EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
UNIONBANCORP, INC.
AND
CENTRUE FINANCIAL CORPORATION
JUNE 30, 2006
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (together with all exhibits and
schedules, this "AGREEMENT") is entered into as of June 30, 2006, between
UNIONBANCORP, INC., a Delaware corporation ("UNION"), and CENTRUE FINANCIAL
CORPORATION, a Delaware corporation ("CENTRUE").
RECITALS
A. The parties to this Agreement desire to effect a reorganization through
the merger (the "MERGER") of Centrue with and into Union, with Union being the
surviving corporation (the "SURVIVING CORPORATION").
B. Pursuant to the terms of this Agreement, each outstanding share of the
common stock of Centrue, $0.01 par value per share ("CENTRUE COMMON STOCK"),
shall be converted at the effective time of the Merger into the right to receive
shares of common stock of Union, $1.00 par value per share ("UNION COMMON
STOCK"), as provided in this Agreement.
C. The parties desire to make certain representations, warranties and
agreements in connection with the Merger and also agree to certain prescribed
conditions to the Merger.
AGREEMENTS
In consideration of the foregoing premises and the following mutual
promises, covenants and agreements, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS. In addition to those terms defined throughout this
Agreement, the following terms, when used herein, shall have the following
meanings.
(a) "ACQUISITION TRANSACTION" means with respect to Centrue or Union,
any of the following: (i) a merger or consolidation, or any similar transaction
(other than the Merger) of any company with either Centrue or Union,
respectively, or any significant subsidiary, as defined in Rule 1.2 of
Regulation S-X of the SEC (a "SIGNIFICANT SUBSIDIARY"), of Centrue or Union;
(ii) a purchase, lease or other acquisition of all or substantially all the
assets of either Centrue or Union or any Significant Subsidiary of such Person;
(iii) a purchase or other acquisition of "beneficial ownership" by any "person"
or "group" (as such terms are defined in Section 13(d)(3) of the Exchange Act)
(including by way of merger, consolidation, share exchange or otherwise) that
would cause such person or group to become the beneficial owner of securities
representing 10% or more of the voting power of either Centrue or Union or any
Significant Subsidiary of either; (iv) a tender or exchange offer to acquire
securities representing 10% or more of the voting power of Centrue or Union; (v)
a public proxy or consent solicitation made to stockholders of Centrue or Union
seeking proxies in opposition to any proposal relating to any aspect of the
Contemplated Transactions that has been recommended by the board of
directors of Centrue or Union; (vi) the filing of an application or notice with
any Regulatory Authority (which application has been accepted for processing)
seeking approval to engage in one or more of the transactions referenced in
clauses (i) through (iv) above; or (vii) the making of a bona fide proposal to
Centrue or Union or their respective stockholders, by public announcement or
written communication, that is or becomes the subject of public disclosure, to
engage in one or more of the transactions referenced in clauses (i) through (v)
above.
(b) "AFFILIATE" means with respect to:
(i) a particular individual: (A) each other member of such
individual's Family; (B) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family; (C) any
Person in which such individual or members of such individual's Family hold
(individually or in the aggregate) a Material Interest; and (D) any Person with
respect to which such individual or one or more members of such individual's
Family serves as a director, officer, partner, executor or trustee (or in a
similar capacity); and
(ii) a specified Person other than an individual: (A) any Person
that directly or indirectly controls, is directly or indirectly controlled by,
or is directly or indirectly under common control with such specified Person;
(B) any Person that holds a Material Interest in such specified Person; (C) each
Person that serves as a director, officer, partner, executor or trustee of such
specified Person (or in a similar capacity); (D) any Person in which such
specified Person holds a Material Interest; (E) any Person with respect to which
such specified Person serves as a general partner or a trustee (or in a similar
capacity); and (F) any Affiliate of any individual described in clause (B) or
(C) of this subsection (ii).
(c) "BANK MERGER" means the merger of Centrue Bank with and into and
under the charter of UnionBank.
(d) "BEST EFFORTS" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible, provided, however, that an obligation
to use Best Efforts under this Agreement does not require the Person subject to
that obligation to take actions that would result in a materially adverse change
in the benefits to such Person of this Agreement and the Contemplated
Transactions.
(e) "BUSINESS DAY" means any day on which the trading of stock occurs
on the Nasdaq National Market.
