<PAGE> 1
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 item:
x Preliminary Proxy Statement ____ Confidential, for use of the
- ---
___ Definitive Proxy Statement Commission Only (as permitted
___ Definitive Additional Materials by Rule 14a-6(e)(2))
___ Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
CENTRAL ILLINOIS BANCORP, INC.
(Name of Registrant as Specified in its Charter)
CENTRAL ILLINOIS BANCORP, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate item):
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 applied:
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:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
Fee paid previously with preliminary materials.
- ---
Check item 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 this filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement:
3) Filing Party:
4) Date Filed:
<PAGE> 2
CENTRAL ILLINOIS BANCORP, INC.
N27 W24025 PAUL COURT
PEWAUKEE, WISCONSIN 53072
May 5, 1999
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders
of Central Illinois Bancorp, Inc. which will be held on Thursday, May 27, 1999
at 2:00 p.m., local time, at Parkland College Training Center, 206A West Anthony
Drive, Champaign, Illinois 61822.
Only shareholders who owned stock at the close of business on April 30,
1999 can vote at this meeting or any adjournments that may take place. At the
meeting, we will be asking you to elect three directors of the Company, to
approve the Company's 1999 Stock Option and Incentive Plan, and to approve a
change in the Company's state of incorporation from Illinois to Wisconsin. In
connection with the proposed change in the Company's state of incorporation, we
are also proposing a number of changes to the Company's articles of
incorporation and by-laws which are intended to strengthen the Company's ability
to respond to an unsolicited takeover bid. By approving the proposed change in
the Company's state of incorporation, you will also be approving those changes.
In addition, you will be asked to consider and vote upon a proposal to
adjourn the annual meeting if the Company's management should determine in its
sole discretion, at the time of the annual meeting, that an adjournment is in
the best interest of the Company and its shareholders. The proposal has been
included to permit management to adjourn the annual meeting to enable it to
solicit additional proxies, if necessary, to secure approval of the proposed
reincorporation. The Board of Directors recommends a vote "for" each nominee,
"for" approval of the new stock option plan, "for" the proposed change in the
Company's state of incorporation, and "for" the proposal to adjourn the annual
meeting in the discretion of the Company's management.
This is our first annual meeting since becoming a public company, and
we are therefore sending you more comprehensive proxy materials than in years
past. Included with this letter are an attached notice of meeting and proxy
statement, as well as a proxy card and copy of the Company's annual report on
Form 10-K/A for its 1998 fiscal year, as filed with the Securities and Exchange
Commission.
Your vote is important. Whether or not you plan to attend the annual
meeting and regardless of the size of your holdings, we encourage you to sign,
date, and mail the enclosed proxy card in the envelope provided. Your right to
vote in person at the meeting is not affected by returning the proxy card.
On behalf of the Board of Directors, officers and employees of Central
Illinois Bancorp, Inc., I would like to thank you for your continued interest
and support.
Sincerely,
J. Michael Straka
President and Chief Executive Officer
<PAGE> 3
CENTRAL ILLINOIS BANCORP, INC.
N27 W24025 PAUL COURT
PEWAUKEE, WISCONSIN 53072
May 5, 1999
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 27, 1999
--------------------------
To the Shareholders of Central Illinois Bancorp, Inc.
Notice is hereby given that the annual meeting of shareholders of
Central Illinois Bancorp, Inc. (the "Company") will be held at Parkland College
Training Center, 206A West Anthony Drive, Champaign, Illinois 61822 on Thursday,
May 27, 1999, at 2:00 p.m., local time. The purpose of the meeting is to:
1. elect three directors of the Company, each for a three-year term;
2. consider and vote upon the adoption of the 1999 Stock Option and
Incentive Plan;
3. consider and vote upon a change in the state of incorporation of
the Company from Illinois to Wisconsin, resulting in new articles
of incorporation and by-laws for the Company;
4. consider and vote upon a proposal to adjourn the annual meeting
if the Company's management should determine, in its sole
discretion, at the time of the annual meeting, that an
adjournment is in the best interest of the Company and its
shareholders, which would include adjourning the annual meeting
to enable management to solicit additional proxies, if necessary,
to secure approval of the reincorporation; and
5. transact any other business properly before the annual meeting.
Any shareholder entitled to vote at the annual meeting will have the
right to dissent to the change in the state of incorporation of the Company and
to receive payment of the fair value of his or her shares of common stock, if
the reincorporation is approved and consummated. You will need to comply with
Sections 11.65 and 11.70 of the Illinois Business Corporation Act to assert your
right to dissent and receive payment for your shares. The full text of Sections
11.65 and 11.70 is included as Appendix E to the proxy statement, which is
attached to this notice of annual meeting. For a summary of those sections and
more information concerning your right to dissent, see "Rights of Dissenting
Shareholders" in the attached proxy statement.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY TO THE COMPANY IN THE ENVELOPE PROVIDED. RETURNING THE PROXY CARD WILL
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
By Order of the Board of Directors
Donald J. Straka,
General Counsel and Secretary
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Questions and Answers
About the Proxy Statement and Annual Meeting ............................................................1
PROPOSAL 1 - Election of Directors................................................................................6
Information Regarding Nominees and Directors.............................................................6
Meetings of the Board of Directors and Committees........................................................8
Directors' Fees and Compensation.........................................................................9
Directors' Deferred Compensation Plan...................................................................10
Compensation Committee Interlocks And Insider Participation.............................................10
Certain Relationships and Related Transactions..........................................................10
Management Indebtedness.................................................................................10
Stock Ownership of Management...........................................................................11
Executive Compensation..................................................................................12
Summary Compensation Table..............................................................................13
Options.................................................................................................13
Option Grants in Last Fiscal Year
Potential Realizable Value............................................................................14
Aggregated Option Exercises in Last Fiscal
Year and Fiscal Year-End Option Values................................................................14
Long-Term Incentive Plans -- Awards in Last Fiscal Year.................................................15
Board Compensation Committee Report on Executive Compensation...........................................15
Common Stock Performance................................................................................16
PROPOSAL 2 - Approval of 1999 Stock Option and Incentive Plan....................................................17
Vote Requirement........................................................................................18
Effect of Vote on Outstanding Options...................................................................18
Administration..........................................................................................18
Shares Subject to the 1999 Plan.........................................................................18
Eligibility.............................................................................................19
Types of Options .......................................................................................19
Grant of Options........................................................................................19
Option Price............................................................................................20
Exercisability of Options..............................................................................20
Expiration of Options; Effect of Termination of Employment or Service...................................20
Payment of Exercise Price for Options...................................................................21
Transfer of Options.....................................................................................21
Provisions Relating to a "Change in Control" of the Company.............................................21
Indemnification of the Committee........................................................................22
Amendment and Duration..................................................................................22
New Plan Benefits.......................................................................................22
Federal Income Tax Consequences.........................................................................23
PROPOSAL 3 - Proposed Reincorporation in Wisconsin...............................................................25
Principal Reasons for the Proposed Reincorporation......................................................25
Means of Effecting the Reincorporation; Effective Date..................................................26
Required Vote; Dissenters' Rights.......................................................................27
</TABLE>
i
<PAGE> 5
<TABLE>
<S> <C>
Changes in the Company's Articles and By-Laws to be Effected by the Reincorporation.....................27
Capital Structure.......................................................................................27
Election of Directors...................................................................................28
Filling of Vacancies on the Board; Removal of Directors.................................................29
Right of Shareholders to Call Shareholder Meetings......................................................29
Advance Notice of Shareholder Nominations and Other Proposals...........................................30
Action by Shareholders by Written Consent...............................................................31
Inspection of Corporate Records.........................................................................32
Required Shareholder Vote for Certain Business Transactions ............................................32
Differences in Dissenters' Rights.......................................................................33
Differences between the Antitakeover Provisions of the IBCA and the WBCL................................33
Shareholder Approval Requirements for Amendments to the Articles of Incorporation.......................36
Shareholder Approval Requirements for Amendments to the By-laws.........................................37
Statutory Liability of Shareholders for Employee Wages under the WBCL...................................37
Differences in Indemnification Rights of Directors and Officers.........................................37
Directors Monetary Liability............................................................................38
Amendment of the Merger Agreement or Abandonment of the Reincorporation ................................39
Rights of Dissenting Shareholders.......................................................................39
Certain Federal Income Tax Consequences of the Reincorporation..........................................40
PROPOSAL 4 - ADJOURNMENT OF ANNUAL MEETING ......................................................................41
OTHER MATTERS....................................................................................................41
Security Ownership of Certain Beneficial Owners.........................................................41
Compliance with Section 16(a) of the Exchange Act.......................................................42
Auditors................................................................................................42
2000 Annual Meeting of the Company's Shareholders.......................................................42
</TABLE>
APPENDICES
Appendix A 1999 Stock Option and Incentive Plan
Appendix B Merger Agreement
Appendix C Wisconsin Articles of Incorporation
Appendix D Wisconsin By-laws
Appendix E Illinois Statutory Provision Governing
Dissenters' Rights
ii
<PAGE> 6
CENTRAL ILLINOIS BANCORP, INC.
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 27, 1999
May 5, 1999
The Board of Directors is soliciting proxies for the 1999 annual
meeting of shareholders. This proxy statement contains important information for
you to consider when deciding how to vote on the matters brought before the
meeting. PLEASE READ IT CAREFULLY.
The Board has set April 30, 1999 as the record date for the meeting.
Shareholders who owned Company common stock on that date are entitled to attend
and vote at the meeting, with each share entitled to one vote. There were
107,153 shares of Company common stock outstanding on the record date.
Voting materials, which include the proxy statement, proxy card, and
the Company's 1998 annual report on Form 10-K/A for its 1998 fiscal year, are
being mailed to shareholders on or about May 5, 1999.
In this proxy statement:
- "we" and the "Company" mean Central Illinois Bancorp, Inc.
- "1999 Plan" means the 1999 Stock Option and Incentive Plan.
----------------------
QUESTIONS AND ANSWERS
ABOUT THE PROXY STATEMENT AND ANNUAL MEETING
Q: WHY AM I RECEIVING THIS PROXY STATEMENT AND PROXY CARD?
A: You are receiving a proxy statement and proxy card from us because you
own shares of common stock in Central Illinois Bancorp, Inc. This proxy
statement describes issues on which we would like you, as a
shareholder, to vote. It also gives you information on these issues so
that you can make an informed decision.
When you sign the proxy card, you appoint Steven T. Klitzing and Donald
J. Straka as your representatives at the meeting. Steven T. Klitzing
and Donald J. Straka will vote your shares, as you have instructed them
on the proxy card, at the meeting. This way, your shares will be voted
whether or not you attend the annual meeting. Even if you plan to
attend the meeting, it is a good idea to complete, sign and return your
proxy card in advance of the meeting just in case your plans change.
If you have signed and returned the proxy card and an issue comes up
for a vote at the meeting that is not identified on the card, Steven T.
Klitzing and Donald J. Straka will vote your shares, under your proxy,
in accordance with their best judgment.
<PAGE> 7
Q: WHAT MATTERS WILL BE VOTED ON AT THE MEETING?
A: You are being asked to vote on the election of three directors of the
Company, the adoption of the 1999 Plan, a proposed change in the state
of incorporation of the Company from Illinois to Wisconsin and a
proposal to adjourn the annual meeting in the discretion of the
Company's management. We have described all of these matters more fully
in the attached proxy statement.
Q: HOW DO I VOTE?
A: You may vote either by mail or in person at the annual meeting. To vote
by mail, complete and sign the enclosed proxy card and mail it in the
enclosed, prepaid addressed envelope. If you mark your proxy card to
indicate how you want your shares voted on each proposal, your shares
will be voted as you instruct.
If you sign and return your proxy card but do not mark the card to
provide voting instructions, the shares represented by your proxy card
will be voted "for" all three nominees for director named in this proxy
statement, "for" the 1999 Plan, "for" the proposed change in the
Company's state of incorporation from Illinois to Wisconsin and "for"
the proposal to adjourn the annual meeting in the discretion of the
Company's management.
If you want to vote in person, please come to the meeting. We will be
passing out written ballots to anyone who wants to vote at the meeting.
Please note, however, that if your shares are held in the name of your
broker (or in what is usually referred to as "street name"), you will
need to arrange to obtain a proxy from your broker in order to vote in
person at the meeting.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
A: It means that you have multiple holdings reflected in our stock
transfer records and/or in accounts with stockbrokers. Please sign and
return ALL proxy cards to ensure that all your shares are voted.
Q: IF I HOLD SHARES IN THE NAME OF A BROKER, WHO VOTES MY SHARES?
A: We provide each brokerage firm listed in our records as an owner of our
common stock with a sufficient number of copies of this proxy statement
and annual report so that the brokerage firm can forward copies to the
actual owners of the shares. If you received this proxy statement from
your broker, your broker should have provided you with instructions for
giving your broker directions as to how to vote your shares. It will
then be your broker's responsibility to vote your shares for you in the
manner you direct.
Under the rules of various national and regional securities exchanges,
brokers may generally vote on routine matters, such as the election of
directors and a proposal to adjourn the annual meeting in the
discretion of the Company's management, but cannot vote on non-routine
matters, such as the adoption of a stock option plan or a change in the
state of incorporation, unless they have received voting instructions
from the person for whom they are holding shares. Thus, if you do not
give your broker instructions as to how to vote your shares, your
broker will most likely be able to vote on the election of directors
and the proposal to adjourn the annual meeting in the discretion of the
Company's management but will not have discretionary authority to cast
a vote--whether "for" or "against" or "abstain"--on the proposed
adoption of 1999 Plan or the proposed change in the Company"s state of
incorporation. If a broker does not receive instructions from you on
how to vote
2
<PAGE> 8
particular shares on the proposed adoption of the 1999 Plan and/or the
change in the Company's state of incorporation and your broker does not
have discretionary authority to vote on these matters, it will return
the proxy card to us, indicating that he or she does not have the
authority to vote on either or both of these matters, as the case may
be. This is generally referred to as a "broker non-vote" and will
affect the outcome of the voting as described below, under "How many
votes are needed for approval of each proposal?"
We encourage you to provide directions to your broker as to how you
want it to vote your shares on each of the matters to be brought before
the annual meeting. You should do this by very carefully following the
instructions your broker gives you concerning its procedures. This
ensures that your shares will be voted at the meeting.
Q: WHAT IF I CHANGE MY MIND AFTER I RETURN MY PROXY?
A: If you hold your shares in your own name, you may revoke your proxy
and change your vote at any time before the polls close at the meeting.
You may do this by:
- signing another proxy with a later date and returning that proxy to
the Company,
- sending notice to the Company that you are revoking your proxy, or
- voting again at the annual meeting.
You should send any later dated proxy or notice of revocation to:
Central Illinois Bancorp, Inc., N27 W24025 Paul Court, Pewaukee,
Wisconsin 53072, Attention: Donald J. Straka, Secretary.
If you hold your shares in the name of your broker, you will need to
contact your broker to revoke your proxy.
Q: HOW MANY VOTES DO YOU NEED TO HOLD THE MEETING?
A: A majority of the shares that were outstanding and entitled to vote as
of the record date must be present in person or by proxy at the meeting
in order to hold the meeting and conduct business. This is called a
quorum.
Shares are counted as present at the meeting if the shareholder either:
- is present and votes in person at the meeting, or
- has properly submitted a signed proxy card or other form of proxy.
Abstentions will be counted as present at the meeting. If a brokerage
firm indicates that it does not have authority to vote any of the
shares held in its name on a particular proposal, then those shares
will not be considered "entitled to vote" and will not be counted as
present for purposes of determining whether there is a quorum for
consideration of that proposal.
3
<PAGE> 9
Q: WHAT HAPPENS IF ANY NOMINEE IS UNABLE TO STAND FOR RE-ELECTION?
A: The Board may, by resolution, provide for a lesser number of directors
or designate a substitute nominee. In the latter case, shares
represented by proxies may be voted for a substitute nominee. Proxies
cannot be voted for more than three nominees. The Board has no reason
to believe any nominee will be unable to stand for re-election.
Q: WHAT OPTIONS DO I HAVE IN VOTING ON EACH OF THE PROPOSALS?
A: You may vote "for," "against," or "withhold authority to vote for" each
nominee for director. You may vote "for," "against," or "abstain" on
each of the other proposals.
Q: HOW MANY VOTES ARE NEEDED FOR APPROVAL OF EACH PROPOSAL?
A: There are differing vote requirements for each of the proposals.
In order to be elected, each director must receive the affirmative vote
of a majority of the shares present in person or by proxy at the
meeting and entitled to vote. If you "withhold authority" to vote for a
particular nominee, your vote will have the same effect as a vote
against such person's election as a director. Since brokers generally
have discretionary authority to vote on the election of directors, the
Company is unlikely to receive any broker non-votes on the election of
directors.
The 1999 Plan must also receive the affirmative vote of a majority of
the shares present in person or by proxy at the meeting and entitled to
vote. An abstention will have the same effect as a vote against the
approval of the 1999 Plan. Broker non-votes will not be counted as
entitled to vote and will thus not count for purposes of determining
whether or not a quorum is present on this matter. So long as a quorum
is present, broker non-votes will have no effect on the outcome of the
vote on the 1999 Plan.
Under the Company's articles of incorporation, approval of the change
in the Company's state of incorporation from Illinois to Wisconsin
requires the affirmative vote, not of a majority of the shares present
in person or by proxy at the meeting and entitled to vote, but of a
majority of the shares outstanding and entitled to vote on the
proposal. As a result, both abstentions and broker non-votes will have
the same effect as votes against this proposal.
If fewer shares of common stock are voted in favor of approval of the
reincorporation than the number required for approval, it is expected
that the annual meeting will be adjourned to allow additional time to
solicit additional proxies or votes, and, at any subsequent reconvening
of the annual meeting, all proxies will be voted in the same manner as
the proxies would have been voted at the original convening of the
annual meeting (except for any proxies which have been effectively
revoked or withdrawn before the meeting is reconvened). In order for
adjournment to be allowed, the proposal relating to adjournment must
receive the affirmative vote of a majority of the shares present in
person or by the proxy at the meeting and entitled to vote.
Q: HOW ARE VOTES COUNTED?
A: Voting results will be tabulated and certified by our transfer agent,
Marine Trust and Investment Company.
4
<PAGE> 10
Q: WHERE DO I FIND THE VOTING RESULTS OF THE MEETING?
A: We will announce preliminary voting results at the meeting, and we will
issue a press release announcing those results. We will also file a
Current Report on Form 8-K to announce the results on the proposed
change in the Company's state of incorporation. We will file that
report with the Securities and Exchange Commission, and you can get a
copy by contacting the Securities and Exchange Commission or through
the SEC's EDGAR system on its home page at www.sec.gov.
Q: WHO BEARS THE COST OF SOLICITING PROXIES?
A: The Company will bear the cost of soliciting proxies. In addition to
solicitations by mail, officers, directors, or employees of the Company
or its subsidiaries may solicit proxies in person or by telephone.
These persons will not receive any special or additional compensation
for soliciting proxies. The Company also reimburses brokerage houses
and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses for forwarding proxy and solicitation materials
to shareholders.
Q. HOW DO I ASSERT MY RIGHT TO DISSENT FROM THE PROPOSED CHANGE IN THE
COMPANY'S STATE OF INCORPORATION?
Under Illinois law, you have the right to "dissent" from the change in
the Company's state of incorporation and to require the Company to pay
you the fair value of your shares if the proposal is approved and the
reincorporation occurs. To assert that right,
- you must deliver a written demand for payment of your shares before
the vote is taken on the reincorporation proposal, and
- you may not vote in favor of the reincorporation.
Your failure to comply with either of these requirements will result in
the loss of your right to dissent and to receive the fair value of your
shares. See "PROPOSAL 3--PROPOSED REINCORPORATION IN WISCONSIN --
Rights of Dissenting Shareholders" for more information.
5
<PAGE> 11
PROPOSAL 1
ELECTION OF DIRECTORS
We currently have ten directors on our board of directors. Our
directors serve staggered terms. This is accomplished as follows:
- the directors are divided into three classes,
- two classes consist of three directors, and the third class
consists of four directors,
- each director serves a three-year term, and
- the term of each class of directors expires in different years.
Three directors will be elected at the 1999 annual meeting to serve for
a three-year term expiring at our annual meeting in the year 2002. The Board has
nominated Jose C. Araujo, Jerry D. Maahs and Howard E. Zimmerman. Each nominee
is currently serving as a director and has consented to serve for a new term.
INFORMATION REGARDING NOMINEES AND DIRECTORS
SERVING POSITION WITH THE COMPANY OR OTHER PRINCIPAL
NAME AND AGE SINCE OCCUPATION AND OTHER DIRECTORSHIPS
- ------------ ----- ----------------------------------
NOMINEES FOR ELECTION AT THE
1999 ANNUAL MEETING TO SERVE UNTIL 2002
---------------------------------------
Jose C. Araujo (53) 1988 President of Joaraucar Consulting, Inc., an
industrial gases service company, since
October 1997; President of Gascarb, a
carbon dioxide manufacturing company, from
February 1969 to September 1997.
Jerry D. Maahs (67) 1987 President of Alto Shaam, Inc. and
Enthermics, Inc., manufacturers of food
service equipment, since 1968; also
Chairman of AS International, an
international sales company since 1975.
Howard E. Zimmerman (70) 1987 Chairman of the Board of Zimmerman Real
Estate Group, a real estate appraisal and
consulting company, since 1986.
6
<PAGE> 12
SERVING POSITION WITH THE COMPANY OR OTHER PRINCIPAL
NAME AND AGE SINCE OCCUPATION AND OTHER DIRECTORSHIPS
- ------------ ----- ----------------------------------
DIRECTORS CONTINUING TO SERVE UNTIL 2000
----------------------------------------
John T. Bean (38) 1998 President, Director and Chief Executive
Officer of CIB Bank (Illinois), a
subsidiary bank of the Company, since
January 1997; Executive Vice President of
Central Illinois Bank MC, a subsidiary bank
of the Company, from October 1994 to
January 1997; Senior Vice President of
Central Illinois Bank, a subsidiary bank of
the Company, from October 1993 to October
1994.
Steven C. Hillard (36) 1992 President of CMI Johnson-Ross Corporation,
a manufacturer of construction equipment,
since July 1997; President and C.E.O. of
Hilmun Holdings, Inc., a diversified
holding company with interests in
manufacturing, real estate development, and
financial investments, since September
1991; President of Central Illinois Bank MC
from October 1992 to October 1994.
J. Michael Straka (61)1 1987 President and Chief Executive Officer of
the Company since 1987; President, Chief
Executive Officer and a director of First
Ozaukee Capital Corp., a subsidiary of the
Company; since 1997, and President,
Chairman and a director of Hillside
Investors Ltd., a subsidiary of the
Company, since 1994; director or chairman
and director of each of the Company's bank
and non-bank subsidiaries, including
Central Illinois Bank, since 1987, CIB Bank
(Illinois), since 1994, Marine Bank and
Savings, since 1997, CIB Bank (Indiana),
since 1998, C.I.B. Data Processing
Services, Inc., since 1990, Mortgage
Services, Inc., since 1995, and Marine
Trust and Investment Company, since 1998.
- ------------------------
1 Mr. J. Michael Straka, President, Chief Executive Officer and a
director of the Company, is the father of Donald J. Straka, a Senior
Vice President, Secretary and General Counsel of the Company, and
Patrick J. Straka, a Senior Vice President and Chief Investment
Officer of the Company.
7
<PAGE> 13
SERVING POSITION WITH THE COMPANY OR OTHER PRINCIPAL
NAME AND AGE SINCE OCCUPATION AND OTHER DIRECTORSHIPS
- ------------ ----- ----------------------------------
DIRECTORS CONTINUING TO SERVE UNTIL 2001
----------------------------------------
Norman E. Baker (52) 1988 President and CEO of Estoy Pronto, Inc., a
consulting and investment company, since
July 1994; Partner in A and B Partnership,
a real estate investment company, and
President and CEO of Associated Storage and
Transfer, a warehousing and trucking
company, from July 1969 to July 1996.
W. Scott Blake (38) 1987 President of Blake Capital Corp., a real
estate development, investment and property
management company, since July 1998;
President of Blake-Weise Real Estate Group,
a real estate development, investment and
property management company from October
1988 to June 1998.
Dean M. Katsaros (43) 1995 Owner of Katsaros & Associates, a tax and
accounting business, since September, 1981;
Chairman of KSB Benefit Consultants, Inc.,
a provider of third-party administrative
services for defined contribution plans,
since May 1994; and General Partner, KB
Consultants, a computer equipment sales and
computer consulting services company, since
May, 1990.
Donald M. Trilling (68) 1987 Secretary/Treasurer of Illini Tile
Distributors Inc, an importer and
distributor of ceramic tiles, since 1983,
and President of Tiles of Italy, Ltd., an
importer of ceramic tiles, since 1975.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held 12 meetings during 1998. The
Board of Directors has standing Audit/Examination and Personnel/Compensation
Committees. The Company does not have a standing nominating committee. In 1998,
each director of the Company attended at least 75% of the aggregate number of
meetings of the Board of Directors and meetings of any committee on which he
served.
The Audit/Examination Committee consists of Jose C. Araujo, W. Scott
Blake, Dean M. Katsaros, and Donald M. Trilling. Effective November 1998, Mr.
Katsaros became the Chairman of this Committee. This Committee met once during
1998. This Committee's duties include:
- - reviewing with management and the Company's independent public
accountants the basis for their respective reports;
8
<PAGE> 14
- - reviewing with management and the Company's independent public
accountants the scope of services required by the audit, significant
accounting policies, and audit conclusions regarding significant
accounting estimates;
- - reviewing with management and the Company's independent public
accountants their assessments regarding internal controls, and
the resolution of identified weaknesses or reportable conditions, if
any, in internal controls, including the prevention or detection of
management override or compromise of the internal control system;
- - discussing with management the selection and/or termination of the
Company's independent public accountants and any significant
disagreements between the accountants and management; and
- - overseeing the internal audit function.
Effective as of February 25, 1999, the Personnel/Compensation Committee
consists of W. Scott Blake, Dean M. Katsaros, and Howard E. Zimmerman. Mr.
Zimmerman is the Chairman of this Committee. From January 28, 1998 until
February 25, 1999, the Personnel/Compensation Committee consisted of Norman E.
Baker, W. Scott Blake, John T. Bean, Jerry D. Maahs, J. Michael Straka and
Howard E. Zimmerman. This Committee met twice during 1998. This Committee's
duties include:
- - establishing policies relating to executive compensation;
- - determining the salary and bonus of the President and Chief
Executive Officer of the Company; and
- - recommending to the Board of Directors the adoption of, or any
substantive amendments to, any employee benefit or long-term executive
compensation plan or program in which senior management participates.
If the shareholders of the Company approve the 1999 Plan, this
Committee's duties will also include the administration of the 1999 Plan. See
"PROPOSAL 2 - APPROVAL OF 1999 STOCK OPTION AND INCENTIVE PLAN - Administration"
for more information.
DIRECTORS' FEES AND COMPENSATION
During the 1998 fiscal year, (1) each director except Mr. J. Michael
Straka and Mr. John T. Bean received an annual retainer fee in the amount of
$8,000, and (2) each director, except Mr. Bean, was paid a fee of $600 for each
Board of Directors meeting attended.
On February 25, 1998, under the 1998 non-employee director stock option
plan, each director of the Company who was not an employee of the Company or any
of its subsidiaries also received an option to purchase 100 shares of common
stock. The exercise price per share for each option granted was $1,960.56, an
amount equal to 1.75 times the book value per share of the common stock as of
the last day of the calendar month preceding the date of grant. The options
become exercisable in five equal annual installments, beginning February 25,
1999, and expire on February 25, 2008.
9
<PAGE> 15
DIRECTORS' DEFERRED COMPENSATION PLAN
Effective December 1994, the Company adopted a plan allowing
directors to elect to defer receipt of all or a portion of their directors'
fees. Under these plans, any director may enter into a written deferred
compensation agreement under which that director's fees are retained by the
Company in a segregated account. These fees remain an asset of the Company,
subject to the claims of the Company's creditors, until paid to the director
under the agreement. The deferred directors' fees accrue interest, and a
director has a right to cancel future deferrals at any time. The fees may be
withdrawn and are payable in equal monthly installments over a period of 5 years
at the time of retirement or upon the death of the director either before or
after retirement. If the director resigns from the board, the deferred fees are
paid in full in a single lump sum payment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, Mr. John T. Bean was the President, Chief Executive
Officer and a director of CIB Bank (Illinois), a subsidiary bank of the Company.
During that time, Mr. Bean also served on the Compensation/Personnel Committee
of the Board of Directors, which was responsible, among other things, for fixing
the compensation of Mr. J. Michael Straka. During 1998, Mr. J. Michael Straka
was the President and Chief Executive Officer of the Company and a director of
CIB Bank (Illinois), served on its compensation committee and was responsible
for fixing Mr. Bean's compensation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has business relationships with entities in which directors
of the Company or members of their immediate family have ownership interests.
These business relationships are summarized below. The Company believes each
transaction described was on commercially reasonable terms.
Mr. Katsaros is a director of the Company and the owner of Katsaros
and Associates, a tax and accounting business. The Company and its subsidiaries
paid $3,860 to Katsaros and Associates for tax and accounting services in
1998. Mr. Katsaros is also a general partner of KB Consultants, a partnership
that sells computer equipment and services. The Company purchased $271,618 in
computer hardware and services from KB Consultants in 1998. Mr. Katsaros is also
an owner and officer of KSB Benefit Consultants, Inc., a corporation providing
benefit plan consulting and administration services. In 1998, the Company paid
KSB Benefit Consultants, Inc. $18,737 for administering the Company's ESOP and
401(k) Plans. In 1998, one of the Company's subsidiary banks also paid $20,147
in rental payments to KSB Benefit Consultants for space that the subsidiary
bank subleased from KSB Benefit Consultants from January to July, 1998. In July
1998, the subsidiary bank assumed primary responsibility for the lease, and KSB
Benefit Consultants paid the subsidiary bank $24,709 in rental payments for
space that it subleased from the subsidiary bank for the remainder of 1998.
Mr. J. Michael Straka is a director of the Company. Mr. Straka's wife,
Karen Straka, operates a sole proprietorship known as Plank & Peg that sells
antiques. During 1998, the Company and its subsidiaries paid Plank & Peg $97,239
in connection with the purchase of antiques to furnish their office facilities.
MANAGEMENT INDEBTEDNESS
Directors and executive officers of the Company, including members of
their immediate families and companies with which they are affiliated, were
customers of, and had banking transactions with, the Company's subsidiary banks
in the ordinary course of business during 1998. These transactions included
loans, fiduciary relationships, and deposits. All loans to the Company's
directors and executive officers, any member of their immediate family, or any
corporation or organization of which any of them is an executive
10
<PAGE> 16
officer or partner or is, directly or indirectly, the beneficial owner of 5% or
more of any class of equity securities were (1) made in the ordinary course of
business, (2) made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
unrelated persons, and (3) did not involve more than the normal risk of
collectibility or present other unfavorable features.
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 31, 1999, the number of
shares of common stock beneficially owned by (i) each director of the Company
(including nominees), (ii) each of the executive officers named in the Summary
Compensation Table included in this proxy statement, and (iii) all directors and
executive officers of the Company as a group. Except as otherwise indicated,
each person listed has sole voting and investment power over shares beneficially
owned.
Common Shares Percent
Name of Beneficial Owner Beneficially Owned of Class(1)
------------------------ ------------------ -----------
Jose C. Araujo 583(2) *
Norman E. Baker 2,441(3) 2.28%
John T. Bean 241(4) *
W. Scott Blake 921(5) *
Steven C. Hillard 1,009(6) *
Dean M. Katsaros 1,664(7) 1.55%
Jerry D. Maahs 1,931(8) 1.80%
Donald J. Straka 69(9) *
J. Michael Straka 1,834(10) 1.71%
Donald M. Trilling 1,474(11) 1.38%
Howard E. Zimmerman 1,033(12) *
All directors and executive
officers as a group (15 persons) 14,048(13) 12.95%
- ---------------
* Less than one percent.
(1) Based on 107,153 shares outstanding as of March 31, 1999.
(2) Includes 33 shares that Mr. Araujo has the right to acquire within 60 days
upon the exercise of stock options.
(3) Includes 33 shares Mr. Baker has the right to acquire within 60 days upon
the exercise of stock options.
11
<PAGE> 17
(4) Includes 50 shares jointly owned by Mr. Bean and his wife, 13 shares owned
by Mr. Bean's wife, and 91 shares that Mr. Bean has the right to acquire
within 60 days upon the exercise of stock options.
(5) Includes 33 shares that Mr. Blake has the right to acquire within 60 days
upon the exercise of stock options.
(6) Includes 159 shares Mr. Hillard has the right to acquire within 60 days
upon the exercise of stock options.
(7) Includes 375 shares jointly owned by Mr. Katsaros and his wife, and 36
shares that Mr. Katsaros has the right to acquire within 60 days upon the
exercise of stock options.
(8) Includes 1,900 shares jointly owned by Mr. Maahs and his wife, and 31
shares that Mr. Maahs has the right to acquire within 60 days upon the
exercise of stock options.
(9) Includes 30 shares Mr. Straka has the right to acquire within 60 days upon
exercise of stock options and 32 shares owned by a partnership with
respect to which Mr. Straka shares voting and investment power.
(10) Includes 864 shares jointly owned by Mr. Straka and his wife, 20 shares
owned by Mr. Straka's wife, 57 shares owned by partnerships with respect to
which Mr. Straka shares voting and investment power, and 371 shares that
Mr. Straka has the right to acquire within 60 days upon the exercise of
stock options.
