common stock shares
issuable to an eligible participant under the 2003 Stock Option Plan; (ii) no
action of the Committee will cause ISOs granted under this 2003 Stock Option
Plan not to comply with Section 422 of the Code unless the Committee
specifically declares such action to be made for that purpose; and, (iii) no
action of the Committee shall alter or impair any option previously granted or
awarded under the 2003 Stock Option Plan without the consent of such affected
option holder.
Incentive Stock Options and Non-Qualified Stock Options
The 2003 Stock Option Plan authorizes the grant of both ISOs and NSOs,
both of which are exercisable for shares of the Company's common stock. The
price that an option holder must pay in order to exercise an option may be
stated in terms of a fixed dollar amount, a percentage of fair market value at
the time of the grant, or such other method as determined by the Committee in
its discretion. In no event shall the option price for an ISO or an NSO be less
than the fair market value per share of the Company's common stock on the date
of the option grant. In the case of ISOs granted to persons possessing more than
10 percent of the total combined voting power or value of all classes of stock
of the Company and/or its subsidiaries, the option price will be no less than
110 percent of the fair market value per share of the Company's common stock on
the date of the grant. The fair market value shall mean the average of the mean
between the bid and asked price for the Company's common stock at the close of
trading for the 5 consecutive trading days immediately preceding the date in
question. An option holder may pay all or a portion of the option price, and/or
the tax withholding liability, if applicable, in cash or by certified check or,
such other legal consideration as may be approved by the Committee, in its
discretion.
The period during which an option may be exercised shall be determined
by the Committee at the time of the option grant and, for ISOs, may not extend
more than ten years from the date of the grant, except in the case of ISOs
granted to persons possessing more than 10 percent of the total combined voting
power or value of all classes of stock of the Company and/or its subsidiaries in
which case the option period will not exceed five years from the date of grant.
To the extent not previously exercised, each ISO will terminate upon
the expiration of the option period specified in the option agreement provided,
however that, subject to the discretion of the Committee, each ISO will
terminate, if earlier: (i) ninety days after the date that the option holder
ceases to be an eligible participant for any reason other than cause,
retirement, death or disability; (ii) immediately upon the eligible
participant's termination of employment for cause; (iii) one year after the date
that the option holder ceases to be an eligible participant by reason of such
person's disability; or (iv) five years after the option holder ceases to be an
eligible participant by reason of such person's retirement or death; provided,
however, that the ISO will convert to an NSO if exercised more than three months
after retirement or more than one year following death.
To the extent not previously exercised, each NSO will terminate upon
the expiration of the option period specified in the option agreement provided,
however that, subject to the discretion of the Committee, each NSO will
terminate, if earlier: (i) ninety days after the date that the option holder
ceases to be an eligible participant for any reason other than cause,
retirement, death or disability; (ii) immediately upon the eligible
participant's termination of employment for cause; (iii) one year after the date
that the option holder ceases to be an eligible participant by reason of such
person's disability; or (iv) five years after the option holder ceases to be an
eligible participant by reason of such person's retirement or death.
7.
Stock Appreciation Rights
SARs may be granted in tandem with or with reference to a related stock
option, in which event the grantee may elect to exercise either the option or
the SAR but not both. SARs may also be granted independently of a related
option. In the event of a grant with a related stock option, the SAR shall be
subject to the terms and conditions of the related option. Upon exercise of a
SAR, the grantee shall be paid the excess of the then fair market value of the
number of shares of Company common stock to which the SAR relates over the fair
market value of such number of shares of Company common stock at the date of
grant of the SAR or of the related option, as the case may be. Such excess shall
be paid in cash or in shares of Company common stock having a fair market value
equal to such excess or in such combination thereof as the Committee shall
determine.
Transferability; Dividend and Voting Rights; Withholding
The terms of the 2003 Stock Option Plan provide that ISOs are not
transferable other than by will or the laws of descent and distribution. NSOs
may not be transferred other than by will, the laws of descent and distribution,
or, at the discretion of the Committee, by direct gift to a family member, or
gift to a family trust or family partnership. The terms "family member," "family
trust" and "family partnership" shall have meanings consistent with Section 704
of the Internal Revenue Code of 1986. Options will be exercisable only by the
eligible participant during his or her lifetime, or, with respect to an NSO, by
any of the recipients of the Transfers specifically permitted by the 2003 Stock
Option Plan. Holders of ISOs or NSOs shall have no dividend rights or voting
rights until the options have been exercised.
SARs shall not be transferable, except that SARs may be exercised by
the executor, administrator or personal representative of the deceased grantee
within twelve months of the death of the grantee. SARs may be exercised during
the individual's continued employment with the Company and for a period not in
excess of ninety days following termination of employment
The 2003 Stock Option Plan provides that recipients of options and SARs
pay all required local, state and federal withholding taxes associated with the
exercise of such options in cash or such other consideration as the Committee
permits in its discretion.
Change in Control
In the event of a change in control of the corporation or a liquidation
or dissolution of the corporation, on the effective date of such change in
control, all options shall become fully exercisable.
For purposes of the 2003 Stock Option Plan, a change of control of the
Company shall have occurred:
(i) on the scheduled expiration date of a tender offer by, or
exchange offer by any corporation, person, other entity or
group (other than the Company, any of its wholly-owned
subsidiaries or a qualified retirement plan of the Company or
one of its subsidiaries), to acquire voting stock of the
Company if:
(1) after giving effect to such offer such corporation,
person, or other entity or group would own 50 percent
or more of the voting stock of the Company;
(2) there shall have been filed documents with the
Securities and Exchange Commission in connection
therewith (or, if no such filing is required, public
evidence that the offer has already commenced); and
8.
(3) such corporation, person, or other entity or group
has secured all required regulatory approvals to own
or control 50 percent or more of the voting stock of
the Company;
(ii) if the stockholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into
another corporation in a transaction in which neither the
Company nor any of its wholly-owned subsidiaries will be the
surviving corporation, or to sell or otherwise dispose of all
or substantially all of the Company's assets to any
corporation, person, other entity or group (other than the
Company, any of its wholly-owned subsidiaries or a qualified
retirement plan of the Company or one of its subsidiaries),
and such definitive agreement is consummated;
(iii) if any corporation, person, or other entity or group (other
than the Company or any of its wholly-owned subsidiaries)
becomes the beneficial owner (as defined in the Company's
Articles of Incorporation) of stock representing 50 percent or
more of the voting stock of the Company; or
(iv) if during any period of two consecutive years continuing
directors cease to comprise a majority of the Company's Board
of Directors.
Certain Federal Income Tax Consequences
The following summary generally describes the principal federal (and
not state and local) income tax consequences of awards granted under the 2003
Stock Option Plan. The summary is general in nature and is not intended to cover
all tax consequences that may apply to a particular employee or to the Company.
The provisions of the Internal Revenue Code of 1986, as amended (the "Code") and
regulations thereunder relating to these matters are complicated and their
impact in any one case may depend upon the particular circumstances.
The discussion of federal income tax consequences set forth below is
included for informational purposes only. The discussion is based on currently
existing provisions of the code, existing or proposed treasury regulations
thereunder and current administrative rulings and court decisions. All of the
foregoing are subject to change, and any such change could affect the continuing
validity of this discussion. Each participant in the 2003 Stock Option Plan
should consult his or her tax advisor regarding specific tax consequences
including the application and effect of state and local tax laws.
Incentive Stock Options. ISOs granted under the 2003 Stock Option Plan
are intended to qualify as incentive stock options under Section 422 of the
Code. Pursuant to Section 422, the grant and exercise of an ISO generally will
not result in taxable income to the option holder (with the possible exception
of alternative minimum tax liability) if the option holder does not dispose of
common stock received upon exercise of such option within one year after the
date of exercise and two years after the date of grant (either type of
disposition hereinafter referred to as a "Disqualifying Disposition"), and if
the option holder has continuously been an eligible participant from the date of
grant to three months before the date of exercise (or 12 months in the event of
death or disability) (hereinafter referred to as the "Employment Requirement").