(f) "CALL REPORTS" means the quarterly reports of income and condition
required to be filed with the Federal Deposit Insurance Corporation.
(g) "CENTRUE BANK" means Centrue Bank, an Illinois chartered
commercial bank with its main office located in Kankakee, Illinois, and a
wholly-owned subsidiary of Centrue.
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(h) "CENTRUE DEFERRED COMPENSATION PLAN" means the Kankakee Bancorp,
Inc. Non-Employee Directors' Deferred Compensation Plan, effective as of January
1, 2003.
(i) "CENTRUE RESTRICTED STOCK" means each of the 12,400 shares of
restricted Centrue Common Stock granted to a Person by Centrue under the Centrue
Stock Incentive Plan prior to the date of this Agreement that is outstanding on
the date hereof.
(j) "CENTRUE RIGHTS AGREEMENT" means the Rights Agreement dated as of
May 11, 1999, between Centrue and LaSalle Bank National Association, as Rights
Agent.
(k) "CENTRUE SEC REPORTS" means the annual, quarterly and other
reports, schedules, forms, statements and other documents (including exhibits
and all other information incorporated therein) filed by Centrue with the SEC.
(l) "CENTRUE STOCK INCENTIVE PLAN" means the Centrue Financial
Corporation 2003 Stock Incentive Plan.
(m) "CENTRUE STOCK OPTION" means each of the 204,800 stock options
granted to a Person by Centrue, under the Centrue Stock Incentive Plan or
otherwise, prior to the date of this Agreement that is outstanding on the date
hereof.
(n) "CENTRUE SUBSIDIARY" means any Subsidiary of Centrue.
(o) "CODE" means the Internal Revenue Code of 1986, as amended.
(p) "CONTEMPLATED TRANSACTIONS" means all of the transactions
contemplated by this Agreement, including: (i) the Merger; (ii) the Bank Merger;
(iii) the performance by Union and Centrue of their respective covenants and
obligations under this Agreement; and (iv) Union's issuance of shares of Union
Common Stock pursuant to the Registration Statement in exchange for shares of
Centrue Common Stock.
(q) "CONTRACT" means any agreement, contract, obligation, promise or
understanding (whether written or oral and whether express or implied) that is
legally binding: (i) under which a Person has or has the right to acquire any
rights; (ii) under which such Person has or has the right to become subject to
any obligation or liability; or (iii) by which such Person or any of the assets
owned or used by such Person is or has the right to become bound.
(r) "CRA" means the Community Reinvestment Act, as amended.
(s) "DEPARTMENT" means the Illinois Department of Financial and
Professional Regulation.
(t) "DGCL" means the Delaware General Corporation Law, as amended.
(u) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
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(v) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(w) "FAMILY" means with respect to an individual: (i) the individual;
(ii) the individual's spouse and any former spouse; (iii) any other natural
person who is related to the individual or the individual's spouse within the
second degree; and (iv) any other individual who resides with such individual.
(x) "FDIC" means the Federal Deposit Insurance Corporation.
(y) "FEDERAL RESERVE" means the Board of Governors of the Federal
Reserve System.
(z) "GAAP" means generally accepted accounting principles in the
United States, consistently applied.
(aa) "KNOWLEDGE" with respect to:
(i) an individual means that such person will be deemed to have
"Knowledge" of a particular fact or other matter if: (A) such individual is
actually aware of such fact or other matter; or (B) a prudent individual could
be expected to discover or otherwise become aware of such fact or other matter
in the course of conducting a reasonably comprehensive investigation concerning
the existence of such fact or other matter; and
(ii) a Person (other than an individual) means that such Person
will be deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving as a director, officer, manager, partner, executor or
trustee of such Person (or in any similar capacity) has Knowledge of such fact
or other matter.
(bb) "LEGAL REQUIREMENT" means any federal, state, local, municipal,
foreign, international, multinational or other Order, constitution, law,
ordinance, regulation, rule, policy statement, directive, statute or treaty.
(cc) "MATERIAL ADVERSE EFFECT" with respect to a Person (other than an
individual) means, a material adverse effect (whether or not required to be
accrued or disclosed under Statement of Financial Accounting Standards No. 5):
(i) on the condition (financial or otherwise), properties, assets, liabilities,
businesses or results of operations of such Person; or (ii) on the ability of
such Person to perform its obligations under this Agreement on a timely basis;
but not including (x) any such effect resulting from or attributable to any
action or omission by such Person or any Subsidiary of such Person taken with
the prior written consent of the other party hereto or in contemplation of the
Contemplated Transactions or (y) the effect of any change in any Legal
Requirement, any general economic event or any change in interest rates
affecting financial institutions generally.
