<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
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):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
March 25, 1999
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 29, 1999, 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 I
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,
/s/ R. Scott Grigsby
-----------------------------------------
R. Scott Grigsby
Chairman of the Board
122 WEST MADISON STREET o OTTAWA ILLINOIS 61350 o (815) 433-7030
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 29, 1999
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 29, 1999, at
10:00 a.m., local time, for the purpose of considering and voting upon the
following matters:
1. to elect four (4) Class I 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 8, 1999, 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
/s/ R. Scott Grigsby
----------------------------------------
R. Scott Grigsby
Chairman of the Board
Ottawa, Illinois
March 22, 1999
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>
UNIONBANCORP, INC.
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 29, 1999,
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 four bank subsidiaries (the
"Banks"). The Banks serve communities throughout Central and Northern Illinois
through twenty-six 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 UnionFinancial
Services, Inc., an insurance/brokerage agency located in Peru, 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 22, 1999. The 1998 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 8,
1999, 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 8, 1999, the Company had 4,262,359 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 29, 1999, to elect
four Class I directors for terms of three years or until their successors are
elected and qualified. Each of the nominees for election as Class I 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 8, 1999. 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 I directors for
three year terms expiring in 2002. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE YOUR SHARES FOR ALL FOUR NOMINEES.
<TABLE>
<CAPTION>
NOMINEES
NAME POSITION WITH THE COMPANY
(AGE) DIRECTOR SINCE AND PRINCIPAL OCCUPATION
- ----- -------------- -------------------------
<S> <C> <C>
CLASS I
(TERM EXPIRES 2002)
Richard J. Berry 1985 Director of the Company; Attorney, Myers,
(Age 46) Daugherity, Berry, O'Conor & Kuzma, Ltd.
Walter E. Breipohl 1993 Director of the Company; Owner,
(Age 45) Kaszynski/Breipohl Realtors/Developers
Lawrence J. McGrogan 1987 Director of the Company; Owner, Handy Foods, Inc.
(Age 61)
John A. Trainor 1985 Director of the Company; Owner, Trainor Grain &
(Age 68) Supply Company, Inc.
</TABLE>
2
<PAGE>
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
NAME POSITION WITH THE COMPANY AND
(AGE) DIRECTOR SINCE PRINCIPAL OCCUPATION
- ----- -------------- -----------------------------
<S> <C> <C>
CLASS II
(TERM EXPIRES 2000)
L. Paul Broadus 1986 Director of the Company; Founder and President,
(Age 64) Broadus Oil Company
John Michael Daw 1991 Director and Senior Agriculture Representative
(Age 51) (since 1996) of the Company; President, Farmers
Grain Service (1969-1996)
Robert J. Doty 1996 Director of the Company; Chairman of Prairie
(Age 71) Bancorp, Inc. (1989-1996); Consultant, Farm
Management
Jimmie D. Lansford 1988 Director and Senior Vice President, Organizational
(Age 59) 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 General
(Age 61) Manager, St. Louis Beverage Company
CLASS III
(TERM EXPIRES 2001)
R. Scott Grigsby 1983 Chairman of the Board, President and Chief
(Age 47) Executive Officer of the Company
H. Dean Reynolds 1981 Director of the Company; Owner (1966-1995) and
(Age 70) Consultant (1996-1998), Reynolds-West &
Associates, Inc.
John A. Shinkle 1997 Director of the Company and Executive Vice
(Age 47) President, Synovus Securities, Inc. (1986-present)
Scott C. Sullivan 1996 Director of the Company; Attorney, Williams &
(Age 44) McCarthy
</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 six times during 1998. During 1998,
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 five times in 1998.
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 1998, 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
three times in 1998.
COMPENSATION OF DIRECTORS
Each of the Company's directors was paid a fee of $1,000 for each Board
meeting attended and $250 for each committee meeting attended. 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, 1998, each
director was granted options to purchase 2,000 shares of Common Stock at a price
of $13.88 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, 1999, 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
UnionBank, as Trustee for the 457,493(3) 11.3%
UnionBancorp, Inc. Employee Stock Ownership
Plan ("ESOP")
201 East Main Street
Streator, Illinois 61364
Dennis J. McDonnell 55,288(4) 8.8%
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Wayne W. Whalen 355,288(4) 8.8%
333 W. Wacker Drive, Suite 2100
Chicago, Illinois 60606
Jeffrey L. Gendell 291,100(5) 7.2%
200 Park Avenue, Suite 3900
New York, New York 10166
Franklin Mutual Advisors, Inc. 220,100(6) 5.4%
51 John F. Kennedy Parkway
Short Hills, NJ 07078
DIRECTORS AND NOMINEES
Richard J. Berry 36,056(7) *
Walter E. Breipohl 17,756 *
L. Paul Broadus 21,141(8) *
John Michael Daw 22,132(9) *
Robert J. Doty 3,384 *
R. Scott Grigsby 785,754(10) 19.4%
Jimmie D. Lansford 18,756(11) *
Lawrence J. McGrogan 26,080(12) *
I.J. Reinhardt, Jr. 28,860(13) *
H. Dean Reynolds 30,085(14) *
John A. Shinkle 2,846(15) *
Scott C. Sullivan 6,900(16) *
John A. Trainor 24,060(17) *
OTHER NAMED EXECUTIVE OFFICERS
Charles J. Grako 28,805(18) *
Wayne L. Bismark 15,390(19) *
All directors and executive officers as a group
(15 persons) 1,068,005(20) 26.4%
</TABLE>
- -----------------------
* Indicates less than one percent.