The Company will not be entitled to a deduction for income tax purposes in
connection with the grant or exercise of an ISO. Additionally, the Company will
not be entitled to a deduction at the time common stock acquired pursuant to an
ISO are disposed of, provided that the option holder has satisfied the
Employment Requirement and the disposition is not a Disqualifying Disposition.
Disposition of common stock acquired pursuant to an ISO, except in the
case of a Disqualifying Disposition, will result in long-term capital gain or
loss taxation of the option holder on the difference between the amount realized
9.
upon disposition and the option price. An option holder who, in a Disqualifying
Disposition, disposes of common stock acquired pursuant to an ISO, will be
required to notify the Company and will immediately recognize the gain on the
disposition as ordinary income. In the event of a Disqualifying Disposition, the
Company will be entitled to a deduction in the amount of income recognized by
the option holder.
Pursuant to the Code and the terms of the 2003 Stock Option Plan, the
Committee will designate all options granted under the 2003 Stock Option Plan as
either ISOs or NSOs. To the extent that the fair market value of the Company's
common stock (determined at the time an option is granted) with respect to which
all ISOs are exercisable for the first time by any individual during any
calendar year exceeds $100,000, such option shall be treated for all purposes
under the 2003 Stock Option Plan as an NSO.
Non-Qualified Stock Options. For NSOs, or ISOs which have converted to
NSOs for any reason, the difference between the market value of the Company's
common stock on the date of exercise and the option price will constitute
taxable ordinary income to the option holder on the date of exercise. The
Company will be entitled to a deduction in the same year in an amount equal to
the income taxable to the option holder. The option holder's basis in shares of
the Company's common stock acquired upon exercise of an option will equal the
option price plus the amount of income taxable at the time of exercise. Any
subsequent disposition of such the Company's common stock by the option holder
will be taxed as a capital gain or loss to the option holder, and will be
long-term capital gain or loss if the option holder has held such Company common
stock for more than one year at the time of sale.
Stock Appreciation Rights. Upon the exercise of a SAR, the excess of
the then fair market value of the number of shares of Company common stock to
which the SAR relates over the fair market value of such number of shares of
Company common stock at the date of grant of the SAR or of the related option,
as the case may be, will constitute taxable ordinary income to the option holder
on the date of exercise. The Company will be entitled to a deduction in the same
year in an amount equal to the income taxable to the grantee of the SAR. In the
event the SAR grantee receives shares of the Company's common stock upon
exercise of a SAR, the grantee's basis in such stock will equal the amount of
income taxable at the time of exercise. Any subsequent disposition of such the
Company's common stock by the option holder will be taxed as a capital gain or
loss to the option holder, and will be long-term capital gain or loss if the
option holder has held such Company common stock for more than one year at the
time of sale.
Pursuant to the terms of the 2003 Stock Option Plan, the Committee will
require any recipient of common stock upon the exercise of an NSO or a SAR to
pay the Company in cash or in such other form as the Committee may determine in
its discretion, the amount of any tax or other amount required by any
governmental authority to be withheld and paid by the Company to such authority
for the account of such recipient.
Performance-Based Compensation -- Section 162(m) Requirement
The 2003 Stock Option Plan is intended to preserve the Company's tax
deduction for certain awards made under the 2003 Stock Option Plan by complying
with the terms of Section 162(m) of the Code and regulations relating thereto.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" THE APPROVAL OF THE
ADOPTION OF THE 2003 STOCK OPTION PLAN
10.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of our common stock at March 3, 2003, by each person known
by us to be the beneficial owner of more than 5% of the outstanding common
stock, by each director or nominee, by each executive officer named in the
summary compensation table which can be found later in this proxy statement, and
by all of our directors and executive officers as a group.
Name of Individual or Amount and Nature of Percent
Number of Individuals in Group Beneficial Ownership(1)(2) of Class
------------------------------ -------------------------- --------
5% Stockholders
UnionBank, as Trustee for the 496,379 (3) 12.5%
UnionBancorp, Inc. Employee Stock Ownership
Plan ("ESOP")
201 East Main Street
Streator, Illinois 61364
Wayne W. Whalen 797,263 (4) 19.6%
333 W. Wacker Drive, Suite 2100
Chicago, Illinois 60606
Jeffrey L. Gendell 392,300 (5) 9.8%
37 Park Avenue, 9th Floor
New York, New York 10017
Directors and Nominees
Richard J. Berry 44,479 (6) 1.1%
Walter E. Breipohl 26,179 *
Robert J. Doty 8,834 *
Charles J. Grako 47,594 (7) 1.2%
Dennis J. McDonnell 600,920 (8) 14.8%
I.J. Reinhardt, Jr. 21,500 (9) *
John A. Shinkle 10,544 (10) *
Scott C. Sullivan 17,062 (11) *
John A. Trainor 35,089 (12) *
Other Named Executive Officers
Jimmie D. Lansford 35,205 (13) *
Gaylon E. Martin 1,243 (14) *
Kurt R. Stevenson 8,413 (15) *
All directors and executive officers as a group 857,062 21.0%
(12 persons)
-----------------------
* Indicates less than one percent.
(1) The information contained in this column is based upon information
furnished to us by the persons named above and the members of the
designated group. Amounts reported include shares held directly as well
as shares which are held in retirement accounts and shares held by
members of the named individuals' families or held by trusts of which
the named individual is a trustee or substantial beneficiary, with
respect to which shares the respective individual may be deemed to have
sole or shared voting and/or investment power. The nature of beneficial
ownership for shares shown in this column is sole voting and investment
power, except as set forth in the footnotes below. Inclusion of shares
shall not constitute an admission of beneficial ownership or voting and
investment power over included shares.
11.
(2) Amounts shown include shares presently obtainable through the exercise
of options to purchase shares of common stock granted under
UnionBancorp's stock option plan as follows: Mr. Berry - 10,900 shares;
Mr. Breipohl - 14,500 shares; Mr. Doty - 5,850 shares; Mr. Grako -
18,504 shares; Mr. McDonnell - 2,250 shares; Mr. Reinhardt - 12,500
shares; Mr. Shinkle - 5,850 shares; Mr. Sullivan - 5,850 shares; Mr.
Trainor - 14,000 shares; Mr. Lansford - 20,802; Mr. Martin - 815 shares
and Mr. Stevenson - 3,061 shares. Option holders have the sole power to
exercise their respective options and would also be entitled to
exercise sole voting and investment power over the shares issued upon
the exercise of such options.
(3) All of the shares held by the employee stock ownership plan are
allocated to particular participants' accounts and over which shares
the employee stock ownership plan trustee has shared voting and no
investment power over such shares.
(4) As reported to the Securities and Exchange Commission on Schedule Form
4 dated August 30, 2002. In addition, Mr. Whalen's wife, Paula Wolff,
and WPW Associates, L.P., a family limited partnership, were also named
as parties sharing voting and investment power over such shares. The
amount above also includes approximately 86,181.5 shares which are
issuable upon the conversion of 1,381 shares of UnionBancorp, Inc.
convertible preferred stock held by Mr. Whalen.
(5) As reported to the Securities and Exchange Commission on a Schedule 13G
dated February 7, 2003. Includes 362,000 shares allocated to Tontine
Financial Partners, L.P. and 30,300 shares allocated to Tontine
Overseas Associates, L.L.C., over which Mr. Gendell has shared voting
and investment power over such shares.
(6) Includes 3,000 shares held individually by Mr. Berry's spouse and
11,100 shares held in trusts for which Mr. Berry is a co-trustee, over
which shares Mr. Berry has shared voting and investment power.
(7) Includes 2,500 shares held by Mr. Grako jointly with his spouse, over
which shares Mr. Grako has shared voting and investment power. Also
includes 23,101 shares allocated to Mr. Grako under the employee stock
ownership plan.
(8) Includes shares held jointly by Mr. McDonnell and his wife over which
voting and dispositive power is shared. Also includes shares held in
trust for which Mr. McDonnell is trustee. The amount above also
includes approximately 86,181.5 shares which are issuable upon the
conversion of 1,381 shares of UnionBancorp, Inc. convertible preferred
stock held by Mr. McDonnell. Mr. McDonnell's address is 815 Jackson
Avenue, River Forest, Illinois 60305.
