<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LETTERHEAD]
March 16, 1998
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 Thursday, April 23, 1998, at 10:00 a.m. At the meeting,
I will report to you on the progress of our Company and respond to your
comments or questions. Moreover, several of our management people will be
available to talk individually with you about our record of achievement and
plans for the future.
Your Board of Directors has nominated four persons to serve as Class III
directors on the Board of Directors. Their names appear in the enclosed
proxy material. All four of the nominees are incumbent directors. We
recommend that you vote your shares for the nominees.
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,
R. Scott Grigsby
Chairman of the Board
122 WEST MADISON STREET - OTTAWA ILLINOIS 61350 - (815)433-7030
<PAGE>
[LETTERHEAD]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 23, 1998
----------------------------------------
TO HOLDERS OF COMMON STOCK:
The Annual Meeting of Stockholders of UnionBancorp, Inc., a Delaware
corporation (the "Company"), will be held at the Starved Rock Lodge and
Conference Center located in Utica, Illinois, on Thursday, April 23, 1998, at
10:00 a.m., local time, for the purpose of considering and voting upon the
following matters:
1. to elect four (4) Class III directors.
2. to transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors is not aware of any other business to come before
the meeting. Only those stockholders of record as of the close of business
on March 9, 1998, shall be entitled to notice of the meeting and to vote at
the meeting and any adjournments or postponements thereof.
By Order of the Board of Directors
R. Scott Grigsby
Chairman of the Board
Ottawa, Illinois
March 16, 1998
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.
<PAGE>
[LETTERHEAD]
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of UnionBancorp, Inc. (the "Company") 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 Thursday, April
23, 1998, at 10:00 a.m., local time, or at any adjournments or postponements
thereof.
The Company, a Delaware corporation, is a regional financial services
company based in Ottawa, Illinois which has five bank subsidiaries (the
"Banks"). The Banks serve communities throughout Central and Northern
Illinois through twenty-seven locations. The Company also has three non-bank
subsidiaries, UnionData Corp, Inc. ("UnionData"), which provides data
processing services, UnionTrust Corporation ("UnionTrust"), a trust company
which also serves as an owner and lessor of banking offices to certain of the
Banks, and Credit Recovery, Inc., a debt collection agency located in Ottawa,
Illinois. The Banks and the three non-bank subsidiaries are collectively
referred to as the "Subsidiaries."
The Proxy Statement and the accompanying Notice of Meeting and proxy are
first being mailed to holders of shares of common stock, par value $1.00 per
share, (the "Common Stock"), on or about March 16, 1998. The 1997 Annual
Report of the Company, including financial statements, is enclosed.
VOTING RIGHTS AND PROXY INFORMATION
The Board of Directors has fixed the close of business on March 9, 1998,
as the record date for the determination of stockholders entitled to notice
of, and to vote at, the annual meeting. The transfer books of the Company
will not be closed. 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 the Company, and stockholders present at the meeting may revoke
their proxy and vote in person.
On March 9, 1998, the Company had 4,135,830 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.
<PAGE>
ELECTION OF DIRECTORS
The Company has a staggered Board of Directors divided into three
classes. One class is elected annually to serve for three years.
Stockholders will be entitled at the annual meeting to be held on April 23,
1998, to elect four Class III directors for terms of three years or until
their successors are elected and qualified. Each of the nominees for
election as Class III 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 solicited
hereby 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 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, as of March 9, 1998.
Unless otherwise indicated, each person has held the positions shown for at
least five years. The four nominees, if elected at the annual meeting, will
serve as Class III directors for three year terms expiring in 2001. THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE YOUR SHARES FOR ALL FOUR NOMINEES.
NOMINEES
<TABLE>
<CAPTION>
NAME POSITION WITH THE COMPANY
(AGE) DIRECTOR SINCE AND PRINCIPAL OCCUPATION
- ----- -------------- -------------------------
<S> <C> <C>
CLASS III
(TERM EXPIRES 2001)
R. Scott Grigsby 1983 Chairman of the Board, President and Chief
(Age 46) Executive Officer of the Company
H. Dean Reynolds 1981 Director of the Company; Owner (1966-1995)
(Age 69) and Consultant (1996-present), Reynolds-
West & Associates, Inc.