(11) Includes 531 shares held in a trust for the benefit of Mr. Trilling's wife,
and 38 shares that Mr. Trilling has the right to acquire within 60 days
upon the exercise of stock options.
(12) Includes 75 shares held in a trust for the benefit of Mr. Zimmerman's wife
and 33 shares Mr. Zimmerman has the right to acquire within 60 days upon
the exercise of stock options.
(13) Includes, in addition to those shares footnoted above, 456 shares which the
executive officers as a group have the right to acquire within 60 days upon
the exercise of stock options.
EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation for
each of the last two fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the General Counsel, Senior Vice President and
Secretary of the Company. None of the Company's other executive officers
received in excess of $100,000 in total salary and bonus for such services in
the last two fiscal years, and therefore no other executive officers are listed.
12
<PAGE> 18
SUMMARY COMPENSATION TABLE*
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION (1) LONG-TERM COMPENSATION
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER ALL
ANNUAL OTHER
NAME PRINCIPAL POSITION YEAR SALARY BONUS COMP AWARDS PAYOUTS COMP.
- -----------------------------------------------------------------------------------------------------------------------------------
SECURITIES
RESTRICTED UNDERLYING
STOCK STOCK LTIP
AWARDS OPTIONS(#) PAYOUTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Michael President and 1998 $207,338 $0 $53,550(2) $0 159 $0 $6,775(3)
Straka Chief Executive 1997 $150,000 $8,060 $34,700(2) $0 0 $0 $1,706(3)
Officer
Donald J. Senior Vice 1998 $107,934 $0 $0 $0 103 $0 $1,320(5)
Straka President,
General Counsel 1997 $ 43,771(4) $0 $0 $0 46 $0 $0
and Secretary
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Because the Company did not become a reporting company until June, 1998, this
table includes information for 1997 and 1998 only.
(1) Includes amounts earned in the fiscal year, whether or not deferred.
(2) Consists of payments for attendance at meetings of the Board of
Directors of the Company and regular and committee meetings of the
board of directors of its subsidiaries in 1997 and 1998.
(3) Includes imputed compensation from group term life insurance, the
cash value of life insurance and additional term life insurance
policies and auto allowance.
(4) Partial year only. Mr. Donald J. Straka was hired on July 15, 1997
at an annual salary of $95,500.
(5) Includes imputed compensation from group term life insurance and
moving expenses.
OPTIONS
The following tables summarize option grants to and exercises by the
executive officers named in the Summary Compensation Table above during the
1998 fiscal year and the value of the options held by such persons at the
end of the 1998 fiscal year. No stock appreciation rights have been granted
to date by the Company.
13
<PAGE> 19
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
INDIVIDUAL GRANTS IN 1998 ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
10-YEAR OPTION TERM
- -----------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE EXPIRATION
NAME GRANTED EMPLOYEES (1) PRICE (2) DATE(3) 0% 5% 10%
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
J.Michael 159 (4) 7.32% $1,960.56 2/25/08 $0 $196,045 $496,816
Straka
- -----------------------------------------------------------------------------------------------------------------
Donald J. 103 (4) 4.74% $1,960.56 2/25/08 $0 $126,998 $321,837
Straka
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on 2,173 options granted to all employees.
(2) Equal to 1.75 times the book price per share of the common stock as of
the last day of the calendar month preceding February 25, 1998, the
date of grant.
(3) These options become exercisable in 20% annual installments, beginning
February 25, 1999.
(4) In February 1998, the Board of Directors extended, from five to ten
years, the exercise period of all options then outstanding under the
Company's stock option plans. As a result of that action, the
expiration date of 130 options granted to Mr. J. Michael Straka on June
30, 1993 at an exercise price of $742.98 was extended to June 30, 2003,
the expiration date of 90 options granted to Mr. J. Michael Straka on
January 1, 1995 at an exercise price of $1,274.91 was extended to
January 1, 2005, the expiration date of 228 options granted to Mr. J.
Michael Straka on April 25, 1996 at an exercise price of $1,630.51 was
extended to April 25, 2006, and the expiration date of 46 options
granted to Mr. Donald J. Straka on September 24, 1997 at an exercise
price of $2,059.64 was extended to September 24, 2007. None of the
options for which the terms were extended in 1998 are included in the
table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF SECURITIES TOTAL VALUE OF UNEXERCISED,
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS HELD
OPTIONS HELD AT AT FISCAL YEAR END (1)
FISCAL YEAR END
- -------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Michael 0 $0 275 332 $333,362 $200,307
Straka
- -------------------------------------------------------------------------------------------------------------
Donald J. 0 $0 9 140 $ 2,643 $51,325
Straka
- -------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 20
(1) There is no public market for the Company's Common Stock. Current
market value is based on $1,344.77, the book value of the common stock
at December 31, 1998, times 1.75, the multiple of book value at which
the Company sold 16,320 shares of its Common Stock in its most recent
private placement offering beginning in May 1998.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
In January 1998, the Board of Directors approved, upon the
recommendation of the Personnel/Compensation Committee, a long-term cash
incentive plan for Mr. J. Michael Straka, which superseded the long-term
incentive plan for Mr. Straka that was adopted in 1996. The plan provides for
the payment of a cash bonus of $250,000 to Mr. Straka on the fifth business day
of the year 2000 if two of three specified performance goals are met in fiscal
years 1998 and 1999. The goals relate to the Company's asset size, net income
and value per share. The Company met two of the three specified performance
criteria in 1998. The plan further provides that in the event the Company is
sold prior to January 1, 2000 Mr. Straka shall be paid a portion of the $250,000
bonus amount prorated based upon the point in time during this two-year period
at which the sale occurs.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Personnel/Compensation Committee of the Board of Directors is
responsible for developing executive compensation philosophies, determining the
components of the compensation to be paid to the president and chief executive
officer, and assuring that the compensation program is administered in a manner
consistent with compensation objectives.
Compensation of President and Chief Executive Officer and Other Executive
Officers
The Committee determines the salary of the President and Chief
Executive Officer of the Company. Although Mr. J. Michael Straka was a member of
the Compensation Committee in 1998, he did not participate in discussions or
vote on matters relating to his compensation. Mr. J. Michael Straka determines
the salaries of the other executive officers in accordance with the Committee's
compensation policies.
Effective July 15, 1998 Mr. J. Michael Straka's base salary was fixed
at $250,000, an increase of 67% over his 1997 base salary of $150,000. In fixing
Mr. Straka's compensation in 1998, the Committee took into account peer group
information concerning the compensation levels of chief executive officers at
bank holding companies or banks with total assets equal to or greater than $1
billion. The Committee also took into account the Company's growth and
performance in 1998. The Company's net income in 1998 was $8.7 million, as
compared to $5.3 million in 1997, an increase of 64.1%. Total assets at December
31, 1998 were approximately $1.2 billion, as compared to $807.3 at December 31,
1997, an increase of 47.0%. The Company achieved these results primarily through
internal growth, including the opening of new banks and branches, and, to a
lesser extent, acquisitions.
The Committee believes it is appropriate to link a portion of Mr.
Straka's compensation to the future performance of the Company in order to more
closely align his interests with the interests of the Company's shareholders. As
a result, in February 1998, Mr. Straka was granted options to acquire 159 shares
of common stock. In addition, the Committee approved a long-term cash incentive
plan for Mr. Straka in 1998 which superseded the long-term incentive plan for
Mr. Straka that was adopted in 1996. The plan provides for the payment of a cash
bonus of $250,000 in 2000, if certain targeted performance goals are met. See
"Long-Term Incentive Plans--Awards in Last Fiscal Year."
15
<PAGE> 21
Cash Bonus Program; Other Benefit Programs
Employees of the Company and its subsidiaries, including executive
officers, are eligible to participate in a cash bonus program. Bonuses are based
on a percentage of base salary, which increases in graduated steps in the event
that the Company achieves or surpasses budgeted earnings for the fiscal year.
Since executive officers and other senior officers are in a better position to
contribute to the achievement of such goals, the percentage of base salary that
they are eligible to receive as a bonus is proportionately higher.
The Company provides its employees with insurance protection plans,
including medical, dental, life, accidental death and dismemberment, travel and
accident, and disability insurance plans, and vacation and holiday plans. The
Company also makes available to all of its employees, including its executive
officers, a 401(k) plan which permits participants to make voluntary tax
deferred contributions of up to 15% of annual compensation subject to various
limitations. The Company does not match employee contributions to the 401(k)
plan. The Company also has an employee stock ownership plan for the benefit of
employees who have achieved a certain length of service. Executive officers are
eligible to participate in all of these plans.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code (the "Code") and related
regulations provide that a public company may not deduct, for federal income tax
purposes, compensation in excess of $1 million per year paid to the chief
executive officer and the four other most highly compensated executive officers
employed by the company at year-end, other than compensation which qualifies as
"performance-based compensation" under the Code and related regulations or is
otherwise exempt from the provisions of Section 162(m). In designing future
compensation programs for the chief executive officer and other highly
compensated executive officers, the Committee will take into account the
deductibility of such compensation under Section 162(m).
Norman E. Baker, Committee Member
John T. Bean, Committee Member
W. Scott Blake, Committee Member
Dean M. Katsaros, Committee Member
Jerry D. Maahs, Committee Member
J. Michael Straka, Committee Member
Howard E. Zimmerman, Committee Chairman
COMMON STOCK PERFORMANCE
The following graph compares, on a cumulative basis, the percentage
changes since June 30, 1998 in (a) the total shareholder return on the Common
Stock, (b) the total return of all companies listed on The NASDAQ Stock Market
("NASDAQ Composite"), and (c) the total return of financial institutions traded
on the NASDAQ Market ("NASDAQ Bank"). The Company's common stock was registered
under Section 12(b) of the Securities Exchange Act of 1934 on June 25, 1998, and
information is therefore provided only since June 30, 1998.
16
<PAGE> 22
There is no established public trading market for the Company's common
stock, and the Company is aware of only isolated transactions in its Common
Stock in 1998. The information provided for the Company is based on changes in
book value and may not be representative of shareholder return.
6/30/98 12/31/98
------- --------
CENTRAL ILLINOIS BANCORP, INC. 100.00 104.63
NASDAQ BANK 100.00 86.57
NASDAQ COMPOSITE 100.00 115.90
PROPOSAL 2
APPROVAL OF 1999 STOCK OPTION
AND INCENTIVE PLAN
On March 25, 1999, the Board of Directors approved the Central Illinois
Bancorp, Inc. 1999 Stock Option and Incentive Plan (the "1999 Plan"). The 1999
Plan provides for the grant of options to acquire shares of the common stock to
(1) key employees of the Company and its subsidiaries, (2) non-employee
directors of the Company, and (3) non-employee directors of the Company's
subsidiaries, including outside directors of the Company's subsidiary banks. The
purpose of the 1999 Plan is to enable the Company and its subsidiaries to
attract, retain and reward key employees and non-employee directors by offering
them an opportunity to have a greater proprietary interest in and closer
identity with the Company and its financial success.
Since 1992, the Board of Directors has adopted, and the Company's
shareholders have approved, a total of 12 stock option plans for the benefit of
key employees of the Company and its subsidiaries, non-employee directors of the
Company, and non-employee directors of the Company's subsidiaries. As of March
31, 1999, options to acquire a total of 5,795 shares of common stock were
outstanding under these plans.
If the 1999 Plan is approved by the shareholders, the Company intends
to merge all of its existing stock option plans into the 1999 Plan. Subject to
the execution of a new option award agreement with each option holder, each
option that was granted under an existing plan will be governed by the 1999
Plan, although no changes will be made to the number of shares subject to the
option, the exercise price, the vesting schedule, the date of grant or the
expiration date. Several provisions of the 1999 Plan, such as those relating to
the transferability of options or the payment method upon exercise of an option,
differ from the provisions in the existing stock option plans.
A total of 11,750 shares will be authorized for issuance under the 1999
Plan. Of that amount, 5,795 shares will be reserved for issuance upon the
exercise of options outstanding under the merged stock option plans, and 5,955
shares will be available for future grants under the 1999 Plan.
A copy of the 1999 Plan is attached as Appendix A to this proxy
statement. The following discussion of the material features and provisions of
the 1999 Plan is qualified in its entirety by reference to Appendix A.
17
<PAGE> 23
VOTE REQUIREMENT
The affirmative vote of a majority of the votes cast by the holders of
common stock present, in person or by proxy, and entitled to vote at the 1999
annual meeting is required in order to approve the 1999 Plan. Abstentions will
be counted in determining the total number of votes cast on the proposal at the
1999 annual meeting. As a result, an abstention will have the same effect as a
vote "against" the approval of the 1999 Plan. Broker non-votes will not be
counted as entitled to vote and will thus not count for purposes of determining
whether or not a quorum is present. Provided that a quorum is present, broker
non-votes will have no effect on the outcome of the vote on the 1999 Plan.
EFFECT OF VOTE ON OUTSTANDING OPTIONS
Options granted under the existing stock option plans will remain
outstanding whether or not the 1999 Plan is approved by the shareholders. If the
1999 Plan is not approved by the Company's shareholders, the existing stock
option plans will remain in effect.
ADMINISTRATION
Under the terms of the 1999 Plan, a committee of no fewer than three
non-employee directors (the "Committee") appointed by the Board of Directors
will administer the plan. The Company anticipates that the
Personnel/Compensation Committee of the Board of Directors will serve as the
Committee under the 1999 Plan. The Committee has the authority to interpret the
1999 Plan, prescribe, amend and rescind rules and regulations relating to it,
determine the terms and provisions of options granted under the 1999 Plan (which
need not be identical), and make other determinations as it deems necessary and
advisable for the administration of the 1999 Plan. The Committee also has the
authority to delegate decisions with respect to Options granted to key employees
who are not elected officers or directors of the Company or its subsidiaries to
any elected officer of the Company and to delegate decisions with respect to Key
Employees who are elected officers of the Company or its subsidiaries (other
than the Chief Executive Officer of the Company) to the Chief Executive Officer.
Any decision by the Committee or the Chief Executive Officer to grant
an award under the 1999 Plan is subject to ratification by the Board of
Directors of the Company. The Company will also require the Board to ratify any
decision that affects the terms or conditions of options awarded to elected
officers or directors of the Company or its subsidiaries.
SHARES SUBJECT TO THE 1999 PLAN
If the 1999 Plan is adopted, 11,750 shares of common stock will be
authorized for issuance under the plan, which amount includes 5,795 shares
reserved for issuance upon the exercise of outstanding options granted under the
existing stock option plans and 5,955 shares available for future grants under
the 1999 Plan. Common stock issued upon the exercise of options granted under
the 1999 Plan may be either authorized but unissued shares or shares reacquired
by the Company and held in treasury. The grant of an option will reduce the
number of shares of common stock available for grant under the 1999 Plan by the
number of shares of common stock subject to such option. If an option granted
under the 1999 Plan expires unexercised, terminates or lapses, any shares of
common stock subject to such option will again be available for grant.
18
<PAGE> 24
In the event that shares of the Company's common stock are subdivided
or consolidated as a result of a reorganization, stock split, payment of a stock
dividend, reverse stock split or other change in the Company's capitalization,
the Committee has the authority to make appropriate adjustments in the shares of
common stock available for issuance under the 1999 Plan, the number of shares
subject to options that may have been or may be awarded to any participant in
any 12-month period, the price, number of shares of common stock or kind of
securities subject to outstanding options, or the terms of such options in order
to prevent dilution or enlargement of rights under the options. In addition, the
Board may also change the kind of securities available for grant under the 1999
Plan to reflect any such corporate changes.
ELIGIBILITY
Only the following persons will be eligible to participate in the 1999
Plan:
- key employees of the Company or its subsidiaries,
- non-employee directors of the Company, and
- non-employee directors of the Company's subsidiaries.
The Committee or the Chief Executive Officer has the discretion to
determine which employees constitute key employees to whom options will be
awarded under the 1999 Plan, and there is therefore no fixed number of employees
eligible to participate in the 1999 Plan. In 1998, options were awarded to a
total of 41 key employees. As of the date hereof, a total of eight non-employee
directors on the Company's Board of Directors and 24 other persons who are
non-employee directors of the Company's bank and non-bank subsidiaries will also
be eligible to participate in the 1999 Plan.
TYPES OF OPTIONS
Options granted to key employees will be either incentive stock options
("ISOs") intended to qualify under Section 422 of the Code, or non-statutory
options ("NSOs") not intended to qualify under Section 422 of the Code. All
options granted to non-employee directors of the Company or non-employee
directors of the Company's subsidiaries under the 1999 Plan will be NSOs. For a
description of the differing tax consequences of ISOs and NSOs to the optionee
and the Company, see "Federal Income Tax Consequences."
GRANT OF OPTIONS
Under the 1999 Plan, the Committee may grant options to key employees
or non-employee directors at any time. The Committee or Chief Executive Officer,
as the case may be, will determine the number of shares of common stock subject
to options to be granted to each key employee or non-employee director. During
any 12-month period, the Committee may not grant to any single key employee
under the 1999 Plan options to acquire more than 1,000 shares, as such number
may be adjusted from time to time as a result of a recapitalization, stock
dividend, stock split or similar corporate event. No participant in the 1999
Plan may hold or exercise options for the purchase of an aggregate number of
shares in excess of 25% of the total number of shares available for future
grants of options under the 1999 Plan, as such number may be adjusted from time
to time as a result of a recapitalization, stock dividend, stock split or
similar corporate event.
19
<PAGE> 25
OPTION PRICE
The purchase price per share of common stock to be paid by a key
employee or non-employee director upon the exercise of either an ISO or a NSO
will be at least 100 % of the fair market value of a share of common stock on
the date on which the option was granted. NSOs granted under certain existing
Company stock option plans were granted at an exercise price of more than 100%
of the fair market value of a share of common stock on the date of grant. In the
case of an ISO granted to a key employee owning more than 10% of the voting
stock of the Company or its subsidiaries, the price will be at least 110% of the
fair market value of the common stock on the date of grant.
Under the 1999 Plan, if the common stock is principally traded on a
national securities exchange or the Nasdaq Stock Market's National Market at the
time of grant, the Company is required to use, as fair market value, the average
of the closing prices of the common stock for the 10 consecutive trading days
immediately before the date of grant. If the common stock is traded on a
national securities exchange or the Nasdaq Stock Market's National Market, but
no closing prices are reported for such 10-day period, or if the common stock is
principally traded in the over-the-counter market, the Company is required to
use, as fair market value, the average of the mean between the bid and asked
prices reported for the Company's common stock at the close of trading during
such 10-day period before the date of grant. If the common stock is traded
neither on a national securities exchange or the Nasdaq Stock Market's National
Market nor in the over-the-counter market or if bid and asked prices are
otherwise not available, the Committee has the right to determine, in good
faith, the fair market value of the common stock on the date of grant, subject
to ratification of the grant by the Board of Directors.
EXERCISABILITY OF OPTIONS
The Committee or, to the extent that such authority has been delegated
to the Chief Executive Officer, the Chief Executive Officer will determine, at
the time of grant, when each option granted under the 1999 Plan will become
exercisable. Notwithstanding the foregoing, all options held by a key employee
or a non-employee director of the Company or its subsidiaries will become
immediately exercisable, whether or not exercisable at the time, upon the death
or disability of the key employee or non-employee director or on a "change in
control" of the Company, as defined in the 1999 Plan. See "--Expiration of
Options; Effect of Termination of Employment or Service," and "-- Provisions
Relating to a 'Change in Control' of the Company."
EXPIRATION OF OPTIONS; EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE
No option will be exercisable more than ten years from the date the
option is granted, and no ISO granted to a key employee owning more than 10% of
the voting stock of the Company or its subsidiaries will be exercisable more
than five years from the date the ISO is granted.
Death or Disability. If a participant in the 1999 Plan ceases to be an
employee or a non-employee director of the Company or its subsidiaries due to
death or disability (as determined by the Committee or the Chief Executive
Officer, as applicable), the participant or his or her beneficiary or permitted
transferee, as the case may be, will be permitted to exercise any options held
by the participant on the date of termination of employment or service on the
board, whether or not exercisable as of such date, for a period of 12 months
following such date, but in no event later than the expiration date of the
options.
Termination by the Company without Cause. If the Company or any of its
subsidiaries terminates a participant's employment with, or service on the board
of, the Company or its subsidiaries without cause,
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the participant will be permitted to exercise any options that were exercisable
upon the date of termination of employment or service for a period of 90 days
following such date, but in no event later than the expiration date of the
options.
Termination for Cause; Voluntary Resignation. If (1) the Company or any
of its subsidiaries terminates a participant's employment with, or service on
the board of, the Company or its subsidiaries for cause, or (2) the participant
voluntarily resigns all employment with, or service on the board of, the Company
or its subsidiaries, all options held by the non-employee director or key
employee, whether or not exercisable at the date of termination of employment
service, will be null and void and will terminate. Termination for cause
includes termination for willful misconduct, willful and substantial
non-performance of duty, incompetence, breach of trust, personal dishonesty,
conviction of any felony, and similar reasons.
PAYMENT OF EXERCISE PRICE FOR OPTIONS
Under the 1999 Plan, payment for shares purchased upon exercise of an
option may be made by any of the following methods, subject to certain
requirements in the 1999 Plan: (i) in cash, paid by either the option holder or
a broker to whom the optionee has tendered the option; (ii) in shares of common
stock, delivered to the Company and valued at the fair market value of such
shares on the date of exercise, provided that such shares were held by the
option holder for not less than six months prior to the date of exercise of the
option; (iii) by any other medium of payment that the Committee or the Chief
Executive Officer, as applicable, has authorized at the time of grant (other
than the withholding of shares issuable upon the exercise of options); or (iv)
by any combination of the preceding methods.
TRANSFER OF OPTIONS
Under the 1999 Plan, an ISO may not be sold, assigned or otherwise
transferred. A Plan participant may sell, assign or otherwise transfer NSOs only
to:
- his or her spouse or lineal descendant;
- the trustee of a trust for the primary benefit of his or her spouse
or lineal descendant;
- a partnership of which his or her spouse and lineal descendants are
the only partners; or
- a charitable organization.
These assignments will only be permitted if the assigning key employee or
non-employee director does not receive any compensation in connection with the
assignment and the assignment is expressly approved by the Committee.
PROVISIONS RELATING TO A "CHANGE IN CONTROL" OF THE COMPANY
For purposes of the 1999 Plan, a "change of control" will be deemed to
have occurred if any of the following events occurs:
- any individual, entity, or group acquires beneficial ownership of
15% or more of the outstanding capital stock of the Company
entitled to vote in the election of directors (the "Voting Stock");
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- the commencement by an entity, person, or group (other than the
Company or a subsidiary of the Company) of a tender offer or an
exchange offer for more than 15% of the outstanding Voting Stock of
the Company;
- the effective date of (A) a merger or consolidation of the Company
with one or more other corporations as a result of which the
holders of the outstanding Voting Stock of the Company immediately
prior to such merger or consolidation hold less than 60% of the
voting stock of the surviving or resulting corporation, or (B) a
transfer of substantially all of the assets of the Company other
than to an entity of which the Company owns at least 80% of the
voting stock;
- the election to the Board of Directors of the Company, without the
recommendation or approval of the incumbent Board, of the lesser
of: (A) three directors; or (B) directors constituting a majority
of the number of members of the Board of Directors then in office;
- the occurrence of any transaction, merger or consolidation of the
Company whereby the chief executive officer of the Company
immediately prior to the consummation of such transaction is not
the chief executive officer of the surviving or resulting company
and the members of the Board, or any number thereof immediately
prior to the consummation of such transaction, do not constitute a
majority plus one director of the total number of directors
appointed to the Board of the surviving or resulting company; or
- the liquidation or dissolution of the Company.
INDEMNIFICATION OF THE COMMITTEE
The Company will indemnify the members of the Committee and its
delegatees and the Chief Executive Officer against (1) reasonable expenses
incurred in connection with the defense of any action, suit or proceeding to
which they may be a party by reason of any action taken or failure to act in
connection with the 1999 Plan and (2) against all amounts paid by them in
settlement of or satisfaction of a judgment entered in any such action, suit or
proceeding, except in cases where a Committee member is adjudged liable for
gross negligence or gross misconduct in the performance of his or her duties.
AMENDMENT AND DURATION
The Board may terminate, suspend, or amend the 1999 Plan at any time
without the authorization of shareholders to the extent allowed by law or the
rules of any applicable national securities exchange or other market on which
the Company's shares are then listed or quoted.
Unless required by law, no termination, suspension, or amendment of the
1999 Plan may adversely affect options outstanding under the 1999 Plan, without
the consent of the owners of the options.
NEW PLAN BENEFITS
The Board of Directors has not proposed any option grants to be awarded
if the 1999 Plan is approved by the shareholders. As a result, benefits under
the 1999 Plan in 1999 or thereafter are not determinable. For information on
option grants to the Company's named executive officers in 1998, see "Option
Grants in Last Fiscal Year - Potential Realizable Value." For information on
option grants to the Company's non-executive directors as a group in 1998, see
"Directors' Fees and Compensation."
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On February 25, 1998, the Company's executive officers as a group were
granted a total of 372 options, the Company's non-executive subsidiary directors
as a group were granted a total of 220 options, and the Company's non-executive
officer employees and the executive and non-executive officer employees of the
Company's subsidiaries, as a group, were granted a total of 1,570 options. All
of these options had an exercise price of $1,960.56 and a term of ten years.
Subsequent to February 25, 1998, a total of 231 options were granted to other
non-executive officer employees at exercise prices between $1,971.58 and
$2,279.27, each with an expiration date ten years from the date of grant. In
each case, the exercise price was fixed at 1.75 times the book value of the
common stock as of the last day of the calendar month on or immediately
preceding the date of grant. All of these categories of employees and directors
will be eligible to participate in the 1999 Plan.
FEDERAL INCOME TAX CONSEQUENCES
Under present U.S. federal income tax laws, awards under the 1999 Plan
will have the following tax consequences.
The grant of any option under the 1999 Plan will not give rise to
taxable income to the option holder or to a deduction for the Company. The tax
consequences upon exercise of the option or upon sale of the shares of common
stock acquired upon exercise of the option will depend upon whether it is an ISO
or a NSO.
In the case of an ISO, the option holder does not ordinarily recognize
income, and the Company is not entitled to a deduction, at the time of exercise
of the option. The excess of the fair market value of the common stock at the
date of exercise over the exercise price is, however, a tax preference item and
may lead to alternative minimum tax liability for the option holder at the time
of exercise of the option.
The option holder will be subject to taxation at the time the shares of
common stock acquired upon exercise of the option are sold. If, at the time of
sale,
(1) the option holder has held the common stock acquired upon
exercise of the option for at least two years from the date
the option was granted and one year from the date the option
was exercised, and
(2) the option holder was an employee of the Company or a
subsidiary of the Company continuously from the date of grant
until at least three months before the date of exercise (or
one year before the date of exercise if the option holder's
employment terminated because of disability),
any amount realized upon sale of the common stock in excess of the exercise
price will be taxable to the optionee as long-term capital gain and any loss
will constitute long-term capital loss. In such event, the Company will not be
entitled to a deduction at the time of sale. If, however, the sale occurs within
two years of the date of grant of the option or one year of the date the option
was exercised, the lesser of (1) the excess of the fair market value of the
common stock on the date of exercise over the exercise price, or (2) the excess
of the sale price over the exercise price will be taxable to the option holder
as ordinary income. Under such circumstances, the Company will be entitled to a
deduction in the year that the sale occurs in an amount equal to the income
realized by the option holder.
In the case of a NSO, or in the case of an ISO with respect to which
the option holder does not satisfy the continuous employment requirement
referred to in the preceding paragraph, the option holder will recognize as
ordinary income upon exercise of the option an amount equal to the excess of the
fair market
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value of the common stock on the date of exercise over the exercise price. The
Company will be entitled to a deduction in an amount equal to, and at the same
time that, income is recognized by the option holder, provided that the Company
complies with applicable withholding tax requirements. Upon disposition of the
shares of common stock subject to the option, the option holder will recognize
long-term or short-term capital gain or loss, depending upon the length of time
the shares of common stock were held prior to disposition, equal to the
difference between the amount realized on disposition and the option holder's
adjusted basis in the common stock acquired upon exercise of the option.
If the option holder pays the exercise price of an option in cash, his
or her original tax basis in the common stock acquired upon exercise of the
option will be equal to the sum of the exercise price paid plus the amount that
the option holder is required to recognize as income as a result of the exercise
of the option. If the option holder pays the exercise price of an option by
tendering other common stock then owned by the option holder, the option holder
will not recognize any gain or loss on the tendered stock, and the option
holder's original tax basis for an equal number of shares of common stock
acquired upon exercise of the option will be the same as the option holder's
adjusted tax basis in the tendered stock. The remaining acquired common stock
will have an original tax basis equal to the sum of the amount paid in cash, if
any, plus any amount which the option holder is required to recognize as income
as a result of the exercise of the option.
In lieu of providing cash to the Company to pay withholding tax
liability upon exercise of an option, the option holder may authorize the
Company to withhold shares to be issued pursuant to the exercised option in
payment for such tax liability or may tender common stock he or she owned prior
to the exercise of the option in payment of the tax withholding amount due. Use
of such shares may result in the recognition, for tax purposes, of gain or loss
by the option holder on the shares tendered to the Company to satisfy the option
holder's tax liability. Shares withheld or otherwise delivered to the Company in
payment for withholding tax liabilities will be valued at their fair market
value as of the date on which the amount of tax to be withheld is determined.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1999
PLAN. UNLESS OTHERWISE DIRECTED IN THE PROXY, THE PERSONS NAMED IN THE
ACCOMPANYING PROXY INTEND TO VOTE THE PROXY "FOR" PROPOSAL 2.
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PROPOSAL 3
PROPOSED REINCORPORATION IN WISCONSIN
On April 29, 1999, the Company's Board of Directors unanimously
approved and, for the reasons described below, unanimously recommends that the
Company's shareholders approve a proposal that provides, among other things, for
a change in the Company's state of incorporation from Illinois to Wisconsin (the
"Reincorporation"). The Reincorporation, if approved, will not result in any
change in the business, operations, assets or liabilities of the Company. There
will also be no change in the Company's management. Those persons who are
directors (including persons who are elected directors at this meeting) or
officers of the Company on the date of the Reincorporation will be directors or
officers of the Company following the Reincorporation.
If the Reincorporation is approved, however, the Company's corporate
affairs will be governed by a new corporate charter and by-laws, which differ,
in a number of material respects, from its existing charter and by-laws. The
Company's corporate affairs will also be governed, not by Illinois, but by
Wisconsin law. As a result, approval of the Reincorporation will have a material
effect on how the Company is governed and on your rights, powers and privileges
as a shareholder.
As part of the Reincorporation, the Company will also change its name
to CIB Marine Bancorp, Inc. ("CIB Marine"). The proposed new name combines the
names of the Company's Illinois and Indiana subsidiary banks with the name of
its Wisconsin subsidiary savings bank.
PRINCIPAL REASONS FOR THE PROPOSED REINCORPORATION
The Company has undergone a number of significant changes since its
incorporation as an Illinois corporation in 1985. In September 1987, a group of
investors led by J. Michael Straka, the president and chief executive officer
of the Company, acquired all of the common stock of the Company. At the time of
the acquisition, the Company was headquartered in, and its operations were
limited to, Sidney, Illinois. Since that time, the Company has significantly
expanded its operations, first in Central Illinois and more recently in the
Chicago, Milwaukee, and Indianapolis metropolitan areas. The Company currently
has a total of 35 full-service banking facilities in Illinois, Wisconsin and
Indiana, and has recently filed an application to establish a de novo thrift in
Nebraska. During 1998, the Company moved its principal executive offices to
Pewaukee, Wisconsin, so that management could be nearer to the Company's more
rapidly growing operations in the Chicago and Milwaukee metropolitan areas.
By 1998, the number of holders of record of the Company's common stock
also exceeded 500, and the Company was required to register its common stock
under the Securities and Exchange Act of 1934. The Company became a public
company in June 1998. The Board of Directors anticipates that the Company may
issue additional common stock in a public offering in late 1999 or at a later
date, if the Company needs to raise additional capital and the Board of
Directors determines that market conditions are favorable.
In light of the changes to the Company since the time of its
incorporation and its current status as a public company, the Board of Directors
recently reviewed, with the assistance of legal counsel, the Company's existing
Illinois articles of association (the "Illinois Articles") and Illinois by-laws
(the "Illinois By-laws") to determine whether any changes were appropriate. The
Illinois Articles and Illinois By-laws contain relatively few provisions
intended to strengthen the ability of the Company's Board of Directors to
negotiate more favorable terms for the Company's shareholders in the event of an
unsolicited takeover attempt. The Board of Directors concluded that it was
appropriate to adopt such provisions even though such provisions may also have
the effect of discouraging unsolicited takeover offers that some of its
shareholders might find attractive.
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The Board of Directors also reexamined, at the same time, the
appropriateness of the Company's choice of Illinois as its legal domicile for
corporate law purposes. The Board of Directors concluded that there were certain
advantages to changing the Company's state of incorporation from Illinois to
Wisconsin. Although there are many similarities between Wisconsin and Illinois
corporate law, Wisconsin corporate law provides more statutory antitakeover
protection than Illinois corporate law and provides for mandatory
indemnification of officers and directors. The Board of Directors believes that
the indemnification provisions, in particular, are of value in that they will
permit the Company to continue to attract and retain qualified persons to serve
as directors and to encourage the effective exercise of directors' business
judgment by providing a greater degree of assurance to the directors that they
can act within a wider range of discretion without the threat of litigation.