(9) Includes 6,000 shares held by Mr. Reinhardt jointly with his spouse,
over which shares Mr. Reinhardt has shared voting and investment power.
(10) Includes 400 shares held by members of Mr. Shinkle's family. Mr.
Shinkle has no voting or investment power over 100 of such shares and
has shared voting and investment power over the remaining 300 shares.
Also includes 2,515 shares held in trust for which Mr. Shinkle serves
as trustee. Mr. Shinkle also has voting and investment power over 700
shares held in an investment club.
(11) Includes 1,660 shares held by Mr. Sullivan jointly with his spouse and
1,000 shares held by members of Mr. Sullivan's family. Mr. Sullivan has
shared voting and investment power over the 2,660 shares.
(12) Includes 6,690 shares held solely by Mr. Trainor's spouse, over which
shares Mr. Trainor has no voting or investment power.
(13) Includes 2,000 shares held by Mr. Lansford jointly with his spouse,
over which shares Mr. Lansford has shared voting and investment power.
Also includes 2,324 shares allocated to Mr. Lansford under the employee
stock ownership plan.
(14) Includes 428 shares allocated to Mr. Martin under the employee stock
ownership plan. Mr. Martin will retire effective April 22, 2003.
(15) Includes 425 shares held by Mr. Stevenson jointly with his spouse, over
which shares Mr. Stevenson has shared voting and investment power. Also
includes 359 shares held by Mr. Stevenson in his 401(k) plan and 4,568
shares allocated to Mr. Stevenson under the employee stock ownership
plan.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that our
executive officers, directors and persons who own more than 10% of our common
stock file reports of ownership and changes in ownership with the Securities and
Exchange Commission. They are also required to furnish us with copies of all
Section 16(a) forms they file. Based solely on our review of the copies of such
forms, and, if appropriate, representations made to us by any reporting person
concerning whether a Form 5 was required to be filed for 2002, we are not aware
that any of our directors, executive officers or 10% stockholders failed to
comply with the filing requirements of Section 16(a) during 2002, except as
follows: Mr. Trainor was late in filing three reports involving five
transactions.
12.
EXECUTIVE COMPENSATION
Cash Compensation
The following table shows the compensation earned for the last three
fiscal years by the chief executive officer and our executive officers whose
2002 salary and bonus exceeded $100,000:
-------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------------------
Long Term
Compensation
Annual Compensation Awards
------------------------------------------
(a) (b) (c) (d) (g) (i)
Securities
Underlying All Other
Name and Options/SARs Compensation
Principal Position Year Salary($) Bonus($) (#)(1) ($)
-------------------------------------------------------------------------------------------------------
Charles J. Grako(2) 2002 $ 205,000 $ 17,938 10,164 $ 22,647 (2)
President and Chief 2001 175,000 -- 5,707 25,511 (2)
Executive Officer 2000 162,648 -- -- 26,234 (2)
-------------------------------------------------------------------------------------------------------
Jimmie D. Lansford(3) 2002 $ 110,000 $ 7,700 5,979 $ 16,891 (3)
Executive Vice President 2001 110,000 -- 3,587 22,310 (3)
2000 102,954 -- -- 19,377 (3)
-------------------------------------------------------------------------------------------------------
Gaylon E. Martin(4) 2002 $ 140,000 $ 9,800 7,120 $ 16,197 (4)
Senior Vice President 2001 119,218 -- -- 4,969 (4)
-------------------------------------------------------------------------------------------------------
Kurt R. Stevenson(5) 2002 $ 110,000 $ 7,700 5,327 $ 7,803 (5)
Vice President and Chief
Financial Officer
-------------------------------------------------------------------------------------------------------
(1) All options vest at a rate of 20% per year on or about each anniversary
of the date of grant.
(2) Mr. Grako was named chief executive officer on June 22, 2000.
Represents the dollar value of allocations under our employee stock
ownership plan in the amounts of $7,911 for 2002, $6,657 for 2001 and
$5,953 for 2000, premiums for split dollar life insurance of $486 for
2002, $404 for 2001 and $678 for 2000, fees for services provided to
our board of directors and director fees for serving on the boards of
various subsidiaries of $8,100 for 2002, $15,050 for 2001, and $16,350
for 2000. In addition, it includes $6,150 of 401(k) matching
contributions in 2002, $3,400 in 2001 and $3,253 for 2000.
(3) Represents the dollar value of allocations under our employee stock
ownership plan in the amount of $4,400 for 2002, $4,308 for 2001 and
$3,768 for 2000, premiums for split dollar life insurance of $891 for
2002 and $802 for 2001, fees for services provided to our board of
directors and director fees for serving on the boards of various
subsidiaries of $8,300 for 2002, $15,000 for 2001 and $13,550 for 2000,
and $3,300 of 401(k) matching contributions in 2002, $2,200 for 2001
and $2,059 for 2000.
(4) We were not required to disclose Mr. Martin's salary information with
respect to his compensation prior to 2001. Represents the dollar value
of allocations under our employee stock ownership plan in the amount of
$5,538 for 2002, premiums for split dollar life insurance of $1,109 for
2002, fees for services provided to our board of directors and director
fees for serving on the board of one subsidiary of $5,350 for 2002 and
$4,400 for 2001 and $4,200 of 401(k) matching contributions in 2002 and
$569 for 2001. Mr. Martin will retire effective April 22, 2003.
(5) We were not required to disclose Mr. Stevenson's salary information
with respect to his compensation prior to 2002. Represents the dollar
value of allocations under our employee stock ownership plan in the
amount of $4,351 for 2002, premiums for split dollar life insurance of
$152 for 2002 and $3,300 of 401(k) matching contributions in 2002.
13.
Stock Option Information
The following table sets forth certain information concerning the
number and value of stock options granted in the last fiscal year to the
individuals named above in the summary compensation table:
------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
------------------------------------------------------------------------------------------------------------
Individual Grants
------------------------------------------------------------------------------------------------------------
Potential realizable value
at assumed annual rates of
stock price appreciation
for option term
------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options
Options Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#)(1) Fiscal Year ($/Sh) Date 5%($) 10%($)
------------------------------------------------------------------------------------------------------------
Charles J. Grako 5,707 (2) 22% $ 14.25 02/20/12 $ 51,144 $ 129,611
4,457 (3) 19% $ 15.09 12/19/12 $ 42,297 $ 107,189
------------------------------------------------------------------------------------------------------------
Jimmie D. Lansford 3,587 (2) 14% $ 14.25 02/20/12 $ 32,146 $ 81,464
2,392 (3) 10% $ 15.09 12/19/12 $ 22,700 $ 57,527
------------------------------------------------------------------------------------------------------------
Gaylon E. Martin 4,076 (2) 16% $ 14.25 02/20/12 $ 36,528 $ 92,569
3,044 (3) 13% $ 15.09 12/19/12 $ 28,888 $ 73,207
------------------------------------------------------------------------------------------------------------
Kurt R. Stevenson 2,935 (2) 11% $ 14.25 02/20/12 $ 26,303 $ 66,656
2,392 (3) 10% $ 15.09 12/19/12 $ 22,700 $ 57,527
------------------------------------------------------------------------------------------------------------
(1) All options vest at a rate of 20% per year on or about each anniversary
of the date of grant.
(2) Represents qualified options granted on February 20, 2002.
(3) Represents qualified options granted on December 19, 2002.
14.
The following table sets forth certain information concerning the
exercisable and nonexercisable stock options at December 31, 2002 held by the
individuals named in the summary compensation table.