John A. Shinkle 1997 Director of the Company and Executive Vice
(Age 46) President, Synovus Securities, Inc. (1986-
present)
Scott C. Sullivan 1996 Director of the Company; Attorney, Williams
(Age 43) & McCarthy
</TABLE>
2
<PAGE>
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
NAME POSITION WITH THE COMPANY
(AGE) DIRECTOR SINCE AND PRINCIPAL OCCUPATION
- ----- -------------- -------------------------
<S> <C> <C>
CLASS I
(TERM EXPIRES 1999)
Richard J. Berry 1985 Director of the Company; Attorney, Myers,
(Age 45) Daugherity, Berry, O'Conor & Kuzma, Ltd.
Walter E. Breipohl 1993 Director of the Company; Owner, Kaszynski/
(Age 44) Breipohl Realtors/Developers
Lawrence J. McGrogan 1987 Director of the Company; Owner, Handy
(Age 60) Foods, Inc.
John A. Trainor 1985 Director of the Company; Owner, Trainor
(Age 67) Grain & Supply Company, Inc.
CLASS II
(TERM EXPIRES 2000)
L. Paul Broadus 1986 Director of the Company; Founder and
(Age 63) President, Broadus Oil Company
John Michael Daw 1991 Director and Senior Agriculture
(Age 50) Representative (since 1996) of the Company;
President, Farmers Grain Service (1969-1996)
Robert J. Doty 1996 Director of the Company; Chairman of
(Age 70) Prairie Bancorp, Inc. (1989-1996);
Consultant, Farm Management
Jimmie D. Lansford 1988 Director and Senior Vice President,
(Age 58) Organizational Development and Planning
(since 1996) of the Company; Chief
Executive Officer, St. Mary's Hospital
(1987-1996)
I. J. Reinhardt, Jr. 1991 Director of the Company; Director and
(Age 60) General Manager, St. Louis Beverage Company
</TABLE>
All of the Company's 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 the Company and any other
person pursuant to which any director has been selected, except that Messrs.
Doty and Sullivan were initially appointed to the Board pursuant to the terms
of the agreement regarding the acquisition of Prairie Bancorp, Inc. in 1996.
No member of the Board of Directors is related to any other member of the
Board of Directors.
3
<PAGE>
BOARD COMMITTEES AND MEETINGS
Meetings of the Company's Board of Directors are generally held on a
quarterly basis. The Board of Directors met seven times during 1997. During
1997, all directors attended at least 75 percent of the meetings of the Board
and the committees on which they served. The Board of Directors of the
Company has standing executive, audit and compensation committees.
The Executive Committee is comprised of Messrs. Grigsby (Chair), Berry,
Broadus, Daw, 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 two times in 1997.
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 assures that the books and records of the Company are kept in
accordance with applicable accounting principles and standards. The members
of the Audit Committee are Messrs. Reynolds (Chair), Doty and Reinhardt. Mr.
Grigsby serves as an EX OFFICIO member of this committee. During 1997, 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 officers and employees of the Company and the Subsidiaries.
The Committee also administers and oversees the Company's stock-based
incentive compensation plans. The members of the Compensation Committee are
Messrs. McGrogan (Chair), Breipohl, Broadus, Lansford and Shinkle. Mr.
Grigsby also serves as an EX OFFICIO member of this committee. The
Compensation Committee met four times in 1997.
COMPENSATION OF DIRECTORS
Through April, 1997, each of the Company's directors was paid a fee of
$500 for each Board meeting attended and $100 for each committee meeting
attended. Beginning in May, 1997, Board fees were increased to $1,000 per
meeting and committee fees were increased to $250 per meeting. In addition,
each director is paid an annual retainer of $2,500. Each of the Company's
directors also receives an annual grant of options to purchase shares of
Common Stock under the Company's Stock Option Plan. The Stock Option Plan
provides for annual formula grants to each of the Company's directors of
options to purchase up to 3,000 shares of Common Stock with an exercise price
of 75% of the then current market price of the Common Stock on the date of
the grant. Such options become exercisable over five years. For the fiscal
year ended December 31, 1997, each director was granted options to purchase
between 2,000 and 2,500 shares of Common Stock at a price of $9.75 per share.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock at March 15, 1998, by each
person known by the Company 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, and by all directors and
executive officers of the Company as a group.