The Board of Directors also believes that there may be benefits to
conforming the Company's state of incorporation to the location of its principal
executive offices. For example, now that it is headquartered in Wisconsin, the
Company will be in a better position to have an impact on legislation affecting
Wisconsin corporations, than legislation affecting Illinois corporations.
Although the Company is not presently involved in any material litigation,
reincorporating in Wisconsin will also make it more likely that any corporate
disputes involving the Company will be resolved in the same jurisdiction in
which its principal executive offices are located.
Reincorporating in Wisconsin will result in a one-time filing charge of
$10,000. It will neither increase nor reduce the annual franchise taxes the
Company pays in Illinois or any other state in which it conducts business.
MEANS OF EFFECTING THE REINCORPORATION; EFFECTIVE DATE
In order to effect the reincorporation, the Company intends to form a
new, wholly-owned Wisconsin corporation which will be called CIB Marine
Bancshares, Inc. ("CIB Marine"). The Board of Directors has approved a Plan of
Merger (the "Merger Agreement") which provides for the merger of the Company
into CIB Marine. A copy of the Merger Agreement is attached as Appendix B to
this proxy statement. Under the terms of the Merger Agreement, CIB Marine will
be the surviving corporation, and the articles of incorporation of CIB Marine
(the "Wisconsin Articles") and the by-laws of CIB Marine (the "Wisconsin
By-laws") will become the articles and by-laws of the surviving corporation.
Copies of the Wisconsin Articles and Wisconsin By-laws are attached as
Appendices C and D to this proxy statement.
Under the terms of the Merger Agreement, each share of the Company's
Common Stock which is issued and outstanding as of the date of the
Reincorporation will be automatically converted into one share of common stock
of CIB Marine. Outstanding options to purchase shares of the Company's Common
Stock will be automatically converted into options to purchase the same number
of shares of common stock of CIB Marine. All of the assets, liabilities and
other properties of the Company will become assets, liabilities and properties
of CIB Marine in accordance with applicable Illinois and Wisconsin law.
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If the Reincorporation is approved by the shareholders, the Board of
Directors expects to consummate the merger to effect the reincorporation as
promptly as possible following the annual meeting. The Company expects to
obtain, prior to consummation of the Reincorporation, written confirmation from
the Federal Reserve Board that the change in the Company's state of
incorporation will not require any action or approval by the Federal Reserve
Board. Under the terms of the Merger Agreement, the Board of Directors may
abandon the merger at any time if it determines, in its sole discretion, that
the reincorporation is not in the best interests of the Company and its
shareholders.
REQUIRED VOTE; DISSENTERS' RIGHTS
The affirmative vote of the holders of a majority of the outstanding
Common Stock is required for approval of the Reincorporation. Abstentions and
broker non-votes will have the same effect as a vote against the
reincorporation. A vote for approval of the reincorporation will constitute
specific approval of the merger between the Company and its newly formed
Wisconsin subsidiary, as well as other matters included in the description of
the Reincorporation in this proxy statement.
Shareholders of the Company whose shares are not voted in favor of the
reincorporation will have the right to dissent from the merger and to receive
the fair value of their shares under Illinois law. See "--Rights of Dissenting
Shareholders," below.
CHANGES IN THE COMPANY'S ARTICLES AND BY-LAWS TO BE EFFECTED BY THE
REINCORPORATION
The following discussion summarizes the (1) material differences
between the Illinois Articles and Illinois By-laws and the Wisconsin Articles
and Wisconsin By-laws and (2) material differences between the provisions of the
Illinois Business Corporation Act (the "IBCA") and the Wisconsin Business
Corporation Law (the "WBCL") . The discussion is qualified in its entirety by
reference to the Wisconsin Articles and Wisconsin By-laws attached as Appendices
C and D. In the discussion which follows, we sometimes refer to the Company in
its current status as an Illinois corporation as the "Company" and to the
proposed Wisconsin corporation as "CIB Marine."
CAPITAL STRUCTURE
The Company. The Illinois Articles authorize the issuance of 50,000,000
shares of Common Stock, $1.00 par value. As of the date of this proxy statement,
107,153 shares of Common Stock are issued and outstanding. No preferred stock is
authorized, and there is therefore no class of stock with rights superior to the
Common Stock with respect to the payment of dividends or upon the liquidation,
dissolution or winding up of the Company. Under the IBCA, the Board of Directors
may authorize the issuance of additional shares of Common Stock, up to the
maximum number of shares authorized under the Illinois Articles, without any
further action by the shareholders.
CIB Marine. If the Reincorporation is approved, the Wisconsin Articles
will authorize the issuance of the same number (50,000,000) shares of common
stock, $1.00 par value, and 5,000,000 shares of preferred stock, $1.00 par
value. Each of the 107,153 outstanding shares of the Company's Common Stock will
be automatically converted in the Merger into one share of CIB Marine common
stock.
Under the WBCL (as under the IBCA), the Board of Directors may
authorize the issuance of additional shares of common stock, up to the maximum
number of shares authorized under the Wisconsin Articles, without any further
action by the shareholders. In addition, the Board of Directors of CIB Marine
will have the right to authorize the issuance, and fix the rights, terms and
preferences, of one or more series of preferred stock, without further action by
the shareholders. As a result, the Board of Directors will have the authority to
issue shares of preferred stock which have voting rights and take precedence
over the
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common stock with respect to both the payment of dividends and payments upon the
liquidation of the Company.
The Board of Directors has no present intention of issuing shares of
preferred stock. By authorizing such shares under the Wisconsin Articles,
however, the shareholders will be giving the Board of Directors the ability to
take timely advantage of market conditions and issue such shares, should the
need arise. Although the Board of Directors has no present intention of using
shares of preferred stock for such purposes, the ability to authorize and issue
shares of preferred stock could also be used, in certain circumstances, to
discourage or render more difficult a change in control of CIB Marine. For
example, the Board of Directors could authorize the issuance of shares of voting
preferred stock to dilute the voting power of a person seeking to gain control
of CIB Marine or it could privately place shares of voting preferred stock with
purchasers who might be expected to support the Board of Directors in opposing a
change of control. The Board could also issue a series of preferred stock in one
or more transactions with terms that might make the acquisition of a controlling
interest in CIB Marine more difficult or costly.
ELECTION OF DIRECTORS
The Company. The Illinois By-laws provide that the Board of Directors
will consist of ten persons. The IBCA permits, and the Illinois By-laws provide,
that the Company's Board of Directors is to be divided into three classes of
directors, with each class serving a staggered term of three years. Under the
Illinois By-laws, directors are elected by a majority vote of the shares present
in person or by proxy at a shareholders meeting and entitled to vote.
The Company believes that serving staggered terms promotes continuity
and stability in the Company's board of directors, since at any time a majority
of the directors on the Board generally will have had previous experience as
directors. Staggered terms have the effect, however, of making it more difficult
to change the composition of the Board in a relatively short time since at least
two annual meetings of the shareholders, instead of one annual meeting, is
generally required to replace a majority of the directors on the Board.
Since the provision establishing a staggered board is included in the
Illinois By-laws, shareholders can amend or eliminate the provision, and
circumvent the antitakeover effect of a staggered board, by a simple majority
vote at any meeting at which more than 50% of the outstanding shares of common
stock are present or represented by proxy. The Illinois Articles and Illinois
By-laws impose no restrictions on the ability of shareholders to bring such
business before an annual or special meeting.
CIB Marine. The Wisconsin Articles provide that the number of directors
of the corporation is to be initially fixed at ten and thereafter may be fixed,
from time to time, by resolution adopted by a majority of the number of
directors that would have been in office at the time if there were no vacancies
on the Board of Directors (the "Whole Board"). The WBCL permits, and the
Wisconsin Articles provide, that the Board of Directors of CIB Marine will also
be divided into three classes, with each class serving a term of three years.
Under the WBCL, unless otherwise provided in a corporation's articles of
incorporation, directors are elected by a plurality of the votes cast at a
meeting at which a quorum is present. The Wisconsin Articles do not provide
otherwise. The nominee who receives the most votes will therefore be elected,
whether or not the number of votes received constitutes a majority of the votes
cast at the meeting.
The provision establishing a staggered board is included, not in the
Wisconsin By-laws, but in the Wisconsin Articles. The Wisconsin Articles
expressly provide that the provision establishing a staggered board may be
amended only by (1) the vote of a majority of the outstanding shares entitled to
vote in the
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election of directors, if and only if, the amendment has first been approved by
a vote of 75% of the Whole Board, and (2) otherwise, by the vote of 80% of the
outstanding shares of CIB Marine stock then entitled to vote in the election of
directors. As a result, it will much more difficult for a shareholder of CIB
Marine to circumvent the effects of a staggered board.
FILLING OF VACANCIES ON THE BOARD; REMOVAL OF DIRECTORS
The Company. The Illinois By-laws provide that vacancies on the Board
of Directors may be filled by shareholders at any annual or special meeting. The
Illinois By-laws further provide that directors have the right to fill vacancies
resulting from an increase in the size of the board. However, any director
appointed by the Board of Directors to fill such a vacancy will serve only until
the next annual meeting of shareholders. At that point, he or she must be
elected by the shareholders.
The Illinois By-laws also provide that shareholders may remove
directors, with or without cause, at any annual or special meeting of the
shareholders by an affirmative vote of a majority of the outstanding shares
entitled to vote generally in the election of directors. The notice of meeting
must specifically state that a proposal to remove the director will be brought
before the meeting and must identify the director or directors whose removal
will be sought.
These two provisions, in combination, enable shareholders, in a single
meeting, to remove one or all of the directors, without cause, and to fill the
vacancies created by such removal with their own nominees. As a result, they
enable shareholders to circumvent the antitakeover effect of a staggered board.
CIB Marine. The Wisconsin Articles and Wisconsin By-laws provide that,
not the shareholders, but a majority of the Board of Directors has the right to
fill vacancies on the board, no matter how the vacancy is created. Any director
appointed to fill a vacancy on the board will serve out the term of the class of
directors to which he or she is appointed.
The Wisconsin Articles and Wisconsin By-laws further provide that any
director or the entire Board of Directors may be removed from office at any
time, but only for cause, and only upon the affirmative vote of 80% of the
outstanding shares entitled to vote generally in the election of directors. The
WBCL does not define "cause." What constitutes "cause" is determined by the
courts and generally involves fraud, criminal conduct, or abuse of office
amounting to a breach of fiduciary duty to the corporation.
These provisions, in combination, prevent a substantial shareholder
from circumventing the purposes of a staggered board by removing incumbent
directors without cause and then filling the vacancies with its own nominees.
Such provisions will, however, make it more difficult to remove a director even
when a large number of shareholders are dissatisfied with the director's
performance. In particular, the burden of having to prove cause will make
removal of a director much more difficult than at present.
RIGHT OF SHAREHOLDERS TO CALL SHAREHOLDER MEETINGS
The Company. The IBCA and the Illinois By-laws provide that special
meetings of shareholders may be called by the Chairman, the President, or the
Board of Directors, and they require the President to call a special meeting at
the request of the holders of not less than one-fifth of the outstanding shares
entitled to vote on the matter for which the meeting is called. Neither the IBCA
nor the Illinois By-laws specify procedures which must be followed by
shareholders in order to call a special meeting.
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CIB Marine. The Wisconsin By-laws also provide that the Chairman, the
President or the Board of Directors may call special meetings of shareholders.
The WBCL requires, and the Wisconsin By-laws provide, that the Chairman or
President must call a special meeting of shareholders upon the request of the
holders of not less than one-tenth of the votes entitled to be cast on the
matter to be considered at the meeting. If the Reincorporation is approved,
shareholders holding significantly fewer shares of the Company's common stock
will be therefore permitted to demand that a special meeting be called.
Unlike the Illinois By-laws, however, the Wisconsin By-laws require
shareholders to follow certain procedures if they propose to call a special
meeting. More specifically, the Wisconsin By-laws require any shareholder who
proposes to call a special meeting to deliver a signed demand to the Board of
Directors, (1) specifying his name, address, and the number of shares of CIB
Marine stock he or she holds of record or beneficially and the purpose or
purposes for which the special meeting is to be called and (2) requesting the
Board of Directors to fix a special record date for determining shareholders
entitled to demand that a special meeting be called. Shareholders who hold, in
the aggregate, 10% of the outstanding shares of CIB Marine stock entitled to
vote on the matter for which the meeting is called are required to submit signed
demands, containing similar information, within 70 business days of the record
date fixed by the Board of Directors for such purposes. In addition,
shareholders who actively participate in the solicitation of proxies (or, if
fewer than ten shareholders submit demands, all of the shareholders who submit
demands) must enter into an agreement to pay CIB Marine's costs of holding the
special meeting, including its costs in soliciting proxies in opposition to the
shareholder proposal, if the proposals brought by the shareholders at the
special meeting are not approved.
These procedures are intended to ensure that shareholders who exercise
their right to demand a special meeting do so in a sufficiently orderly manner
to enable the Board of Directors to determine that the right has been properly
exercised and to enable the Board of Directors to marshal a response to
proposals that it believes are not in the best interests of CIB Marine and its
shareholders. The requirement with respect to the payment of the costs of
holding such a meeting is also intended to ensure that CIB Marine is not forced
to bear the cost of calling a meeting to consider proposals which do not have
the broad-based support of CIB Marine's shareholders. As a practical matter,
however, the need to comply with such procedures and to assume responsibility
for the costs of the meeting if the proposed business is not approved by the
shareholders will make it more time-consuming and burdensome for shareholders to
call a special meeting following the Reincorporation, notwithstanding the
reduction in the percentage of shares required to demand such a meeting.
ADVANCE NOTICE OF SHAREHOLDER NOMINATIONS AND OTHER PROPOSALS
The Company. The Illinois Articles and Illinois By-laws do not impose
any procedural requirements upon shareholders who want to nominate a director or
to bring business at an annual or special meeting. As a result, any shareholder
who attends an annual or special meeting may nominate a director or introduce a
proposal from the floor.
CIB Marine. The Wisconsin By-laws establish advance notice requirements
for the nomination, other than by or at the direction of the Board of Directors,
of candidates for election as directors and for bringing any business proposal
before an annual meeting of shareholders. In general, to comply with the advance
notice requirements, a shareholder must deliver notice of the nomination or
other business in writing to the Secretary of CIB Marine not less than 60 nor
more than 90 days in advance of the first anniversary of the preceding year's
annual meeting. Those dates are subject to adjustment if the date of an annual
meeting is more than 30 days before or more than 60 days after the anniversary
of the preceding year's annual meeting.
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If the notice is given in connection with a shareholder's nomination of
a director, it must include certain information concerning the proposed nominee,
including the information that would be required to be disclosed in a proxy
statement under the Exchange Act in connection with the solicitation of proxies
for the election of directors (e.g., information about the nominee's involvement
in legal proceedings, background, and relationships with CIB Marine and the
nominee's written consent to being named as a nominee and serving as a
director). If the notice is given in connection with business that the
shareholder proposes to bring before an annual meeting, the notice must include
a brief description of the business to be brought, the reasons for conducting
the business at the annual meeting, and any material interest of the shareholder
in such business.
If CIB Marine calls a special meeting of shareholders for the purpose
of electing one or more directors, a shareholder must also comply with the
advance notice and disclosure requirements in order to nominate a person for
election to such a position. If CIB Marine calls a special meeting to consider
any business other than the election of directors, the business brought before
that meeting will be limited to the business specified in the notice of meeting.
Shareholders will not have the right to propose business at a special meeting of
shareholders called by the Board of Directors or upon the demand of other
shareholders.
The advance notice requirements in the Wisconsin By-laws are intended
to ensure that shareholder nominations and proposals are brought before
shareholder meetings in an orderly manner. They are also intended to give the
Board of Directors adequate time to consider, and inform the Company's
shareholders of the Board's views, concerning the qualifications of proposed
nominees and the advisability or inadvisability of approving any other proposal
brought before the shareholders. Such provisions may, however, have antitakeover
effects since they will preclude a shareholder from using surprise tactics to
nominate his or her own slate of directors or to propose a matter for approval
at a shareholders' meeting. Shareholders will be required to forewarn the Board
of Directors of their intent well in advance of the time that the nomination or
proposal is made.
ACTION BY SHAREHOLDERS BY WRITTEN CONSENT
The Company. Under the IBCA and the Illinois By-laws, the Company's
shareholders may take, without a meeting, any action that could have been taken
at an annual or special meeting, if a consent describing the action taken is
signed (1) by all of the shareholders entitled to vote on the matter, or (2) by
the holders of outstanding shares of the Common Stock having at least the
minimum number of votes that would have been required to authorize the action at
a meeting at which all shares entitled to vote on the action were present and
voting. If the consent is less than unanimous, it will be effective only if
written notice of the proposed action was delivered to all of the shareholders
entitled to vote on the matter at least five days before the consent was signed
and prompt notice of the taking of the action is delivered in writing to those
shareholders who have not signed the consent. There is no requirement that the
Board of Directors first approve the action taken by the shareholders.
CIB Marine. Under the WBCL, shareholders may also take any action that
could have been taken at a shareholders meeting by unanimous written consent.
Action may be taken by less than unanimous consent, however, only if explicitly
authorized by a corporation's articles of incorporation. The Wisconsin Articles
do not permit shareholder action by less than unanimous consent. The probability
of obtaining the written consent of all of the shareholders of a public company
to any action is remote. As a result, if the Reincorporation is approved,
shareholders, for all practical purposes, will be unable to act by written
consent.
The requirement that shareholder action be taken only by unanimous
written consent will prevent the holders of a majority of CIB Marine's
outstanding common stock from using the written consent
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procedure to effect a change in control that might be opposed by the Board of
Directors. At the same time, however, this requirement, when combined with the
advance notice requirements and the procedural requirements for calling a
special meeting of shareholders, will result in a delay in the taking of any
shareholder action which lacks the support of a majority of the Board, whether
or not the action relates to a change of control. Shareholders will generally be
required to wait until the next annual meeting of shareholders to nominate
directors or introduce business or will be required to demand that a special
meeting be called for the purpose of considering the proposed action, provided
that such shareholders hold one-tenth of the shares entitled to vote on the
matter. They will also have to comply, under these circumstances, with the
advance notice and other requirements described above. The Board of Directors
believes that such requirements will result in fuller and more careful
consideration of any matters brought before the shareholders. They will also,
however, make it much more time-consuming and burdensome for a shareholder to
bring such proposals.
INSPECTION OF CORPORATE RECORDS
The IBCA permits any shareholder of record to inspect the corporate
records of a corporation upon a good faith showing of a proper purpose. In
addition, the IBCA requires that a corporation make a shareholders' list
available for inspection within 20 days after the record date or at least 10
days before a shareholders meeting, whichever is earlier, and permit the list to
be inspected by any shareholder during the 10-day period before and during the
meeting.
By contrast, under the WBCL, in order to inspect and copy the corporate
records of a corporation, including the shareholder list, a shareholder must be
a shareholder of record and either have been a shareholder of record of the
corporation for at least six months prior to making a demand or hold at least 5%
of the outstanding shares of the corporation. As a result, a person will be
unable to purchase a nominal number of shares for the sole purpose of obtaining
access to CIB Marine's corporate records. As is the case under the IBCA, under
the WBCL, a shareholder's demand must also be made for a proper purpose. In
addition, under the WBCL, all shareholders may inspect the shareholder list for
a meeting beginning two business days after the notice of a meeting of
shareholders is given and ending at the conclusion of the meeting.
REQUIRED SHAREHOLDER VOTE FOR CERTAIN BUSINESS TRANSACTIONS
Subject to certain limited exceptions, the IBCA requires the
affirmative vote of the holders of two-thirds of the outstanding stock of a
corporation entitled to vote on the matter to approve a proposed plan of merger,
consolidation or exchange between an Illinois corporation and another
corporation, the sale of all or substantially all of the assets of the
corporation, other than in the ordinary course of business, or the voluntary
liquidation of the corporation. The IBCA permits an Illinois corporation to
include a provision in its articles of incorporation which supersedes that
voting requirement, so long as the vote is not reduced to less than a majority
of the outstanding shares. The Illinois Articles include a provision reducing
the voting requirement to a majority of the outstanding shares.
Subject to essentially the same limited exceptions as provided for in
the IBCA, the WBCL requires the affirmative vote of the holders of a majority of
the outstanding stock of a corporation entitled to vote on the matter to approve
a proposed plan of merger, consolidation or exchange between a Wisconsin
corporation and another corporation, the sale of all or substantially all of the
assets of the corporation, other than in the ordinary course of business, or the
voluntary liquidation of the corporation. Notice of the meeting in which the
vote is to be taken must be sent to all shareholders, whether or not they are
entitled to vote on the matter. As a result, the Reincorporation, if approved,
will not result in a change in the shareholder vote required to approve mergers,
consolidations, exchanges, asset sales or voluntary liquidations, unless the
transaction comes within the scope of one or more of the antitakeover provisions
described below under "Differences between the Antitakeover Provisions of the
IBCA and the WBCL."
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DIFFERENCES IN DISSENTERS' RIGHTS
Under the IBCA, the Company's shareholders are entitled to dissent from
a plan of merger, consolidation or exchange, asset sale or certain other
transactions subject to shareholder approval and to receive payment of the "fair
value" of their shares from the corporation if the transaction is completed.
That right and the procedures required to be followed are more fully described
below, under "Rights of Dissenting Shareholders." The right to dissent is not
affected by the existence or non-existence of a public market for the shares. If
a public market for the shares is available, an Illinois corporation may,
however, instruct a shareholder who asserts dissenters' rights to sell his or
her shares in the market. If the shareholder fails to sell the shares, the
Illinois corporation can value those shares at the average closing price (if the
shares are listed on a national exchange) or average of the bid and asked price
quoted by their principal market-maker (if not listed on a national exchange)
for the 10-day period after the instruction to sell was given.
If the Reincorporation is approved, shareholders will have a right to
dissent from the same types of transactions as the transactions from which they
had the right to dissent before the Reincorporation (although their right to
dissent from certain types of amendments to the Wisconsin Articles may be
somewhat more restricted than under the IBCA). Under the WBCL and the Wisconsin
Articles, however, except with respect to business combinations within the
meaning of the WBCL Fair Price Statute (as described below), dissenters' rights
are not available to holders of shares registered on a national securities
exchange or quoted on Nasdaq's automated quotations system on the record date
for a meeting of shareholders at which action is to be taken on a proposed
transaction which would otherwise be subject to dissenters' rights.
The Company's common stock is not currently listed on a national
securities exchange or quoted on Nasdaq. It is unclear that the difference in
dissenters rights under the IBCA and the WBCL would have a meaningful effect on
a shareholder's dissenters rights if the Company's common stock were to be
listed on an exchange or traded on Nasdaq at a later date. Under such
circumstances, under the IBCA, the Company would have the right to direct a
dissenting shareholder to sell his or her shares in the market or to treat the
average market price, as specified above, as the measure of the fair value of
the shares if the shareholder fails to sell them. As a result, a shareholder who
exercises his or her dissenters' rights under the IBCA under such circumstances
may not, as a practical matter, be in any better a position than a shareholder
who lacks such rights under the WBCL. In either case, the shareholder will not
receive any greater value for his or her shares than their then current market
value in the public market in which the shares are then traded.
DIFFERENCES BETWEEN THE ANTITAKEOVER PROVISIONS OF THE IBCA AND THE WBCL
As an Illinois corporation, the Company is currently protected by
certain provisions of the IBCA which might be deemed to have an antitakeover
effect. As a Wisconsin corporation, CIB Marine will be protected by similar and
parallel provisions, together with certain other types of antitakeover
provisions not included in the IBCA. The similarities and differences between
these provisions are described below.
Fair Price Statutes. The IBCA and the WBCL both include "fair price
statutes" which require the approval of certain business transactions involving
an "interested shareholder" by a super-majority vote of the shareholders
entitled to vote on the matter, unless certain "fair price" and other
requirements specified in the statute are met. Section 7.85 of the IBCA (the
"Illinois Fair Price Statute") currently applies to the Company, and Sections
180.1130 to 180.1134 (the "Wisconsin Fair Price Statute") will apply to CIB
Marine, if the Reincorporation is approved.
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Under Section 7.85 of the IBCA, the Company is precluded from entering
into a "business combination" with an "interested shareholder" unless the
transaction has been approved by (1) the holders of at least 80% of the
outstanding shares of the Common Stock and (2) the holders of a majority of the
shares of Common Stock not held by the interested shareholder or his or her
affiliates or associates.
A "business combination" is defined as (1) any merger, consolidation,
or share exchange of the corporation or a subsidiary with an interested
shareholder or any corporation which would become an affiliate or associate of
the interested shareholder following the merger, consolidation or share
exchange; (2) any type of encumbrance or disposition of the corporation's or a
subsidiary's assets that involves an interested shareholder and represents 10%
or more of the consolidated net worth of the corporation; (3) any issuance or
transfer of securities of the corporation or its subsidiary to the interested
shareholder; (4) the adoption of any plan or dissolution or liquidation proposed
by the interested shareholder or in which an interested shareholder will receive
anything other than cash; (5) any reclassification of securities, reorganization
or recapitalization of the corporation or any merger, consolidation, or share
exchange of the corporation with or involving any of its subsidiaries which has
the effect of increasing the proportionate share of any outstanding class of
securities of the corporation directly or indirectly owned by an interested
shareholder. A "business combination" also includes any such transaction between
the corporation and an associate or affiliate of an interested shareholder. An
"interested shareholder" is defined as any individual, corporation or other
entity which (1) is the beneficial owner of 10% or more of the outstanding
voting stock of the corporation or (2) is an affiliate or associate of the
corporation and was the owner of 10% or more of the outstanding voting stock of
the corporation at any time within the two-year period immediately prior to the
date on which a determination is being made as to whether such person is an
interested shareholder.
The super-majority voting requirement of Section 7.85 does not apply if
(1) the business combination has been approved by two-thirds of the
"disinterested directors" or (2) certain procedural requirements and
requirements relating to the fairness of the consideration to be paid are met. A
"disinterested director" is defined as a member of the board of directors who
(1) is neither the interested shareholder nor an associate or affiliate of the
interested shareholder, (2) was a member of the board of directors prior to the
time that the interested shareholder became an interested shareholder or was
recommended to succeed a disinterested director by a majority of the
disinterested directors then in office, and (3) was not nominated for election
as a director by the interested shareholder or any associate or affiliate of the
interested shareholder.
The Wisconsin Fair Price Statute does not apply to certain types of
self-dealing transactions between a 10% shareholder and a corporation to which
the Illinois Fair Price Statute applies. For example, it applies, only to sales
of all or substantially all of the assets of the corporation to an interested
shareholder (rather than encumbrances or sales of assets representing 10% or
more of the consolidated net worth of the corporation) and does not apply to
transfers of securities to, or reclassifications or reorganizations proposed for
the benefit of, an interested shareholder. On the other hand, the Wisconsin Fair
Price Statute requires that transactions with interested shareholders be
approved, not by a simple majority, but by a two-thirds vote of the shares not
held by the interested shareholder or his or her affiliates or associates.
The Wisconsin Articles include a fair price provision which combines
the more stringent requirements of the Illinois Fair Price Statute and the
Wisconsin Fair Price Statute. It also applies to transactions between CIB Marine
and an interested shareholder involving as little as 1% of the corporation's
total assets (rather than 10% of the corporation's net worth).
Business Combination Statutes. If the Reincorporation is approved,
Sections 180.1140 to 180.1145 (the "Wisconsin Business Combination Statute")
will apply to CIB Marine. The Wisconsin Business
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Combination Statute prohibits a corporation from engaging in a business
combination (other than a business combination of a type specifically excluded
from the coverage of the statute) with an interested shareholder for a period of
three years following the date the person becomes an interested shareholder,
unless the board of directors either approved the business combination or
approved, in advance, the acquisition of the stock that resulted in the person
becoming an interested shareholder. Business combinations after the three-year
period following the stock acquisition date are permitted only if (1) the board
of directors approved the acquisition of the stock prior to the acquisition
date, (2) the business combination is approved by a majority of the outstanding
voting stock not beneficially owned by the interested shareholder, or (3) the
consideration to be received by shareholders meets certain requirements of the
statute with respect to form and amount.
The Wisconsin Business Combination Statute defines a "business
combination" to include a merger or share exchange, sale, lease, exchange,
mortgage, pledge, transfer or other disposition of assets equal to at least 5%
of the market value of the stock or assets of the company or 10% of its earning
power, or issuance of stock or rights to purchase stock with a market value
equal to at least 5% of the outstanding stock, adoption of a plan of liquidation
and certain other transactions involving an "interested shareholder." An
"interested shareholder" is defined as a person who beneficially owns, directly
or indirectly, 10% of the voting power of the outstanding voting stock of a
corporation or who is an affiliate or associate of the corporation and
beneficially owned 10% of the voting power of the then outstanding voting stock
within the last three years. The prohibition on business combinations applies
for three years after the acquisition of at least 10% of the outstanding shares
without regard to the percentage of shares owned by the interested shareholder
and cannot be avoided by subsequent action of the board of directors.
Although Section 11.75 of the IBCA (the "Illinois Business Combination
Statute") is similar, in certain respects, to the Wisconsin Business Combination
Statute, the Illinois Business Combination Statute does not currently apply to
the Company. The Illinois Business Combination Statute automatically applies
only to those Illinois corporations which, among other things, have a class of
voting stock that is listed on a national securities exchange, authorized for
quotation on an interdealer quotation system (such as Nasdaq) or held of record
by more than 2,000 shareholders. The Illinois Business Combination Statute would
apply to the Company only if the Illinois Articles include a provision in which
the Company affirmatively elects to be covered by the provisions of the Illinois
Business Combination Statute. The Illinois Articles do not include such a
provision.
Antitakeover Provisions Unique to the WBCL. The WBCL contains two
additional statutory antitakeover provisions which have no parallel in the IBCA.
Section 180.1134 (the "Wisconsin Defensive Action Restriction") provides that,
in addition to the vote otherwise required by law or the articles of
incorporation of an "issuing public corporation" (as more fully described below)
the approval of the holders of a majority of the shares entitled to vote on the
proposal is required before a Wisconsin corporation can take certain actions
while a takeover offer is being made or after a takeover offer has been publicly
announced and before it is concluded. Those actions include (1) acquiring more
than 5% of its outstanding voting shares at a price above the market price from
any individual or entity that owns more than 3% of the outstanding voting shares
and has held such shares for less than two years, unless an equal offer is made
to acquire all voting shares; or (2) selling or optioning assets of the
corporation which amount to at least 10% of the market value of the corporation,
unless in such case, the corporation has at least three independent directors
and a majority of the independent directors vote to have the provision not apply
to the corporation. If the Reincorporation is approved, CIB Marine will have
more than three independent directors. Although the Board of Directors expects
that its independent directors may elect not to have clause (2) apply to the
corporation, the restrictions in clause (1) (sometimes referred to as an
"anti-greenmail provision") will apply. That provision may have the effect of
deterring a shareholder from acquiring CIB Marine's shares with the goal of
seeking to have CIB Marine repurchase those shares at a premium over the market
price.
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Section 180.1150 of the WBCL (the "Wisconsin Control Share Statute")
provides that, unless otherwise provided in its articles of incorporation, the
voting power of shares of an "issuing public corporation" held by a person (or
group of persons acting in concert) in excess of 20% of the voting power of the
corporation's shares in the election of directors will be limited to 10% of the
full voting power of those shares. This provision does not apply (1) to shares
acquired from the issuing public corporation, (2) to shares acquired in a
transaction with respect to which the corporation's shareholders have voted
(either before or after the acquisition of the shares) to restore the full
voting power of the shares, and (3) under certain other circumstances specified
in the Wisconsin Control Share Statute.
The Wisconsin Defensive Action Restriction and Wisconsin Control Share
Statute automatically apply to "issuing public corporations" which are
restricted to Wisconsin corporations which, among other things, have voting
shares held by at least 100 Wisconsin residents. As permitted by the WBCL, the
Wisconsin Articles include a provision in which CIB Marine has affirmatively
elected to be covered by those provisions. The provisions will therefore apply,
even if CIB Marine has fewer than 100 Wisconsin shareholders.
SHAREHOLDER APPROVAL REQUIREMENTS FOR AMENDMENTS TO THE ARTICLES OF
INCORPORATION
Under the IBCA, amendments to a corporation's articles of incorporation
must be approved by the affirmative vote of at least two-thirds of the
outstanding shares entitled to vote on such amendments unless the articles of
incorporation provide otherwise. The Illinois Articles include a provision that
reduces that requirement, for the Company, to a majority of the outstanding
shares of each class entitled to vote on the matter.
As permitted under the WBCL, the Wisconsin Articles impose a
super-majority voting requirement for the approval of an amendment to certain
provisions of the Wisconsin Articles. More specifically, the holders of at least
80% of the outstanding shares of all classes of stock of CIB Marine then
entitled to vote in the election of directors, voting as one class, will be
required to amend or adopt any provision inconsistent with (1) Section 5.1,
governing the right of the Board of Directors to fix the rights, terms and
preferences of CIB Marine preferred stock, (2) the provisions of Article 7,
governing the establishment of a staggered board of directors, the removal of
directors, and the filling of vacancies on the board, (3) Article 8, governing
the amendment of the Wisconsin By-laws, (4) Article 9, the "fair price
provision," (5) Article 10, governing the right of shareholders to act by
written consent, (5) Article 11, the provision under which CIB Marine has
affirmatively elected to be subject to certain antitakeover provisions under the
WBCL, and (6) Article 12, imposing a super-majority shareholder vote requirement
to amend these provisions of the Wisconsin Articles. This super-majority voting
requirement ensures that an acquiror or dissident shareholder cannot circumvent
the antitakeover effect of these provisions of the Wisconsin Articles by
amending or eliminating the provisions.