(dd) "MATERIAL INTEREST" means the direct or indirect beneficial
ownership (as currently defined in Rule 13d-3 under the Exchange Act) of voting
securities or other voting interests representing at least 10% of the
outstanding voting power of a Person or equity
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securities or other equity interests representing at least 10% of the
outstanding equity securities or equity interests in a Person.
(ee) "ORDER" means any award, decision, injunction, judgment, order,
ruling, extraordinary supervisory letter, policy statement, memorandum of
understanding, resolution, agreement, directive, subpoena or verdict entered,
issued, made, rendered or required by any court, administrative or other
governmental agency, including any Regulatory Authority, or by any arbitrator.
(ff) "ORDINARY COURSE OF BUSINESS" means any action taken by a Person
only if such action:
(i) is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of such Person;
(ii) is not required to be authorized by the board of directors
of such Person (or by any Person or group of Persons exercising similar
authority), other than loan approvals for customers of a financial institution;
and
(iii) is similar in nature and magnitude to actions customarily
taken, without any authorization by the board of directors (or by any Person or
group of Persons exercising similar authority), other than loan approvals for
customers of a financial institution, in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of business as
such Person.
(gg) "PERSON" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union or
other entity or Regulatory Authority.
(hh) "PROCEEDING" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any judicial or governmental authority, including a
Regulatory Authority, or arbitrator.
(ii) "REGULATORY AUTHORITY" means any federal, state or local
governmental body, agency, court or authority that, under applicable Legal
Requirements: (i) has supervisory, judicial, administrative, police,
enforcement, taxing or other power or authority over Centrue, Union, or any of
their respective Subsidiaries; (ii) is required to approve, or give its consent
to the Contemplated Transactions; or (iii) with which a filing must be made in
connection therewith, including, in any case, the Federal Reserve, the FDIC and
the Department.
(jj) "REPRESENTATIVE" means with respect to a particular Person, any
director, officer, manager, employee, agent, consultant, advisor or other
representative of such Person, including legal counsel, accountants and
financial advisors.
(kk) "SEC" means the Securities and Exchange Commission.
(ll) "SECURITIES ACT" means the Securities Act of 1933, as amended.
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(mm) "SUBSIDIARY" means with respect to any Person (the "OWNER"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries.
(nn) "TAX" means any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency or other fee,
and any related charge or amount (including any fine, penalty, interest or
addition to tax), imposed, assessed or collected by or under the authority of
any Regulatory Authority or payable pursuant to any tax-sharing agreement or any
other Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency or fee.
(oo) "TAX RETURN" means any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Regulatory Authority in connection with the determination, assessment,
collection or payment of any Tax or in connection with the administration,
implementation, or enforcement of or compliance with any Legal Requirement
relating to any Tax.
(pp) "THREATENED" means a claim, Proceeding, dispute, action or other
matter for which any demand or statement has been made (orally or in writing) or
any notice has been given (orally or in writing), or if any other event has
occurred or any other circumstances exist, that would lead a prudent Person with
knowledge of such event or circumstances to conclude that such a claim,
Proceeding, dispute, action or other matter is likely to be asserted, commenced,
taken or otherwise pursued in the future.
(qq) "UNIONBANK" means UnionBank, an Illinois chartered commercial
bank with its main office located in Streator, Illinois, and a wholly-owned
subsidiary of Union.
(rr) "UNION RIGHTS AGREEMENT" means the Rights Agreement dated as of
August 5, 1996, between Union and Xxxxxx Trust and Savings Bank, as Rights
Agent.
(ss) "UNION SEC REPORTS" means the annual, quarterly and other
reports, schedules, forms, statements and other documents (including exhibits
and all other information incorporated therein) filed by Union with the SEC.
(tt) "UNION STOCK OPTION" means each of the 288,175 stock options
granted to a Person by Union, under the Union Stock Option Plans or otherwise,
prior to the date of this Agreement that is outstanding on the date hereof.
(uu) "UNION STOCK OPTION PLANS" means the UnionBancorp, Inc. 1993
Stock Option Plan, the UnionBancorp 1999 Non-Qualified Stock Option Plan and the
UnionBancorp, Inc. 2003 Stock Option Plan.