5
<PAGE>
(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 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 18,600 shares of Common
Stock representing 2,046 shares by each director. Mr. Grako also has an
interest in the partnership amounting to 186 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 - 6,110 shares;
Mr. Breipohl - 6,110 shares; Mr. Broadus - 5,510 shares; Mr. Daw -
6,910 shares; Mr. Doty - 400 shares; Mr. Grigsby - 15,658 shares;
Mr. Lansford - 6,910 shares; Mr. McGrogan - 6,110 shares;
Mr. Reinhardt - 4,860 shares; Mr. Reynolds - 5,085 shares; Mr. Shinkle
- 400 shares; Mr. Sullivan - 400 shares; Mr. Trainor - 5,910 shares;
Mr. Grako - 6,224 shares; and Mr Bismark - 3,324 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 April 15, 1998.
Mr. Gendell reported shared voting and investment power over such
shares.
(6) As reported to the SEC on a schedule 13D dated January 27, 1999.
Franklin Mutual Advisors, Inc., reported sole voting and investment
power over such shares.
(7) 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.
(8) Includes 7,380 shares held by Mr. Broadus jointly with his spouse, over
which shares Mr. Broadus has shared voting and investment power.
(9) Includes 900 shares held solely by Mr. Daw's spouse over which Mr. Daw
has no voting or investment power.
(10) 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.
6
<PAGE>
(11) Includes 2,000 shares held by Mr. Lansford jointly with his spouse,
over which shares Mr. Lansford has shared voting and investment power.
(12) 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.
(13) 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.
(14) 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.
(15) 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.
(16) Includes 1,500 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 2,500 shares.
(17) Includes 1,200 shares held solely by Mr. Trainor's spouse, over which
shares Mr. Trainor has no voting or investment power.
(18) Includes 1,000 shares held by Mr. Grako jointly with his spouse, over
which shares Mr. Grako has shared voting and investment power. Also
includes 18,095 shares allocated to Mr. Grako under the ESOP.
(19) Includes 2,566 shares allocated to Mr. Bismark under the ESOP.
(20) 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 1998, 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, 1998 through December 31, 1998.
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 whose 1998 salary and bonus exceeded $100,000:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
------------------------------------- ------------------
(a) (b) (c) (d) (g) (i)
Securities All Other
Name and Underlying Compensation
Principal Position Year Salary($) Bonus($) Options/SARs ($)
(#)(1)
- ------------------------------ ----------- -------------------- --------------- ------------------- -------------------
- ------------------------------ ----------- -------------------- --------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
R. Scott Grigsby(2) 1998 $197,983 $15,000 7,000 $15,216
Chairman of the Board, President 1997 156,555 8,000 4,000 10,050
and Chief Executive Officer 1996 149,100 32,000 5,550 15,597
- ------------------------------ ----------- -------------------- --------------- ------------------- -------------------
Charles J. Grako(3) 1998 $112,545 $ 7,000 4,000 $17,275
Executive Vice President and 1997 104,878 4,000 1,500 13,200
Chief Financial Officer 1996 99,225 11,000 2,100 17,439
- ------------------------------ ----------- -------------------- --------------- ------------------- -------------------
Wayne L. Bismark(4) 1998 $112,545 $ --- 3,000 $24,752
Executive Vice President and 1997 104,878 2,000 1,500 21,734
Chief Credit Officer 1996 99,225 11,000 2,100 9,525
- ------------------------------ ----------- -------------------- --------------- ------------------- -------------------
- ------------------------------ ----------- -------------------- --------------- ------------------- -------------------
</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 $9,115 for 1998, $7,149 for 1997 and $12,697 for 1996,
and premiums for split dollar life insurance of $2,901 for 1998, $2,901
for 1997 and $2,900 for 1996. In addition, it includes $3,200.00 of
401(k) matching contributions in 1998.
(3) Represents the dollar value of allocations under the Company's ESOP in
the amounts of $7,062 for 1998, $4,941 for 1997 and $9,330 for 1996,
premiums for split dollar life insurance of $2,034 for each of 1998,
1997 and 1996, fees for services provided to the Company's Board of
Directors and director fees for serving on the Boards of various
Subsidiaries of $5,700 for 1998, $6,225 for 1997 and $6,075 for 1996.