The super-majority voting requirement will not apply, however, to any
proposed amendment to such sections that is approved by the affirmative vote of
75% of the whole Board and also, in the case of a proposed amendment to Article
9 and 12(b), the affirmative vote of 75% of the continuing directors on the
Board of Directors. Under such circumstances, the amendment need only be
approved by the shareholder vote then required under the WBCL. Under most
circumstances, the WBCL will require the approval only of a majority of the
shareholders at a meeting at which a quorum is present. Under the WBCL, the
board of directors may also condition its submission of any proposed amendment
to the shareholders upon the approval of a higher vote than the vote specified
in the WBCL.
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SHAREHOLDER APPROVAL REQUIREMENTS FOR AMENDMENTS TO THE BY-LAWS
The Illinois By-laws provide that either the Board of Directors or the
shareholders may amend or repeal the Illinois By-laws, except that the Board of
Directors may not amend or repeal a by-law adopted by the shareholders, if the
Illinois By-laws (including any specific by-law adopted by the shareholders), so
provides. Under the IBCA and the Illinois By-laws, the shareholders may act, and
the Illinois By-laws may therefore be amended, by a majority vote at any
shareholder meeting at which a quorum is present or by the written consent of
the holders of a majority of the outstanding shares.
The Wisconsin Articles provide that no provision of the Wisconsin
By-laws may be amended or repealed, and no provision inconsistent with any
provision of the By-laws may be adopted, except by (1) the affirmative vote of a
majority of the members of the Whole Board or (2) by the affirmative vote of at
least 80% of the outstanding shares of all classes of stock of the Corporation
generally entitled to vote in the election of directors, considered as one
class. As a result, if the Reincorporation is approved, the ability of
shareholders to amend the by-laws will be strictly curtailed. An 80% vote will,
for example, be required to amend the Wisconsin by-law provisions establishing
advance notice procedures for shareholder nominations of directors or the
introduction of business at shareholder meetings or the procedures required to
be followed by shareholders in order to demand that a special meeting be called.
STATUTORY LIABILITY OF SHAREHOLDERS FOR EMPLOYEE WAGES UNDER THE WBCL
The WBCL provides that shareholders of a corporation are personally
liable, up to an amount equal to the par value of the shares that they own, for
all debts owed by the corporation to employees for services performed, but not
exceeding six months' service in any one case. Although the WBCL specifies that
such liability is limited to the par value of the shares ($1.00 in the case of
CIB Marine), at least one Wisconsin trial court has interpreted this to mean the
consideration paid to a corporation for shares. This decision was affirmed by a
split decision of the Wisconsin Supreme Court, with one justice abstaining. As a
result, the affirming decision is without precedential effect.
Although the IBCA has no comparable provision, Wisconsin courts have
held that this provision of the WBCL applies to corporations organized under the
laws of other states which are registered to do business in Wisconsin. Since the
Company is registered to do business in Illinois, the provision may already be
applicable to the Company.
DIFFERENCES IN INDEMNIFICATION RIGHTS OF DIRECTORS AND OFFICERS
Under the IBCA, a corporation may, but is not required to, indemnify a
director or officer who is or is threatened to be made a party to a civil,
criminal, administrative or investigative proceeding by reason of the fact that
such person was a director or officer of the corporation against expenses,
judgments, fines and amounts paid in settlement. Such indemnification is
permitted if the director or officer acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and with respect to criminal proceedings, had no reasonable cause
to believe that the conduct was unlawful. Under the IBCA , such statutory
provisions are not deemed to be exclusive of any other rights to which a person
seeking indemnification may be entitled under any by-law or agreement, by the
vote of the shareholders or disinterested directors of the corporation, or
otherwise. Expenses incurred by a director or officer in defending against a
claim may be paid in advance by the corporation prior to final disposition of
the matter, provided such person undertakes to repay such amount if it is
ultimately determined that he or she is not entitled to be indemnified by the
corporation pursuant to the statute. The Illinois Articles and
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Illinois By-laws provide for indemnification of directors and officers in
accordance with the foregoing statutory provisions and require a case-by-case
determination for the advancement of expenses.
Unless the articles of incorporation of a company provides otherwise,
the WBCL provides for mandatory indemnification of a director or officer against
certain liabilities and expenses. In particular, the WBCL mandates
indemnification: (1) to the extent such officers or directors are successful in
the defense of a proceeding (whether brought derivatively or by a third party)
and (2) in proceedings in which the director or officer is not successful in the
defense, unless it is determined that the director or officer breached or failed
to perform his or her duties to the corporation and such breach or failure
constituted (a) a willful failure to deal fairly with the corporation or its
shareholders in connection with a matter in which the director or officer had a
material conflict of interest; (b) a violation of criminal law, unless the
director or officer had reasonable cause to believe his or her conduct was
lawful or had no reasonable cause to believe his or her conduct was unlawful;
(c) a transaction from which the director or officer derived an improper
personal profit; or (d) willful misconduct. The Wisconsin Articles do not limit
or qualify, and the Wisconsin By-laws provide for indemnification in accordance
with, these statutory provisions. The Wisconsin By-laws also require CIB Marine
to pay the reasonable expenses incurred by an officer or director in advance of
the final disposition of a proceeding, provided that, among other things, the
officer or director agrees to repay the advances if it is ultimately determined
that he or she is not entitled to indemnification under the Wisconsin By-laws.
DIRECTORS' MONETARY LIABILITY
Under the IBCA, a corporation may adopt a provision in its articles of
incorporation eliminating or limiting the personal liability of directors to the
corporation or its shareholders for monetary damages for violations of their
duties of care. The articles of incorporation of an Illinois corporation may
not, however, eliminate or limit a director's liability: (1) for any breach of
the director's duty of loyalty to the corporation or its shareholders, (2) for
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (3) under certain specified provisions of the IBCA, or
(4) for any transaction from which the director derived an improper personal
benefit. The Illinois Articles include such a provision.
The WBCL imposes a statutory limit on the liability of directors of
Wisconsin corporations, without requiring a provision in a corporation's
articles of incorporation. Under the WBCL, a director of a corporation is not
liable to the corporation, its shareholders or persons asserting rights on
behalf of the corporation or its shareholders, unless (1) the liability is based
on a breach of the director's duty (whether the duty of care or duty of loyalty)
to the corporation and its shareholders and (2) such breach constitutes (a) the
director's willful failure to deal fairly with the corporation or its
shareholders in connection with a matter in which the director had a material
conflict of interest; (b) a violation of criminal law, unless the director had
reasonable cause to believe that his or her conduct was lawful or no reasonable
cause to believe his or her conduct was unlawful; (c) a transaction from which
the director derived an improper personal profit; or (d) willful misconduct.
The IBCA does not specifically define the type of conduct that
constitutes a breach of a director's duty of loyalty. The WBCL more explicitly
describes the kind of conduct which will preclude a director from limiting or
eliminating personal liability. Given the IBCA's lack of specificity, it is
possible that a broad interpretation of a breach of a director's duty of loyalty
under the IBCA could result in the imposition of personal liability on a
director under the IBCA when such conduct would be shielded from liability under
the WBCL.
38
<PAGE> 44
AMENDMENT OF THE MERGER AGREEMENT OR ABANDONMENT OF THE REINCORPORATION
The Board of Directors of the Company may amend, modify and supplement
the Merger Agreement, before or after shareholder approval. However, no such
amendment, modification or supplement may be made or become effective after
shareholder approval which, in the judgment of the Board, would have a material
adverse effect upon the rights, powers, privileges or preferences of the
Company's shareholders. The Merger Agreement may be terminated and the
Reincorporation may be abandoned, notwithstanding shareholder approval, by the
Board of Directors of the Company at any time before consummation of the
Reincorporation if the Board should determine, in its sole discretion, that the
Reincorporation does not appear to be in the best interests of the Company or
its shareholders.
RIGHTS OF DISSENTING SHAREHOLDERS
Shareholders of the Company who do not vote in favor of the
Reincorporation and who follow certain procedures specified in the IBCA will
have the right to dissent from the merger necessary to effect the
Reincorporation and to obtain payment for their shares in the event that such
merger is consummated. The procedures to be followed are specified in Sections
11.65 and 11.70 of the IBCA, copies of which are attached as Appendix E to this
proxy statement. The following summary of those procedures is qualified in its
entirety by reference to Appendix E.
The Company has, prior to the annual meeting, furnished to shareholders
in this proxy statement material information with respect to the Reincorporation
which will objectively enable a shareholder to vote on the Reincorporation and
to determine whether or not to exercise dissenters' rights. A shareholder may
therefore dissent to the Reincorporation and assert a right to payment for his
or her shares only if (i) the shareholder delivers to the Company, before the
vote on the Reincorporation is taken, a written demand for payment for his or
her shares in the event the Reincorporation is consummated, and (ii) the
shareholder does not vote in favor of the reincorporation. Any shareholder who
fails to deliver such prior written demand to the Company or who votes in favor
of the Reincorporation may not subsequently assert a right to payment for his or
her shares.
A record owner of common stock may assert dissenters' rights as to
fewer than all of the shares held in such person's name only if such person
dissents with respect to all of the shares beneficially owned by any one person
and notifies the corporation in writing of the name and address of each person
on whose behalf the record owner is asserting dissenters' rights. A beneficial
owner of shares who is not the record owner may assert dissenters' rights as to
shares held on his or her behalf if the beneficial owner submits to the Company
the record owner's written consent to the dissent before or at the same time
that the beneficial owner asserts dissenters' rights.
Within (i) 10 days after the merger under the Merger Agreement is
effected or (ii) 30 days after the shareholder delivers to the Company his or
her written demand for payment, whichever date is later, the Company will send
to each shareholder delivering such a written demand (a "Dissenting
Shareholder") a statement setting forth the opinion of the Company as to the
estimated value of such shareholder's shares (a "Statement of Value"), the
Company's latest balance sheet as of the end of its fiscal year ending December
31, 1998, its income statement for its fiscal year ending December 31, 1998 and
its latest interim financial statements, if any, together with a commitment to
pay for the shares of the dissenting shareholder at the estimated value thereof
upon transmittal to the Company of the certificate or certificates, or other
evidence of ownership, with respect to such shares. Upon consummation of the
merger and receipt of such evidence of ownership, the Company shall pay the
Dissenting Shareholder the previously stated estimated value of the shares, plus
accrued interest, together with a written explanation of how the interest was
calculated.
39
<PAGE> 45
If the Dissenting Shareholder does not agree with the Company's opinion
regarding the estimated value of the shares or the amount of interest due, the
Dissenting Shareholder, within thirty days from the Company's delivery of the
Statement of Value, must notify the Company in writing of his or her estimates
of the fair value of the shares and the amount of interest due and demand
payment for the difference between the dissenting shareholder's estimate of fair
value and interest and the amount of the payment made by the Company. If, within
sixty days of delivery of the Dissenting Shareholder's estimate to the Company,
the Company and the dissenting shareholder have not agreed in writing on the
value of the shares and the amount of interest due, the company shall either pay
the difference in value, with interest, demanded by the Dissenting Shareholder
or file a petition in the Circuit Court of Champaign County requesting the court
to determine the fair value of the shares. The Company shall make all dissenters
whose demands remain unsettled parties to the proceeding as an action against
their shares, whether or not such dissenters are residents of Illinois, and
shall serve all parties with a copy of the petition. Non-residents may be served
by registered or certified mail or by publication as required by law.
Each Dissenting Shareholder made a party to the proceeding will be
entitled to judgment for the amount, if any, by which the court finds that the
fair value of his or her shares, plus interest, exceeds the amount paid by the
Company. The court, in such a proceeding, shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers, if
any, and experts employed by any party, but shall exclude the fees and expenses
of counsel for any party. If the fair value of the shares as determined by the
court materially exceeds the amount which the Company offered to pay for those
shares, or if no offer was made, then all or any part of such expenses may be
assessed against the Company. If, on the other hand, the Dissenting
Shareholder's estimate of the fair value of the shares materially exceeds the
fair value determined by the court, all or any part of such costs may be
assessed against the Dissenting Shareholder.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The Reincorporation will constitute a reorganization within the meaning
of Section 368(a) of the Code. Accordingly, for federal income tax purposes, no
gain or loss will be recognized by shareholders upon the conversion of Common
Stock into CIB Marine common stock resulting from the Reincorporation. Each
shareholder whose shares are converted from Company common stock into CIB Marine
common stock will have the same basis in his or her shares of the common stock
of CIB Marine as such shareholder had in his or her shares of Company common
stock immediately prior to the Effective Date of the Reincorporation, and each
shareholder's holding period for CIB Marine common stock will include the period
during which such shareholder held the corresponding shares of Company common
stock, provided that the corresponding shares of Company common stock were held
by the shareholder as a capital asset on the Effective Date. No gain or loss
will be recognized by the Company or by CIB Marine as a result of the
Reincorporation.
NO INFORMATION IS PROVIDED HEREIN WITH RESPECT TO THE TAX CONSEQUENCES, IF ANY,
UNDER APPLICABLE STATE, LOCAL OR FOREIGN LAWS, AND EACH SHAREHOLDER IS ADVISED
TO CONSULT HIS OR HER PERSONAL ATTORNEY OR TAX ADVISOR AS TO THE FEDERAL, STATE,
LOCAL OR FOREIGN TAX CONSEQUENCES OF THE PROPOSED REINCORPORATION IN VIEW OF THE
SHAREHOLDER'S INDIVIDUAL CIRCUMSTANCES.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE REINCORPORATION PROPOSAL.
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<PAGE> 46
PROPOSAL 4
ADJOURNMENT OF ANNUAL MEETING
Under certain circumstances, the Company's management may determine at
the time of the annual meeting that it is in the best interests of the Company
and its shareholders to adjourn the annual meeting to a later date. For example,
in the event that the number of shares present, in a person or by proxy, at the
annual meeting is insufficient to constitute a quorum or to approve the
reincorporation, the Company might decide to adjourn the annual meeting to
permit further solicitation of proxies. If the annual meeting is adjourned, no
further notice of the time and place of the adjourned meeting is required to be
given to the Company's shareholders other than an announcement of such time and
place at the annual meeting, provided, however, that if the date of any
adjourned meeting is more than thirty (30) days after the date for which the
meeting was originally noticed, or if a new record date is fixed for the
adjourned meeting, written notice of the place, date, and time of the adjourned
meeting will be given.
If the annual meeting is postponed or adjourned, at any subsequent
reconvening of the annual meeting, all proxies will be voted in the same manner
as such proxies would have been voted at the original convening of the annual
meeting (except for any proxies which have theretofore effectively been revoked
or withdrawn).
In order to approve a proposal for adjournment of the annual meeting,
the number of the shares present at the annual meeting, in person or by proxy,
whether or not a quorum is present, and voted in favor of the proposal must
exceed the number of shares voted against the proposal. In order to allow the
Company's management to vote proxies received by the Company at the time of the
annual meeting in favor of such an adjournment, in the event that the Company
determines, in its sole discretion, that such an adjournment is in the best
interests of the Company and its shareholders, the Company has submitted the
question of adjournment as a separate matter for the consideration and vote of
the shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE PROPOSAL TO ADJOURN THE ANNUAL MEETING.
OTHER MATTERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following persons are known to the Company to be the beneficial
owners of more than 5% of the outstanding common stock of the Company as of the
most recent date prior to the preparation of this proxy statement for which
information is available to the Company.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES OF COMMON PERCENT OF CLASS OF
STOCK BENEFICIALLY OWNED(1) COMMON STOCK(1)
<S> <C> <C>
Strategic Capital Management Inc./Strategic 6,414(2) 5.99%
Capital Trust
John and Mary Lydia Hadley 6,928(3) 6.47%
</TABLE>
41
<PAGE> 47
(1) Based upon a total of 107,153 shares of Common Stock issued and
outstanding on March 31, 1999.
(2) Based on written information provided by SCM to the Company as of April
7, 1999. Mr. David Sinow, a former director of the Company, is an
officer, director, and shareholder of Strategic Capital Trust Company
("SCTC"). Mr. Sinow is also an officer and director of Strategic
Capital Management, Inc. ("SCM"), a wholly owned subsidiary of SCTC.
SCTC owns 750 shares of the Company's common stock. The Company
understands that Mr. Sinow, SCTC, and SCM have direct or indirect
shared voting and investment authority over 5,664 shares of the
Company's common stock purchased by investors for whom SCM provides
investmen management services.
(3) Based solely on information in the Company's stock transfer records.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Directors, officers and beneficial owners of more than 10 percent of
the outstanding shares of the Company's common stock are required to file with
the SEC reports on Forms 3, 4 and 5 reflecting certain changes in their
beneficial ownership of the Company's common stock. Pursuant to regulations
adopted by the SEC, the Company is required to disclose each such person who
failed to file any such report on a timely basis during the Company's most
recent fiscal year. Based solely on a review of the Forms 3, 4 and 5 furnished
to the Company and any amendments thereto, the Company believes that all of its
officers, directors and greater than 10 percent beneficial owners complied with
all filing requirements applicable to them with respect to transactions during
the 1998 fiscal year.
AUDITORS
On November 9, 1998, the Company engaged the accounting firm of KPMG
LLP as its independent accountants. KPMG replaced Striegel Knobloch
& Company, LLC who had been the Company's independent accountants since 1991.
Striegel Knobloch resigned as the Company's independent accountants effective
November 9, 1998. The change in the Company's independent accountants was the
result of a formal process involving proposals from two prospective accounting
firms. The decision to change accountants was approved by the Company's Board of
Directors.
During the two most recent fiscal years there have been no
disagreements with Striegel Knobloch on any matter of accounting principles or
practices, financial statement disclosure, auditing scope or procedure. Striegel
Knobloch's report on the consolidated financial statements for the past two
years contained no adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting principles.
A representative from KPMG LLP will be present at the 1999 annual
meeting and will have the opportunity to make a statement and to respond to
appropriate questions.
2000 ANNUAL MEETING OF THE COMPANY'S SHAREHOLDERS
Proposals from shareholders to be presented at the 2000 annual meeting
of the shareholders of the Company must be received by the Company on or before
January 6, 2000 in order to be eligible for inclusion in the Company's proxy
statement and form of proxy for that meeting.
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<PAGE> 48
APPENDIX A
CENTRAL ILLINOIS BANCORP, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
1. Purpose
Central Illinois Bancorp, Inc., an Illinois corporation ("CIBI"),
hereby establishes the Central Illinois Bancorp, Inc. 1999 Stock Option and
Incentive Plan, effective January 1, 1999 (the "1999 Plan"). The purpose of the
1999 Plan is to enable CIBI and its subsidiaries to attract, retain, and reward
key managerial employees ("Key Employees") and non-employee members of the board
of directors of CIBI or its subsidiaries (references hereinafter to "Board"
means the Board of Directors of CIBI and any subsidiary of CIBI, as the context
dictates, unless otherwise indicated) ("Nonemployee Directors") by offering them
an opportunity to have a greater proprietary interest in and closer identity
with CIBI and its subsidiaries and with their financial success. An option
granted under the 1999 Plan to a Key Employee to purchase shares of CIBI's
common stock, $1.00 par value ("Common Stock"), may be an incentive stock option
("ISO") as defined in Section 422 of the Internal Revenue Code of 1986 as
heretofore or hereafter amended ("Code") or a nonqualified stock option ("NSO")
(collectively referred to as "Options"). An Option that is not an ISO shall be
an NSO. Nonemployee Directors shall be granted NSOs under Section 6 of the 1999
Plan. Proceeds received by CIBI from shares of Common Stock acquired pursuant to
Options granted under the 1999 Plan shall be used for general corporate
purposes.
2. Merger of Predecessor Stock Option Plans
Effective January 1, 1999, all of CIBI's stock option plans listed on
the attached schedule shall be merged into the 1999 Plan (collectively referred
to as the "Merged Plans"). Each outstanding stock option issued under a Merged
Plan shall be assumed by the 1999 Plan ("Assumed Option"). Each existing stock
option agreement entered into with respect to an Assumed Option under a Merged
Plan shall be replaced by an amended and restated stock option agreement
("Restated Agreement") between CIBI and the Participant (hereinafter defined)
and each Assumed Option shall be subject to the terms of the 1999 Plan and the
Restated Agreement from and after January 1, 1999 and the Merged Plans shall
have no further force or
<PAGE> 49
effect. Upon execution of a Restated Agreement, any prior stock option
agreements with the Participant shall be deemed canceled and of no further force
and effect. References herein to Options include Assumed Options, unless
otherwise indicated.
3. Administration
The 1999 Plan shall be administered by a committee ("Committee")
appointed by the Board. The Committee shall be composed of not fewer than three
Nonemployee Directors, all of whom are "nonemployee directors" within the
meaning of Rule 16(b)-3 under the Securities Exchange Act of 1934 and "outside
directors" within the meaning of Section 162(m) of the Code. Except as otherwise
provided in the 1999 Plan, the Committee may interpret the 1999 Plan, prescribe,
amend and rescind rules and regulations relating to it, determine the terms and
provisions of options granted under the 1999 Plan (which need not be identical),
and make such other determinations as it deems necessary and advisable for the
administration of the 1999 Plan. A majority of the Committee members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing, and
signed by all of the members, shall be fully as effective as if it had been made
by a majority vote at a meeting duly called and held. The Committee shall also
have express authorization to hold Committee meetings by means of conference
telephone, or similar communications equipment, by which all persons
participating in the meeting can hear each other. The Committee may delegate
decisions with respect to Options granted to Key Employees who are not elected
officers or directors of CIBI or its subsidiaries to such elected officer or
officers of CIBI as the Committee determines, and subject to Sections 7 and 20,
the Committee may delegate decisions with respect to Key Employees who are
elected officers of CIBI or its subsidiaries to the Chief Executive Officer of
CIBI (the "Chief Executive Officer"). The decisions of the Committee or the
Chief Executive Officer under the 1999 Plan shall be conclusive and binding. No
member of the Board or the Committee, or the Chief Executive Officer, shall be
liable for any action taken or determination made hereunder in good faith.
Service on the Committee shall constitute service as a director of CIBI so that
the
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<PAGE> 50
members of the Committee shall be entitled to indemnification and reimbursement
as directors of CIBI pursuant to its by-laws.
4. Eligibility
Key Employees who have been selected to receive an Option shall
participate in the 1999 Plan. Nonemployee Directors shall participate in the
1999 Plan through grants of NSOs pursuant to Section 6 hereof. (Key Employees
and Nonemployee Directors who participate in the 1999 Plan shall be collectively
referred to as "Participants"). The Committee or the Chief Executive Officer, as
applicable, shall determine, within the limits of the express provisions of the
1999 Plan, those Participants to whom, and the time or times at which, Options
shall be granted. The Committee or the Chief Executive Officer, as applicable,
shall also determine, with respect to Options granted to Participants, the
number of shares of Common Stock to be subject to each such Option; the duration
of each Option; the exercise price under each Option; the time or times within
which (during the term of the Option) all or portions of each Option may be
exercised; whether cash, Common Stock, or other property may be accepted in full
or partial payment upon exercise of an Option; any other terms and conditions of
such Options; and in the case of Options granted to Key Employees, the type of
Options (ISO or NSO). In making such determinations, the Committee or Chief
Executive Officer, as applicable, may take into account the nature of the
services rendered by the Participant, his or her present and potential
contributions to CIBI's success and such other factors as the Committee or the
Chief Executive Officer, as applicable, in its or his discretion shall deem
relevant.
5. Common Stock
The total number of shares of Common Stock that may be subject to
Options (including ISOs) under the 1999 Plan shall be 11,750, which includes all
shares of Common Stock subject to the Assumed Options. Such total number of
shares shall be adjusted in accordance with the provisions of Section 12 hereof.
Such shares may be either authorized but unissued shares or reacquired shares.
In the event that any Option granted under the 1999 Plan expires unexercised or
is terminated, surrendered, forfeited, canceled or reacquired without being
exercised, in whole or in part, for any reason, then the number of shares of
Common
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<PAGE> 51
Stock theretofore subject to such Option, or the unexercised, terminated,
surrendered, forfeited, canceled or reacquired portion thereof, shall be added
to the remaining number of shares of Common Stock that may be made subject to
Options granted under the 1999 Plan. Such Options include Options to former
holders of such Options, and, with respect to Options granted to Nonemployee
Directors, upon such terms and conditions as are set forth in Sections 6 and 9,
and, with respect to Options granted to Key Employees, upon such terms and
conditions as the Committee or the Chief Executive Officer, as applicable, shall
determine, which terms may be more or less favorable than those applicable to
such former holders of Options.
6. Grants to Nonemployee Directors
NSOs may be granted to Nonemployee Directors at any time and from time
to time as shall be determined by the Committee. The Committee shall have
discretion in determining the number of shares of Common Stock subject to
issuance to a Nonemployee Director.
7. Grants to Key Employees
Options may be granted to Key Employees at any time and from time to
time as shall be determined by the Chief Executive Officer; provided that a
grant to the Chief Executive Officer shall be determined by the Committee.
Subject to the limitation on the total number of shares subject to issuance to a
Key Employee in subsection 9(d), the Committee or the Chief Executive Officer,
as applicable, shall have complete discretion in determining the number of
shares of Common Stock subject to Options granted to each Key Employee. The
Committee or the Chief Executive Officer, as applicable, may grant to a Key
Employee any type of Option to purchase Common Stock that is permitted by law at
the time of the grant, including ISOs. Unless otherwise expressly provided at
the time of grant, Options granted to Key Employees under the 1999 Plan will not
be ISOs.
8. Required Terms and Conditions of ISOs
The provisions of each ISO granted to a Key Employee under this Section
8 shall be interpreted in
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<PAGE> 52
a manner consistent with Section 422 of the Code and with all regulations issued
thereunder. Each ISO granted to a Key Employee shall be in such form and subject
to such restrictions and conditions and other terms as the Committee may
determine at the time of grant, subject to the general provisions of the 1999
Plan, Section 422 of the Code, the applicable Option Agreement and the following
specific rules:
(a) Exercise Price. Except as otherwise provided, the per share
exercise price of each ISO shall be at least 100% of the Fair Market Value of
the Common Stock at the time such ISO is granted, provided that in the case of
an ISO granted to a Key Employee who at the time of grant owns (as defined in
Section 424(d) of the Code) stock of CIBI or any of its subsidiaries possessing
more than 10% of the total combined voting power of all classes of stock of any
such corporation, the exercise price shall be at least 110% of the Fair Market
Value of the Common Stock subject to the ISO at the time such ISO is granted and
the ISO by its terms shall not be exercisable after the expiration of five years
from the date the ISO is granted.
(b) Maximum Term. Subject to earlier termination as provided in Section
11, each ISO shall expire on the date determined in the applicable Option
Agreement at the time the ISO is granted, provided that no ISO shall be
exercisable after the expiration of 10 years from the date it is granted, except
as otherwise provided in subsection (a) next above.
(c) Time of Exercise. The Committee or the Chief Executive Officer, as
applicable, shall specify in the Option Agreement, at the time each ISO is
granted, the duration of each ISO and the time or times within which (during the
term of the ISO) all or portions of each ISO may be exercised, except to the
extent that other terms of exercise are specifically provided by other
provisions of the 1999 Plan.
(d) Value of Shares. The aggregate Fair Market Value (determined at the
time of grant) of Common Stock with respect to which ISOs are exercisable for
the first time by a Key Employee during any calendar year (under all option
plans of CIBI or of a corporation which, at the time such ISO was granted, is a
parent or subsidiary of CIBI, or is a predecessor corporation of any such
corporation) shall not exceed $100,000. If the aggregate Fair Market Value
(determined at the time of grant) of the stock subject to an Option, which first
becomes exercisable in any calendar year and during this period exceeds the
limitation
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<PAGE> 53
of this subsection, so much of the Option that does not exceed the applicable
dollar limit shall be an ISO and the remainder shall be an NSO; but in all other
respects, the original Option Agreement shall remain in full force and effect.
(e) Conversion. The Committee or the Chief Executive Officer, as
applicable, may, in its or his sole discretion, cause CIBI to convert an ISO to
an NSO upon such terms and conditions and in such manner as the Committee or the
Chief Executive Officer, as applicable, deems appropriate in its or his sole
discretion.
9. Required Terms and Conditions of NSOs
Each NSO granted to a Participant shall be in such form and subject to
such restrictions and conditions and other terms as the Committee or the Chief
Executive Officer, as applicable, may determine at the time of grant, subject to
the general provisions of the 1999 Plan, the applicable Option Agreement, and
the following specific rules:
(a) Exercise Price. The number of shares of Common Stock subject to
each NSO and the per share exercise price of each NSO shall be determined by the
Committee or the Chief Executive Officer, as applicable, at the time the NSO is
granted, provided that such exercise price shall be at least 100% of the Fair
Market Value of the Common Stock on the date the NSO is granted. The exercise
price of an Assumed Option shall be at least Fair Market Value or a multiple of
the Fair Market Value of the Common Stock at the date the Assumed Option is
granted, as specified in the agreement evidencing the grant of the Assumed
Option.
(b) Maximum Term. Subject to earlier termination as provided in Section
10, each such NSO shall expire on the date determined in the applicable Option
Agreement at the time the NSO is granted, provided that such date shall not be
more than 10 years after the date of grant.
(c) Time of Exercise. The Committee or the Chief Executive Officer, as
applicable, shall specify in the Option Agreement at the time each NSO is
granted, the duration of each NSO and the time or times within which (during the
term of the NSO) all or portions of each NSO many be exercised, except to the
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<PAGE> 54
extent that other terms of exercise are specifically provided by other
provisions of the 1999 Plan.
(d) Maximum Number of Shares subject to Option. The total number of
shares with respect to which Options may be granted under the 1999 Plan to any
Key Employee during any 12-month period shall not exceed 1,000 shares; provided,
however, that such number of shares may be adjusted from time to time in
accordance with Section 12 hereof. No Participant shall hold or exercise an
Option, or Options, under the 1999 Plan (other than an "Assumed Option") for the
purchase of an aggregate number of shares in excess of 25% of the total number
of shares available for future grants of Options under the 1999 Plan, as such
number may be adjusted in accordance with Section 12.
(e) Option Agreement. Each Option shall be evidenced by a written
agreement specifying the type of Option to be granted in the case of a Key
Employee, the Option exercise price, the terms for payment of the exercise
price, the duration of the Option, and the number of shares of Common Stock to
which the Option pertains (the "Option Agreement"). An Option Agreement may also
contain a vesting schedule, a noncompetition agreement, a confidentiality
provision, and such restrictions and conditions and other terms as the Committee
or the Chief Executive Officer, as applicable, in its or his sole discretion,
shall from time to time determine. Option Agreements need not be identical. The
Option Agreement shall provide that it does not confer upon the Participant any
right to continue in the employ of CIBI, or any such subsidiary, or as a member
of the Board, and that it does not prejudice or interfere in any way with the
right of CIBI or of any subsidiary to terminate the employment of a Key Employee
at any time.
(f) The Committee or the Chief Executive Officer, as applicable, in its
or his sole discretion, shall have the power and authority to accelerate the
dates for exercise of any or all Options, or any part thereof, granted to a
Participant under the 1999 Plan.
10. Expiration of Options; Termination of Employment, Disability, Death,
and Expiration of Restrictions Upon Occurrence of Specified Events
(a) General Rule. Except with respect to Options expiring pursuant to
subsection 10(b), (c) or
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(d) below, each Option granted to a Participant shall expire on the expiration
date or dates set forth in the applicable Option Agreement. Each Option expiring
pursuant to subsection 10(b), (c) or (d) below shall expire on the date set
forth in subsection 10(b), (c) or (d) notwithstanding any restrictions and
conditions that may be contained in a Participant's Option Agreement.
(b) Expiration Upon Termination of Employment or Service on the Board.
If a Participant ceases to be an employee of CIBI or any of its subsidiaries, or
ceases to serve on the Board, due to the voluntary resignation of the
Participant, or a termination by CIBI or any of its subsidiaries for Cause, then
all of such Participant's Options shall be null and void and shall terminate. If
a Participant ceases to be an employee of CIBI or any of its subsidiaries or
ceases to serve on the Board of CIBI or any of its subsidiaries due to
termination without Cause by CIBI or any of its subsidiaries, then all of such
Participant's Options shall expire on the first to occur of (i) the applicable
date or dates determined pursuant to section 10(a) or (ii) the date ninety (90)
days after the date that the employment of the Participant with CIBI or its
subsidiaries, or service of the Participant on the Board, terminates.
(c) Expiration Upon Disability or Death. If the employment of a
Participant with CIBI and its subsidiaries, or service on the Board, terminates
by reason of disability (as determined by the Committee or the Chief Executive
Officer, as applicable), all of the Participant's unexercised Options may be
exercised by the Participant, whether or not otherwise exercisable at the date
of disability, within twelve (12) months after the date of disability, but in no
event later than the expiration date of such Options. If a Participant dies
while in the employ of CIBI and its subsidiaries, or during such Participant's
service on the Board, all of the Participant's unexercised Options, whether or
not otherwise exercisable at the date of death, may be exercised within twelve
(12) months after the date of death by the person specified in Section 11, but
in no event later than the expiration date of such Options.