(vv) "UNION SUBSIDIARY" means any Subsidiary of Union.
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SECTION 1.2 PRINCIPLES OF CONSTRUCTION.
(a) In this Agreement, unless otherwise stated or the context
otherwise requires, the following uses apply: (i) actions permitted under this
Agreement may be taken at any time and from time to time in the actor's sole
discretion; (ii) references to a statute shall refer to the statute and any
successor statute, and to all regulations promulgated under or implementing the
statute or its successor, as in effect at the relevant time; (iii) in computing
periods from a specified date to a later specified date, the words "FROM" and
"COMMENCING ON" (and the like) mean "FROM AND INCLUDING," and the words "TO,"
"UNTIL" and "ENDING ON" (and the like) mean "TO, BUT EXCLUDING"; (iv) references
to a governmental or quasi-governmental agency, authority or instrumentality
shall also refer to a regulatory body that succeeds to the functions of the
agency, authority or instrumentality; (v) indications of time of day mean
Ottawa, Illinois time; (vi) "INCLUDING" means "INCLUDING, BUT NOT LIMITED TO";
(vii) all references to sections, schedules and exhibits are to sections,
schedules and exhibits in or to this Agreement unless otherwise specified;
(viii) all words used in this Agreement will be construed to be of such gender
or number as the circumstances and context require; (ix) the captions and
headings of articles, sections, schedules and exhibits appearing in or attached
to this Agreement have been inserted solely for convenience of reference and
shall not be considered a part of this Agreement nor shall any of them affect
the meaning or interpretation of this Agreement or any of its provisions; and
(x) any reference to a document or set of documents in this Agreement, and the
rights and obligations of the parties under any such documents, shall mean such
document or documents as amended from time to time, and any and all
modifications, extensions, renewals, substitutions or replacements thereof.
(b) The schedules of each of Centrue and Union referred to in this
Agreement (the "CENTRUE SCHEDULES" and the "UNION SCHEDULES," respectively, and
collectively the "SCHEDULES") shall consist of the agreements and other
documentation described and referred to in this Agreement with respect to such
party, which Schedules were delivered by each of Centrue and Union to the other
before the date of this Agreement. Any item or matter disclosed on any Schedule
shall be deemed to be disclosed for all purposes on all other Schedules, to the
extent that it should have been disclosed on such other Schedule, to the extent
that sufficient details are set forth so that the purpose for which disclosure
is made is reasonably clear. In the event of any inconsistency between the
statements in the body of this Agreement and those in the Schedules (other than
an exception expressly set forth as such in the Schedules), the statements in
the body of this Agreement will control.
(c) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP.
(d) With regard to each and every term and condition of this Agreement
and any and all agreements and instruments subject to the terms hereof, the
parties hereto understand and agree that the same have or has been mutually
negotiated, prepared and drafted, and that if at any time the parties hereto
desire or are required to interpret or construe any such term or condition or
any agreement or instrument subject hereto, no consideration shall be given to
the issue of which party hereto actually prepared, drafted or requested any term
or condition of this Agreement or any agreement or instrument subject hereto.
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ARTICLE 2
THE MERGER
SECTION 2.1 THE MERGER. Provided that this Agreement shall not prior
thereto have been terminated in accordance with its express terms, upon the
terms and subject to the conditions of this Agreement and in accordance with the
applicable provisions of the DGCL, at the Effective Time (as defined below),
Centrue shall be merged with and into Union pursuant to the provisions of, and
with the effects provided in, the DGCL, the separate corporate existence of
Centrue shall cease and Union will be the Surviving Corporation. As a result of
the Merger, each share of Centrue Common Stock issued and outstanding
immediately prior to the Effective Time will be converted into the right to
receive shares of Union Common Stock as provided in SECTION 3.2.
SECTION 2.2 EFFECTIVE TIME; CLOSING.
(a) Provided that this Agreement shall not prior thereto have been
terminated in accordance with its express terms, the closing of the Merger (the
"CLOSING") shall occur through the mail or at a place that is mutually
acceptable to Union and Centrue, at 10:00 a.m. on the date that is ten Business
Days after the latest to occur of the receipt of all required approvals or
consents of the Regulatory Authorities for the Contemplated Transactions, the
expiration of all statutory waiting periods relating to such regulatory
approvals and the receipt of the approvals of the stockholders of Union and
Centrue, or at such other time and place as Centrue and Union may agree in
writing (the "CLOSING DATE"). Subject to the provisions of ARTICLE 11, failure
to consummate the Merger on the date and time and at the place determined
pursuant to this Section will not result in the termination of this Agreement
and will not relieve any party of any obligation under this Agreement.