---------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTIONS VALUES
---------------------------------------------------------------------------------------------------------------------
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired on Options at FY-End In-the-Money Options at
Name Exercise Value Realized (#)(d) FY-End ($)(e)
(#)(a) (#)(b) ($)(c) Exercisable Unexercisable Exercisable Unexercisable
---------------------------------------------------------------------------------------------------------------------
Charles J. Grako -- -- 14,521 17,330 $ 49,624 $ 22,025
---------------------------------------------------------------------------------------------------------------------
Jimmie D. Lansford -- -- 18,167 10,649 $ 82,406 $ 13,812
---------------------------------------------------------------------------------------------------------------------
Gaylon E. Martin -- -- -- 7,120 $ -- $ 4,207
---------------------------------------------------------------------------------------------------------------------
Kurt R. Stevenson -- -- 1,687 7,975 $ 2,745 $ 11,192
---------------------------------------------------------------------------------------------------------------------
Employment Agreements and Other Arrangements
We are not a party to any employment agreements with our executive
officers, except for the employment agreement entered into on August 22, 2001
with Paul R. Tingley, President and CEO of UnionFinancial Services & Trust
Company. The employment agreement with Mr. Tingley provides that beginning
January 2002, UnionBancorp, Inc. will pay Mr. Tingley a minimum of $10,000
monthly. Mr. Tingley's total compensation, including bonuses, is valued at
$150,000 annually. Mr. Tingley is entitled to other customary employee benefits
provided by UnionBancorp. Mr. Tingley's employment agreement terminates on
August 22, 2004.
Compensation Committee Interlocks and Insider Participation
During 2002, the members of the compensation committee were Messrs.
Shinkle (Chair), Breipohl, McDonnell and Lansford (ex officio). None of these
individuals was an officer or employee of UnionBancorp or any of our
subsidiaries during 2002, and none of these individuals is a former officer or
employee of UnionBancorp or any of our subsidiaries, except for Mr. Lansford who
is Executive Vice President, Organizational Development and Planning. Mr.
Lansford did not participate in any decisions pertaining to his compensation.
Board Compensation Committee Report on Executive Compensation
The incorporation by reference of this proxy statement into any
document filed with the Securities and Exchange Commission by UnionBancorp shall
not be deemed to include the following report unless the report is specifically
stated to be incorporated by reference into such document.
The compensation committee of our board of directors is comprised of
three independent directors and is responsible for recommendations to the board
of directors for compensation of executive officers of UnionBancorp and our
subsidiaries. In determining compensation, the following factors are generally
taken into consideration:
o the performance of the executive officers in achieving our
short and long-term goals;
o payment of compensation commensurate with the ability and
expertise of the executive officers; and
15.
o payment of compensation that is competitive with similar
companies.
The committee considers the foregoing factors, as well as others, in
determining compensation. There is no assigned weight given to any of these
factors.
Additionally, the compensation committee considers various benefits,
such as our employee stock ownership plan, 401(k) plan and the stock option
plan, together with perquisites in determining compensation. The committee
believes that the benefits provided through the stock-based plans more closely
tie the compensation of the officers to the interests of the stockholders and
provide significant additional performance incentives for the officers which
directly benefit the stockholders through an increase in the stock value.
Annually, the compensation committee evaluates four primary areas of
performance in determining the chief executive officer's level of compensation.
These areas are:
o long-range strategic planning and implementation;
o our financial performance;
o our compliance with regulatory requirements and relations with
regulatory agencies; and
o the individual's effectiveness of managing relationships with
stockholders and the board of directors.
When evaluating our financial performance, the committee considers
profitability, asset growth and risk management. The primary evaluation criteria
are considered to be essential to our long-term viability and are given equal
weight in the evaluation. Finally, the committee reviewed compensation packages
of peer institutions, as well as compensation surveys provided by independent
third parties, to ensure that the chief executive officer's compensation is
competitive and commensurate with his level of performance.
Compensation Committee:
John A. Shinkle (Chair)
Walter E. Breipohl
Dennis J. McDonnell
Jimmie D. Lansford (ex officio)
16.
Stockholder Return Performance Presentation
The incorporation by reference of this proxy statement into any
document filed with the Securities and Exchange Commission by UnionBancorp shall
not be deemed to include the following performance graph and related information
unless such graph and related information are specifically stated to be
incorporated by reference into such document.
The following graph shows a comparison of cumulative total returns for
UnionBancorp, the Nasdaq Stock Market (US Companies) and an index of SNL Midwest
Bank Stocks for the five-year period beginning January 1, 1998 and ending on
December 31, 2002. The graph was prepared at our request by SNL Securities,
Charlottesville, Virginia.
COMPARISON OF CUMULATIVE TOTAL RETURN
(ASSUMES $100 INVESTED ON JANUARY 1, 1998)
[GRAPHIC CHART OMITTED]
--------------------------------------------------------------------------------------------------
Period Ending
--------------------------------------------------------------------------------------------------
Index 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
--------------------------------------------------------------------------------------------------
UnionBancorp, Inc. 100.00 77.23 66.46 48.13 67.46 75.27
--------------------------------------------------------------------------------------------------
NASDAQ - Total US * 100.00 140.99 261.48 157.42 124.89 86.33
--------------------------------------------------------------------------------------------------
NASDAQ Bank Index* 100.00 99.36 95.51 108.95 117.97 120.61
--------------------------------------------------------------------------------------------------
SNL Midwest Bank Index 100.00 106.37 83.57 101.20 103.43 99.77
--------------------------------------------------------------------------------------------------
*Source: CRSP, Center for Research in Security Prices, Graduate School of
Business, The University of Chicago 2003.
Used with permission. All rights reserved. crsp.com.
17.
TRANSACTIONS WITH MANAGEMENT
Several of our directors and executive officers (including their
affiliates, families and companies in which they are principal owners, officers
or directors) were loan customers of, and had other transactions with, us and
our subsidiaries in the ordinary course of business. These loans and lines of
credit were made in the ordinary course of business on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for transactions with other persons and did not involve more than the normal
risk of collectibility or present other unfavorable features. During 2002, we
paid approximately $201,193 to the law firm of Myers, Berry, O'Conor & Kuzma,
Ltd. for legal services. Richard J. Berry, a director of UnionBancorp, is a
principal of that firm.
ACCOUNTANT FEES
Audit Fees
Our independent auditor during 2002 was Crowe, Chizek and Company LLP.
The aggregate fees and expenses billed by Crowe Chizek in connection with the
audit of our annual financial statements as of and for the year ended December
31, 2002 and for the required review of our financial information included in
our Form 10-Q filings for the year 2002 was $97,500.
Financial Information Systems Design and Implementation Fees
There were no fees incurred for these services for the year 2002.
All Other Fees
The aggregate fees and expenses billed by Crowe Chizek for all other
services rendered to us for 2002 was $242,480.
The audit committee, after consideration of the matter, does not
believe that the rendering of these services by Crowe Chizek to be incompatible
with maintaining its independence as our principal accountant.
AUDIT COMMITTEE REPORT
The incorporation by reference of this proxy statement into any
document filed with the Securities and Exchange Commission by UnionBancorp shall
not be deemed to include the following report unless the report is specifically
stated to be incorporated by reference into such document.
The audit committee assists the board in carrying out its oversight
responsibilities for our financial reporting process, audit process and internal
controls. The audit committee also reviews the audited financial statements and
recommends to the board that they be included in our annual report on Form 10-K.
The committee is comprised solely of independent directors, with the exception
of Mr. Berry.
18.
The audit committee has reviewed and discussed our audited financial
statements for the fiscal year ended December 31, 2002 with our management and
Crowe, Chizek and Company LLP, our independent auditors. The committee has also
discussed with Crowe Chizek the matters required to be discussed by SAS 61
(Codification for Statements on Auditing Standards) as well as having received
and discussed the written disclosures and the letter from Crowe Chizek required
by Independence Standards Board Statement No. 1 (Independence Discussions with
Audit Committees). Based on the review and discussions with management and Crowe
Chizek, the committee has recommended to the board that the audited financial
statements be included in our annual report on Form 10-K for the fiscal year
ending December 31, 2002 for filing with the Securities and Exchange Commission.
Audit Committee:
I.J. Reinhardt, Jr. (Chair)
Richard J. Berry
Robert J. Doty
STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
For inclusion in our proxy statement and form of proxy relating to the
2004 annual meeting of stockholders, stockholder proposals must be received by
us on or before November 18, 2003. In order to be presented at such meeting,
notice of the proposal must be received by UnionBancorp on or before March 23,
2004, and must otherwise comply with our bylaws.