(d) Expiration Upon Occurrence of Specified Events. Upon the occurrence
of any event described in subsection 12(b), each Participant's outstanding
Options shall become immediately vested and exercisable. In such event, the
Participant may elect to exercise in whole or in part any or all of his or her
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Options, in accordance with the terms of Section 11, notwithstanding any
restrictions and conditions that may be contained in his or her Option
Agreement.
(e) "Cause" shall mean: a) the willful failure of Participant to
substantially perform his or her duties with CIBI or any of its subsidiaries
(other than any such failure resulting from Participant's incapacity due to
physical or mental illness) after a written demand for substantial performance
is delivered to Participant specifically identifying the manner in which
Participant has not substantially performed his or her duties; b) any willful
act of misconduct by Participant which is materially injurious to CIBI or it
subsidiaries (monetarily or otherwise); c) criminal indictment or conviction of
Participant for any felony or act involving dishonesty, breach of trust, or a
violation of the laws of the United States or any state of the United States; d)
a breach of fiduciary duty involving personal profit; e) a willful violation of
any law, rule, regulation or final cease and desist order; f) incompetence,
personal dishonesty or material violation of any employment policy of CIBI or
any of its subsidiaries relating to Participant which would have a material
adverse effect on CIBI or any of its subsidiaries; or g) suspension, removal
and/or prohibition (whether temporary or permanent) by any banking or similar
regulatory authority from participation in the affairs of CIBI or any of its
subsidiaries.
11. Method of Exercise of Options
Any Option may be exercised by the Participant, by a legatee or
legatees of such Option under the Participant's last will, by his or her
executors, personal representatives or distributees, or in the case of an NSO by
his or her assignee or assignees as provided in Section 14 below, by delivering
to the Secretary of CIBI written notice of the number of shares of Common Stock
with respect to which the Option is being exercised, accompanied by full payment
to CIBI of the exercise price of the shares being purchased under the Option,
and by satisfying all other conditions provided for in the 1999 Plan. Except as
otherwise provided in the 1999 Plan or in any Option Agreement, the exercise
price of Common Stock upon exercise of any Option by a Participant shall be paid
in full (i) in cash, (ii) in Common Stock which has been held by the Participant
for not less than six months prior to the exercise of the Option, valued at its
Fair Market Value
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on the date of exercise, (iii) in cash by a broker-dealer to whom the holder of
the Option has submitted an exercise notice consisting of a fully endorsed
Option, or (iv) by such other medium of payment as the Committee or the Chief
Executive Officer, as applicable, in its or his sole discretion, shall
authorize, or by any combination of (i), (ii), or (iii), at the sole discretion
of the Committee or the Chief Executive Officer, as applicable, or in any manner
provided in the Option Agreement, except by directing CIBI to withhold shares of
Common Stock otherwise issuable upon the exercise of the Option in payment of
the exercise price. In the case of payment pursuant to (ii) or (iii), above, the
Participant's election must be made on or prior to the date of exercise of the
Option and must be irrevocable. In lieu of a separate election governing each
exercise of an Option, a Participant may file a blanket election which shall
govern all future exercises of Options until revoked by the Participant. CIBI
shall issue, in the name of the Participant (or, if applicable, the legatee(s),
executor(s), personal representative(s), or distributee(s) of a deceased
Participant, or the assignee(s) as provided in Section 14), stock certificates
representing the total number of shares of Common Stock issuable pursuant to the
exercise of any Option as soon as reasonably practicable after such exercise,
provided that any Common Stock purchased by a Participant through a
broker-dealer pursuant to clause (iii) above shall be delivered to such
broker-dealer in accordance with 12 CFR ss 220.3(e)(4).
12. Adjustments
(a) Appropriate adjustment in the maximum number of shares of Common
Stock issuable pursuant to the 1999 Plan, the maximum number of shares of Common
Stock with respect to which Options may be granted within any 12-month period to
any Key Employee or to any Participant during the duration of the Plan, the
number of shares subject to Options granted under the 1999 Plan or the Merged
Plans, and the exercise price with respect to Options, shall be made to give
effect to any increase or decrease in the number of shares of issued Common
Stock resulting from a subdivision or consolidation of shares whether through
reorganization, recapitalization, stock split, reverse stock split, spin-off,
split-off, spin-out, or other distribution of assets to shareholders, stock
distributions or combination of shares, assumption and conversion of outstanding
Options due to an acquisition by CIBI of the stock or assets of any other
corporation, payment
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of stock dividends, other increase or decrease in the number of such shares
outstanding effected, without receipt of consideration by CIBI, or any other
occurrence for which the Committee determines an adjustment is appropriate. If
the number of shares of Common Stock subject to an Option has been adjusted
pursuant to this paragraph, the decision of the Committee as to the amount and
timing of any such adjustments shall be conclusive.
(b) Upon the earliest to occur of:
(i) the acquisition by any entity, person, or group
of beneficial ownership, as that term is defined in Rule 13d-3
under the Exchange Act, of more than 15% of the outstanding
capital stock of CIBI entitled to vote for the election of
directors ("Voting Stock");
(ii) the commencement by an entity, person, or group
(other than CIBI or a subsidiary of CIBI) of a tender offer or
an exchange offer for more than 15% of the outstanding Voting
Stock of CIBI; or
(iii) the effective date of (A) a merger or
consolidation of CIBI with one or more other corporations as a
result of which the holders of the outstanding Voting Stock of
CIBI immediately prior to such merger or consolidation hold
less than 60% of the voting stock of the surviving or
resulting corporation, or (B) a transfer of substantially all
of the assets of CIBI other than to an entity of which CIBI
owns at least 80% of the voting stock; or
(iv) the election to the CIBI Board, without the
recommendation or approval of the incumbent CIBI Board, of the
lesser of: (a) three directors; or (B) directors constituting
a majority of the number of directors of the CIBI Board then
in office; or
(v) the occurrence of any transaction, merger or
consolidation of CIBI whereby the Chief Executive Officer of
CIBI immediately prior to the consummation of such transaction
is not the Chief Executive Officer of the surviving or
resulting company and the members of the CIBI Board, or any
number thereof immediately prior to the consummation
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of such transaction, do not constitute a majority plus one
director of the total number of directors appointed to the
Board of Directors of the surviving or resulting company; or
(vi) the liquidation or dissolution of CIBI; then as
set forth in Subsection 10(d), all unexercised Options shall
become immediately vested and exercisable, whether or not
otherwise exercisable at such time, and may be exercised at
any time during the term set forth in the applicable Option
Agreement.
(d) The Committee shall make all determinations relating to the
applicability and interpretation of this Section 12, and all such determinations
shall be conclusive and binding.
13. Terms and Conditions of Options
(a) In order for an Option to be effective, each Participant shall
agree to such restrictions and conditions and other terms in connection with the
exercise of an Option, including restrictions and conditions on the disposition
of the Common Stock acquired upon the exercise, grant or sale thereof, as the
Committee may deem appropriate. The certificates delivered to a Participant
evidencing the shares of Common Stock acquired upon exercise of an Option may
bear a legend referring to the restrictions and conditions and other terms
contained in the respective Option Agreement and the 1999 Plan, and CIBI may
place a stop transfer order with its transfer agent against the transfer of such
shares. If requested to do so by the Committee at the time of exercise of an
Option, each Participant shall execute a written instrument stating that he or
she is purchasing the Common Stock for investment and not with any present
intention to sell the same.
(b) The obligation of CIBI to sell and deliver Common Stock under the
1999 Plan shall be subject to all applicable laws, regulations, rules and
approvals, including, but not by way of limitation, the effectiveness of a
registration statement under the Securities Act of 1933, if deemed necessary by
the Committee, of the Common Stock and Options reserved for issuance or that may
be offered under the 1999 Plan. A Participant shall have no rights as a
shareholder with respect to any shares covered by an Option granted to, or
exercised by, him or her until the date of delivery of a stock certificate to
him or her for such
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shares. No adjustment other than pursuant to Section 12(a) hereof shall be made
for dividends or other rights for which the record date is prior to the date
such stock certificate is delivered.
14. Nontransferability
(a) Except as provided in subsection (b) next below, Options governed
hereby and any rights and privileges pertaining thereto, may not be transferred,
assigned, pledged or hypothecated in any manner, by operation of law or
otherwise, other than by will or by the laws of descent and distribution, and
shall not be subject to execution, attachment or similar process. The granting
of an Option shall impose no obligation upon the applicable Participant to
exercise such Option.
(b) Notwithstanding the provisions of subsection (a) above, a
Participant, at any time prior to his or her death, may assign all or any
portion of an Option granted to him or her (other than an ISO) to (i) his or her
spouse or lineal descendant, (ii) the trustee of a trust for the primary benefit
of his or her spouse or lineal descendant, (iii) a partnership of which his or
her spouse and lineal descendants are the only partners, or (iv) a tax exempt
organization as described in Section 501(c)(3) of the Code. In such event, the
spouse, lineal descendant, trustee, partnership or tax exempt organization will
be entitled to all of the rights of the Participant with respect to the assigned
portion of such Option, and such portion of the Option will continue to be
subject to all of the terms, conditions and restrictions applicable to the
Option, as set forth herein and in the related Option Agreement immediately
prior to the effective date of the assignment. Any such assignment will be
permitted only if (i) the Participant does not receive any consideration
therefore, and (ii) the assignment is expressly permitted by the applicable
Option Agreement and approved by the Committee. Any such assignment shall be
evidenced by an appropriate written document executed by the Participant, and a
copy thereof shall be delivered to CIBI on or prior to the effective date of the
assignment.
(c) The offer and sale of shares of Common Stock under Options granted
prior to February 25, 1998 have not been registered under the Securities Act of
1933, as amended (the "Act"). A Participant shall not sell or otherwise dispose
of shares of Common Stock acquired pursuant to the exercise of such Options,
except pursuant to an effective registration statement under the Act, if
applicable, or except in a transaction
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which is exempt from registration under the Act.
15. Indemnification of the Committee and Chief Executive Officer
In addition to such other rights of indemnification as they may have as
members of the Board, or as members of the Committee, or as its delegatees, or
as the Chief Executive Officer, the members of the Committee and its delegatees
and the Chief Executive Officer shall be indemnified by CIBI against (a) the
reasonable expenses (as such expenses are incurred), including attorneys' fees
actually and necessarily incurred in connection with the defense of any action,
suit or proceeding (or in connection with any appeal therein), to which they or
any of them may be a party by reason of any action taken or failure to act under
or in connection with the 1999 Plan, or any Option granted hereunder; and (b)
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by CIBI) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee member or delegatee, or the Chief Executive
Officer, as applicable, is liable for gross negligence or gross misconduct in
the performance of his or her duties; provided that within 60 days after
institution of any such action, suit or proceeding a Committee member or
delegatee or the Chief Executive Officer shall in writing offer CIBI the
opportunity, at its own expense, to handle and defend the same.
16. No Contract of Employment or Service on the Board
Neither the adoption of the 1999 Plan nor the grant of any Option shall
be deemed to obligate CIBI or any subsidiary to continue the employment or
service on the Board of any Participant for any particular period, nor shall the
granting of an Option constitute a request or consent to postpone the retirement
date of any Participant.
17. Termination and Amendment of 1999 Plan
(a) No ISOs shall be granted under the 1999 Plan more than ten years
after the first to occur of (i) the date the 1999 Plan was adopted by the Board
or (ii) the date the 1999 Plan was approved by the shareholders of CIBI. The
Board may at any time terminate, suspend, amend, or modify the 1999 Plan
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without the authorization of shareholders to the extent allowed by law,
including without limitation any rules issued by the Securities and Exchange
Commission under Section 16 of the Securities Exchange Act of 1934, or the rules
of any national securities exchange or automated quotation system on which the
Common Stock is then listed or quoted.
(b) Unless required by law, no termination, suspension, amendment or
modification of the 1999 Plan shall adversely affect any right acquired by any
Participant under an Option granted before the date of such termination,
suspension, amendment or modification, unless such Participant shall consent;
but it shall be conclusively presumed that any adjustment for changes in
capitalization as provided for herein does not adversely affect any such right.
18. Effective Date of 1999 Plan
The 1999 Plan shall become effective upon adoption by the Board;
provided, however, that it shall be submitted for approval by the holders of a
majority of the outstanding shares of Common Stock of CIBI present, or
represented, and entitled to vote at a shareholders' meeting held within 12
months thereafter, and Options, but excluding Assumed Options, granted prior to
such shareholder approval shall become null and void if such shareholder
approval is not obtained.
19. Withholding Taxes
Whenever CIBI proposes or is required to issue or transfer shares of
Common Stock to a Participant under the 1999 Plan, CIBI or the Committee shall
have the right to require the Participant to remit to CIBI an amount sufficient
to satisfy all federal, state and local withholding tax requirements prior to
the delivery of any certificate or certificates for such shares. If such
certificates have been delivered prior to the time a withholding obligation
arises, CIBI shall have the right to require the Participant to remit to CIBI an
amount sufficient to satisfy all federal, state or local withholding tax
requirements at the time such obligation arises and to withhold from other
amounts payable to the Participant, as compensation or otherwise, as necessary.
A Participant may elect to satisfy his or her tax withholding obligation
incurred with respect to the Taxable Date of an Option by (a) directing CIBI to
withhold a portion of the shares of Common Stock otherwise
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distributable to the Participant, or (b) by transferring to CIBI a certain
number of shares of Common Stock either subject to an Option being exercised or
previously owned, such shares being valued at the Fair Market Value thereof on
the Taxable Date. Notwithstanding any provision of the 1999 Plan to the
contrary, a Participant's election pursuant to the preceding sentence (a) must
be made on or prior to the Taxable Date with respect to such Option, and (b)
must be irrevocable. In lieu of a separate election on each Taxable Date of an
Option, a Participant may make a blanket election with the Committee that shall
govern all future Taxable Dates until revoked by the Participant. If the holder
of shares of Common Stock purchased in connection with the exercise of an ISO
disposes of such shares within two years of the date such ISO was granted or
within one year of such exercise, he or she shall notify CIBI of such
disposition and remit an amount necessary to satisfy applicable withholding
requirements including those arising under federal income tax laws. If such
holder does not remit such amount, CIBI may withhold all or a portion of any
amounts then or in the future owed to such holder as necessary to satisfy such
requirements. Taxable Date means the date a Participant recognizes income with
respect to an Option under the Code or any applicable state or local income tax
law.
20. Ratification of Awards
The determination by the Committee or the Chief Executive Officer, as
applicable, to grant any Award under the Plan on or after January 1, 1999, must
be ratified in full by the Board of Directors of CIBI. Any such Award which is
not ratified in full by the Board of Directors of CIBI within 60 days after the
date of grant thereof shall be null and void.
21. Leaves of Absence
A period of leave of absence shall not be deemed a termination of
employment or service on the Board for purposes of Options granted under the
1999 Plan, if:
(i) such leave of absence is expressly approved in writing by the
Committee or the Chief Executive Officer, as applicable, as a leave of absence
for purposes of the 1999 Plan; or
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(ii) to the extent required by the Family and Medical Leave Act or
other applicable law. Except as provided above, a leave of absence shall be
deemed a termination of employment or service on the Board for purposes of
Options governed by the 1999 Plan.
22. Governing Law
The 1999 Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the State of Wisconsin and, in the
case of ISOs, Section 422 of the Code and regulations issued thereunder.
23. Fair Market Value
"Fair Market Value" as of a given date for all purposes of the 1999
Plan and any Option Agreement means (a) if the Common Stock is listed on a
national securities exchange or the Nasdaq Stock Market's National Market, the
average of the closing prices of the Common Stock for the 10 consecutive trading
days immediately preceding such given date; (b) if the Common Stock is
principally traded on a national securities exchange or the Nasdaq Stock
Market's National Market but there are no reported closing sales prices on such
exchange or the Nasdaq Stock Market's National Market during the 10 consecutive
trading days immediately preceding such given date or if the Common Stock is
principally traded on the over-the-counter market, the average of the mean
between the bid and the asked price for the Common Stock at the close of trading
for the 10 consecutive trading days immediately preceding such given date; or
(c) if the Common Stock is neither listed on a national securities exchange or
the Nasdaq Stock Market's National Market nor traded on the over-the-counter
market, or if no such bid and asked prices are otherwise available, such value
as the Board, in good faith, shall determine. The Committee shall have broad
discretion in selecting a valuation method consistent with this Section 23 for
purposes of determining "Fair Market Value." Notwithstanding any provision of
the 1999 Plan to the contrary, no determination made with respect to the Fair
Market Value of Common Stock subject to an ISO shall be inconsistent with
Section 422 of the Code or regulations issued thereunder.
24. Successors
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<PAGE> 65
In the event of a liquidation, dissolution, sale or transfer of
substantially all of the assets of CIBI, or a merger or consolidation involving
CIBI, all obligations of CIBI under the 1999 Plan with respect to Options
governed by the 1999 Plan shall be binding on the successor to the transaction.
Employment of a Key Employee with such a successor or service on the board of
directors of a successor shall be considered employment of the Key Employee with
CIBI, or service on the Board, for purposes of the 1999 Plan.
25. Notices
Notices given pursuant to the 1999 Plan shall be in writing and shall
be deemed received when personally delivered or five days after mailed by United
States registered or certified mail, return receipt requested, addressee only,
postage prepaid. Notice to CIBI shall be directed to:
Donald J. Straka
Senior Vice President, General Counsel
and Secretary
Central Illinois Bancorp, Inc.
N27 W24025 Paul Court
P.O. Box 449
Pewaukee, Wisconsin 53072
Notices to or with respect to a Participant shall be directed to the
Participant, or the executors, personal representatives or distributees of a
deceased Participant or to a Participant's assignee, at the Participant's or
assignee's home address on the records of CIBI.
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<PAGE> 66
IN WITNESS WHEREOF, CIBI has caused the 1999 Plan to be executed on its
behalf by its duly authorized officer on _________, 1999, effective as of
January 1, 1999.
CENTRAL ILLINOIS BANCORP, INC.
By:_______________________________
Its:______________________________
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SCHEDULE A
----------
1993 Employee Stock Option Plan
1995 Employee Stock Option Plan
1995 Director Stock Option Plan
1996 Employee Stock Option Plan
1996 Director Stock Option Plan
1997 Employee Stock Option Plan
1997 Employee Stock Option Plan
1997 Employee Stock Option Plan
1997 Employee Stock Option Plan
1998 Employee Stock Option Plan
1998 Director Stock Option Plan
1998 Director Stock Option Plan
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APPENDIX B
AGREEMENT AND PLAN OF MERGER BETWEEN
CENTRAL ILLINOIS BANCORP, INC. AND CIB MARINE BANCSHARES, INC.
This PLAN OF MERGER (the "Plan of Merger") is made and entered into
this ____ day of________________, 1999 by and between Central Illinois Bancorp,
Inc., an Illinois corporation ("CIBI"), and CIB Marine Bancshares, Inc., a
Wisconsin corporation ("CIBM" or, where appropriate, the "Surviving
Corporation").
WHEREAS, CIBI is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended, with authorized capital stock
consisting of 50,000,000 shares of common stock, $1.00 par value (the "CIBI
Common Stock"), of which ____________ shares are issued and outstanding as of
the date hereof;
WHEREAS, CIBM will be a bank holding company registered under the Bank
Holding Company Act of 1956, as amended, with authorized capital stock
consisting solely of 50,000,000 shares of common stock, $1.00 par value (the
"CIBM Common Stock"), and 5,000,000 shares of preferred stock $1.00 par value
(the "CIBM Preferred Stock");
WHEREAS, One (1) share of CIBM Common Stock is issued and outstanding
and owned of record by CIBI, and no shares of CIBM Preferred Stock are issued
and outstanding;
WHEREAS, CIBI and CIBM are entering into this Plan of Merger, which
contemplates the merger (the "Merger") of CIBI with and into CIBM upon the terms
and conditions provided herein and pursuant to the applicable provisions of the
Wisconsin Business Corporation Law (the "WBCL"), the Illinois Business
Corporation Act of 1983, as amended (the "IBCA") and Section 368(a) of the
Internal Revenue Code of 1986, as amended; and
WHEREAS, the respective Boards of Directors of CIBI and CIBM
(collectively the "Merging Corporations") deem it in the best interests of their
respective corporations and shareholders that CIBI be merged with and into CIBM,
with CIBM being the surviving corporation of the Merger, and each such Board of
Directors has approved this Plan of Merger, has authorized its execution and
delivery, has directed that this Plan of Merger be submitted to its respective
shareholders for approval and has recommended its approval;
NOW THEREFORE, with the foregoing recitals incorporated herein by this
reference and made a part hereof, and in consideration of the premises and
agreements, covenants and conditions herein contained, and in accordance with
the WBCL and IBCA, the Merging Corporations adopt and agree to the following
agreements, terms and conditions relating to the Merger and the method of
carrying the same into effect:
ARTICLE I
THE MERGER
1.01 THE MERGER. Subject to the terms and conditions of this Plan of
Merger, at the Effective Time (as more fully defined in Section 1.02), CIBI will
be merged with and into CIBM, in accordance with the applicable provisions of
the WBCL and IBCA.
1.02 EFFECTIVE TIME OF MERGER. Subject to the provisions of this Plan
of Merger, articles of merger ("Articles of Merger") shall be duly prepared and
executed by CIBI and CIBM and thereafter
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delivered to the Secretary of State of Wisconsin and the Secretary of State of
Illinois for filing as provided in the WBCL and IBCA as soon as practicable
after approval of the Plan of Merger and the Merger by the shareholders of CIBI
and the sole shareholder of CIBM. The Merger shall become effective as of 5:00
P.M. (Central Time) on the day of filing of the Articles of Merger with the
Secretary of State of Wisconsin and with the Secretary of State of Illinois (the
"Effective Time").
1.03 EFFECTS OF THE MERGER.
(a) At the Effective Time:
(i) the separate existence of CIBI shall cease,
and CIBI shall be merged with and into CIBM
as provided in Section 180.1106 of the WBCL
and Section 11.50 of the IBCA;
(ii) the Articles of Incorporation of CIBM in
effect immediately prior to the Effective
Time shall continue without change (until
further amended in accordance with
applicable law) as the Articles of
Incorporation of the Surviving Corporation;
(iii) the By-Laws of CIBM in effect immediately
prior to the Effective Time shall continue
without change as the By-Laws of the
Surviving Corporation;
(iv) the members of the board of directors of
CIBM immediately prior to the Effective Time
shall continue without change as the
directors of the Surviving Corporation
until such time as their respective
successors are duly elected or their earlier
resignation, death, retirement or removal;
(v) the officers of CIBI immediately prior to
the Effective Time shall become the officers
of the Surviving Corporation, to serve
until such time as their respective
successors are duly elected or their earlier
resignation, death, retirement or removal;
and
(vi) the corporate headquarters of CIBM at N27
W2425 Paul Court, Pewaukee, Wisconsin 53072
shall be the headquarters of the Resulting
Corporation.
(B) In accordance with Section 180.1 106 of the WBCL and
Section 11.50 of the IBCA, at and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises of a
public or private nature, and be subject to all the restrictions, disabilities
and duties, of each of the Merging Corporations; and all singular rights,
privileges, powers and franchises of each of the Merging Corporations, and all
property, real, personal and mixed, and all debts due to either of the Merging
Corporations on whatever account, as well as for stock subscriptions and all
other things in action or belonging to each of the Merging Corporations, shall
be vested in the Surviving Corporation; and all property, rights, privileges,
powers and franchises, and all and every other interest, shall be thereafter as
effectually the property of the Surviving Corporation as they were of the
Merging Corporations, and the title to any real estate vested, by deed or
otherwise, in either of the Merging Corporations shall not revert or be in any
way impaired; but all rights of creditors and all liens upon any property of
either of the Merging Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the Merging Corporations shall thereafter attach to
the Surviving Corporation, and may be enforced against it to the same extent as
if said debts and liabilities had been incurred or contracted by it. Any action
or proceeding, whether civil, criminal, administrative or investigatory, pending
by or against either Merging Corporation shall be prosecuted as if the Merger
had not taken place, or the Surviving Corporation may be substituted as a party
in such action or proceeding in place of the Merging Corporation.
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE MERGING CORPORATIONS
2.01 (A) EFFECT ON CIBI COMMON STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the Merging
Corporations or the shareholders of CIBI, all shares of CIBI Common Stock issued
and outstanding or held in treasury, if any, immediately prior to the Effective
Time shall automatically be converted into an equal number of fully paid and
non-assessable shares (except as provided in Section 180.0622(2)(b) of the WBCL)
of CIBM Common Stock, and certificates representing such shares of CIBI Common
Stock issued and outstanding or held in treasury, if any, immediately prior to
the Effective Time shall from and after the Effective Time represent the number
of shares of CIBM Common Stock into which such shares shall have been converted.
(B) EFFECT ON CIBI OPTIONS. At the Effective Time, each option
granted by CIBI to purchase CIBI Common Stock (under or subject to any stock
option plan of CIBI) and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become an option to purchase, upon the same terms
and conditions, the number of shares of the Surviving Corporation's common stock
(subject to further adjustments as provided in the governing stock option plan)
equal to the number of shares of CIBI common stock that the holder thereof would
have received had such holder exercised the option in full immediately prior to
the Effective Time (whether or not such option was then exercisable). The price
per share payable upon the exercise under each of said options shall (subject to
future adjustments as provided in the governing stock option plan) be equal to
the exercise price per share thereunder immediately prior to the Effective Time.
2.02 EFFECT ON CIBI PLANS.
(A) All plans of CIBI relating to the issuance or purchase of
CIBI Common Stock shall be automatically amended immediately prior to the
Effective Time to the extent necessary to permit continuance of such plans into
those of the Surviving Corporation following the Merger, notwithstanding any
provisions therein contained to the contrary.
(B) At the Effective Time, each employee or director benefit
plan or incentive compensation plan to which CIBI is a party shall be assumed
by, and continue to be the plan of, the Surviving Corporation.
(C) To the extent any of the aforementioned plans of CIBI or
any of its subsidiaries provides for the issuance or purchase of, or otherwise
relates to, CIBI Common Stock, after the Effective Time such plans shall be
deemed to provide for the issuance or purchase of, or otherwise relate to, CIBM
Common Stock upon the same terms and conditions.
2.03 EFFECT ON CIBM COMMON STOCK. As of the Effective Time, by virtue
of the Merger and without any action on the part of the Merging Corporations or
the shareholder of CIBM, all shares of CIBM Common Stock issued and outstanding
or held in treasury, if any, immediately prior to the Effective Time shall no
longer be issued or outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto.
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ARTICLE III
SHAREHOLDER APPROVAL
3.01 SHAREHOLDER APPROVAL. This Plan of Merger and the Merger herein
contemplated shall have been, or shall be, submitted to the shareholders of each
of the Merging Corporations hereto in accordance with applicable provisions of
law. The consummation of this Plan of Merger and the Merger herein provided for
are conditioned upon the approval hereof by the shareholders of the Merging
Corporations as provided by law.
ARTICLE IV
TERMINATION; AMENDMENT
4.01 TERMINATION. This Plan of Merger may be terminated and the Merger
abandoned by the Boards of Directors of CIBI and CIBM at any time until the
first to occur of the filing of Articles of Merger with the Secretary of State
of Wisconsin or the filing of Articles of Merger with the Secretary of State of
Illinois if the Boards of Directors shall determine, in their sole discretion,
that the Merger is not in the best interests of a Merging Corporation or its
shareholders.
4.02 AMENDMENT. Subject to the following sentence, this Plan of Merger
may be amended, modified or supplemented by the Merging Corporations at any time
until the first to occur of the filing of the Articles of Merger with the
Secretary of State of Wisconsin or the filing of Articles of Merger with the
Secretary of State of Illinois, whether before or after shareholder approval, to
the extent permitted under applicable law. Notwithstanding the foregoing,
amendments, modifications or supplements of this Plan of Merger that are
required by the Secretary of State of Wisconsin or the Secretary of State of
Illinois and that do not materially and adversely affect the rights, benefits
and obligations of either of the Merging Corporations may be made unilaterally
by the Merging Corporation filing this Plan of Merger with such office.
IN WITNESS WHEREOF, each of the Merging Corporations has caused this
Plan of Merger to be executed by its duly authorized officer as of the date and
year first above written.
CENTRAL ILLINOIS BANCORP, INC.,
an Illinois corporation
By: __________________________
J. Michael Straka
President and Chief Executive Officer
CIB MARINE BANCSHARES, INC.,
a Wisconsin corporation
By: _________________________
J. Michael Straka
President and Chief Executive Officer
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APPENDIX C
ARTICLES OF INCORPORATION
OF
CIB MARINE BANCSHARES, INC.
The following Articles of Incorporation are adopted under the
Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin Statutes:
ARTICLE 1
NAME
The name of the Corporation is CIB Marine Bancshares, Inc.
ARTICLE 2
REGISTERED OFFICE AND AGENT
The address of the registered office of the Corporation in the
State of Wisconsin is N27 W24025 Paul Court, Pewaukee, Wisconsin 53072. The name
of its registered agent at such address is Donald J. Straka.
ARTICLE 3
PURPOSE
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Wisconsin Business
Corporation Law.
ARTICLE 4
CLASSES OF STOCK
The total number of shares of all classes of capital stock
which the Corporation has the authority to issue is fifty-five million
(55,000,000) shares, which are divided into two classes as follows:
(a) five million (5,000,000) shares of capital stock
designated as "Preferred Stock," with a par value of
$1.00 per share; and
(b) fifty million (50,000,000) shares of capital stock
designated as "Common Stock," with a par value of
$1.00 per share (the "Common Stock").
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ARTICLE 5
RIGHTS AND PREFERENCES OF CLASSES OF STOCK
The designations, preferences, voting powers and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions of each of the classes of stock of the Corporation are as
follows:
5.1 PREFERRED STOCK. Pursuant to Section 180.0602(1) of the
Wisconsin Business Corporation Law, the Board of Directors is authorized, at any
time and from time to time, to provide for the issuance of shares of Preferred
Stock in one or more series with such designations, preferences, voting powers
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof as are stated and expressed
in the resolution or resolutions providing for the issuance of such Preferred
Stock adopted by the Board of Directors, and as are not stated and expressed in
these Articles of Incorporation or any amendment thereto, including, but not
limited to, determination of any of the following:
(a) the distinctive serial designation and the number of
shares constituting a series;
(b) the dividend rate or rates, whether dividends are
cumulative (and if so on what terms and conditions), the payment date
or dates for dividends, and the participating or other special rights,
if any, with respect to dividends;
(c) the voting rights, full or limited, if any, of the shares
of the series, which may include the right to elect a specified number
of directors if dividends on the series are not paid for in a specified
period of time;
(d) whether the shares of the series are redeemable and, if
so, the price or prices at which, and the terms and conditions on
which, the shares may be redeemed, which prices, terms and conditions
may vary under different conditions and at different redemption dates;
(e) the amount or amounts, if any, payable upon the shares of
the series in the event of voluntary or involuntary liquidation,
dissolution or winding up of the Corporation prior to any payment or
distribution of the assets of the Corporation to any class or classes
of stock of the Corporation ranking junior to the series;
(f) whether the shares of the series are entitled to the
benefit of a sinking or retirement fund to be applied to the purchase
or redemption of shares of the series and the amount of the fund and
the manner of its application, including the price or prices at which
the shares of the series may be redeemed or purchased through the
application of the fund;
(g) whether the shares are convertible into, or exchangeable
for, shares of any other class or classes or of any other series of the
same or any other class or classes of stock of the Corporation and the
conversion price or prices, or the rates of exchange, and the
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adjustments thereof, if any, at which the conversion or exchange may be
made, and any other terms and conditions of the conversion or exchange;
and
(h) any other preferences, privileges and powers, and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions of a series, as the Board
of Directors may deem advisable and as are not inconsistent with the
provisions of these Articles of Incorporation.
5.2 COMMON STOCK.
(a) Dividends. Subject to the preferential rights of the
Preferred Stock, the holders of the Common Stock are entitled to
receive, to the extent permitted by law, such dividends as may be
declared from time to time by the Board of Directors.
(b) Liquidation. In the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets or winding up of the
Corporation, after distribution in full of the preferential amounts, if
any, to be distributed to the holders of shares of Preferred Stock,
holders of Common Stock shall be entitled to receive all of the
remaining assets of the Corporation of whatever kind available for
distribution to shareholders, ratably in proportion to the number of
shares of Common Stock held by them respectively. The Board of
Directors may distribute in kind to the holders of Common Stock such
remaining assets of the Corporation or may sell, transfer or otherwise
dispose of all or any part of such remaining assets to any other
corporation, trust or other entity and receive payment therefor in
cash, stock or obligations of such other corporation, trust, or other
entity, or any combination hereof, and may sell all or any part of the
consideration so received and distribute any balance thereof in kind to
holders of Common Stock. Neither the merger or consolidation of the
Corporation into or with any other corporation or corporations, nor the
purchase or redemption of shares of stock of any class of the
corporation, nor the sale or transfer by the corporation of all or any
part of its assets, nor the reorganization or recapitalization of the
corporation, shall be deemed to be a dissolution, liquidation or
winding up of the corporation for the purposes of this paragraph.
(c) Voting Rights. Except as may be otherwise required by law
or these Articles of Incorporation, each holder of Common Stock has one
vote in respect of each share of stock held by the holder of record on
the books of the Corporation on all matters voted upon by the
shareholders.
5.3 CHANGES IN AUTHORIZED CAPITAL STOCK. The number of
authorized shares of any class or series of stock may be increased or decreased
without the approval of such class or series as a separate voting group, except
to the extent that the Board of Directors shall specify, in the resolution or
resolutions providing for the issuance of a series of stock, that the approval
of the holders of such series shall be required to increase or decrease the
number of authorized shares of such series.