(b) The parties hereto agree to file on the Closing Date an
appropriate certificate of merger, as contemplated by Section 252 of the DGCL,
with the Secretary of State of the State of Delaware. The Merger shall be
effective upon the close of business on the day the certificate of merger has
been duly filed with and accepted by the Secretary of State of the State of
Delaware (the "EFFECTIVE TIME").
SECTION 2.3 EFFECTS OF MERGER. At the Effective Time, the effect of the
Merger shall be as provided in Sections 251, 252, 259, 260 and 261 of the DGCL.
Without limiting the generality of the foregoing, at the Effective Time, all the
property, rights, privileges, powers and franchises of Union and Centrue shall
be vested in the Surviving Corporation, and all debts, liabilities and duties of
Union and Centrue shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.4 NAME. The name of the Surviving Corporation shall be "Centrue
Financial Corporation."
SECTION 2.5 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION. Union and
Centrue agree to cause to be filed on the Closing Date with the Secretary of
State of the State of Delaware an amendment and restatement of the certificate
of incorporation of Union, as amended to date, substantially in the form
attached as Exhibit A, and such amended and restated
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certificate of incorporation shall from and after the Effective Time represent
the certificate of incorporation of the Surviving Corporation until further
amended as provided by law.
SECTION 2.6 BYLAWS. The bylaws of Union, in the form attached as Exhibit B,
shall from and after the Effective Time be the bylaws of the Surviving
Corporation until further amended as provided by law.
SECTION 2.7 DIRECTORS AND OFFICERS. From and after the Effective Time, the
directors and executive officers of the Surviving Corporation shall be as set
forth in Exhibit C, with three (3) members in each of Class I and Class II, and
four (4) members of Class III, of the Surviving Corporation's board of
directors. From and after the Effective Time, the chairmen of each of the
committees of the board of directors of the Surviving Corporation shall be as
set forth in Exhibit C, and each of the committees of the board of the directors
of the Surviving Corporation shall include two persons designated by Centrue and
two persons designated by Union, each of whom shall be reasonably acceptable to
the other. Such directors and executive officers shall serve until their
successors shall have been elected or appointed and shall have qualified in
accordance with the DGCL and the certificate of incorporation and bylaws of the
Surviving Corporation.
SECTION 2.8 UNION'S DELIVERIES AT CLOSING. At the Closing, Union shall
deliver or cause to be delivered the following items to or on behalf of Union:
(a) evidence of the delivery by Union or its agents to the Exchange
Agent (as defined below) of: (i) certificates representing the number of shares
of Union Common Stock to be issued in exchange for the shares of Centrue Common
Stock pursuant to the terms of this Agreement; and (ii) an aggregate amount of
cash equal to the total fractional shares of Union Common Stock that former
holders of Centrue Common Stock would be entitled to receive;
(b) a good standing certificate for Union issued by the Secretary of
State of each of the States of Delaware and Illinois, and dated in each case not
more than ten Business Days prior to the Closing Date;
(c) a copy of the certificate of incorporation of Union certified not
more than ten Business Days prior to the Closing Date by the Secretary of State
of the State of Delaware;
(d) a certificate of the Secretary or any Assistant Secretary of Union
dated the Closing Date certifying a copy of the bylaws of Union;
(e) copies of resolutions of the board of directors and stockholders
of Union authorizing and approving this Agreement and the consummation of the
Contemplated Transactions certified as of the Closing Date by the Secretary or
any Assistant Secretary of Union;
(f) a good standing certificate for UnionBank issued by the Department
and dated not more than ten Business Days prior to the Closing Date;
(g) a copy of the charter of UnionBank certified by the Department and
dated not more than ten Business Days prior to the Closing Date;
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(h) a certificate of the Secretary of UnionBank dated the Closing Date
certifying a copy of the bylaws of UnionBank and stating that there have been no
further amendments to the charter of UnionBank delivered pursuant to the
immediately preceding paragraph of this Section;
(i) a certificate executed by Union dated the Closing Date stating
that: (i) all of the representations and warranties of Union set forth in this
Agreement, when read without regard to any qualification as to materiality or
Material Adverse Effect contained therein, are true and correct with the same
force and effect as if all of such representations and warranties were made at
the Closing Date (provided, however, that to the extent such representations and
warranties expressly relate to an earlier date, such representations and
warranties shall be true and correct on and as of such earlier date), except for
any untrue or incorrect representations or warranties that individually or in
the aggregate do not have a Material Adverse Effect on Union on a consolidated
basis or on Centrue's or its stockholders' rights or interests under this
Agreement; and (ii) all of the covenants and obligations to be performed or
complied with by Union under the terms of this Agreement on or prior to the
Closing Date, when read without regard to any qualification as to materiality or
Material Adverse Effect contained therein, have been performed or complied with
by Union, except where any non-performance or noncompliance would not have a
Material Adverse Effect on Union on a consolidated basis or on Centrue's or its
stockholders' rights or interests under this Agreement; and
(j) a copy of the tax opinion described in SECTION 10.10.