"HOUSEHOLDING" OF PROXY MATERIALS
In December of 2000, the Securities and Exchange Commission adopted new
rules that permit companies and intermediaries (e.g., brokers) to satisfy the
delivery requirements for proxy statements, prospectuses and annual reports with
respect to two or more security holders sharing the same address by delivering a
single copy of proxy statements, prospectuses and annual reports, as the case
may be, addressed to those security holders. This process, which is commonly
referred to as "householding," potentially means extra convenience for security
holders and cost savings for companies.
This year, a number of brokers with accountholders who are UnionBancorp
stockholders will be "householding" our proxy materials. As indicated in the
notice previously provided by these brokers to UnionBancorp stockholders, a
single proxy statement and annual report will be delivered to multiple
stockholders sharing an address unless contrary instructions have been received
from an affected stockholder. Once you have received notice from your broker or
the Company that they will be "householding" communications to your address,
"householding" will continue until you are notified otherwise or until you
revoke your consent. If, at any time, you no longer wish to participate in
"householding" and would prefer to receive a separate proxy statement and annual
report, please notify your broker, direct your written request to UnionBancorp,
Inc., Investor Relations, 321 West Main Street, Ottawa, IL 61350 or contact
Investor Relations at (815) 431-2720.
Stockholders who currently receive multiple copies of the proxy
statement and annual report at their address and would like to request
"householding" of their communications should contact their broker or, if a
stockholder is a direct holder of UnionBancorp shares, they should submit a
written request to Computershare Investor Services, the Company's transfer
agent, at 2 North LaSalle Street, Chicago, IL 60602.
19.
OTHER MATTERS
We do not intend to present any other business at the meeting and know
of no other matters which will be presented. However, if any other matters come
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote in accordance with their best judgment on those matters. A
representative of our independent auditors, Crowe, Chizek and Company, LLP, is
expected to attend the annual meeting and will be available to respond to
appropriate questions and to make a statement if he or she so desires.
Your proxy is solicited by the board of directors, and we will pay the
cost of solicitation. In addition to soliciting proxies by use of the mail,
officers, directors and regular employees of UnionBancorp or our subsidiaries,
acting on our behalf, may solicit proxies by telephone, telegraph or personal
interview. We will, at our expense, upon the receipt of a request from brokers
and other custodians, nominees and fiduciaries, forward proxy soliciting
material to the beneficial owners of shares held of record by such persons.
FAILURE TO INDICATE CHOICE
If any stockholder fails to indicate a choice with respect to any of
the proposals on the proxy for the annual meeting, the shares of such
stockholder shall be voted FOR the nominees listed under proposal 1 and FOR
proposal 2.
By Order of the Board of Directors
/s/ CHARLES J. GRAKO
-----------------------
Charles J. Grako
President and
Chief Executive Officer
Ottawa, Illinois
March 17, 2003
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
20.
Exhibit A
UNIONBANCORP, INC.
2003 STOCK OPTION PLAN
----------------------
1. Purpose of the Plan. The Plan is intended to provide a means
whereby key policy-making directors and employees of the Company and its
Subsidiaries may sustain a sense of proprietorship and personal involvement in
the continued development and financial success of the Company, and to encourage
them to remain with and devote their best efforts to the business of the
Company, thereby advancing the interests of the Company and its stockholders.
Accordingly, the Company may permit certain directors and employees to acquire
common stock of the Company or otherwise participate in the financial success of
the Company, on the terms and conditions established herein.
2. Definitions Unless the context otherwise requires, the
following defined terms (together with other capitalized terms defined elsewhere
in this Plan) will govern the construction of this Plan, and of any Stock Option
Agreements entered into pursuant to this Plan:
a. "10% Shareholder" means a person who owns, either directly or
indirectly by virtue of the ownership attribution provisions set forth in
Section 424(d) of the Code at the time he or she is granted an Option, Stock
possessing more than 10% of the total combined voting power or value of all
classes of Stock of the Company and/or of its Subsidiaries.
b. "1933 Act" means the federal Securities Act of 1933, as
amended.
c. "1934 Act" means the federal Securities Exchange Act of 1934,
as amended.
d. "Board" means the Board of Directors of the Company.
e. "Cause" means (i) the Participant's material breach of an
employment agreement, if any, between the Participant and the Company or one of
its Subsidiaries, (ii) the Participant's breach of a Confidential Information
Agreement between the Participant and the Company or one of its Subsidiaries,
(iii) the breach of any non-disclosure or non-compete agreement between the
Participant and the Company or one of its Subsidiaries, or (iv) the Participant
engages in illegal conduct or misconduct which materially and demonstrably
injures the Company. For purposes of determining whether "Cause" exists, no act
or failure to act, on the Participant's part shall be considered "willful,"
unless it is done, or omitted to be done, by the Participant in bad faith or
without reasonable belief by the Participant that his action or omission was in
the best interests of the Company.
f. A "Change in Control" of the Company shall have occurred:
(i) on the scheduled expiration date of a tender offer
by, or exchange offer by any corporation, person,
other entity or group (other than the Company, any of
its wholly owned Subsidiaries or a qualified
retirement plan of the Company or one of its
Subsidiaries, or one or more persons who are
beneficial owners, as determined under Rule 13d-4
under the 1934 Act , of 10% or more of the Voting
Stock of the Company on the date on which the Plan is
approved by the Board), to acquire Voting Stock of
the Company if:
21.
Exhibit A
(1) after giving effect to such offer such
corporation, person, other entity or group
would own 50% or more of the Voting Stock of
the Company;
(2) there shall have been filed documents with
the Securities and Exchange Commission in
connection therewith (or, if no such filing
is required, public evidence that the offer
has already commenced); and
(3) such corporation, person, other entity or
group has secured all required regulatory
approvals to own or control 50% or more of
the Voting Stock of the Company;
(ii) if the shareholders of the Company approve a
definitive agreement to merge or consolidate the
Company with or into another corporation in a
transaction in which neither the Company nor any of
its wholly owned Subsidiaries will be the surviving
corporation, or to sell or otherwise dispose of all
or substantially all of the Company's assets to any
corporation, person, other entity or group (other
than the Company or any of its wholly owned
Subsidiaries), and such definitive agreement is
consummated; or
(iii) if any corporation, person, other entity or group
(other than the Company, any of its wholly owned
Subsidiaries or a qualified retirement plan of the
Company or one of its Subsidiaries, or one or more
persons who are beneficial owners, as determined
under Rule 13d-4 under the 1934 Act , of 10% or more
of the Voting Stock of the Company on the date on
which the Plan is approved by the Board ) becomes the
beneficial owner, as determined under Rule 13d-4
under the 1934 Act, of Stock representing 50% or more
of the Voting Stock of the Company.
g. "Code" means the Internal Revenue Code of 1986, as amended
(references herein to Sections of the Code are intended to refer to Sections of
the Code as enacted at the time of this Plan's adoption by the Board and as
subsequently amended, or to any substantially similar successor provisions of
the Code resulting from recodification, renumbering or otherwise).
h. "Committee" means the UnionBancorp, Inc. Stock Option Plan
Administrative Committee of the Company's Board of Directors. The Committee
shall be comprised solely of not less than 3 Non-Employee Directors. In the
alternative, the Board of Directors may, in its discretion, choose to act as the
Committee for the Plan and the Committee, whether or not comprised solely of
Non-Employee Directors shall act as an advisory committee.
i. "Company" means UnionBancorp, Inc., an Illinois corporation
and its successor or successors.
j. "Disability" has the same meaning as "permanent and total
disability," as defined in Section 22(e)(3) of the Code.
k. "Disqualifying Disposition" means a disposition, as defined in
Section 424(c)(1) of the Code, of Option Stock acquired pursuant to an ISO,
which occurs either:
22.
Exhibit A
(i) within two years after the underlying Option is
granted; or
(ii) within one year after the underlying Option is
exercised.