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ARTICLE 6
NO PREEMPTIVE RIGHTS
No shareholder shall have any preemptive right to subscribe to
an additional issue of stock, whether now or hereafter authorized, of any class
or series or to any securities of the Corporation convertible into such stock.
ARTICLE 7
DIRECTORS
7.1 NUMBER, ELECTION AND TERMS OF DIRECTORS.
(a) The business and affairs of the Corporation shall be
managed by or under the direction of a Board of Directors. Subject to the rights
of the holders of any class or series of Preferred Stock to elect additional
directors under specified circumstances, the number of directors constituting
the Board or Directors shall be initially fixed at ten and shall thereafter be
fixed from time to time exclusively by the Board of Directors pursuant to a
resolution adopted by the affirmative vote of a majority of the number of
directors that the Corporation would have at the time if there were no vacancies
existing in the Board of Directors (the "Whole Board").
(b) The Board of Directors, other than the directors who may
be elected by the holders of any class or series of Preferred Stock under
specified circumstances, shall be divided into three classes, as nearly equal in
number as possible. The initial term of office of Class I directors shall expire
at the annual meeting of shareholders to be held in 2000; the initial term of
office of Class II directors shall expire at the annual meeting of shareholders
to be held in 2001; and the initial term of office of Class III directors shall
expire at the annual meeting of shareholders to be held in 2003, and in each
case until their respective successors are elected and qualified. At each annual
meeting of shareholders, directors shall be chosen to succeed those whose terms
then expire and shall be elected for a term of office expiring at the third
succeeding annual meeting of shareholders after their election, and in each case
until their respective successors are elected and qualified.
7.2 INITIAL BOARD OF DIRECTORS. The initial Board of Directors
shall consist of the following persons, each of whom shall serve as a member of
the class of directors set forth below:
CLASS I (TERMS EXPIRE AT THE 2000 ANNUAL MEETING)
John T. Bean
1631 S. Highland
Arlington Heights, Illinois 60007
Steven C. Hillard
c/o Hilmun Holdings
P.O. Box 3966
Champaign, Illinois 61826
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J. Michael Straka
N27 W24025 Paul Court
Pewaukee, Wisconsin 53072
CLASS II (TERMS EXPIRE AT THE 2001 ANNUAL MEETING)
--------------------------------------------------
Norman Baker
14493 S. Padre Island Drive
Suite A, Box 321
Corpus Christi, Texas 78418
W. Scott Blake
731 N. Jackson Street, Suite 400
Milwaukee, Wisconsin 53202
Dean Katsaros
2301 Village Green Place, Suite B
Champaign, Illinois 61821
Donald M. Trilling
c/o Illini Tile
1300 Touhy Avenue
Elk Grove Village, Illinois 60007-5304
CLASS III (TERMS EXPIRE AT THE 2002 ANNUAL MEETING)
---------------------------------------------------
Jose C. Araujo
Calle C RES DE MORD Valle Amiba
Caracas, Venezuela
Jerry D. Maahs
19385 Buckingham Place
Brookfield, Wisconsin 53045
Howard E. Zimmerman
111 W. Washington Street, Suite 902
Chicago, Illinois 60602
7.3 NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Subject to the
rights of any class or series of Preferred Stock then outstanding and unless the
Board of Directors otherwise determines, newly created directorships resulting
from any increase in the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation, retirement,
disqualification, removal from office or other cause shall be filled by a
majority vote of the directors then in office, although less than a quorum, or
by a sole remaining director.
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Directors chosen to fill vacancies pursuant to this Section
5.2 shall hold office for a term expiring at the annual meeting of shareholders
at which the term of the class to which they have been elected expires. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director. Newly created directorships shall be
allocated among the classes of directors so that each class of directors shall
consist, as nearly as possible, of one-third of the total number of directors.
7.4 REMOVAL. Subject to the rights of the holders of any class
or series of Preferred Stock then outstanding, any director, or the entire Board
of Directors, may be removed from office at any time, but only for cause and
only by the affirmative vote of the holders of at least eighty percent (80%) of
the outstanding shares of all classes of stock of the Corporation generally
entitled to vote in the election of directors, considered for purposes of this
Section 5.4 as one class.
ARTICLE 8
BY-LAWS
No provision of the by-laws of the Corporation may be amended,
altered or repealed and no provision inconsistent with the by-laws of the
Corporation may be adopted, except by (a) the affirmative vote of a majority of
the members of the Whole Board, or (b) the affirmative vote of the holders of at
least eighty percent (80%) of the outstanding shares of all classes of stock of
the Corporation generally entitled to vote in the election of directors,
considered for purposes of this Article 6 as one class.
ARTICLE 9
FAIR PRICE PROVISION
9.1 DEFINITIONS. For purposes of this Article 9, the following
terms shall have the following meanings:
(a) "Business Combination" shall mean:
(i) any merger, consolidation or share exchange of the
Corporation or any Subsidiary with or into (A) an Interested
Shareholder or (b) any other person (whether or not itself an
Interested Shareholder) which is, or after such merger,
consolidation, or share exchange would be, an Affiliate or
Associate of an Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of
transactions) to or with, or proposed by or on behalf of, an
Interested Shareholder or an Affiliate or Associate of an
Interested Shareholder of any assets of the Corporation or any
Subsidiary having an aggregate Fair Market Value equal to or
greater than one percent (1%) of the total assets of the
Corporation as reported in the consolidated balance sheet of
the Corporation as of the end of the most recent quarter with
respect to which such balance sheet has been prepared; or
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(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of
any securities of the Corporation or any Subsidiary to, or
proposed by or on behalf of, an Interested Shareholder or an
Affiliate or Associate of an Interested Shareholder in
exchange for cash, securities or other property (or a
combination thereof) having an aggregate Fair Market Value
equal to or greater than one percent (1%) of the total assets
of the Corporation as reported in the consolidated balance
sheet of the Corporation as of the end of the most recent
quarter with respect to which such balance sheet has been
prepared; or
(iv) any reclassification of securities (including any
reverse stock split), recapitalization or reorganization of
the Corporation or any Subsidiary, or any merger,
consolidation or share exchange of the Corporation with any
Subsidiary or any other transaction (whether or not with or
into or otherwise involving an Interested Shareholder) which
has the effect, directly or indirectly, of increasing the
percentage of the outstanding shares of (A) any class of
equity securities of the Corporation or any Subsidiary or (b)
any class of securities of the Corporation or any Subsidiary
convertible into equity securities of the Corporation or any
Subsidiary, represented by securities of such class which are
directly or indirectly owned by an Interested Shareholder and
all of its Affiliates and Associates;
(v) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation or any
Subsidiary or any spin-off or split-up of any kind of the
Corporation or any Subsidiary proposed by or on behalf of the
Interested Shareholder or any Affiliate or Associate of an
Interested Shareholder; or
(vi) any agreement, contract, or other arrangement
providing for any one or more of the actions specified in
clauses (i) through (v) of this Section 9.1(a).
(b) "Affiliate" and "Associate" shall have the respective
meanings given such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the initial date of filing of these
Articles of Incorporation.
(c) "Beneficial Owner" shall have the meaning given such term
in Rule 13d-3 of the General Rules and Regulations under the Exchange
Act, as in effect on the initial date of filing of these Articles of
Incorporation, and a person shall "Beneficially Own" and have
"Beneficial Ownership" of any securities of which such person is the
Beneficial Owner.
(d) "Continuing Director" shall mean (i) any member of the
Board of Directors of the Corporation who (A) is neither the Interested
Shareholder involved in the Business Combination as to which a vote of
Continuing Directors is provided for hereunder, nor an Affiliate,
Associate, employee, agent or nominee of such Interested Shareholder,
or the relative of any of the foregoing, and (B) was a member of the
Board of Directors prior to the time that such Interested Shareholder
became an Interested Shareholder; and (ii) any
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successor of a Continuing Director described in clause (i) who is
recommended or elected to succeed a Continuing Director by the
affirmative vote of a majority of Continuing Directors then on the
Board of Directors of the Corporation.
(e) "Fair Market Value" shall mean (i) in the case of stock,
the highest closing sales price during the 30-day period immediately
preceding the date in question of a share of such stock on the
principal national securities exchange on which such stock is listed or
admitted to trading or on the Nasdaq Stock Market's National Market,
or, if such stock is not listed or admitted to trading on any such
exchange or the Nasdaq Stock Market's National Market, the highest last
quoted price or, if not so quoted, the highest average high bid and low
asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation
System ("Nasdaq") or such system then in use during the 30-day period
preceding the date in question, or, if no such quotation is available,
the fair market value on the date in question of a share of such stock
as determined by a majority of the Continuing Directors in good faith;
and (ii) in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined by
a majority of the Continuing Directors in good faith.
(f) "Interested Shareholder" shall mean any person (other than
the Corporation or a Subsidiary, any employee benefit plan maintained
by the Corporation or any Subsidiary, or any trustee or fiduciary with
respect to any such plan when acting in such capacity) who or which:
(i) is the Beneficial Owner of ten percent (10%) or more
of the Voting Shares:
(ii) is an Affiliate or an Associate of the Corporation
and at any time within the two-year period immediately prior
to the date in question, was the Beneficial Owner of 10% or
more of the voting power of the then-outstanding Voting
Shares; or
(iii) is an assignee of, or has otherwise succeeded to,
any shares of Voting Stock of the Corporation of which an
Interested Shareholder was the Beneficial Owner at any time
within the two-year period immediately prior to the date in
question, if such assignment or succession shall have occurred
in the course of a transaction, or series of transactions, not
involving a public offering within the meaning of the
Securities Act of 1933, as amended.
For the purpose of determining whether a person is an
Interested Shareholder, the outstanding Voting Shares shall include
unissued Voting Shares of which the Interested Shareholder is the
Beneficial Owner but shall not include any other Voting Shares which
may be issuable pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, warrants or
options, or otherwise, to any person who is not an Interested
Shareholder.
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(g) A "person" shall include any individual, firm,
corporation, partnership, trust or other entity, organization or
association, as well as any syndicate or group deemed to be a person
under Section 14(d)(2) of the Exchange Act.
(h) "Subsidiary" shall mean any corporation, limited
partnership, general partnership or other firm or entity of which a
majority of any class of equity security or other equity interests
owned, directly or indirectly, by the Corporation; provided, however,
that for purposes of the definition of Interested Shareholder set forth
in paragraph (f) of this Section 9.1, the term "Subsidiary" shall mean
only a corporation, limited partnership, general partnership or other
firm or entity of which a majority of each class of equity security or
other equity interest is owned, directly or indirectly, by the
Corporation.
(i) "Voting Shares" shall mean the outstanding shares of all
classes of stock of the Corporation generally entitled to vote in the
election of directors, considered for purposes of this Article 9 as one
class.
9.2 VOTE REQUIRED FOR CERTAIN BUSINESS TRANSACTIONS. In
addition to any affirmative vote required by law or by these Articles of
Incorporation, and except as otherwise expressly provided in Section 9.3 of this
Article, any Business Combination shall require the affirmative vote of the
holders of record of outstanding shares representing at least (a) eighty percent
(80%) of the voting power of the then outstanding shares of the Voting Stock of
the Corporation, voting together as a single class, and (b) sixty-six and two
thirds percent (66-2/3%) of the voting power of the Voting Stock owned by
Persons other than any Interested Shareholder and its Associates and Affiliates,
notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
9.3 WHEN HIGHER VOTE IS NOT REQUIRED. The provisions of
Section 9.2 of this Article shall not apply to a particular Business
Combination, and such Business Combination shall require only such affirmative
vote, if any, of the shareholders as is required by law and any other provision
of these Articles of Incorporation, if all of the conditions specified in either
of the following paragraphs (a) and (b) are met.
(a) Approval by Continuing Directors. The Business Combination
has been approved by the affirmative vote of a majority of the
Continuing Directors, even if the Continuing Directors do not
constitute a quorum of the entire Board of Directors.
(b) Form of Consideration, Price and Procedure Requirements.
All of the following conditions shall have been met:
(i) With respect to each share of each class of Voting
Stock of the Corporation (including Common Stock), the holder
thereof shall be entitled to receive on or before the date of
the consummation of the Business Combination (the
"Consummation Date") consideration, in the form specified in
(b)(ii) hereof, with an aggregate Fair Market Value as of the
Consummation Date at least equal to the highest of the
following:
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(A) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Shareholder to which the Business
Combination relates, or by any Affiliate or Associate of such
Interested Shareholder, for any shares of such class of Voting
Stock acquired by it (1) within the five-year period
immediately prior to the first public announcement of the
proposal of the Business Combination (the "Announcement
Date"), (2) within the two-year period prior to the
Consummation Date or (3) within the two-year period prior to,
or in, the transaction in which it became a Interested
Shareholder, whichever is highest; plus, in any such case,
interest compounded annually from the earliest date on which
that highest per share acquisition price was paid through the
Consummation Date at the rate for one-year United States
Treasury obligations from time to time in effect, less the
aggregate amount of any cash dividends paid and the Fair
Market Value of any dividends paid other than in cash per
share of such class of Voting Stock since that earliest date,
up to the amount of that interest;
(B) the Fair Market Value per share of such class of
Voting Stock of the Corporation on the Announcement Date or on
the date on which the Interested Shareholder became an
Interested Shareholder, whichever is higher; plus interest
compounded annually from that date through the Commencement
Date at the rate for one-year United States Treasury
obligations from time to time in effect; less the aggregate
amount of any cash dividends paid, and the Fair Market Value
of any dividends paid other than in cash, per share of such
class of Voting Stock since that date, up to the amount of
that interest; and
(C) the highest preferential amount per share, if
any, to which the holders of shares of such class of Voting
Stock of the Corporation are entitled in the event of any
voluntary or involuntary liquidation, dissolution or winding
up of the Corporation; plus the aggregate amount of any
dividends declared or due as to which those holders are
entitled prior to payment of dividends on some other class or
series of stock (unless the aggregate amount of those
dividends is included in that preferential amount).
(ii) The consideration to be received by holders of a
particular class of outstanding Voting Stock of the Corporation
(including Common Stock) as described in Section 9.3(b)(i) hereof shall
be in cash or, if the consideration previously paid by or on behalf of
the Interested Shareholder in connection with its acquisition of
beneficial ownership of shares of such class of Voting Stock consisted
in whole or in part of consideration other than cash, then in the same
form as such consideration. If such payment for shares of any class of
Voting Stock of the Corporation has been made in varying forms of
consideration, then the form of consideration for such class of Voting
Stock shall be either cash or the form used to acquire the beneficial
ownership of the largest number of shares of such class of Voting Stock
previously acquired by the Interested Shareholder.
(iii) After such Interested Shareholder has become an
Interested Shareholder and prior to the Consummation Date:
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(A) except as approved by the affirmative vote of a
majority of the Continuing Directors, there shall have been no
failure to declare and pay at the regular date therefor any
full quarterly dividends (whether or not cumulative) on the
outstanding Preferred Stock of the Corporation, if any;
(B) there shall have been (1) no reduction in the
annual rate of dividends paid on the Common Stock of the
Corporation (except as necessary to reflect any subdivision of
the Common Stock), except as approved by the affirmative vote
of a majority of the Continuing Directors, and (2) an increase
in such annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding
shares of Common Stock, unless the failure so to increase such
annual rate is approved by the affirmative vote of a majority
of the Continuing Directors; and (3) such Interested
Shareholder shall not have become the Beneficial Owner of any
additional shares of Voting Stock of the Corporation except
(x) as part of the transaction which results in such
Interested Shareholder becoming an Interested Shareholder, (y)
by virtue of proportionate stock splits, stock dividends or
other distributions of stock in respect of stock not
constituting a Business Combination, or (z) through a Business
Combination meeting all of the considerations of this Section
9.3.
(iv) After such Interested Shareholder has become an
Interested Shareholder, neither such Interested Shareholder nor any
Affiliate or Associate thereof shall have received the benefit,
directly or indirectly (except proportionately as a shareholder of the
Corporation), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages
provided by the Corporation.
(v) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Exchange Act and the General Rules and Regulations thereunder (or any
subsequent provisions replacing such Act, rules or regulations) shall
be mailed to the shareholders of the Corporation at least 30 days prior
to the consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed pursuant to
such Act or subsequent provisions thereof). Such proxy or information
statement shall contain, (A) any recommendations as to the advisability
(or inadvisability) of the Business Transaction that a majority of the
Continuing Directors may choose to state, and (B) if a majority of the
total number of Continuing Directors so requests, an opinion of a
reputable investment banking firm (which firm shall be selected by a
majority of the total number of Continuing Directors, furnished with
all information it reasonably requests, and paid a reasonable fee for
its services by the Corporation upon the Corporation's receipt of such
opinion) as to the fairness (or lack of fairness) of the terms of the
proposed Business Combination from the point of view of the holders of
shares of Voting Stock (other than the Interested Shareholder).
9.4 POWERS OF CONTINUING DIRECTORS. A majority of the
Continuing Directors shall have the power and duty to determine, on the basis of
information known to them after
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reasonable inquiry, all facts necessary to determine compliance with this
Article, including, without limitation, (A) whether a Person is an Interested
Shareholder, (B) the number of shares of Voting Stock of the Corporation
beneficially owned by any Person, (C) whether a Person is an Affiliate or
Associate of another, (D) whether the requirements of paragraph (b) of Section
9.3 have been met with respect to any Business Combination, and (E) whether the
assets which are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value equal to or greater than one percent (1%) of the total assets of
the Corporation as reported in the consolidated balance sheet of the Corporation
as of the end of the most recent quarter with respect to which such balance
sheet has been prepared; and the good faith determination of a majority of the
Continuing Directors on such matters shall be conclusive and binding for all the
purposes of this Article 9.
9.5 NO EFFECT ON FIDUCIARY OBLIGATIONS.
(a) Nothing contained in this Article shall be construed to
relieve an Interested Shareholder or any Associate or Affiliate of an
Interested Shareholder from any fiduciary obligation imposed by law.
(b) The fact that any Business Combination complies with the
provisions of Section 9.3(b) of this Article shall not be construed to
impose any fiduciary duty, obligation or responsibility on the Board of
Directors, or any member thereof, to approve such Business Combination
or recommend its adoption or approval to the shareholders of the
Corporation, nor shall such compliance limit, prohibit or otherwise
restrict in any manner the Board of Directors, or any member thereof,
with respect to evaluations of or actions and responses taken with
respect to such Business Combination.
ARTICLE 10
SHAREHOLDER ACTION BY WRITTEN CONSENT
Action required or permitted by the Wisconsin Business
Corporation Law to be taken at a shareholders' meeting may be taken without a
meeting without action by the board of directors only by all shareholders
entitled to vote on the action.
ARTICLE 11
ELECTION TO BE SUBJECT TO CERTAIN PROVISIONS
OF THE WISCONSIN BUSINESS CORPORATION LAW
The Corporation elects to be subject to Sections 180.1130 to
180.1134 and Section 180.1150 of the Wisconsin Business Corporation Law as if it
were an issuing public corporation within the meaning of Section 180.1130(8) of
the Wisconsin Business Corporation Law.
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ARTICLE 12
AMENDMENTS TO THE ARTICLES
The Corporation reserves the right to amend, alter or repeal
any provision contained in these Articles of Incorporation, in the manner now or
hereafter prescribed by law, and all rights conferred upon shareholders and
directors herein are granted subject to this reservation. Notwithstanding that a
lesser or different percentage may be specified by the Wisconsin Business
Corporation Law and in addition to any affirmative vote of any particular class
or series of the capital stock that may be required by the Wisconsin Business
Corporation Law and these Articles of Incorporation,
(a) the affirmative vote of the holders of at least eighty
percent (80%) of the outstanding shares of all classes of stock of the
Corporation generally entitled to vote in the election of directors,
considered for purposes of this Article 12 as one class, shall be
required to amend, alter or repeal in any respect, or adopt any
provision inconsistent with,
(i) Section 5.1 of Article 5,
(ii) Sections 7.1, 7.3 and 7.4 of Article 7,
(iii) Article 8,
(iv) Article 10,
(v) Article 11, and
(vi) this Article 12(a);
provided, however, that if such amendment, alteration, repeal or
adoption of an inconsistent provision is declared advisable by the
Board of Directors by the affirmative vote of at least seventy-five
percent (75%) of the Whole Board, such amendment, alteration, repeal or
adoption of an inconsistent provision need only be approved by the vote
then required under the Wisconsin Business Corporation Law; and
(b) the affirmative vote of the holders of at least eighty
percent (80%) of the outstanding shares of all classes of stock of the
Corporation generally entitled to vote in the election of directors,
considered for purposes of this Article 12 as one class, shall be
required to amend, alter or repeal in any respect, or adopt any
provision inconsistent with Article 9 or this Article 12(b); provided,
however, that if such amendment, alteration, repeal or adoption of an
inconsistent provision is declared advisable by the Board of Directors
by the affirmative vote of at least seventy-five percent (75%) of the
Whole Board and a majority of the Continuing Directors, such amendment,
alteration, repeal or adoption of an inconsistent provision need only
be approved by the vote then required under the Wisconsin Business
Corporation Law.
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ARTICLE 13
INCORPORATOR
The name and address of the sole incorporator is Donald J.
Straka, N27 W24025 Paul Court, Pewaukee, Wisconsin 53072.
Executed in duplicate this ___ day of _____, 1999.
---------------------------------
Donald J. Straka
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APPENDIX D
BY-LAWS
OF
CIB-MARINE BANCORP, INC.
A WISCONSIN CORPORATION
(ADOPTED ________________)
ARTICLE I
OFFICES AND RECORDS
Section 1.1 Principal and Business Offices. The Corporation may have
such principal and other business offices, either within or without the State of
Wisconsin, as the Board of Directors may designate or as the business of the
Corporation may require from time to time.
Section 1.2 Registered Office. The registered office of the Corporation
required by the Wisconsin Business Corporation Law to be maintained in the State
of Wisconsin may be, but need not be, identical with its principal office in the
State of Wisconsin, and the address of the registered office may be changed from
time to time by the Board of Directors or by the registered agent. The business
office of the registered agent of the corporation shall be identical to such
registered office.
ARTICLE II
SHAREHOLDERS
Section 2.1 Annual Meeting. An annual meeting of the shareholders shall
be held at such time and date as may be fixed each year by resolution of the
Board of Directors for the purpose of electing directors and for the transaction
of such other business as may come before the meeting.
Section 2.2 Special Meetings.
(a) Special meetings of the shareholders, for any purpose or purposes,
unless otherwise prescribed by the Wisconsin Business Corporation Law, may be
called only by the Chairman of the Board of Directors, the President, or the
Board of Directors, and shall be called by the Chairman of the Board of
Directors or President upon the demand, in accordance with this Section 2.2(a),
of the holders of record of shares representing at least ten percent (10%) of
all of the votes entitled to be cast on any issue proposed to be considered at
the special meeting.
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(b) In order that the Corporation may determine the shareholders
entitled to demand a special meeting, the Board may fix a record date to
determine the shareholders entitled to make such a demand (the "Demand Record
Date"). The Demand Record Date shall not precede the date upon which the
resolution fixing the Demand Record Date is adopted by the Board and shall be
not more than 10 days after the date upon which the resolution fixing the Demand
Record Date is adopted by the Board. Any shareholder of record seeking to have
shareholders demand a special meeting shall send a written demand to the
Secretary of the Corporation, in the form provided for in Section 2.2(d), by
hand or by certified mail, return receipt requested, which includes a request
that the Board fix a Demand Record Date. The Board shall promptly, but in all
events within 10 days after the date on which a valid request to fix a Demand
Record Date is received, adopt a resolution fixing the Demand Record Date and
shall make a public announcement of such Demand Record Date. If no Demand Record
Date has been fixed by the Board within 10 days after the date on which a valid
request to fix a Demand Record Date is received by the Secretary, then the
Demand Record Date shall be the 10th day after the first day on which a valid
request to fix a Demand Record Date is first received by the Secretary.
(c) In order for a shareholder or shareholders to demand a Special
Meeting, a written demand or demands for a Special Meeting by the holders of
record as of the Demand Record Date of shares representing at least 10% of all
the votes entitled to be cast on any issue proposed to be considered at the
special meeting must be received by the Secretary by hand or by certified or
registered mail, return receipt requested, within 70 days of the Demand Record
Date.
(d) To be valid, any demand which includes a request to fix a Demand
Record Date shall set forth the specific purpose or purposes for which the
special meeting is to be held, shall be signed by one or more persons who, as of
the date of the demand, are shareholders of record (or their duly authorized
proxies or other representatives), shall bear the date of signature of each such
shareholder (or proxy or other representative), and shall set forth the name and
address, as they appear in the Corporation's books, of each shareholder signing
such demand and the class or series and number of shares of the Corporation that
are owned of record and beneficially by each such shareholder. Each demand
submitted by any other shareholder in connection with the same meeting shall
include the same information and shall be signed by one or more persons who, as
of the Demand Record Date, are shareholders of record (or their duly authorized
proxies or other representatives).
(e) The Corporation shall not be required to call a special meeting
upon shareholder demand unless, in addition to the documents required by Section
2.2(b), (c) and (d), the Secretary receives a written agreement signed by each
Soliciting Shareholder (as defined herein), pursuant to which each Soliciting
Shareholder, jointly and severally, agrees to pay the Corporation's costs of
holding the special meeting, including the costs of preparing and mailing proxy
materials for the Corporation's own solicitation; provided that if each of the
resolutions introduced by any Soliciting Shareholder at such meeting is adopted,
and each of the individuals nominated by or on behalf of any Soliciting
Shareholder for election as director at such meeting is elected, then the
Soliciting Shareholders shall not be required to pay such costs. For purposes of
this Section 2.2(e), the following terms shall have the meanings set forth
below:
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(i) "Affiliate" of any Person shall mean any Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such first Person.
(ii) "Participant" shall have the meaning assigned to such
term in Item 4 of Schedule 14A (Rule 14a-101) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(iii) "Person" shall mean any individual, partnership, firm,
corporation, association, trust, unincorporated organization or other
entity, as well as any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act.
(iv) "Proxy" shall have the meaning assigned to such term in
Rule 14a-1 promulgated under the Exchange Act.
(v) "Solicitation" shall have the meaning assigned to such
term in Rule 14a-1 promulgated under the Exchange Act.
(vi) "Soliciting Shareholder" shall mean, with respect to any
special meeting demanded by a shareholder or shareholders, any of the
following persons:
(A) if the number of shareholders signing the demand
or demands for a meeting delivered to the corporation pursuant
to Section 2.2(c) is ten or fewer, then each shareholder
signing any such demand;
(B) if the number of shareholders signing the demand
or demands for a meeting delivered to the corporation pursuant
to Section 2.2(c) is more than ten, then each Person who
either (I) was a Participant in any Solicitation of such
demand or demands or (II) at the time of the delivery to the
corporation of such demand or demands, had engaged or intended
to engage in any Solicitation of Proxies for use at such
special meeting (other than a Solicitation of Proxies on
behalf of the Corporation); or
(C) any Affiliate of a Soliciting Shareholder, if a
majority of the directors then in office determine, reasonably
and in good faith, that such Affiliate should be required to
sign the written demand described in Section 2.2(d) and/or the
written agreement described in this subsection (e) in order to
prevent the purposes of this Section 2.2 from being evaded.
(f) Except as provided in the following sentence, any special meeting
shall be held at such hour and day as may be designated by whichever of the
Chairman of the Board, the President or the Board shall have called such
meeting. In the case of any special meeting called by the Chairman of the Board
or the President upon the demand of shareholders (a "Demand Special Meeting"),
such meeting shall be held at such hour and day as may be designated by the
Board; provided, however, that the date of any Demand Special Meeting shall be
not more than 70 days
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after the record date fixed for the special meeting pursuant to Section 2.5(a);
and provided further that in the event that the directors then in office fail to
designate an hour and date for a Demand Special Meeting within 10 days after the
date that valid written demands for such meeting by the holders of record as of
the Demand Record Date of shares representing at least 10% of all the votes
entitled to be cast on any issue proposed to be considered at the special
meeting are delivered to the corporation (the "Delivery Date"), then such
meeting shall be held on the 100th day after the Delivery Date, or if such 100th
day is not a Business Day (as defined below), on the first preceding Business
Day. In fixing a meeting date for any special meeting, the Chairman of the
Board, the President or the Board may consider such factors as he or it deems
relevant within the good faith exercise of his or its business judgment,
including, without limitation, the nature of the action proposed to be taken,
the facts and circumstances surrounding any demand for such meeting, and any
plan of the Board to call an annual meeting or a special meeting for the conduct
of related business.
(g) Any special meeting may be adjourned by the chairman of the meeting
from time to time and place to place without notice other than announcement at
the meeting. At any adjourned special meeting the corporation may transact any
business which might have been transacted at the special meeting as originally
called. In accordance with the provisions of applicable law, the Board acting by
resolution may postpone and reschedule any previously scheduled special meeting;
provided, however, that a Demand Special Meeting shall not be postponed beyond
the 100th day following the Delivery Date.
(h) For purposes of these by-laws, "Business Day" shall mean any day
other than a Saturday, a Sunday, legal holiday for federal or state governmental
agencies located in the State of Wisconsin, or a day on which banking
institutions in the State of Wisconsin are obligated by law or executive order
to close.
Section 2.3 Place of Shareholder Meetings. The Board of Directors may
designate any place, either within or without the State of Wisconsin, as the
place of meeting for any annual or special meeting of shareholders. If no
designation is made, the place of the meeting shall be at the principal office
of the Corporation in the State of Wisconsin.
Section 2.4 Notice of Meetings.
(a) Delivery of Notice. Written or printed notice stating the place,
day and hour of the meeting, and, in the case of a special meeting, the purpose
or purposes for which the meeting is called, shall be delivered not less than
ten (10) nor more than sixty (60) days before the date of the meeting (unless a
different time is provided by the Wisconsin Business Corporation Law or the
Articles of Incorporation), or in the case of a merger, consolidation, share
exchange, dissolution, or sale, lease, or exchange of assets, not less than
twenty (20) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the Chairman, President, or the
Secretary to each shareholder of record entitled to vote at such meeting and to
such other persons as required by the Wisconsin Business Corporation Law. In the
event of any Demand Special Meeting, such notice shall be sent not more than 30
days after the Delivery Date. If mailed, such notice shall be deemed to be
delivered when deposited in the United
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States mail, with postage thereon prepaid, addressed to the shareholder at his
address as it appears on the records of the Corporation.
(b) Content of Notice. In the case of any special meeting, (i) the
notice of meeting shall describe any business that the Board shall have
theretofore determined to bring before the meeting, and (ii) in the case of a
Demand Special Meeting, the notice of meeting (A) shall describe any business
set forth in the statement of purpose of the demands received by the Corporation
in accordance with Section 2.2(d) of these by-laws.
(c) Notice of Adjournments. When a meeting is adjourned to another time
or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if a new record date for an adjourned meeting is or must
be fixed, the Corporation shall give notice of the adjourned meeting to persons
who are shareholders as of the new record date.
2.5 Fixing of Record Date.
(a) Shareholder Meetings. The Board of Directors may fix in advance a
date as the record date for the purpose of determining shareholders entitled to
notice of and to vote at any meeting of shareholders, shareholders entitled to
demand a special meeting as contemplated by Section 2.2 hereof, shareholders
entitled to take any other action, or shareholders for any other purpose. Such
record date shall not be more than 70 days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken.
In the case of any Demand Special Meeting, (i) the record date for the special
meeting shall not be later than the 30th day after the Delivery Date and (ii) if
the Board fails to fix a record date for such special meeting within 30 days
after the Delivery Date, then the close of business on such 30th day shall be
the record date for such special meeting. Except as provided by the Wisconsin
Business Corporation Law for a court-ordered adjournment, a determination of
shareholders entitled to notice of and to vote at a meeting of shareholders is
effective for any adjournment of such meeting unless the Board of Directors
fixes a new record date, which it shall do if the meeting is adjourned to a date
more than 120 days after the date fixed for the original meeting.
(b) Distributions. The record date for determining shareholders
entitled to a distribution (other than a distribution involving a purchase,
redemption or other acquisition of the corporation's shares) or a share dividend
is the date on which the Board of Directors authorized the distribution or share
dividend, as the case may be, unless the Board of Directors fixes a different
record date.
(c) Other Corporate Action. Subject to the procedures set forth in
Section 2.2(b) relating to the fixing of a Demand Record Date, the Board may
also fix a future date as the record date to determine the shareholders entitled
to take any other action. Such record date may not be more than 70 days before
the action requiring a determination of shareholders.
2.6 Shareholders' List for Meetings. After a record date for a special
or annual meeting of shareholders has been fixed, the corporation shall prepare
a list of the names of all of the shareholders entitled to notice of the
meeting. The list shall be arranged by class or series of shares,
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if any, and show the address of and number of shares held by each shareholder.
Such list shall be available for inspection by any shareholder, beginning two
business days after notice of the meeting is given for which the list was
prepared and continuing to the date of the meeting, at the Corporation's
principal office or at a place identified in the meeting notice in the city
where the meeting will be held. A shareholder or his or her agent may, on
written demand, inspect and, subject to the limitations imposed by the Wisconsin
Business Corporation Law, copy the list, during regular business hours and at
his or her expense, during the period that it is available for inspection
pursuant to this Section 2.6. The Corporation shall make the shareholders' list
available at the meeting and any shareholder or his or her agent or attorney may
inspect the list at any time during the meeting or any adjournment thereof.
Refusal or failure to prepare or make available the shareholders' list shall not
affect the validity of any action taken at a meeting of shareholders.