4
<PAGE>
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL OR AMOUNT AND NATURE OF PERCENT
NUMBER OF INDIVIDUALS IN GROUP BENEFICIAL OWNERSHIP(1)(2) OF CLASS
-------------------------------- -------------------------- --------
<S> <C> <C>
5% STOCKHOLDERS 439,368(3) 10.6%
UnionBank/Streator, as Trustee for the
UnionBancorp, Inc. Employee Stock Ownership
Plan ("ESOP")
201 East Main Street
Streator, Illinois 61364
Dennis J. McDonnell 355,288(4) 8.6%
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Wayne H. Whalen 355,288(4) 8.6%
333 W. Wacker Drive, Suite 2100
Chicago, Illinois 60606
Jeffrey L. Gendell 229,400(5) 5.6%
200 Park Avenue, Suite 3900
New York, New York 10166
DIRECTORS AND NOMINEES
Richard J. Berry 34,344(6) *
Walter E. Breipohl 13,544 *
L. Paul Broadus 19,579 *
John Michael Daw 19,720 *
Robert J. Doty 1,000 *
R. Scott Grigsby 780,860(7) 18.8%
Jimmie D. Lansford 16,344 *
Lawrence J. McGrogan 24,364(8) *
I.J. Reinhardt, Jr. 27,130(9) *
H. Dean Reynolds 28,280(10) *
John A. Shinkle 2,864(11) *
Scott C. Sullivan 5,000 *
John A. Trainor 21,744(12) *
OTHER NAMED EXECUTIVE OFFICERS
Charles J. Grako 26,323(13) *
Wayne L. Bismark 13,525(14) *
All directors and executive officers as a group
(15 persons) 1,034,621(15) 24.7%
</TABLE>
- -----------------------
* Indicates less than one percent.
(1) The information contained in this column is based upon information
furnished to the Company 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
certain 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
5
<PAGE>
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.
(2) Amounts shown include interests in a general partnership held by Messrs.
Berry, Broadus, Breipohl, Grigsby, Daw, Lansford, McGrogan, Shinkle and
Trainor which holds an aggregate of 22,400 shares of Common Stock
representing 2,464 shares by each director. Mr. Grako also has an
interest in the partnership amounting to 224 shares. Voting and
investment power over shares held in this partnership is shared. The
information also includes shares presently obtainable through the
exercise of options to purchase shares of Common Stock granted under the
Company's Stock Option Plan as follows: Mr. Berry - 3,980 shares; Mr.
Breipohl - 3,980 shares; Mr. Broadus - 3,530 shares; Mr. Daw 4,080
shares; Mr. Grigsby - 10,361 shares; Mr. Lansford - 4,080 shares; Mr.
McGrogan - 3,980 shares; Mr. Reinhardt 3,130 shares; Mr. Reynolds -
3,280 shares; Mr. Trainor - 3,880 shares; Mr. Grako - 3,948 shares; and
Mr. Bismark - 1,788 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 ESOP are allocated to particular
participants' accounts and over which shares the ESOP trustee has shared
voting and no investment power over such shares.
(4) As reported to the Securities and Exchange Commission ("SEC") on a
Schedule 13D dated October 9, 1996. Pursuant to the terms of an
agreement executed by the Company and these individuals in connection
with the Company's acquisition of Prairie Bancorp, Inc. ("Prairie"), the
President of the Company has a limited proxy with respect to such shares
until August 6, 2000.
(5) As reported to the SEC on a Schedule 13D dated October 24, 1997. Mr.
Gendell reported shared voting and investment power over such shares.
(6) Includes 13,800 shares held jointly by Mr. Berry and his spouse, 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 all of which shares Mr.
Berry has shared voting and investment power.
(7) Includes 710,576 shares over which Mr. Grigsby, as President of the
Company, is entitled to exercise a limited proxy pursuant to an
agreement entered into between the Company and Messrs. McDonnell and
Whalen in connection with the Company's acquisition of Prairie. Also
includes 17,758 shares held by Mr. Grigsby jointly with his spouse and
with or for other family members, over which shares Mr. Grigsby has
shared voting and investment power, 400 shares held solely by members of
Mr. Grigsby's family, over which shares Mr. Grigsby has no voting or
investment power, and 35,001 shares allocated to Mr. Grigsby under the
Company's ESOP. Excludes the remaining shares held by the ESOP but
allocated to other participants' accounts. Mr. Grigsby, as trustee of
the ESOP, has shared voting power over such shares.
(8) Includes 11,040 shares held by Mr. McGrogan jointly with his spouse,
over which shares Mr. McGrogan has shared voting and investment power,
and also includes 1,884 shares owned solely by his spouse, over which
shares Mr. McGrogan has no voting or investment power.
(9) Includes 6,000 shares held by Mr. Reinhardt jointly with his spouse and
15,000 shares held in a retirement account, over all of which shares Mr.
Reinhardt has shared voting and investment power.