In addition, it includes $2,479.33 of 401(k) matching contributions in
1998.
(4) Represents the dollar value of allocations under the Company's ESOP in
the amounts of $6,626 for 1998, $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 $15,800 for 1998,
$16,800 for 1997 and $9,525 for 1996. In addition, it includes
$2,325.99 of 401(k) matching contributions in 1998.
8
<PAGE>
STOCK OPTION INFORMATION
The following table sets forth certain information concerning the
number and value of stock options granted in the last fiscal year to the
individuals named above in the Summary Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
Potential realizable value
at assumed annual rates of
stock price appreciation
for option term
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total Options
OPTIONS Granted to
GRANTED Employees in Exercise or Base Price Expiration
NAME (#)(1) Fiscal Year ($/Sh) Date 5%($) 10%($)
- ---------------------------------------- ---------------------------------------- --------------------------------- ----------------
- ---------------------------------------- ---------------------------------------- --------------------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
R. Scott Grigsby 5,000 13% $18.50 02/16/08 $ 58,173 $147,421
2,000(2) 8% 13.88 02/16/08 32,509 68,208
- ---------------------------------------- ---------------------------------------- --------------------------------- ----------------
Charles J. Grako 4,000 10% 18.50 02/16/08 46,538 117,937
- ---------------------------------------- ---------------------------------------- --------------------------------- ----------------
Wayne L. Bismark 3,000 8% 18.50 02/16/08 34,904 88,453
- ---------------------------------------- ---------------------------------------- --------------------------------- ----------------
- ---------------------------------------- ---------------------------------------- --------------------------------- ----------------
</TABLE>
(1) Options vest at a rate of 20% per year on or about each anniversary of the
date of grant.
(2) Represents non-qualified options granted for service on the Board of
Directors.
The following table sets forth certain information concerning the
exercisable and nonexercisable stock options at December 31, 1998 held by the
individuals named in the Summary Compensation Table:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
Shares Number of Securities
Acquired Underlying Unexercised Value of Unexercised In-
on Value Options at FY-End the-Money Options
Name Exercise Realized (#)(d) at FY-End ($)(e)
(#)(a) (#)(b) ($)(c) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. Scott Grigsby --- $ --- 10,361 16,125 $96,943 $76,020
- ------------------------------------------------------------------------------------------------------------------------------------
Charles J. Grako --- --- 3,948 7,432 34,128 22,458
- ------------------------------------------------------------------------------------------------------------------------------------
Wayne L. Bismark --- --- 1,788 5,892 12,528 17,058
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</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 1998, 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 1998,
and none of these individuals is a former officer or employee of the Company or
any of the Subsidiaries, except for Mr. Lansford who is Senior Vice President,
Organizational Development and Planning. Mr. Lansford did not participate in any
decisions pertaining to his compensation.
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
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<PAGE>
weight given to any of these factors.
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 1998 compensation of Mr. Grigsby was based upon the factors
described above and his substantial experience and length of service with the
organization. During 1998, Mr. Grigsby successfully headed the Company's
acquisition program, which included planning and analysis, contacting a number
of financial institutions and investment bankers, acquiring the Mercier
Insurance Agency and implementing the strategies contained in the Corporate
Strategic Plan. 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 Data Group, Inc., San Francisco,
California.
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COMPARISON OF CUMULATIVE TOTAL RETURN*
(ASSUMES $100 INVESTED ON JANUARY 10, 1996)
[GRAPHIC OMITTED]
*TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
<TABLE>
<CAPTION>
Cumulative Total Return
1/10/96 12/31/96 12/31/97 12/31/98
- --------------------------------------------------- -------------- ------------ ---------- --------------
<S> <C> <C> <C> <C>
UnionBancorp, Inc. $100 $147 $224 $173
Nasdaq Stock Market - US $100 $131 $161 $226
Nasdaq Bank Index $100 $135 $227 $223
- --------------------------------------------------- -------------- ------------ ---------- --------------
</TABLE>
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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 1998, the Company and the Subsidiaries paid approximately
$47,589 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. Additionally, the Company paid premiums of approximately $74,688 in
1998 to American Bankers Professional Fidelity Insurance Company, Ltd. ("ABFIC")
for a Blanket Bond Insurance Policy. R. Scott Grigsby, the Company's Chairman
and President, is a director of ABFIC. Management believes such legal services
and insurance were obtained on terms no less favorable than would have been
obtained from unaffiliated third-parties.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
For inclusion in the Company's Proxy Statement and form of proxy
relating to the 2000 Annual Meeting of Stockholders, stockholder proposals must
be received by the Company on or before November 20, 1999. In order to be
presented at such meeting, notice of the proposal must be received by the
Company on or before November 20, 1999, 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 soliciting 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
/s/ R. Scott Grigsby
-------------------------------------
R. Scott Grigsby
Chairman of the Board
Ottawa, Illinois
March 22, 1999
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
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