All of such items shall be reasonably satisfactory in form and substance to
Centrue and its counsel.
SECTION 2.9 CENTRUE'S DELIVERIES AT CLOSING. At the Closing, Centrue shall
deliver the following items to Union:
(a) a good standing certificate for Centrue issued by the Secretary of
State of each of the States of Delaware and Illinois, and dated in each case not
more than ten Business Days prior to the Closing Date;
(b) a copy of the certificate of incorporation of Centrue certified
not more than ten Business Days prior to the Closing Date by the Secretary of
State of the State of Delaware;
(c) a certificate of the Secretary or any Assistant Secretary of
Centrue dated the Closing Date certifying a copy of the bylaws of Centrue;
(d) copies of resolutions of the board of directors and stockholders
of Centrue authorizing and approving this Agreement and the consummation of the
Contemplated Transactions certified as of the Closing Date by the Secretary or
any Assistant Secretary of Centrue;
(e) a good standing certificate for Centrue Bank issued by the
Department and dated not more than ten Business Days prior to the Closing Date;
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(f) a copy of the charter of Centrue Bank certified by the Department
and dated not more than ten Business Days prior to the Closing Date;
(g) a certificate of the Secretary of Centrue Bank dated the Closing
Date certifying a copy of the bylaws of Centrue Bank and stating that there have
been no further amendments to the charter of Centrue Bank delivered pursuant to
the immediately preceding paragraph of this Section;
(h) a certificate executed by Centrue dated the Closing Date stating
that: (i) all of the representations and warranties of Centrue set forth in this
Agreement, when read without regard to any qualification as to materiality or
material Adverse Effect contained therein, are true and correct with the same
force and effect as if all of such representations and warranties were made at
the Closing Date (provided, however, that to the extent such representations and
warranties expressly relate to an earlier date, such representations and
warranties shall be true and correct on and as of such earlier date), except for
any untrue or incorrect representations or warranties that individually or in
the aggregate do not have a Material Adverse Effect on Centrue on a consolidated
basis or on Union's or its stockholders' rights or interests under this
Agreement; and (ii) all of the covenants and obligations to be performed or
complied with by Centrue under the terms of this Agreement on or prior to the
Closing Date, when read without regard to any qualification as to materiality or
Material Adverse Effect contained therein, have been performed or complied with
by Centrue, except where any non-performance or noncompliance would not have a
Material Adverse Effect on Centrue on a consolidated basis or on Union's or its
stockholders' rights or interests under this Agreement; and
(i) a list of all holders of Centrue Common Stock as of the Closing
Date and a list of all Persons as of the Closing Date who, to the Knowledge of
Centrue, have the right at any time to acquire shares of Centrue Common Stock,
certified in each case by the Secretary or any Assistant Secretary of Centrue;
(j) a copy of the tax opinion described in SECTION 10.10; and
(k) such other documents as Union may reasonably request.
All of such items shall be reasonably satisfactory in form and substance to
Union and its counsel.
SECTION 2.10 BANK MERGER. The parties understand that it is the present
intention of Union at or after the Effective Time to effect the Bank Merger.