(10) Includes 1,000 shares held by Mr. Reynolds jointly with his spouse and
1,200 shares held by relatives of Mr. Reynolds, over which shares Mr.
Reynolds has shared voting and investment power.
(11) 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.
(12) Includes 1,200 shares held solely by Mr. Trainor's spouse, over which
shares Mr. Trainor has no voting or investment
6
<PAGE>
power.
(13) Includes 17,851 shares allocated to Mr. Grako under the ESOP.
(14) Includes 2,237 shares allocated to Mr. Bismark under the ESOP.
(15) Includes 710,576 shares over which Mr. Grigsby, as President of the
Company, is entitled to exercise a limited proxy pursuant to an
agreement entered into between the Company and Messrs. McDonnell and
Whalen in connection with the Prairie acquisition.
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's executive officers, directors and persons who own more than 10% of
the Company's Common Stock file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Such persons are also required
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms, and, if
appropriate, representations made to the Company by any such reporting person
concerning whether a Form 5 was required to be filed for 1997, the Company is
not aware that any of its directors, executive officers or 10% stockholders
failed to comply with the filing requirements of Section 16(a) during the
period commencing January 1, 1997 through December 31, 1997.
VOTING AGREEMENTS
Pursuant to the terms of a Standstill Agreement entered into between the
Company and Messrs. McDonnell and Whalen, the President of the Company has
sole voting power with respect to all 710,576 shares of Common Stock held by
such persons in any election of directors of the Company. The proxy will
further pertain to any additional shares of Common Stock obtained by either
party. The proxy expires on August 6, 2000.
7
<PAGE>
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table shows the compensation earned for the last three
fiscal years by the Chief Executive Officer and those executive officers of
the Company (including those employed by the Subsidiaries) whose 1997 salary
and bonus exceeded $100,000:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION
ANUUAL COMPENSATION AWARDS
- ---------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (g) (i)
SECURITIES ALL OTHER
NAME AND UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS (#)(1) ($)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
R. Scott Grigsby(2) 1997 $156,555 $ 8,000 4,000 $10,050
Chairman of the Board, 1996 149,100 32,000 5,550 15,597
President and Chief Executive 1995 142,000 12,800 3,036 21,832
Officer
- ---------------------------------------------------------------------------------------------------
Charles J. Grako(3) 1997 $104,878 $ 4,000 1,500 $13,200
Executive Vice President and 1996 99,225 11,000 2,100 17,439
Chief Financial Officer 1995 94,500 7,675 1,080 21,880
- ---------------------------------------------------------------------------------------------------
Wayne L. Bismark(4) 1997 $104,878 $ 2,000 1,500 $21,734
Executive Vice President and 1996 99,225 11,000 2,100 9,525
Chief Credit Officer 1995 94,500 7,675 1,080 0
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Options vest at a rate of 20% per year on or about each anniversary of
the date of grant.
(2) Represents the dollar value of allocations under the Company's ESOP in
the amounts of $7,149 for 1997, $12,697 for 1996 and $18,931 in 1995, and
premiums for split dollar life insurance of $2,901 for 1997, $2,900 for
1996 and $2,901 in 1995.
(3) Represents the dollar value of allocations under the Company's ESOP in
the amounts of $4,941 for 1997, $9,330 for 1996 and $12,896 for 1995,
premiums for split dollar life insurance of $2,034 for each of 1997, 1996
and 1995, and fees for services provided to the Company's Board of
Directors and director fees for serving on the Boards of various
Subsidiaries of $6,225 for 1997, $6,075 for 1996 and $6,950 for 1995.
(4) Represents the dollar value of allocations under the Company's ESOP in
the amounts of $4,934 for 1997, and fees for services provided to the
Company's Board of Directors and director fees for serving on the Boards
of various Subsidiaries of $16,800 for 1997 and $9,525 for 1996.
8
<PAGE>
STOCK OPTION INFORMATION
The following table sets forth certain information concerning the number
and value of stock options granted in the last fiscal year to the individuals
named above in the Summary Compensation Table:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- -----------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- -----------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR OPTION TERM
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% OF TOTAL
OPTIONS OPTIONS GRANTED
GRANTED TO EMPLOYEES IN EXERCISE OR BASE PRICE EXPIRATION
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. Scott Grigsby 2,000 21% $13.00 02/14/07 $16,351 $41,437
2,000(2) 8% 9.75 02/14/07 22,851 47,937
- -----------------------------------------------------------------------------------------------------------------------
Charles J. Grako 1,500 16% $13.00 02/14/07 $12,263 $31,078
- -----------------------------------------------------------------------------------------------------------------------
Wayne L. Bismark 1,500 16% $13.00 02/14/07 $12,263 $31,078
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options vest at a rate of 20% per year on or about each anniversary of
the date of grant.