Under Section 424(c)(1) of the Code, the term "disposition" includes a
sale, exchange, gift, or a transfer of legal title, but does not include (A) a
transfer from a decedent to an estate or a transfer by bequest or inheritance,
(B) an exchange to which Section 354, 355, 356, or 1036 (or so much of Section
1031 as relates to Section 1036) applies, or (C) a mere pledge or hypothecation.
l. "Eligible Persons" means persons who, at a particular time,
are employees, officers or members of the Board of Directors of the Company or
its Subsidiaries. With respect to ISOs only, this definition does not include
persons who have been on leave of absence for greater than 90 days, unless
re-employment is guaranteed by law or contract.
m. "Fair Market Value" means, with respect to Option Stock and as
of the date in question, the market price per share of such Stock determined by
the Committee, consistent with the requirements of Section 422 of the Code and
to the extent consistent therewith:
(i) if the Stock was principally traded on an exchange or
market in which prices are reported on a bid and
asked basis, the average of the mean between the bid
and asked price for the Stock at the close of trading
for the 5 consecutive trading days immediately
preceding the date in question;
(ii) if the Stock was principally listed on a national
securities exchange, the closing price of the Stock
for the trading day immediately preceding the date in
question as reported in the Wall Street Journal, or
if there is no closing price reported on such day,
the reporting price on the next previous trading day
for which a closing price is reported in the Wall
Street Journal; or
(iii) if neither of the foregoing provisions is applicable,
then the Committee shall determine Fair Market Value
in good faith on such basis as it deems appropriate;
in the case of ISOs, "good faith" shall be determined
in accordance with Section 422 of the Code.
n. "ISO" or "Incentive Stock Option" means an Option, which is
subject to certain holding requirements and tax benefits, and which qualifies as
an "incentive stock option," as defined in Section 422 of the Code.
o. "New Employer" shall mean the Participant's employer, or the
parent or a Subsidiary of such employer, immediately following a Change in
Control.
p. "Non-Employee Director" means a director who:
(i) is not currently an officer of the Company or its
Subsidiaries, or otherwise currently employed by the
Company or its Subsidiaries;
(ii) does not receive compensation, either directly or
indirectly, from the Company or its Subsidiaries, for
services rendered as a consultant or in any capacity
other than as a director, except for an amount that
does
23.
Exhibit A
not exceed the dollar amount for which disclosure
would be required in the Company's proxy statement;
(iii) does not possess an interest in any other transaction
for which disclosure would be required in the
Company's proxy statement; and
(iv) is not engaged in a business relationship for which
disclosure would be required in the Company's proxy
statement.
q. "NSO" means any Option granted under this Plan whether
designated by the Committee as a "non-qualified stock option," a "non-statutory
stock option" or otherwise, other than an Option designated by the Committee as
an ISO. The term "NSO" also includes any Option designated by the Committee as
an ISO but which, for any reason, fails to qualify as an ISO pursuant to Section
422 of the Code and the rules and regulations thereunder.
r. "Option" means a right granted pursuant to this Plan entitling
the Participant to acquire shares of Stock issued by the Company.
s. "Option Agreement" means an agreement between the Company and
an Eligible Person to evidence the terms and conditions of the issuance of
Options hereunder.
t. "Option Price" with respect to any particular Option means the
exercise price at which the Participant may acquire each share of the Option
Stock called for under such Option.
u. "Option Stock" means Stock issued or issuable by the Company
pursuant to the valid exercise of an Option.
v. "Participant" means an Eligible Person to whom an Option is
granted hereunder, and any transferee of such Option received pursuant to a
Transfer authorized under this Plan.
w. "Plan" means this UnionBancorp, Inc. 2003 Stock Option Plan.
x. "Retirement" means the Optionee's voluntary cessation of
employment or service as a director following the attainment of age 55 and the
completion of 7 years of service.
y. "SARs" shall mean stock appreciation rights entitling the
grantee to receive cash or Shares having a fair market value equal to the
appreciation in market value of a stated number of Shares from the date of
grant, or in the case of rights granted in tandem with or by reference to an
option granted prior to the grant of such rights, from the date of grant of the
related option to the date of exercise.
z. "Stock" means shares of the Company's common stock.
aa. "Subsidiary" has the same meaning as "Subsidiary Corporation"
as defined in Section 424(f) of the Code.
bb. "Tax Withholding Liability" means all federal and state income
taxes, social security tax, medicare tax and any other taxes applicable to the
income arising from a transaction involving Options required by applicable law
to be withheld by the Company. The Committee shall retain the discretion to
determine the amount of Tax Withholding Liability.
24.
Exhibit A
cc. "Transfer," with respect to Option Stock, includes, without
limitation, a voluntary or involuntary sale, assignment, transfer, conveyance,
pledge, hypothecation, encumbrance, disposal, loan, gift, attachment or levy of
such Stock, including without limitation an assignment for the benefit of
creditors of the Participant, a transfer by operation of law, such as a transfer
by will or under the laws of descent and distribution, an execution of judgment
against the Option Stock or the acquisition of record or beneficial ownership
thereof by a lender or creditor, a transfer pursuant to any decree of divorce,
dissolution or separate maintenance, any property settlement, any separation
agreement or any other agreement with a spouse (except for estate planning
purposes) under which a part or all of the shares of Option Stock are
transferred or awarded to the spouse of the Participant or are required to be
sold, or a transfer resulting from the filing by the Participant of a petition
for relief, or the filing of an involuntary petition against such Participant,
under the bankruptcy laws of the United States or of any other nation.
dd. "Voting Stock" shall mean those shares of the Company Stock
entitled to vote generally in the election of directors.
3. Administration of the Plan. Subject to review by the Board,
the Committee shall select the directors and employees from among those eligible
to whom Option Stock shall be sold under the Plan, to establish the number of
such Shares that may be sold to each such director or employee and the time when
certificates for such Option Stock shall be issued, and to prescribe the legend
to be affixed to the certificate representing such Stock. Subject to review by
the Board, the Committee shall also to select the directors and employees from
among those eligible to whom rights to participate in the appreciation of Option
Stock shall be granted. Subject to review by the Board, the Committee shall have
the authority to select the directors and employees from among those eligible to
whom SARs may be granted and the terms of such SARs. The Committee is
authorized, subject to Board approval, to interpret the Plan and may from time
to time adopt such rules, regulations, forms and agreements, not inconsistent
with the provisions of the Plan, as it may deem advisable to carry out the Plan.
The Board shall independently review and approve all decisions made by the
Committee in administering the Plan.
4. Shares Subject to the Plan. Subject to Sections 9 and 10 of
this Plan, the aggregate number of shares of Option Stock that may be issued and
outstanding pursuant to the exercise of Options under this Plan (the "Option
Pool") will not exceed 200,000 shares. The maximum number of shares of Option
Stock which may be subject to one or more awards to a single Eligible Person
shall not exceed 200,000 shares in the aggregate. Shares of Option Stock that
would have been issuable pursuant to Options, but that are no longer issuable
because all or part of those Options have terminated or expired may also be
added back into the Option Pool to be available for issuance.
5. Type of Stock Options. Except as otherwise provided herein,
the Committee will designate any Option granted hereunder either as an ISO or as
an NSO. To the extent that the Fair Market Value of Stock, determined at the
time the Option is granted, with respect to which all ISOs are exercisable for
the first time by any individual during any calendar year (pursuant to this Plan
and all other plans of the Company and/or its Subsidiaries) exceeds $100,000,
such Option will be treated as an NSO.
6. Terms of Stock Option Agreements. Each Option granted pursuant
to this Plan will be evidenced by an Option Agreement between the Company and
the Eligible Person to whom such Option is granted, in form and substance
satisfactory to the Committee in its sole discretion, consistent with this Plan.
Apart from making copies of this Plan and Option Agreements under this Plan
available to the Eligible Person, the Company shall have no obligation to
explain the terms and conditions of the Plan or Option Agreements, including,
not by way of limitation, the terms of vesting, the available methods for
exercising Options and the timing of an Option's expiration. Without limiting
the foregoing, the following terms and conditions will be considered a part of
each Option Agreement (unless otherwise stated therein):
25.