Section 2.7 Voting of Shares. Except as provided under the Wisconsin
Business Corporation Law or otherwise provided in the Articles of Incorporation
of the Corporation, each outstanding share of Common Stock shall be entitled to
one vote upon each matter submitted to vote at a meeting of shareholders.
Section 2.8 Proxies. At all meetings of shareholders, a shareholder may
vote his or her shares in person or by proxy. A shareholder may appoint a proxy
to vote or otherwise act for the shareholder by signing an appointment form,
either personally or by his or her attorney-in-fact. An appointment of a proxy
is effective when received by the Secretary or other officer or agent of the
Corporation authorized to tabulate votes. An appointment form is valid for 11
months from the date of its signing unless a different period is expressly
provided in the appointment form.
Section 2.9 Conduct of Meetings; Advance Notice Procedures.
(a) Conduct of Meetings. The President or, in his absence, the Chairman
of the Board or such other officer as may be designated by the Board of
Directors, shall be the chairman at shareholders' meetings. The Secretary of the
Corporation or, in his absence, such person as the chairman of the meeting shall
appoint, shall be the secretary at shareholders' meetings. The Board may, to the
extent not prohibited by law, adopt by resolution such rules and regulations for
the conduct of meeting of shareholders as it shall deem appropriate. Except to
the extent inconsistent with such rules and regulations adopted by the Board,
the chairman of any meeting of shareholders shall have the right and authority
to prescribe such rules, regulations or procedures and to do all acts as, in the
judgment of the chairman, are appropriate for the conduct of the meeting.
(b) Conduct of Business at Annual Meetings. At any annual meeting of
the shareholders of the corporation, only such business shall be conducted, and
only nominations of persons for election to the Board of Directors shall be
made, as shall have been properly brought before the meeting in accordance with
these by-laws. Any nomination of persons for election to the Board of Directors
or proposal of business shall be brought before an annual meeting (i) pursuant
to the Corporation's notice of meeting, (ii) by or at the direction of the Board
of Directors, or (iii) by any shareholder of the Corporation who was a
shareholder of record at the time of giving of notice provided for in this
Section 2.9(b), who is entitled to vote with respect thereto and who complies
with the notice procedures set forth in this Section 2.9(b). For nominations or
other business to be
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properly brought before an annual meeting by a shareholder, the shareholder must
have given timely notice thereof in writing to the Secretary of the Corporation
and in conformance with the requirements of Section 2.9(d), and such other
business must otherwise be a proper matter for shareholder action. To be timely,
a shareholder's notice must be delivered to or mailed to and received by the
Secretary at the principal executive offices of the Corporation not later than
the close of business on the 60th day nor earlier than the close of business on
the 90th day prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is more than 30 days before or more than 60 days after such anniversary
date, notice by the shareholder to be timely must be so delivered not earlier
than the close of business on the 90th day prior to such annual meeting and not
later than the close of business on the later of the 60th day prior to such
annual meeting or the 10th day following the day on which public announcement of
the date of such annual meeting is first made by the Corporation. In no event
shall the public or other announcement of an adjournment of an annual meeting or
the adjournment thereof commence a new time period for the giving of a
shareholder's notice as described above.
Notwithstanding the foregoing, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public disclosure by the Corporation naming all of the
nominees for director or specifying the size of the increased Board of Directors
at least 70 days before the first anniversary of the preceding year's annual
meeting, a shareholder's notice required by this Section 2.9(b) shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to or mailed to and received
by the Secretary at the principal executive offices of the Corporation not later
than the close of business on the 10th day following the day on which such
public disclosure is first made by the Corporation.
(c) Conduct of Business at Special Meetings. At any special meeting of
the shareholders, only such business shall be conducted as the Board of
Directors shall have determined to bring before the special meeting and, in the
case of a Demand Special Meeting, as shall have seen set forth in the statement
of purpose of the demands received by the Corporation in accordance with Section
2.2. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a special meeting of shareholders at which directors
are to be elected pursuant to the Corporation's notice of meeting (i) by or at
the direction of the Board of Directors or (ii) provided that the Board of
Directors has determined that directors shall be elected at such special
meeting, by any shareholder of the Corporation who (A) is a shareholder of
record at the time of the giving of notice provided for in this Section 2.9(c),
(B) is entitled to vote for the election of directors at the meeting and (C)
complies with the notice procedures set forth in this Section 2.9(c). Any
shareholder desiring to nominate persons for election to the Board of Directors
at a special meeting must deliver written notice of such shareholder's proposed
nomination, either by personal delivery or by United States mail, postage
prepaid, to the Secretary of the Corporation. Such notice must be received by
the Secretary not more than 90 days before such special meeting and not later
than the close of business on the later of (i) the 60th day before such special
meeting or (ii) the 10th day following the date on which a public announcement
is first made of the date of such special meeting and of the nominees proposed
by the Board to be elected at such meeting. In no event shall the public or
other announcement of an adjournment of a special meeting or the adjournment
thereof commence a new time period for the giving of a shareholder's notice as
described above.
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(d) Content of Notice. Each shareholder's notice to the Secretary of
the Corporation shall set forth (i) as to each person whom such shareholder
proposes to nominate for election or reelection as a director at an annual or
special meeting, all information relating to such person that would be required
to be disclosed in solicitations of proxies for election of directors in an
election contest, or otherwise required, under Regulation 14A under the
Securities Exchange Act of 1934 ("Regulation 14A") and Rule 14a-11 thereunder
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director, if elected), (ii) as to any other
business such shareholder proposes to bring before an annual meeting, a brief
description of the business desired to be brought before such annual meeting,
the reasons for conducting such business at the annual meeting and any material
interest in such business of such shareholder and the beneficial owner, if any,
on whose behalf the proposal is made; and (c) as to the shareholder giving the
notice and the beneficial owner, if any, on whose behalf the nomination is made
or such business is to be brought, (i) the name and address of such shareholder,
as they appear on the Corporation's books, and the name and address of such
beneficial owner and (ii) the class, series (if applicable) and number of shares
of the Corporation's capital stock that are owned beneficially and of record by
such shareholder and such beneficial owner. The Corporation may require any
proposed nominee for director to furnish such other information as may
reasonably be required by the Corporation to determine the eligibility of such
proposed nominee to serve as a director of the Corporation.
(e) Notwithstanding anything in these by-laws to the contrary, only
such persons who are nominated in accordance with the procedures set forth in
this Section 2.9 shall be eligible for election as directors and only such
business shall be brought before or conducted at a meeting of shareholders as
shall have been brought before the meeting in accordance with the procedures set
forth in this Section 2.9. The chairman of the annual or special meeting shall,
if the facts so warrant, determine and declare to the meeting that a nomination
was not made or business was not properly brought before the meeting in
accordance with the provisions of this Section 2.9 and, if the chairperson
should so determine, he or she shall so declare to the meeting and any such
defective nomination shall be disregarded and/or any such business not properly
brought before the special meeting shall not be transacted.
(f) For purposes of this Section 2.9, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(g) Notwithstanding the foregoing provisions of this Section 2.9, a
shareholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 2.9. Nothing in this Section 2.9 shall be deemed to affect
any rights of (i) shareholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act, or
(ii) holders of any class or series of the Corporation's preferred stock to
elect directors under specified circumstances.
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Section 2.10 Quorum and Voting Requirements.
(a) Quorum. Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares exists with
respect to that matter. If the Corporation has only one class of stock
outstanding, such class shall constitute a separate voting group for purposes of
this Section 2.10. Except as otherwise provided in the Articles of
Incorporation, any by-law adopted under authority granted in the Articles of
Incorporation, or the Wisconsin Business Corporation Law, a majority of the
votes entitled to be cast on the matter shall constitute a quorum of the voting
group for action on that matter. Once a share is represented for any purpose at
a meeting, other than for the purpose of objecting to holding the meeting or
transacting business at the meeting, it is considered present for purposes of
determining whether a quorum exists for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for the
adjourned meeting.
(b) Voting Requirements. If a quorum exists, except in the case of
directors, action on a matter shall be approved if the votes cast within the
voting group favoring the action exceed the votes cast opposing the action,
unless the Articles of Incorporation, any by-law adopted under authority granted
in the Articles of Incorporation, or the Wisconsin Business Corporation Law
requires a greater number of affirmative votes. Unless otherwise provided in the
Articles of Incorporation, each director shall be elected by a plurality of the
votes cast by the shares entitled to vote in the election of directors at a
meeting at which a quorum is present.
(c) Adjournments. Though less than a quorum of the outstanding votes of
a voting group are represented at a meeting, a majority of the votes so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 2.11 Acceptance of Instruments Showing Shareholder Action. If
the name signed on a vote, consent, waiver or proxy appointment corresponds to
the name of a shareholder, the corporation, if acting in good faith, may accept
the vote, consent, waiver or proxy appointment and give it effect as the act of
a shareholder. If the name signed on a vote, consent, waiver or proxy
appointment does not correspond to the name of a shareholder, the corporation,
if acting in good faith, may accept the vote, consent, waiver or proxy
appointment and give it effect as the act of the shareholder if any of the
following apply:
(a) The shareholder is an entity and the name signed purports
to be that of an officer or agent of the entity.
(b) The name purports to be that of a personal representative,
administrator, executor, guardian or conservator representing the
shareholder and, if the corporation requests, evidence of fiduciary
status acceptable to the corporation is presented with respect to the
vote, consent, waiver or proxy appointment.
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(c) The name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the corporation
requests, evidence of this status acceptable to the corporation is
presented with respect to the vote, consent, waiver or proxy
appointment.
(d) The name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the shareholder and, if the
corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder is presented with
respect to the vote, consent, waiver or proxy appointment.
(e) Two or more persons are the shareholders as co-tenants or
fiduciaries and the name signed purports to be the name of at least one
of the co-owners and the person signing appears to be acting on behalf
of all co-owners.
The corporation may reject a vote, consent, waiver or proxy appointment if the
Secretary or other officer or agent of the corporation who is authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's authority to sign for
the shareholder.
Section 2.12 Inspectors of Election. The President may, in advance of
any meeting of shareholders, appoint one or more inspectors to act at the
meeting and make a written report thereof. If no previously appointed inspector
or alternate is able to act at a meeting of shareholders, the chairman of the
meeting may appoint, at the meeting, one or more persons to act as inspectors.
No director or candidate for director may be appointed as an inspector. Any
inspector so appointed, before entering upon the discharge of his duties, shall
take and sign an oath faithfully to execute the duties of inspector with strict
impartiality and to the best of his or her ability.
Any inspectors so appointed shall (i) ascertain the number of shares
outstanding and the voting power of each, (ii) determine the number of shares
represented at a meeting and the validity of proxies and ballots in accordance
with applicable law, (iii) count all votes and ballots in accordance with
applicable law, (iv) determine and retain for a reasonable period a record of
the disposition of any challenges made to any determination by the inspectors,
and (v) certify their determination of the number of shares represented at the
meeting and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of its Board of Directors, subject to
any limitation set forth in the articles of incorporation.
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Section 3.2 Number, Tenure and Qualifications.
(a) Subject to the rights of the holders of any class or
series of Preferred Stock to elect additional directors under specified
circumstances, the number of directors constituting the Board or Directors shall
be fixed from time to time exclusively by the Board of Directors pursuant to a
resolution adopted by the affirmative vote of a majority of the number of
directors that the Corporation would have at the time if there were no vacancies
existing in the Board of Directors (the "Whole Board").
(b) The Board of Directors, other than the directors who may
be elected by the holders of any class or series of Preferred Stock under
specified circumstances, shall be divided into three classes, as nearly equal in
number as possible. The initial term of office of Class I directors shall expire
at the annual meeting of shareholders to be held in 2000; the initial term of
office of Class II directors shall expire at the annual meeting of shareholders
to be held in 2001; and the initial term of office of Class III directors shall
expire at the annual meeting of shareholders to be held in 2003, and in each
case until their respective successors are elected and qualified. At each annual
meeting of shareholders, directors shall be chosen to succeed those whose terms
then expire and shall be elected for a term of office expiring at the third
succeeding annual meeting of shareholders after their election, and in each case
until their respective successors are elected and qualified.
(c) Subject to the rights of any class or series of Preferred Stock
then outstanding and unless the Board of Directors otherwise determines, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other cause
shall be filled by a majority vote of the directors then in office, although
less than a quorum, or by a sole remaining director. Directors chosen to fill
vacancies pursuant to this Section 3.2(c) shall hold office for a term expiring
at the annual meeting of shareholders at which the term of the class to which
they have been elected expires. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director. Newly created directorships shall be allocated among the classes of
directors so that each class of directors shall consist, as nearly as possible,
of one-third of the total number of directors.
(d) Subject to the rights of any class or series of Preferred Stock
then outstanding, any director, or the entire Board of Directors, may be removed
from office at any time, but only for cause and only by the affirmative vote of
the holders of at least eighty percent (80%) of the outstanding shares of all
classes of stock of the Corporation generally entitled to vote in the election
of directors, considered for purposes of this Section 3.2(d) as one class. A
director may be removed by the shareholders only at a meeting called for the
purpose of removing the director, and the meeting notice shall state that the
purpose, or one of the purposes, of the meeting is the removal of the director.
(e) A director may resign at any time by giving written notice to the
Board of Directors, its Chairman, or to the Corporation at the Corporation's
principal or registered office. A resignation is effective when the notice is
given unless the notice specifies a future date. A pending vacancy may be filled
before the effective date, but the successor shall not take office until the
effective date.
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Section 3.3 Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this by-law immediately after,
and at the same place, as the annual meeting of shareholders, unless otherwise
designated by the Board of Directors. The Board of Directors may, by resolution,
provide the time and place for the holding of additional regular meetings
without other notice than such resolution.
Section 3.4 Special Meetings. Special meetings of the Board of
Directors may be called at the request of the Chairman, President or any two
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place as the place for holding any special
meeting of the Board of Directors called by them.
Section 3.5 Notice; Waiver.
(a) Notice of any special meeting shall be given by oral or written
notice to each director at his or her business address. Any person or persons
authorized to call special meetings of the Board of Directors shall deliver oral
or written notice of such at least 24 hours prior to the time and date of the
meeting in person or by telephone, facsimile transmission, telegram, overnight
private or United States mail delivery service, or regular United States mail.
If such notice is given by facsimile transmission, telegram or overnight private
or U.S. mail delivery service, such notice shall be deemed delivered when the
facsimile transmission is confirmed by the director or an agent of the director
at his business address, when the telegram is delivered to the telegraph
company, or the first business day following deposit with an overnight private
or U.S. mail delivery service, or the fifth business day following deposit in
regular United States mail.
(b) Attendance of a director at any meeting shall constitute a waiver
of notice of such meeting except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.
Section 3.6 Quorum. A majority of the number of directors fixed by
resolution adopted in accordance with Section 3.2(a) shall constitute a quorum
for transaction of business at any meeting of the Board of Directors unless a
greater number is required by the Articles of Incorporation or these by-laws;
provided that if less than a majority of such directors is present at any
meeting, a majority of the directors present may adjourn the meeting at any time
without further notice until a quorum shall have been obtained. The act of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors, unless the act of or greater number
is required by the Wisconsin Business Corporation Law, the Articles of
Incorporation or these by-laws.
Section 3.7 Informal Action. Any action required or permitted by the
Wisconsin Business Corporation Law to be taken at a meeting of the Board of
Directors or a committee thereof created pursuant to Section 3.9 may be taken
without a meeting if the action is taken by all members of the Board of
Directors or such committee. The action shall be evidenced by one or more
written consents describing the action taken, signed by each director or
committee member and retained by
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the Corporation. The action taken shall be effective when all the directors have
approved the consent unless the consent specifies a different effective date.
Section 3.8 Telephonic Meetings. The Board of Directors or any
committee of the Board of Directors may, in addition to conducting meetings in
which each director participates in person, and participate in and act at any
meeting of such board or committee through the use of a telephone conference or
other communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in such meetings shall constitute
attendance and presence in person at the meeting of the person or persons so
participating. If a meeting will be conducted in which any directors do not
participate in person, all participating directors shall be informed that a
meeting is taking place at which official business may be transacted.
Section 3.9 Committees.
(a) The Board of Directors, by resolution adopted by a majority of the
directors then in office, may create one or more committees of the Board of
Directors to serve on the committees, and designate other members of the Board
of Directors to serve as alternates. Each committee shall have two or more
members who shall, unless otherwise provided by the Board of Directors, serve at
the pleasure of the Board of Directors. A committee may be authorized to
exercise the authority of the Board of Directors, except that a committee may
not do any of the following: (a) authorize distributions, (b) approve or propose
to shareholders action that the Wisconsin Business Corporation Law requires to
be approved by the shareholders, (c) fill vacancies on the Board of Directors
or, unless the Board of Directors provides by resolution that vacancies on a
committee shall be filled by the affirmative vote of the remaining committee
members, on any Board committee, (d) amend the Corporation's Articles of
Incorporation, (e) adopt, amend, or repeal by-laws, (f) approve a plan of merger
not requiring shareholder approval, (g) authorize or approve the reacquisition
of shares, except according to a formula or method prescribed by the Board of
Directors, and (h) authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a class or series of shares, except that the Board of
Directors may authorize a committee to do so within the limits prescribed by the
Board of Directors. Unless otherwise provided by the Board of Directors in
creating the committee, a committee may employ counsel, accountants, and other
consultants to assist it in the exercise of its authority.
(b) The standing committees of the Board of Directors shall include an
audit committee and a compensation committee, each of which shall exercise such
authority and fulfill such duties as may be fixed by resolution of the Board of
Directors in accordance with Section 3.9(a).
(c) Unless the appointment by the Board of Directors requires a greater
number, a majority of any committee shall constitute a quorum, and a majority of
a quorum is necessary for committee action. A committee may act by unanimous
consent in writing without a meeting and, subject to the provision of these
by-laws or action by the Board of Directors, any committee by majority vote of
its members shall determine the time and place of meetings and the notice
required therefor. Each committee shall keep regular minutes of its proceedings
and report the same to the Board when requested.
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Section 3.10 Presumption of Assent. A director of the Corporation who
is present and is announced as present at a meeting of the Board of Directors or
any committee created in accordance with Section 3.9 when corporate action is
taken assents to the action taken unless any of the following occurs:
(a) The director objects at the beginning of the meeting or
promptly upon his or her arrival to holding the meeting or
transacting business at the meeting;
(b) The director's dissent or abstention from the action taken is
entered in the minutes of the meeting; or
(c) The director delivers written notice that complies with the
Wisconsin Business Corporation Law of his or her dissent or
abstention to the presiding officer of the meeting before its
adjournment or to the Corporation immediately after
adjournment of the meeting.
Such right of dissent shall not apply to any director who votes in favor of the
action taken.
Section 3.12 Compensation. The Board of Directors, by the affirmative
vote of a majority of directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the Corporation as directors,
officers, or otherwise. By resolution of the Board of Directors, the directors
may be paid their expenses, if any, of attendance at each meeting of the Board.
No such payment previously mentioned in this section shall preclude any director
from serving the Corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV
OFFICERS
Section 4.1 Number. The officers of the Corporation shall be a
Chairman, a President, one or more Vice-Presidents, a Secretary, a Treasurer,
and such other officers as may be elected or appointed by the Board of
Directors. Any two or more offices may be held by the same person. The
Secretary, any Assistant Secretary or such other officers as may be designated
from time to time by the Board of Directors or the President shall have the
authority to certify the By-Laws, resolutions of the shareholders and Board of
Directors and committees thereof, and other documents of the Corporation as true
and correct copies thereof.
Section 4.2 Election and Term of Office. The officers of the
Corporation shall be elected or appointed annually by the Board of Directors at
the regular meeting of the Board of Directors or at a meeting held in lieu
thereof. Vacancies may be filled or new offices created and filled at any
meeting of the Board of Directors. Except as provided herein, each officer shall
hold office until his or her successor shall have been duly elected and
qualified or until his earlier death, resignation or removal. Election of an
officer shall not of itself create any contract rights of that officer against
the Corporation.
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Section 4.3 Chairman. The Chairman shall serve as the Chairman of the
Board of Directors. The Chairman shall preside at all meetings of the Board of
Directors. The Chairman shall have power to sign, with the Secretary or
Assistant Secretary, or any other proper officer of the Corporation thereunto
authorized by the Board of Directors, certificates for shares of the
Corporation, deeds, mortgages, bonds, contracts or other instruments which the
Board of Directors has authorized to be executed except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these By-Laws to some other officer or agent of the Corporation
or shall be required by law to be otherwise signed or executed. In the absence
or disability of the President, the Chairman shall preside at all meetings of
the shareholders. The Chairman shall also have such other powers and perform
such other duties as from time to time may be delegated to him or her by the
Board of Directors, or as may be prescribed by these By-Laws.
Section 4.4 President. The President shall serve as the Chief Executive
Officer of the Corporation. The President shall preside at all meetings of the
shareholders. Subject to the control of the Board of Directors, the President
shall supervise and direct all of the business, financial, legal and shareholder
affairs of the Corporation. The President shall be responsible for seeing that
the policies of the Corporation as established by the Board of Directors are
carried out. He or she shall be ex officio a member of all standing committees
to which he or she is not appointed by the Board of Directors. The President
shall have power to sign, with the Secretary or Assistant Secretary, or any
other proper officer of the Corporation thereunto authorized by the Board of
Directors, certificates for shares of the Corporation, deeds, mortgages, bonds,
contracts or other instruments which the Board of Directors has authorized to be
executed except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these By-Laws to some other
officer or agent of the Corporation or shall be required by law to be otherwise
signed or executed. In the absence or disability of the Chairman, the President
shall preside at all meetings of the Board of Directors. In general, the
President shall perform all duties incident to the office of the Chief Executive
Officer and such other duties as may be prescribed by the Board of Directors
from time to time.
Section 4.5 Vice Presidents. The Vice President (or if there be more
than one, the Vice Presidents) shall assist the President in the discharge of
his or her duties as the President may direct and shall perform such other
duties as from time to time may be assigned to him by the President or by the
Board of Directors. In the absence of the President or in the event of his or
her death, inability or refusal to act, the Vice President (or in the event
there be more than one Vice President, the Vice Presidents in the order of their
seniority as determined from time to time by the Board of Directors) shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. Except in
those instances in which the authority to execute is expressly delegated to
another officer or agent of the Corporation or a different mode of execution is
expressly prescribed by the Board of Directors or these By-Laws, the Vice
President (or each of them if there are more than one) may execute for the
Corporation certificates for its shares and any contracts, deeds, mortgages,
bonds or other instruments, which the Board of Directors has authorized to be
executed, and he or she may accomplish such execution either under or without
the seal of the Corporation and either individually or with the Secretary, any
Assistant Secretary, or any other officer thereunto authorized by the Board of
Directors, according to the requirements of the form of the instrument.
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Section 4.6 Secretary. The Secretary shall (a) keep the minutes of the
shareholders' and the Board of Directors' meetings in one or more books provided
for that purpose; (b) see that all notices are duly given in accordance with the
provisions of these By-Laws or as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation, if such a seal shall
exist; (d) keep a register of the post office address of each shareholder which
shall be furnished to the Secretary by each such shareholder; (e) sign with the
Chairman, President or a Vice President, or any other officer thereunto
authorized by the Board of Directors, certificates for shares of the
Corporation, the issuance of which shall have been authorized by the Board of
Directors and any contracts, deeds, mortgages, bonds, or other instruments which
the Board of Directors has authorized to be executed, according to the
requirements of the form of the instrument, except when a different mode of
execution is expressly prescribed by the Board of Directors or these By-Laws;
(f) have general charge of the stock transfer books of the Corporation; and (g)
in general perform all duties incident to the office of Secretary and such other
duties from time to time may be assigned to him by the President or the Board of
Directors.
Section 4.7 Treasurer. The Treasurer shall be the principal accounting
and financial officer of the Corporation. He or she shall (a) have charge and
custody of and be responsible for all funds and securities of the Corporation,
(b) receive and give receipts for moneys due and payable to the Corporation from
any source whatsoever, and deposit all such monies in the name of the
Corporation in such banks, trust companies or other depositaries as shall be
selected by the Board of Directors, (c) disburse the funds of the Corporation as
may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and (d) in general perform all of the duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him or her by the President or the Board of Directors. If required by the
Board of Directors, the Treasurer shall give a bond in such sum and with such
surety or sureties as the Board of Directors shall determine, for the faithful
discharge of his or her duties and for the restoration to the Corporation, in
case of his or her death, resignation, retirement or removal from office, of all
books, papers, vouchers, money, securities, and other property belonging to the
Corporation in his possession or control.
Section 4.8 Assistant Treasurers and Assistant Secretaries. The
Assistant Treasurer, or any of them if there be more than one, and the Assistant
Secretary or any of them if there be more than one, shall perform such duties as
shall be assigned to them by the Treasurer or the Secretary, respectively, or by
the President or the Board of Directors. An Assistant Secretary may sign with
the Chairman, President, or a Vice President, or any other officer thereunto
authorized by the Board of Directors, certificates for shares of the
Corporation, the issue of which shall have been authorized by the Board of
Directors, and any contracts, deeds, mortgages, bonds, or other instruments
which the Board of Directors has authorized to be executed, according to the
requirements of the form of the instrument, except when a different mode of
execution is expressly prescribed by the Board of Directors or these By-Laws. An
Assistant Treasurer shall respectively, if required by the Board of Directors,
give bonds for the faithful discharge of his or her duties in such sums and with
such sureties as the Board of Directors shall determine.
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Section 4.9 Controller. The Board of Directors may elect a Controller
who shall be responsible for all accounting and auditing functions of the
Corporation and who shall perform such other duties as may from time to time be
required of him or her by the Board of Directors.
Section 4.10 Appointive Officers. The President may appoint other
officers and agents on a division basis or otherwise, as such divisions or other
operating units are created by the Board of Directors, and such other officers
and agents shall receive such compensation, have such tenure and exercise such
authority as the President shall specify. All appointments made by the President
hereunder and all the terms and conditions thereof shall be reported to the
Board of Directors. No appointive officer shall have any contractual rights
against the Corporation for compensation by virtue of such appointment beyond
the date of the appointment of his or her successor, death, resignation, or
removal, whichever event shall first occur, except as otherwise provided in an
employment contract or under an employee deferred compensation plan.
Section 4.11 Salaries. The salaries of the elected officers shall be
fixed from time to time by the Board of Directors and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
Section 4.12 Removal. Any officer elected or appointed by the Board of
Directors may be removed by the Board of Directors with or without cause, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. The appointment of an officer does not in and of itself
create contract rights.
Section 4.13 Resignation. An officer may resign at any time by
delivering notice to the Corporation that complies with the Wisconsin Business
Corporation Law. The resignation shall be effective when the notice is
delivered, unless the notice specifies a later effective date and the
Corporation accepts the later effective date.
Section 4.14 Vacancies. A newly created office or a vacancy in any
office because of death, resignation, removal, disqualification or otherwise may
be filled by the Board of Directors for the unexpired portion of the term at any
meeting of the Board of Directors. If a resignation of an officer is effective
at a later date as contemplated by Section 4.13, the Board of Directors may fill
the pending vacancy before the effective date if the Board provides that the
successor may not take office until the effective date.
ARTICLE V
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 5.1 Certificates For Shares. Certificates representing shares
of the Corporation shall be signed by the appropriate corporate officers, such
as the President or a Vice President or by such officer as shall be designated
by resolution of the Board of Directors, and by the Secretary or an Assistant
Secretary, and shall be sealed with the seal or a facsimile of the seal of the
corporation if the Corporation has a seal. If the signature of each officer be
by facsimile, the certificate shall be manually signed by or on behalf of a duly
authorized transfer agent or clerk. Each certificate
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representing shares shall be consecutively numbered or otherwise identified, and
shall also state the name of the shareholder to whom issued, the number and
class of shares (with designation of series, if any), the date of issue, and
that the Corporation is organized under Wisconsin law. The certificate may state
the par value or a statement that the shares are without par value, if
applicable. If the Corporation is authorized and does issue shares of more than
one class or of a series within a class, the certificate shall also contain such
information or statement as may be required by law.
The name and address of each shareholder, the number and class of
shares held and the date on which the certificates for the shares were issued
shall be entered on the books of the Corporation. The shareholder in whose name
shares are registered on the books of the Corporation shall be deemed the owner
thereof for all purposes as regards the Corporation.
Unless prohibited by the Articles of Incorporation, the Board of
Directors may provide by resolution that some or all of any class or series of
shares shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until the certificate has been surrendered
to the Corporation. Within a reasonable time after the issuance or transfer of
uncertificated shares, the Corporation shall send the registered owner thereof a
written notice of all information that would appear on a certificate. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of uncertificated shares shall be identical to those of the holders of
certificates representing shares of the same class and series.
Section 5.2 Transfer of Shares. Transfer of shares of the Corporation
shall be recorded on the books of the Corporation and, except in the case of a
lost or destroyed certificate, shall be made on surrender for cancellation of
the certificate for such shares. A certificate presented for transfer must be
duly endorsed and accompanied by proper guaranty of signature and other
appropriate assurances that the endorsement is effective. Transfer of an
uncertified share shall be made on receipt by the Corporation of an instruction
from the registered owner or other appropriate person. The instruction shall be
in writing or be a communication in such form as may be agreed upon in writing
by the Corporation.
Section 5.3 Lost Certificates. If a certificate representing shares has
allegedly been lost or destroyed, the Board of Directors may in its discretion
as may be required by law, direct that a new certificate be issued upon such
indemnification and other reasonable requirements as it may impose.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 6.1 Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, of the Corporation, to enter into any contract or
execute and deliver any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.
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Section 6.2 Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances. The Corporation shall have the power
to lend money to its directors, officers, employees and agents.
Section 6.3 Checks, Drafts, Etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 6.4 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositaries as the Board of Directors
may select.
ARTICLE VII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 7.1 Mandatory Indemnification.
(a) In all cases other than those set forth in Section 7.1(b) hereof,
subject to the conditions and limitations set forth hereinafter in this Article
7, the Corporation shall indemnify and hold harmless any person who is or was a
party, or is threatened to be made a party, to any Action (see Section 7.16 of
this Article 7 for definitions of capitalized terms used herein) by reason of
his or her status as an Executive, and/or as to acts performed in the course of
such Executive's duties to the Corporation and/or an Affiliate, against
Liabilities and reasonable Expenses incurred by or on behalf of an Executive in
connection with any Action, including, without limitation, in connection with
the investigation, defense, settlement or appeal of any Action; provided,
pursuant to Section 7.3 of this Article 7, that it is not determined by the
Authority, or by a court, that the Executive engaged in misconduct which
constitutes a Breach of Duty.
(b) To the extent an Executive has been successful on the merits or
otherwise in connection with any Action, including, without limitation, the
settlement, dismissal, abandonment, or withdrawal of any such Action where the
Executive does not pay, incur, or assume any material Liabilities, or in
connection with any claim, issue, or matter therein, he or she shall be
indemnified by the Corporation against reasonable Expenses incurred by or on
behalf of him or her in connection therewith. The Corporation shall pay such
Expenses to the Executive (net of all Expenses, if any, previously advanced to
the Executive pursuant to Section 7.2 of this Article 7), or to such other
person or entity as the Executive may designate in writing to the Corporation,
within ten days after the receipt of the Executive's written request therefor,
without regard to the provisions of Section 7.3 of this Article 7. In the event
the Corporation refuses to pay such requested Expenses, the Executive may
petition a court to order the Corporation to make such payment pursuant to
Section 7.4 of this Article 7.
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(c) Notwithstanding any other provision contained in this Article 7 to
the contrary, the Corporation shall not:
(i) Indemnify, contribute, or advance Expenses to an Executive
with respect to any Action initiated or brought voluntarily by the
Executive and not by way of defense, except with respect to Actions:
(A) brought to establish or enforce a right to
indemnification, contribution, and/or an advance of Expenses
under Section 7.4 of this Article 7, under the Statute as it
may then be in effect or under any other statute or law or
otherwise as required;
(B) initiated or brought voluntarily by an Executive
to the extent such Executive is successful on the merits or
otherwise in connection with such an Action in accordance with
and pursuant to Section 7.1(b) of this Article 7; or
(C) as to which the Board determines it to be
appropriate.
(ii) indemnify the Executive under this Article 7 for any
amounts paid in settlement of any Action effected without the
Corporation's written consent.
The Corporation shall not settle in any manner which would
impose any Liabilities or other type of limitation on the Executive without the
Executive's written consent. Neither the Corporation nor the Executive shall
unreasonably withhold their consent to any proposed settlement.
(d) An Executive's conduct with respect to an employee benefit plan
sponsored by or otherwise associated with the Corporation and/or an Affiliate
for a purpose he or she reasonably believes to be in the interests of the
participants in and beneficiaries of such plan is conduct that does not
constitute a breach or failure to perform his or her duties to the Corporation
or an Affiliate, as the case may be.
Section 7.2 Advance for Expenses.
(a) The Corporation shall pay to an Executive, or to such other person
or entity as the Executive may designate in writing to the Corporation, his or
her reasonable Expenses incurred by or on behalf of such Executive in connection
with any Action, or claim, issue, or matter associated with any such Action, in
advance of the final disposition or conclusion of any such Action (or claim,
issue, or matter associated with any such Action), within ten days after the
receipt of the Executive's written request therefor, provided, the following
conditions are satisfied:
(i) The Executive has first requested an advance of such
Expenses in writing (and delivered a copy of such request to the
Corporation) from the insurance carrier(s), if any, to whom a claim has
been reported under an applicable insurance policy purchased by the
Corporation and each such insurance carrier, if any, has declined to
make such an advance;
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(ii) The Executive furnishes to the Corporation an executed
written certificate affirming his or her good faith belief that he or
she has not engaged in misconduct which constitutes a Breach of Duty;
and
(iii) The Executive furnishes to the Corporation an executed
written agreement to repay any advances made under this Section 7.2 if
it is ultimately determined that he or she is not entitled to be
indemnified by the Corporation for such Expenses pursuant to this
Article 7.