(2) Represents non-qualified options granted for service on the Board of
Directors.
The following table sets forth certain information concerning the
exercisable and nonexercisable stock options at December 31, 1997 held by the
individuals named in the Summary Compensation Table:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
- ----------------------------------------------------------------------------------------------------
SHARES NUMBER OF SECURITIES
ACQUIRED UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
ON VALUE OPTIONS AT FY-END THE-MONEY OPTIONS
NAME EXERCISE REALIZED (#)(d) AT FY-END ($)(e)
(#)(a) (#)(b) ($)(c) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. Scott Grigsby -- $-- 6,464 13,022 $96,630 $170,449
- ----------------------------------------------------------------------------------------------------
Charles J. Grako -- -- 2,472 4,908 $35,480 $58,929
- ----------------------------------------------------------------------------------------------------
Wayne L. Bismark -- -- 852 3,828 $10,978 $42,594
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
EMPLOYMENT AGREEMENTS
The Company and certain of the Subsidiaries have entered into three-year
employment agreements with Messrs. Grigsby, Bismark and Grako. Unless
earlier terminated by the Company (or the Subsidiary, if applicable) or the
respective employee, the employment term under each agreement extends for an
additional year on each anniversary of the agreement. Each agreement
specifies a minimum annual salary for the initial year of the agreement and
provides for an automatic minimum five percent annual increase for each
subsequent year. Each agreement also provides that the respective employee
is entitled to participate in any executive bonus plan and other incentive
compensation or benefit plan established by the Company or the applicable
Subsidiary.
Each agreement is terminable by the employee upon thirty days' prior
written notice and automatically terminates upon the death or disability of
the employee. The Company may terminate each agreement at any time for
"cause" without incurring any additional obligations. Each agreement
provides severance benefits in the event the employee is terminated without
cause or "constructively discharged," as defined in each agreement. The
severance benefits are equal to the salary and benefits the terminated
employee would have received through the end of the normal term of the
agreement. If any of the employment agreements are terminated in connection
with a "change in control," as defined in each agreement, the employee is
entitled to receive severance compensation equal to three times his annual
salary and other compensation at the rates then in effect at the time of
termination. The terminated employee in such case will also be entitled to
continuation of participation in other benefit plans for the remaining term
of his agreement. In addition, each officer would be entitled to receive
other benefits for such periods. The employment agreements also require the
Company to provide each employee with indemnification insurance and
indemnification for any expenses arising out of each person's employment with
the Company or the applicable Subsidiary.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the members of the Compensation Committee were Messrs.
McGrogan, Breiphol, Broadus, Lansford and Shinkle. None of these individuals
was an officer or employee of the Company or any of the Subsidiaries during
1997, and none of these individuals is a former officer or employee of the
Company or any of the Subsidiaries, except for Lansford who is Senior Vice
President, Organizational Development and Planning.
THE INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT INTO ANY DOCUMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY THE COMPANY SHALL NOT BE
DEEMED TO INCLUDE THE FOLLOWING REPORT UNLESS SUCH REPORT IS SPECIFICALLY
STATED TO BE INCORPORATED BY REFERENCE INTO SUCH DOCUMENT.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company is
composed of four outside directors and is responsible for recommendations to
the Board of Directors of the Company for compensation of executive officers
of the Subsidiaries and the Company. In determining compensation, the
following factors are generally taken into consideration:
1. The performance of the executive officers in achieving the short and
long term goals of the Company.
2. Payment of compensation commensurate with the ability and expertise
of the executive officers.
3. Attempt to structure compensation packages so that they are
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.
10
<PAGE>
Additionally, the Compensation Committee considers various benefits,
such as the Company's ESOP, 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 Mr. Grigsby's level of compensation. These areas
are: long-range strategic planning and implementation; Company financial
performance; Company compliance with regulatory requirements and relations
with regulatory agencies; and effectiveness of managing relationships with
stockholders and the Board of Directors. When evaluating the financial
performance of the Company, the committee considers profitability, asset
growth and risk management. The primary evaluation criteria are considered
to be essential to the long-term viability of the Company and are given equal
weight in the evaluation. Finally, the committee reviews compensation
packages of peer institutions, as well as compensation surveys provided by
independent third parties, to ensure that Mr. Grigsby's compensation is
competitive and commensurate with his level of performance.