Exhibit A
a. Covenants of Participant. Nothing contained in this Plan, any
Option Agreement or in any other agreement executed in connection with the
granting of an Option under this Plan will confer upon any Participant any right
with respect to the continuation of his or her status as an employee, officer or
director of the Company or its Subsidiaries.
b. Option Vesting Periods. Each Option Agreement will specify the
period or periods of time within which each Option or portion thereof will first
become exercisable (the "Option Vesting Period"). Unless otherwise indicated in
an Option Agreement and unless the Committee shall otherwise determine in the
manner set forth in Section 6(e) below, all Options shall become vested and
exercisable upon the effective date of a Change in Control of the Company.
c. Exercise of the Option.
(i) Mechanics and Notice. Options may be exercised to the
extent exercisable by giving written notice to the
Company specifying the number of Options to be
exercised, the date of the grant of the Option or
Options to be exercised, the Option Price, the
desired effective date of the exercise, the number of
full shares of Option Stock to be retained by the
Participant after exercise, and the method of
payment. Once written notice complying with the
requirements of this subsection is received, the
Committee or its designee shall promptly notify the
Participant of the amount of the Option Price and
withholding taxes due, if either or both is
applicable. Payment of any amounts owing shall be due
immediately upon receipt of such notice.
(ii) Withholding Taxes. As a condition to the issuance of
shares of Option Stock upon exercise of an Option
granted under this Plan, the Participant will pay to
the Company in cash or in such other form as the
Committee may determine in its discretion, the amount
of the Company's Tax Withholding Liability, if any,
associated with such exercise.
d. Payment of Option Price. Each Option Agreement will specify
the Option Price, with respect to the exercise of Option Stock granted
thereunder, which may be stated in terms of a fixed dollar amount, a percentage
of Fair Market Value at the time of the grant, or such other method as
determined by the Committee in its discretion. In no event will the Option Price
for an ISO granted hereunder be less than the Fair Market Value (or, where an
ISO Participant is a 10% Shareholder, one hundred ten percent (110%) of such
Fair Market Value) of the Option Stock at the time such ISO is granted. In no
event will the Option Price for an NSO granted hereunder be less than 100% of
the Fair Market Value of the Options Stock at the time such NSO is granted. The
Option Price will be payable to the Company in United States dollars in cash or
by certified check or, such other legal consideration as may be approved by the
Committee, in its discretion.
e. Alternate Options. Notwithstanding Section 6g, Options shall
not become exercisable upon the effective date of a Change in Control if the
Committee reasonably determines in good faith, prior to the occurrence of a
Change in Control, that such Option shall be honored or assumed, or new rights
substituted therefor (such honored, assumed or substituted option being
hereinafter referred to as an "Alternative Option") by the New Employer,
provided that any such Alternative Option must:
(i) provide the Participant with rights and entitlements
substantially equivalent to or better than the
rights, terms and conditions applicable under such
26.
Exhibit A
Option, including, but not limited to, an option
price, vesting schedule, and terms of payment of the
option price that are as favorable or more favorable
to the Participant.
(ii) have terms and conditions which provide that in the
event that such Participant's employment is
terminated by the New Employer without Cause within
two years following a Change in Control: (1) any
conditions on such Participant's rights to exercise
such Alternative Option shall lapse; or (2) such
Participant shall have the right to surrender such
Alternative Option within 30 days following such
termination in exchange for a payment in cash equal
to the excess of the Fair Market Value of the stock
subject to the Alternative Option over the aggregate
Option Price for the stock subject to the Alternative
Option.
f. Notice of Disqualifying Disposition. In the event of a
Disqualifying Disposition, the Participant will promptly give written notice to
the Company of such disposition including information regarding the number of
shares involved, the exercise price of the underlying Option through which the
shares were acquired and the date of the Disqualifying Disposition.
g. Termination of the Option. Except as otherwise provided
herein, each Option Agreement will specify the period of time, to be determined
by the Committee in its discretion, during which the Option granted therein will
be exercisable, not to exceed ten years from the date of grant (the "Option
Period"); provided that the Option Period will not exceed five years from the
date of grant in the case of an ISO granted to a 10% Shareholder.
(i) Timing of Termination. To the extent not previously
exercised, each Option will terminate upon the
expiration of the Option Period specified in the
Option Agreement; provided, however, that, subject to
the discretion of the Committee, each Option will
terminate, if earlier: (a) ninety days after the date
that the Participant ceases to be an Eligible Person
for any reason other than Cause, death or Disability;
(b) immediately upon the Participant's termination of
employment for Cause; (c) 1 year after the date that
the Participant ceases to be an Eligible Person by
reason of such person's Disability or (d) 5 years
after the Participant ceases to be an Eligible Person
by reason of such person's Retirement or death. In
the case of an ISO, if the Eligible Person or his
beneficiary exercises an Option more than 90 days
following the Eligible Person's Retirement or more
than 1 year following the Eligible Person's death,
then the ISO shall automatically be converted to an
NSO.
(ii) Effect of Change in Control. Except as provided in
Section 6(e) of the Plan, each Option will become
fully exercisable upon the effective date of a Change
in Control of the Company or a liquidation or
dissolution of the Company.
(iii) Effect of Retirement, Death or Disability.
Notwithstanding any other provision of this Plan,
each Option will become fully exercisable upon the
Optionee's Death, Retirement or Disability.
27.
Exhibit A
h. Transferability of Options. ISOs will be subject to Transfer
by the Participant only by will or the laws of descent and distribution. NSOs
will be subject to Transfer by the Participant only by will or the laws of
descent and distribution or, at the discretion of the Committee, by direct gift
to a family member, or gift to a family trust or family partnership. The terms
"family member," "family trust" and "family partnership" shall have meanings
consistent with Section 704 of the Code. Options will be exercisable only by the
Participant during his or her lifetime, or, with respect to an NSO, by any of
the recipients of the Transfers specifically permitted by this subsection h.
i. Compliance with Law. Notwithstanding any other provision of
this Plan, Options may be granted pursuant to this Plan, and Option Stock may be
issued pursuant to the exercise thereof by a Participant, only after there has
been compliance with all applicable federal and state tax and securities laws.
The right to exercise an Option will be further subject to the requirement that
if at any time the Committee determines, in its discretion, that the listing,
registration or qualification of the shares of Option Stock called for by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory authority, is necessary or desirable as
a condition of or in connection with the granting of such Option or the purchase
of shares of Option Stock, the Option may not be exercised, in whole or in part,
unless and until such listing, registration, qualification, consent or approval
is effected or obtained free of any conditions not acceptable to the Committee,
in its discretion.
j. Stock Certificates. Certificates representing the Option Stock
issued pursuant to the exercise of Options will bear all legends required by law
and necessary to effectuate this Plan's provisions. The Company may place a
"stop transfer" order against shares of the Option Stock until all restrictions
and conditions set forth in this Plan and in the legends referred to in this
subsection j have been complied with.
k. Non-Compete. The Committee, in its discretion, may, as a
condition to the grant of an Option, require that the Participant enter into a
covenant not to compete, a non-disclosure agreement or a Confidential
Information Agreement with the Company and its Subsidiaries, which shall become
effective on the date of termination of employment of the Participant with the
Company, or any other date the Committee designates, and which shall contain
such terms and conditions as the Committee specifies.
l. Other Provisions. The Option Agreement may contain such other
terms, provisions and conditions, including such special forfeiture conditions,
rights of repurchase, rights of first refusal and other restrictions on Transfer
of Option Stock issued upon exercise of any Options granted hereunder, not
inconsistent with this Plan, as may be determined by the Committee in its sole
discretion.
7. Stock Appreciation Rights
a. Grants. SARs may be granted to such eligible directors and
employees as may be selected by the Committee.
b. Terms of Grant. SARs may be granted in tandem with or with
reference to a related option, in which event the grantee may elect to exercise
either the option or the SAR but not both, as to the same Share subject to the
option and the SAR, or the SAR may be granted independently of a related option.
In the event of a grant with a related option, the SAR shall be subject to the
terms and conditions of the related option. SARs shall not be transferable,
except that SARs may be exercised by the executor, administrator or personal
representative of the deceased grantee within twelve months of the death of the
grantee. SARs may be exercised during the individual's continued employment with
the Company and for a period not in excess of ninety days following termination
of employment.
28.