(b) If the Corporation makes an advance of Expenses to an Executive
pursuant to this Section 7.2, the Corporation shall be subrogated to every right
of recovery the Executive may have against any insurance carrier from whom the
Corporation has purchased insurance for such purpose.
Section 7.3 Determination of Right to Indemnification
(a) Except as otherwise set forth in this Section 7.3 or in Section
7.1(c) of this Article 7, any indemnification to be provided to an Executive by
the Corporation under Section 7.1(a) of this Article 7 upon the final
disposition or conclusion of any Action, or any claim, issue, or matter
associated with any such Action, unless otherwise ordered by a court, shall be
paid by the Corporation to the Executive (net of all Expenses, if any,
previously advanced to the Executive pursuant to Section 7.2 of this Article 7),
or to such other person or entity as the Executive may designate in writing to
the Corporation, within 60 days after the receipt of the Executive's written
request therefor. Such request shall include an accounting of all amounts for
which indemnification is being sought. No further corporate authorization for
such payment shall be required other than this Section 7.3.
(b) Notwithstanding the foregoing, the payment of such requested
indemnifiable amounts pursuant to Section 7.1(a) of this Article 7 may be denied
by the Corporation if:
(i) the Board by a majority vote thereof determines that the
Executive has engaged in misconduct which constitutes a Breach of Duty;
or
(ii) a majority of the directors of the Corporation are a
party in interest to such Action.
(c) In either event of nonpayment pursuant to Section 7.3(b) of this
Article 7, the Board shall immediately authorize and direct, by resolution, that
an independent determination be made as to whether the Executive has engaged in
misconduct which constitutes a Breach of Duty and, therefore, whether
indemnification of the Executive is proper pursuant to this Article 7.
(d) Such independent determination shall be made, at the option of the
Executive(s) seeking indemnification, by:
(i) A panel of three arbitrators (selected as set forth below
in Section 7.3(f) from the panels of arbitrators of the American
Arbitration Association) in Milwaukee, Wisconsin,
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in accordance with the Commercial Arbitration Rules then prevailing of
the American Arbitration Association;
(ii) An independent legal counsel mutually selected by the
Executive(s) seeking indemnification and the Board by a majority vote
of a quorum thereof consisting of directors who were not parties in
interest to such Action (or, if such quorum is not obtainable, by the
majority vote of the entire Board); or
(iii) A court in accordance with Section 7.4 of this Article
7.
(e) In any such determination there shall exist a rebuttable
presumption that the Executive has not engaged in misconduct which constitutes a
Breach of Duty and is, therefore, entitled to indemnification hereunder. The
burden of rebutting such presumption by clear and convincing evidence shall be
on the Corporation.
(f) If a panel of arbitrators is to be employed hereunder, one of such
arbitrators shall be selected by the Board by a majority vote of a quorum
thereof consisting of directors who were not parties in interest to such Action
or, if such quorum is not obtainable, by an independent legal counsel chosen by
the majority vote of the entire Board, the second by the Executive(s) seeking
indemnification, and the third by the previous two arbitrators.
(g) The Authority shall make its independent determination hereunder
within 60 days of being selected and shall simultaneously submit a written
opinion of its conclusions to both the Corporation and the Executive.
(h) If the Authority determines that an Executive is entitled to be
indemnified for any amounts pursuant to this Article 7, the Corporation shall
pay such amounts to the Executive (net of all Expenses, if any, previously
advanced to the Executive pursuant to Section 7.2 of this Article 7), including
interest thereon as provided in Section 7.6(c) of this Article 7, or such other
person or entity as the Executive may designate in writing to the Corporation,
within ten days of receipt of such opinion.
(i) Except with respect to any judicial determination pursuant to
Section 7.4 of this Article 7, the Expenses associated with the indemnification
process set forth in this Section 7.3 of this Article 7, including, without
limitation, the Expenses of the Authority selected hereunder, shall be paid by
the Corporation.
Section 7.4. Court-Ordered Indemnification and Advance for Expenses.
(a) An Executive may, either before or within two years after a
determination, if any, has been made by the Authority, petition the court before
which such Action was brought or any other court of competent jurisdiction to
independently determine whether or not he or she has engaged in misconduct which
constitutes a Breach of Duty and is, therefore, entitled to indemnification
under the provisions of this Article 7. Such court shall thereupon have the
exclusive authority to make such determination unless and until such court
dismisses or otherwise terminates such proceeding
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without having made such determination. An Executive may petition a court under
this Section 7.4 either to seek an initial determination by the court as
authorized by Section 7.3(d) of this Article 7 or to seek review by the court of
a previous adverse determination by the Authority.
(b) The court shall make its independent determination irrespective of
any prior determination made by the Authority; provided, however, that there
shall exist a rebuttable presumption that the Executive has not engaged in
misconduct which constitutes a Breach of Duty and is, therefore, entitled to
indemnification hereunder. The burden of rebutting such presumption by clear and
convincing evidence shall be on the Corporation.
(c) In the event the court determines that an Executive has engaged in
misconduct which constitutes a Breach of Duty, it may nonetheless order
indemnification to be paid by the Corporation if it determines that the
Executive is fairly and reasonably entitled to indemnification in view of all of
the circumstances of such Action.
(d) In the event the Corporation does not:
(i) Advance Expenses to the Executive within ten days of such
Executive's compliance with Section 7.2 of this Article 7; or
(ii) Indemnify an Executive with respect to requested Expenses
under Section 7.1(b) of this Article 7 within ten days of such
Executive's written request therefor, the Executive may petition the
court before which such Action was brought, if any, or any other court
of competent jurisdiction to order the Corporation to pay such
reasonable Expenses immediately. Such court, after giving any notice it
considers necessary, shall order the Corporation to pay such Expenses
if it determines that the Executive has complied with the applicable
provisions of Section 7.2 of this Article 7 or 7.1(b) of this Article
7, as the case may be.
(e) If the court determines pursuant to this Section 7.4 that the
Executive is entitled to be indemnified for any Liabilities and/or Expenses, or
to the advance of Expenses, unless otherwise ordered by such court, the
Corporation shall pay such Liabilities and/or Expenses to the Executive (net of
all Expenses, if any, previously advanced to the Executive pursuant to Section
7.2 of this Article 7), including interest thereon as provided in Section 7.6(c)
of this Article 7, or to such other person or entity as the Executive may
designate in writing to the Corporation, within ten days of the rendering of
such determination.
(f) An Executive shall pay all Expenses incurred by such Executive in
connection with the judicial determination provided in this Section 7.4, unless
it shall ultimately be determined by the court that he or she is entitled, in
whole or in part, to be indemnified by, or to receive an advance from, the
Corporation as authorized by this Article 7. All Expenses incurred by an
Executive in connection with any subsequent appeal of the judicial determination
provided for in this Section 7.4 shall be paid by the Executive regardless of
the disposition of such appeal.
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Section 7.5. Termination of an Action is Nonconclusive. The adverse
termination of any Action against an Executive by judgment, order settlement,
conviction, or upon a plea of no contest or its equivalent, shall not, of
itself, create a presumption that the Executive has engaged in misconduct which
constitutes a Breach of Duty.
Section 7.6. Partial Indemnification; Reasonableness; Interest.
(a) If it is determined by the Authority, or by a court, that an
Executive is entitled to indemnification as to some claims, issues, or matters,
but not as to other claims, issues, or matters, involved in any Action, the
Authority, or the court, shall authorize the proration and payment by the
Corporation of such Liabilities and/or reasonable Expenses with respect to which
indemnification is sought by the Executive, among such claims, issues, or
matters as the Authority, or the court, shall deem appropriate in light of all
of the circumstances of such Action.
(b) If it is determined by the Authority, or by a court, that certain
Expenses incurred by or on behalf of an Executive are for whatever reason
unreasonable in amount, the Authority, or the court, shall nonetheless authorize
indemnification to be paid by the Corporation to the Executive for such Expenses
as the Authority, or the court, shall deem reasonable in light of all of the
circumstances of such Action.
(c) Interest shall be paid by the Corporation to an Executive, to the
extent deemed appropriate by the Authority, or by a court, at a reasonable
interest rate, for amounts for which the Corporation indemnifies or advances to
the Executive.
Section 7.7. Insurance; Subrogation.
(a) The Corporation may purchase and maintain insurance on behalf of
any person who is or was an Executive of the Corporation, and/or is or was
serving as an Executive of an Affiliate, against Liabilities and/or Expenses
asserted against him or her and/or incurred by or on behalf of him or her in any
such capacity, or arising out of his or her status as such an Executive, whether
or not the Corporation would have the power to indemnify him or her against such
Liabilities and/or Expenses under this Article 7 or under the Statute as it may
then be in effect. Except as expressly provided herein, the purchase and
maintenance of such insurance shall not in any way limit or affect the rights
and obligations of the Corporation and/or any Executive under this Article 7.
Such insurance may, but need not, be for the benefit of all Executives of the
Corporation and those serving as an Executive of an Affiliate.
(b) If an Executive shall receive payment from any insurance carrier or
from the plaintiff in any Action against such Executive in respect of
indemnified amounts after payments on account of all or part of such indemnified
amounts have been made by the Corporation pursuant to this Article 7, such
Executive shall promptly reimburse the Corporation for the amount, if any, by
which the sum of such payment by such insurance carrier or such plaintiff and
payments by the Corporation to such Executive exceeds such indemnified amounts;
provided, however, that such portions, if any, of such insurance proceeds that
are required to be reimbursed to the insurance carrier under the terms
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of its insurance policy, such as deductible, retention, or co-insurance amounts,
shall not be deemed to be payments to such Executive hereunder.
(c) Upon payment of indemnified amounts under this Article 7, the
Corporation shall be subrogated to such Executive's rights against any insurance
carrier in respect of such indemnified amounts and the Executive shall execute
and deliver any and all instruments and/or documents and perform any and all
other acts or deeds which the Corporation shall deem necessary or advisable to
secure such rights. The Executive shall do nothing to prejudice such rights of
recovery or subrogation.
Section 7.8. Witness Expenses. The Corporation shall advance or
reimburse any and all reasonable Expenses incurred by or on behalf of an
Executive in connection with his or her appearance as a Witness in any Action at
a time when he or she has not been formally named a defendant or respondent to
such an Action, within ten days after the receipt of an Executive's written
request therefor.
Section 7.9. Contribution.
(a) Subject to the limitations of this Section 7.9, if the indemnity
provided for in Section 7.1 of this Article 7 is unavailable to an Executive for
any reason whatsoever, the Corporation, in lieu of indemnifying the Executive,
shall contribute to the amount incurred by or on behalf of the Executive,
whether for Liabilities and/or for reasonable Expenses in connection with any
Action in such proportion as deemed fair and reasonable by the Authority, or by
a court, in light of all of the circumstances of any such Action, in order to
reflect:
(i) The relative benefits received by the Corporation and the
Executive as a result of the event(s) and/or transaction(s) giving
cause to such Action; and/or
(ii) The relative fault of the Corporation (and its other
Executives, employees, and/or agents) and the Executive in connection
with such event(s) and/or transaction(s).
(b) The relative fault of the Corporation (and its other Executives,
employees, and/or agents), on the one hand, and of the Executive, on the other
hand, shall be determined by reference to, among other things, the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent the circumstances resulting in such Liabilities and/or Expenses. The
Corporation agrees that it would not be just and equitable if contribution
pursuant to this Section 7.9 were determined by pro rata allocation or any other
method of allocation which does not take account of the foregoing equitable
considerations.
(c) An Executive shall not be entitled to contribution from the
Corporation under this Section 7.9 in the event it is determined by the
Authority, or by a court, that the Executive has engaged in misconduct which
constitutes a Breach of Duty.
(d) The Corporation's payment of, and an Executive's right to,
contribution under this Section 7.9 shall be made and determined in accordance
with and pursuant to the provisions in
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Sections 7.3 and/or 7.4 of this Article 7 relating to the Corporation's payment
of, and the Executive's right to, indemnification under this Article 7.
Section 7.10. Indemnification of Employees. Unless otherwise
specifically set forth in this Article 7, the Corporation shall indemnify and
hold harmless any person who is or was a party, or is threatened to be made a
party, to any Action by reason of his or her status as, or the fact that he or
she is or was an employee or authorized agent or representative of the
Corporation and/or an Affiliate, as to acts performed in the course and within
the scope of such employee's, agent's, or representative's duties to the
Corporation and/or an Affiliate, in accordance with and to the fullest extent
permitted by the Statute as it may then be in effect.
Section 7.11. Severability. If any provision of this Article 7 shall be
deemed invalid or inoperative, or if a court of competent jurisdiction
determines that any of the provisions of this Article 7 contravene public
policy, this Article 7 shall be construed so that the remaining provisions shall
not be affected, but shall remain in full force and effect, and any such
provisions which are invalid or inoperative or which contravene public policy
shall be deemed, without further Action or deed by or on behalf of the
Corporation, to be modified, amended, and/or limited, but only to the extent
necessary to render the same valid and enforceable, and the Corporation shall
indemnify an Executive as to Liabilities and reasonable Expenses with respect to
any Action to the full extent permitted by any applicable provision of this
Article 7 that shall not have been invalidated and to the full extent otherwise
permitted by the Statute as it may then be in effect.
Section 7.12. Nonexclusivity of Article 7. The right to
indemnification, contribution, and advancement of Expenses provided to an
Executive by this Article 7 shall not be deemed exclusive of any other rights to
indemnification, contribution, and/or advancement of Expenses which any
Executive or other employee or agent of the Corporation and/or of an Affiliate
may be entitled under any charter provision, written agreement, resolution, vote
of shareholders or disinterested directors of the Corporation or otherwise,
including, without limitation, under the Statute as it may then be in effect,
both as to acts in his or her official capacity as such Executive or other
employee or agent of the Corporation and/or of an Affiliate or as to acts in any
other capacity while holding such office or position, whether or not the
Corporation would have the power to indemnify, contribute, and/or advance
Expenses to the Executive under this Article 7 or under the Statute; provided
that it is not determined that the Executive or other employee or agent has
engaged in misconduct which constitutes a Breach of Duty.
Section 7.13. Notice to the Corporation; Defense of Actions.
(a) An Executive shall promptly notify the Corporation in writing upon
being served with or having actual knowledge of any citation, summons,
complaint, indictment, or any other similar document relating to any Action
which may result in a claim of indemnification, contribution, or advancement of
Expenses hereunder, but the omission so to notify the Corporation will not
relieve the Corporation from any liability which it may have to the Executive
otherwise than under this Article 7 unless the Corporation shall have been
irreparably prejudiced by such omission.
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(b) With respect to any such Action as to which an Executive notifies
the Corporation of the commencement thereof:
(i) The Corporation shall be entitled to participate therein
at its own expense; and
(ii) Except as otherwise provided below, to the extent that it
may wish, the Corporation (or any other indemnifying party, including
any insurance carrier, similarly notified by the Corporation or the
Executive) shall be entitled to assume the defense thereof, with
counsel selected by the Corporation (or such other indemnifying party)
and reasonably satisfactory to the Executive.
(c) After notice from the Corporation (or such other indemnifying
party) to the Executive of its election to assume the defense of an Action, the
Corporation shall not be liable to the Executive under this Article 7 for any
Expenses subsequently incurred by the Executive in connection with the defense
thereof other than reasonable costs of investigation or as otherwise provided
below. The Executive shall have the right to employ his or her own counsel in
such Action but the Expenses of such counsel incurred after notice from the
Corporation (or such other indemnifying party) of its assumption of the defense
thereof shall be at the expense of the Executive unless:
(i) The employment of counsel by the Executive has been
authorized by the Corporation;
(ii) The Executive shall have reasonably concluded that there
may be a conflict of interest between the Corporation (or such other
indemnifying party) and the Executive in the conduct of the defense of
such Action; or
(iii) The Corporation (or such other indemnifying party) shall
not in fact have employed counsel to assume the defense of such Action,
in each of which cases the Expenses of counsel shall be at the expense
of the Corporation. The Corporation shall not be entitled to assume the
defense of any Derivative Action or any Action as to which the
Executive shall have reached the conclusion provided for in clause (ii)
above.
Section 7.14. Continuity of Rights and Obligations. The terms and
provisions of this Article 7 shall continue as to an Executive subsequent to the
Termination Date and such terms and provisions shall inure to the benefit of the
heirs, estate, executors, and administrators of such Executive and the
successors and assigns of the Corporation, including, without limitation, any
successor to the Corporation by way of merger, consolidation, and/or sale or
disposition of all or substantially all of the assets or capital stock of the
Corporation. Except as provided herein, all rights and obligations of the
Corporation and the Executive hereunder shall continue in full force and effect
despite the subsequent amendment or modification of the Corporation's Articles
of Incorporation, as such are in effect on the date hereof, and such rights and
obligations shall not be affected by any such amendment or modification, any
resolution of directors or shareholders of the Corporation, or by any other
corporate action which conflicts with or purports to amend, modify,
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limit, or eliminate any of the rights or obligations of the Corporation and/or
of the Executive hereunder.
Section 7.15. Amendment. This Article 7 may only be altered, amended,
or repealed by the affirmative vote of a majority of the shareholders of the
Corporation so entitled to vote; provided, however, that the Board may alter or
amend this Article 7 without such shareholder approval if any such alteration or
amendment:
(a) Is made in order to conform to any amendment or revision of the
Wisconsin Business Corporation Law, including, without limitation, the Statute,
which
(i) Expands or permits the expansion of an Executive's
right to indemnification thereunder;
(ii) Limits or eliminates, or permits the limitation or
elimination, of liability of the Executives; or
(iii) Is otherwise beneficial to the Executives; or
(b) In the sole judgment and discretion of the Board, does not
materially adversely affect the rights and protections of the shareholders of
the Corporation.
Any repeal, modification, or amendment of this Article 7 shall not
adversely affect any rights or protections of an Executive existing under this
Article 7 immediately prior to the time of such repeal, modification, or
amendment and any such repeal, modification, or amendment shall have a
prospective effect only.
Section 7.16. Certain Definitions. The following terms as used in this
Article 7 shall be defined as follows:
(a) "Action(s)" shall include, without limitation, any threatened,
pending, or completed action, claim, litigation, suit, or proceeding, whether
civil, criminal, administrative, arbitrative, or investigative, whether
predicated on foreign, Federal, state, or local law, whether brought under
and/or predicated upon the Securities Act of 1933, as amended, and/or the
Securities Exchange Act of 1934, as amended, and/or their respective state
counterparts and/or any rule or regulation promulgated thereunder, whether a
Derivative Action and whether formal or informal.
(b) "Affiliate" shall include, without limitation, any corporation,
partnership, joint venture, employee benefit plan, bust, or other similar
enterprise that directly or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the Corporation.
(c) "Authority" shall mean the panel of arbitrators or independent
legal counsel selected under Section 7.3 of this Article 7.
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(d) "Board" shall mean the Board of Directors of the Corporation.
(e) "Breach of Duty" shall mean the Executive breached or failed to
perform his or her duties to the Corporation or an Affiliate, as the case may
be, and the Executive's breach of or failure to perform those duties
constituted:
(i) A willful failure to deal fairly with the Corporation (or
an Affiliate) or its shareholders in connection with a matter in which
the Executive has a material conflict of interest;
(ii) A violation of the criminal law, unless the Executive:
(A) Had reasonable cause to believe his or her
conduct was lawful; or
(B) Had no reasonable cause to believe his or her
conduct was unlawful;
(iii) A transaction from which the Executive derived an
improper personal profit (unless such profit is determined to be
immaterial in light of all the circumstances of the Action); or
(iv) Willful misconduct.
(f) "Derivative Action" shall mean any Action brought by or in the
right of the Corporation and/or an Affiliate.
(g) "Executive(s)" shall mean any individual who is, was, or has agreed
to become a director and/or officer of the Corporation and/or an Affiliate.
(h) "Expenses" shall include, without limitation, all expenses, fees,
costs, charges, attorneys' fees and disbursements, other out-of-pocket costs,
reasonable compensation for time spent by the Executive in connection with the
Action for which he or she is not otherwise compensated by the Corporation, any
Affiliate, any third party or other entity, and any and all other direct and
indirect costs of any type or nature whatsoever.
(i) "Liabilities" shall include, without limitation, judgments, amounts
incurred in settlement, fines, penalties and, with respect to any employee
benefit plan, any excise tax or penalty incurred in connection therewith, and
any and all other liabilities of every type or nature whatsoever.
(j) "Statute" shall mean Wisconsin Business Corporation Law Sections
180.0850-180.0859 (or any successor provisions).
(k) "Termination Date" shall mean the date an Executive ceases, for
whatever reason, to serve in an employment relationship with the Company and/or
any Affiliate.
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 8.2 Distributions. The Board of Directors may from time to time
declare, and the Corporation may pay distributions (dividends, redemptions and
other transfers of money or property) to its shareholders on its outstanding
shares in the manner and upon the terms and conditions provided by the Wisconsin
Business Corporation Law and the Articles of Incorporation of the Corporation.
Section 8.3 Seal. The Corporation may use a corporate seal which may be
altered at pleasure, by causing it, or a facsimile thereof, to be impressed or
affixed or in any other manner reproduced. The corporate seal shall have
inscribed thereon the name of the Corporation and the words "Corporate Seal,
Wisconsin". The affixing of a corporate seal to an instrument shall not give the
instrument additional force or effect, or change the construction thereof and
the use of the corporate seal is not mandatory.
Section 8.4 Audits. The Board of Directors shall determine whether the
Corporation's accounts, books and records shall be audited upon the conclusion
of each fiscal year, and shall determine who performs that audit.
ARTICLE IX
AMENDMENTS
Section 9.1 Amendments. The By-Laws may contain any provisions for the
regulation and management of the affairs of the Corporation not inconsistent
with law or the Articles of Incorporation of the Corporation. These by-laws may
be amended, altered or repealed, or a provision inconsistent with these by-laws
may be adopted, only by (a) the affirmative vote of a majority of the members of
the Whole Board (unless the shareholders, in adopting, amending or repealing a
particular by-law, provide within the by-laws that the Board of Directors may
not amend, repeal or readopt that by-law), or (b) notwithstanding any other
provision of these by-laws or any provision of law which might permit a lesser
vote or no vote, the affirmative vote of the holders of at least eighty percent
(80%) of the outstanding shares of all classes of stock of the Corporation
generally entitled to vote in the election of directors, considered for purposes
of this Article IX as one class.
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APPENDIX E
SECTIONS 11.65 AND 11.70 OF THE
ILLINOIS BUSINESS CORPORATION ACT
ss. 11.65. Right to Dissent.
(a) A shareholder of a corporation is entitled to dissent
from, and obtain payment for his or her shares in the event of any of the
following corporate actions:
(1) consummation of a plan of merger or consolidation
or a plan of share exchange to which the corporation is a party if (i)
shareholder authorization is required for the merger or consolidation
or the share exchange by Section 11.20 or the articles of incorporation
or (ii) the corporation is a subsidiary that is merged with its parent
or another subsidiary under Section 11.30;
(2) consummation of a sale, lease or exchange of all,
or substantially all, of the property and assets of the corporation
other than in the usual and regular course of business;
(3) an amendment of the articles of incorporation
that materially and adversely affects rights in respect of a
dissenter's shares because it:
(i) alters or abolishes a preferential
right of such shares;
(ii) alters or abolishes a right in respect
of redemption, including a provision respecting a
sinking fund for the redemption or repurchase, of
such shares;
(iii) in the case of a corporation
incorporated prior to January 1, 1982, limits or
eliminates cumulative voting rights with respect to
such shares; or
(4) any other corporate action taken pursuant to a
shareholder vote if the articles of incorporation, by-laws, or a
resolution of the board of directors provide that shareholders are
entitled to dissent and obtain payment for their shares in accordance
with the procedures set forth in Section 11.70 or as may be otherwise
provided in the articles, by-laws or resolution.
(b) A shareholder entitled to dissent and obtain payment for
his or her shares under this Section may not challenge the corporate action
creating his or her entitlement unless the action is fraudulent with respect to
the shareholder or the corporation or constitutes a breach of a fiduciary duty
owed to the shareholder.
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(c) A record owner of shares may assert dissenters' rights as
to fewer than all the shares recorded in such person's name only if such person
dissents with respect to all shares beneficially owned by any one person and
notifies the corporation in writing of the name and address of each person on
whose behalf the record owner asserts dissenters' rights. The rights of a
partial dissenter are determined as if the shares as to which dissent is made
and the other shares were recorded in the names of different shareholders. A
beneficial owner of shares who is not the record owner may assert dissenters'
rights as to shares held on such person's behalf only if the beneficial owner
submits to the corporation the record owner's written consent to the dissent
before or at the same time the beneficial owner asserts dissenters' rights.
SS. 11.70. Procedure to Dissent.
(a) If the corporate action giving rise to the right to
dissent is to be approved at a meeting of shareholders, the notice of a meeting
shall inform the shareholders of their right to dissent and the procedure to
dissent. If, prior to the meeting, the corporation furnishes to the shareholders
material information with respect to the transaction that will objectively
enable a shareholder to vote on the transaction and to determine whether or not
to exercise dissenters' rights, a shareholder may assert dissenters' rights only
if the shareholder delivers to the corporation before the vote is taken a
written demand for payment for his or her shares if the proposed action is
consummated, and the shareholder does not vote in favor of the proposed action.
(b) If the corporate action giving rise to the right to
dissent is not to be approved at a meeting of shareholders, the notice to
shareholders describing the action taken under Section 11.30 or Section 7.10
shall inform the shareholders of their right to dissent and the procedure to
dissent. If, prior to or concurrently with the notice, the corporation furnishes
to the shareholders material information with respect to the transaction that
will objectively enable a shareholder to determine whether or not to exercise
dissenters' rights, a shareholder may assert dissenter's rights only if he or
she delivers to the corporation within 30 days from the date of mailing the
notice a written demand for payment for his or her shares.
(c) Within 10 days after the date on which the corporate
action giving rise to the right to dissent is effective or 30 days after the
shareholder delivers to the corporation the written demand for payment,
whichever is later, the corporation shall send each shareholder who has
delivered a written demand for payment a statement setting forth the opinion of
the corporation as to the estimated fair value of the shares, the corporation's
latest balance sheet as of the end of a fiscal year ending not earlier than 16
months before the delivery of the statement, together with the statement of
income for that year and the latest available interim financial statements, and
either a commitment to pay for the shares of the dissenting shareholder at the
estimated fair value thereof upon transmittal to the corporation of the
certificate or certificates, or other evidence of ownership, with respect to the
shares, or instructions to the dissenting shareholder to sell his or her shares
within 10 days after delivery of the corporation's statement to the shareholder.
The corporation may instruct the shareholder to sell only if there is a public
market for the shares at which the shares may be readily sold. If the
shareholder does not sell within that 10 day period after being so instructed by
the corporation, for purposes of this Section the shareholder shall be deemed to
have sold his or her shares at the average closing price of the shares, if
listed on a national exchange, or the average
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of the bid and asked price with respect to the shares quoted by a principal
market maker, if not listed on a national exchange, during that 10 day period.
(d) A shareholder who makes written demand for payment under
this Section retains all other rights of a shareholder until those rights are
canceled or modified by the consummation of the proposed corporate action. Upon
consummation of that action, the corporation shall pay to each dissenter who
transmits to the corporation the certificate or other evidence of ownership of
the shares the amount the corporation estimates to be the fair value of the
shares, plus accrued interest, accompanied by a written explanation of how the
interest was calculated.
(e) If the shareholder does not agree with the opinion of the
corporation as to the estimated fair value of the shares or the amount of
interest due, the shareholder, within 30 days from the delivery of the
corporation's statement of value, shall notify the corporation in writing of the
shareholder's estimated fair value and amount of interest due and demand payment
for the difference between the shareholder's estimate of fair value and interest
due and the amount of the payment by the corporation or the proceeds of sale by
the shareholder, whichever is applicable because of the procedure for which the
corporation opted pursuant to subsection (c).
(f) If, within 60 days from delivery to the corporation of the
shareholder notification of estimate of fair value of the shares and interest
due, the corporation and the dissenting shareholder have not agreed in writing
upon the fair value of the shares and interest due, the corporation shall either
pay the difference in value demanded by the shareholder, with interest, or file
a petition in the circuit court of the county in which either the registered
office or the principal office of the corporation is located, requesting the
court to determine the fair value of the shares and interest due. The
corporation shall make all dissenters, whether or not residents of this State,
whose demands remain unsettled parties to the proceeding as an action against
their shares and all parties shall be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by publication as
provided by law. Failure of the corporation to commence an action pursuant to
this Section shall not limit or affect the right of the dissenting shareholders
to otherwise commence an action as permitted by law.
(g) The jurisdiction of the court in which the proceeding is
commenced under subsection (f) by a corporation is plenary and exclusive. The
court may appoint one or more persons as appraisers to receive evidence and
recommend decision on the question of fair value. The appraisers have the power
described in the order appointing them, or in any amendment to it.
(h) Each dissenter made a party to the proceeding is entitled
to judgment for the amount, if any, by which the court finds that the fair value
of his or her shares, plus interest, exceeds the amount paid by the corporation
or the proceeds of sale by the shareholder, whichever amount is applicable.
(i) The court, in a proceeding commenced under subsection (f),
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of the appraisers, if any, appointed by the court
under subsection (g), but shall exclude the fees and expenses of counsel and
experts for the respective parties. If the fair value of the shares as
determined by the
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court materially exceeds the amount which the corporation estimated to be the
fair value of the shares or if no estimate was made in accordance with
subsection (c), then all or any part of the costs may be assessed against the
corporation. If the amount which any dissenter estimated to be the fair value of
the shares materially exceeds the fair value of the shares as determined by the
court, then all or any part of the costs may be assessed against that dissenter.
The court may also assess the fees and expenses of counsel and experts for the
respective parties, in amounts the court finds equitable, as follows:
(1) Against the corporation and in favor of any or
all dissenters if the court finds that the corporation did not
substantially comply with the requirements of subsections (a), (b),
(c), (d), or (f).
(2) Against either the corporation or a dissenter and
in favor of any other party if the court finds that the party against
whom the fees and expenses are assessed acted arbitrarily, vexatiously,
or not in good faith with respect to the rights provided by this
Section.
If the court finds that the services of counsel for
any dissenter were of substantial benefit to other dissenters similarly
situated and that the fees for those services should not be assessed
against the corporation, the court may award to that counsel reasonable
fees to be paid out of the amounts awarded to the dissenters who are
benefitted. Except as otherwise provided in this Section, the practice,
procedure, judgment and costs shall be governed by the Code of Civil
Procedure. [FN1]
(j) As used in this Section:
(1) "Fair value," with respect to a dissenter's
shares, means the value of the shares immediately before the
consummation of the corporate action to which the dissenter objects
excluding any appreciation or depreciation in anticipation of the
corporate action, unless exclusion would be inequitable.
(2) "Interest" means interest from the effective date
of the corporate action until the date of payment, at the average rate
currently paid by the corporation on its principal bank loans or, if
none, at a rate that is fair and equitable under all the circumstances.
- ------------------------
[FN1] 735 ILCS 5/1-101 et seq.
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REVOCABLE PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF CENTRAL ILLINOIS BANCORP, INC.
The undersigned hereby appoints Steven T. Klitzing and Donald J.
Straka, or either of them, as proxies for the undersigned, with full power of
substitution, to act and to vote all the shares of common stock of Central
Illinois Bancorp, Inc. that the undersigned would be entitled to vote if
personally present at the annual meeting of shareholders to be held on Thursday,
May 27, 1999, or at any adjournment thereof. Said proxies are directed to vote
as instructed on the matters set forth on the reverse side and otherwise at
their discretion. Receipt of a copy of the notice of said meeting and proxy
statement is hereby acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTIONS ARE GIVEN, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED UNDER PROPOSAL 1 AND FOR
PROPOSALS 2, 3 AND 4 ON THE REVERSE SIDE OF THIS CARD.
(PLEASE SIGN AND DATE THE REVERSE SIDE AND MAIL IN THE ENCLOSED RETURN
ENVELOPE.)
<PAGE> 121
(REVERSE SIDE)
CENTRAL ILLINOIS BANCORP, INC.
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL THE NOMINEES AND "FOR"
PROPOSALS 2, 3 AND 4.
Withhold
1. Election of Directors: For Against Authority
Nominees:
Jose C. Araujo / / / / / /
Jerry D. Maahs / / / / / /
Howard E. Zimmerman / / / / / /
2. Proposal to adopt the 1999 Stock Option For Against Abstain
and Incentive Plan / / / / / /
3. Proposal to change the state of incorporation For Against Abstain
of the Company from Illinois to Wisconsin, / / / / / /
resulting in new articles of incorporation and
by-laws
4. Proposal to adjourn the annual meeting For Against Abstain
in the discretion of the Company's management / / / / / /
------------------------------
Signature
------------------------------
Signature (if held jointly)
Dated:___________________, 1999
IMPORTANT: Please sign exactly
as your name or names appear on
the left. If stock is held
jointly, all joint owners must
sign. Executors,
administrators, trustees,
guardians, custodians,
corporate officers and others
signing in a representative
capacity should give their full
titles.