The 1997 compensation of Mr. Grigsby was based upon the factors
described above and his substantial experience and length of service with the
organization. During 1997, Mr. Grigsby guided the consolidation of the
operations of the Banks. The Compensation Committee also considered the
continuing additional duties required as a result of becoming a publicly
traded institution. Mr. Grigsby serves on the Compensation Committee EX
OFFICIO, but did not participate in any decisions pertaining to his
compensation.
Messrs. McGrogan (Chair), Breipohl, Broadus, Lansford and Shinkle
THE INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT INTO ANY DOCUMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY THE COMPANY 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.
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following graph shows a comparison of cumulative total returns for
the Company, the Nasdaq Stock Market (US Companies) and an index of Nasdaq
Bank Stocks for the period commencing January 10, 1996, the date the
Company's shares were first quoted on the OTC Bulletin Board. The Common
Stock of the Company was first listed for quotation on the Nasdaq Stock
Market on October 1, 1996, and prior to such date was quoted on the OTC
Bulletin Board. The graph was prepared at the Company's request by Research
Holdings Limited, San Francisco, California.
11
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN*
(ASSUMES $100 INVESTED ON JANUARY 10, 1996)
[GRAPH]
*TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------
Cumulative Total Return
- -------------------------------------------------------------
1/10/96 12/31/96 12/31/97
- -------------------------------------------------------------
- -------------------------------------------------------------
<S> <C> <C> <C>
UnionBancorp Inc. $100 $147 $224
Nasdaq Stock Market - US $100 $131 $161
Nasdaq Bank Index $100 $135 $227
- -------------------------------------------------------------
</TABLE>
12
<PAGE>
TRANSACTIONS WITH MANAGEMENT
Certain directors and executive officers of the Company (including their
affiliates, families and companies in which they are principal owners,
officers or directors) were loan customers of, and had other transactions
with, the Company and the Subsidiaries in the ordinary course of business.
Such 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 1997, the Company and the Subsidiaries paid
approximately $61,705 to the law firm of Myers, Daugherity, Berry, O'Conor &
Kuzma, Ltd. for legal services. Richard J. Berry, a director of the Company,
is a principal of that firm. Management believes such legal services were
obtained on terms no less favorable than would have been obtained from
unaffiliated third-parties.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
For inclusion in the Company's Proxy Statement and form of proxy
relating to the 1999 Annual Meeting of Stockholders, stockholder proposals
must be received by the Company on or before November 17, 1998. In order to
be presented at such meeting, notice of the proposal must be received by the
Company on or before November 17, 1998, and must otherwise comply with the
Company's bylaws.
OTHER MATTERS
Management does not intend to present any other business at the meeting
and knows 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.
Your proxy is solicited by the Board of Directors and the cost of
solicitation will be paid by the Company. In addition to the solicitation of
proxies by use of the mails, officers, directors and regular employees of the
Company or the Subsidiaries, acting on the Company's behalf, may solicit
proxies by telephone, telegraph or personal interview. The Company will, at
its 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 included herewith, the shares of such stockholder
shall be voted FOR the nominees listed under proposal 1.
By Order of the Board of Directors
R. Scott Grigsby
Chairman of the Board and President
Ottawa, Illinois
March 16, 1998
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
13
<PAGE>
PROXY UNIONBANCORP, INC. PROXY PROXY
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- APRIL 23, 1998
The undersigned hereby appoints John Michael Daw and R. Scott Grigsby,
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
Thursday, April 23, 1998, at 10:00 a.m., local time, or any adjournments or
postponements thereof, 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:
/ / Check here for address change.
New Address:
---------------------------------
---------------------------------
---------------------------------
(Continued and to be signed on reverse side.)
<PAGE>
UNIONBANCORP, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/
For All
For Withheld Except
1. Election of Directors / / / / / /
R. Scott Grigsby, H. Dean Reynolds,
John A. Shinkle and Scott C. Sullivan
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
SPECIFICATION MADE. IF NO CHOICES ARE INDICATED,
THIS PROXY WILL BE VOTED FOR ALL NOMINEES.
---
The Board of Directors recommends a vote FOR all nominees.
Check here if you plan to attend the meeting. / /
NOTE: Please sign exactly as your name
appears. For joint accounts, each owner should
sign. When signing as executor, administrator,
attorney, trustee or guardian, etc., please give
your full title.
Dated: , 1998
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Signature(s)------------------------------------
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