Exhibit A
c. Payment of Exercise. Upon exercise of a SAR, the grantee shall
be paid the excess of the then fair market value of the number of Shares to
which the SAR relates over the fair market value of such number of Shares at the
date of grant of the SAR or of the related option, as the case may be. Such
excess shall be paid in cash or in Shares having a fair market value equal to
such excess or in such combination thereof as the Committee shall determine.
d. Withholding of Tax. To the extent the award, issuance or
exercise of Shares or SARs result in the receipt of compensation by a director
or employee, the Company is authorized to withhold from any other cash
compensation then or thereafter payable to such director or employee any tax
required to be withheld by reason of the receipt of the compensation.
Alternatively, the director or employee may tender a personal check in the
amount of tax required to be withheld.
8. Right of First Refusal. If any Shares issued under the Plan
are not readily tradable on an established market on the date an owner intends
to sell such Shares, such owner shall first offer such Shares to the Company for
purchase and the Company shall have 30 days to exercise its right to purchase
such Shares. The owner shall give written notice to the Company stating that he
has a bona fide offer for the purchase of such Shares, stating the number of
Shares to be sold, the name and address of the person(s) offering to purchase
the Shares and the purchase price and terms of payment of such sale. The owner
shall be entitled to receive the same purchase price offered by such person(s)
offering to purchase such Shares. Payment may be in a lump sum or, if the lump
sum exceeds $100,000, in substantially equal amounts or more frequent
installments over a period not exceeding 5 years in the discretion of the
Committee. If a method of deferred payment is selected, the unpaid balance shall
earn interest at a rate that is substantially equal to the rate at which the
Company could borrow the amount due and shall be secured by a pledge of the
Shares purchased or such other adequate security as agreed to by the Company and
the owner. For purposes of this Paragraph, Shares shall be considered not
readily tradable on an established market if such Shares are not publicly
tradable or because such Shares are subject to a trading limitation under any
Federal or state securities law or regulation that would make such Shares less
freely tradable than stock not so restricted. For purposes of this Paragraph, an
owner shall include any person who acquires Shares from any other person and for
any reason; including, but not limited to, by gift, death or sale.
9. Adjustments Upon Changes in Stock. In the event of any change
in the outstanding Stock of the Company as a result of a merger, reorganization,
stock split, reverse stock split, stock dividend, recapitalization, combination
or reclassification, appropriate proportionate adjustments will be made:
a. in the aggregate number of shares of Option Stock in the
Option Pool;
b. in the Option Price and the number of shares of Option Stock
that may be purchased pursuant to an outstanding Option granted hereunder;
c. in the exercise price of any rights of repurchase or of first
refusal under this Plan; and
d. with respect to other rights and matters determined on a per
share basis under this Plan or any associated Option Agreement.
Any such adjustments will be made only by the Committee, and when so
made will be effective, conclusive and binding for all purposes with respect to
this Plan and all Options then outstanding. No such adjustments will be required
by reason of the issuance or sale by the Company for cash or other consideration
of additional shares of its Stock or securities convertible into or exchangeable
for shares of its Stock.
29.
Exhibit A
10. Modification, Extension and Renewal of Options. Subject to the
terms and conditions and within the limitations of this Plan, the Committee may
modify, extend or renew outstanding Options granted under this Plan, but in no
event may the Committee change the Option Price as stated in the Option
Agreement, if expressed as a fixed dollar amount, or the manner in which the
Option Price is to be calculated as stated in the Option Agreement, if expressed
as a percentage of Fair Market Value at the time of the grant or otherwise.
Notwithstanding the foregoing and subject to Section 6(e) of the Plan, no
modification of any Option will, without the consent of the holder of the
Option, alter or impair any rights or obligations under any Option previously
granted under this Plan.
11. Amendment and Discontinuance. No Option shall be granted under
this Plan after the 10th anniversary of the earlier of the date on which this
Plan is approved by the Company's Board of Directors or the date on which this
Plan is approved by the Company's shareholders. The Committee may amend, and the
Board may suspend or discontinue, this Plan at any time, provided that:
a. No such action may, without the approval of the shareholders
of the Company, increase the maximum total number of shares of Option Stock that
may be granted to an individual over the term of this Plan, or materially
increase (other than by reason of an adjustment pursuant to Section 9 hereof)
the aggregate number of shares of Option Stock in the Option Pool that may be
granted pursuant to this Plan;
b. No action of the Committee will cause ISOs granted under this
Plan not to comply with Section 422 of the Code unless the Committee
specifically declares such action to be made for that purpose;
c. Subject to Section 6(e) of the Plan, no action of the
Committee shall alter or impair any Option previously granted under this Plan
without the consent of such affected Participant.
12. Plan Binding upon Successors. This Plan shall be binding upon
and inure to the benefit of the Company, its Subsidiaries, and their respective
successors and assigns, and Eligible Persons and their respective assigns,
personal representatives, heirs, legatees and beneficiaries.
13. Compliance with Rule 16b-3. With respect to persons subject to
Section 16 of the 1934 Act, transactions under this Plan are intended to be
exempt from short-swing profit liability. To the extent that any transaction
made pursuant to the Plan may give rise to short-swing profit liability, the
Committee may deem such transaction to be null and void, to the extent permitted
by law and deemed advisable by the Committee. 14. Notices. Every direction,
revocation or notice authorized or required by the Plan shall be deemed
delivered to the Company:
14. Notices. Every direction, revocation or notice authorized or
required by the Plan shall be deemed delivered to the Company:
a. On the date it is personally delivered to the Secretary of the
Company at its principal executive offices; or
b. Three business days after it is sent by registered or
certified mail; postage prepaid, addressed to the Secretary at such offices.
and to a Participant:
30.
Exhibit A
c. On the date it is personally delivered to him or her; or
d. Three business days after it is sent by registered or
certified mail, postage prepaid, addressed to him or her at the last address
shown for him or her on the records of the Company.
15. Governing Law. This Plan will be governed by, and construed in
accordance with, the laws of the State of Illinois, without regard to its
conflict of laws provisions.
16. Copies of Plan. A copy of this Plan will be delivered to each
Participant at or before the time he or she executes an Option Agreement.
31.
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[UBC GRAPHIC LOGO OMITTED]
UNIONBANCORP, INC.
[ ] Mark this box with an X if you have
made changes to your name or
address details above.
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ANNUAL MEETING PROXY CARD
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A ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR all nominees.
FOR WITHHOLD
01 - Robert J. Doty [ ] [ ]
02 - Charles J. Grako [ ] [ ]
03 - I. J. Reinhardt, Jr. [ ] [ ]
B ISSUES
The Board of Directors recommends a vote FOR the following proposal.
FOR AGAINST ABSTAIN
2. Approve the adoption of the [ ] [ ] [ ]
UnionBancorp, Inc.
2003 Stock Option Plan.
Mark this box with an X if you [ ]
plan to attend the meeting.
C AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
NOTE: Please sign exactly as your name(s) appears. For joint accounts, each
owner should sign. When signing as executor, administrator, attorney, trustee or
guardian, etc., please give your full title.
Signature 1 - Please keep signature within the box
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Signature 2 - Please keep signature within the box
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Date (mm/dd/yyyy)
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| __/__/____ |
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PROXY - UNIONBANCORP, INC.
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PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS - APRIL 22, 2003
The undersigned hereby appoints Walter E. Breipohl and John A. Trainor, or
either of them acting in the absence of the other, with power of substitution,
attorneys and proxies, for and in the name and place of the undersigned, to vote
the number of shares of common stock that the undersigned would be entitled to
vote if then personally present at the annual meeting of the stockholders of
UnionBancorp, Inc., to be held at the Starved Rock Lodge and Conference Center
located in Utica, Illinois, on Tuesday, April 22, 2003, 10:00 a.m., local time,
or any adjournments or postponements of the meeting, upon the matters set forth
in the notice of annual meeting and proxy statement (receipt of which is hereby
acknowledged) as designated on the reverse side, and in their discretion, the
proxies are authorized to vote upon such other business as may come before the
meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE
REVERSE. IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES
AND FOR APPROVAL OF THE ADOPTION OF THE UNIONBANCORP, INC. 2003 STOCK OPTION
PLAN.
(Continued and to be signed on reverse side).