Union and Centrue agree to cooperate and to take such steps as may be necessary
to obtain all requisite regulatory, corporate and other approvals to effect the
Bank Merger, subject to the consummation of, and to be effective concurrently
with, the Merger or as soon as practicable thereafter. The resulting bank shall
be Union, provided, however, that the name of the Resulting Bank will be
"Centrue Bank." In furtherance of such agreement, each of Centrue and Union
agrees:
(a) respectively, to cause the board of directors of each of Centrue
Bank and UnionBank to approve the Bank Merger and to submit the same to its
respective sole stockholder for approval;
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(b) respectively, to vote the shares of stock of Centrue Bank and
UnionBank owned by them in favor of the Bank Merger; and
(c) to take, or cause to be taken, all steps necessary to consummate
the Bank Merger at the Effective Time or as soon thereafter as is reasonably
practicable.
The Bank Merger shall be accomplished pursuant to a merger agreement containing
such terms and conditions as are ordinary and customary for affiliated bank
merger transactions of such type. Notwithstanding anything contained herein to
the contrary: (x) the Bank Merger will be effective no earlier than the
Effective Time; and (y) none of Union's or Centrue's actions in connection with
the Bank Merger will unreasonably interfere with any of the operations of
Centrue, Centrue Bank, Union or UnionBank prior to the Effective Time.
SECTION 2.11 ABSENCE OF CONTROL. Subject to any specific provisions of this
Agreement, it is the intent of the parties to this Agreement that neither Union
nor Centrue by reason of this Agreement shall be deemed (until consummation of
the Contemplated Transactions) to control, directly or indirectly, the other
party or any of its respective Subsidiaries and shall not exercise, or be deemed
to exercise, directly or indirectly, a controlling influence over the management
or policies of such other party or any of its respective Subsidiaries.
ARTICLE 3
CONVERSION OF SECURITIES IN THE MERGER
SECTION 3.1 MANNER OF MERGER.
(a) By virtue of the Merger and without any action on the part of
Union, each share of Union Common Stock issued and outstanding immediately prior
to the Effective Time shall be unaffected by the Merger and shall thereafter
represent one share of stock of the Surviving Corporation. By virtue of the
Merger and without any action on the part of Union, each share of Series A
Convertible Preferred Stock, no par value (the "SERIES A STOCK"), and each share
of Series B Preferred Stock, no par value (the "SERIES B STOCK"), of Union
issued and outstanding immediately prior to the Effective Time shall be
unaffected by the Merger and shall thereafter represent one share of Series A
Stock or Series B Stock, respectively, of the Surviving Corporation.
(b) Subject to the provisions of this Article, by virtue of the Merger
and without any action on the part of Union or Centrue, or the holder of any
Centrue Common Stock, each share of Centrue Common Stock issued and outstanding
immediately prior to the Effective Time, including each share of Centrue Common
Stock that is to be paid out at the Effective Time under the Centrue Deferred
Compensation Plan, shall become and automatically be converted into 1.2 shares
of Union Common Stock (the "EXCHANGE RATIO"), and shall thereafter represent the
right to receive and be exchangeable for such number of shares, rounded to the
nearest thousandth of a share of Union Common Stock (the "EXCHANGE SHARES");
provided, however, that all shares of Centrue Common Stock held by Centrue as
treasury stock shall not be converted into shares of Union Common Stock, but
instead shall be canceled as a result of the Merger.
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(c) After the Effective Time, no holder of Centrue Common Stock that
is issued and outstanding immediately prior to the Effective Time will have any
rights in respect of such Centrue Common Stock except to receive shares of Union
Common Stock for the shares of Centrue Common Stock converted as provided in
this Section, plus an amount in cash, as provided below, for any fractional
share of Union Common Stock that such holder would have been entitled to
receive.
(d) If, subject to SECTION 7.15, Union declares a stock dividend,
stock split or other general distribution of Union Common Stock to holders of
Union Common Stock and the ex-dividend or ex-distribution date for such stock
dividend, stock split or distribution occurs at any time after the date of this
Agreement and prior to the Closing, then the Exchange Ratio shall be adjusted by
multiplying it by a fraction: (i) the numerator of which shall be the total
number of shares of Union Common Stock outstanding immediately after such
dividend, split or distribution; and (ii) the denominator of which shall be the
total number of shares of Union Common Stock outstanding immediately prior to
such dividend, split, or distribution. Notwithstanding the foregoing, and
subject to SECTION 7.15, no adjustment shall be made to the Exchange Ratio: (A)
in the event of the issuance of additional shares of Union Common Stock pursuant
to the grant or sale of shares to, or for the account of, employees of Union
pursuant to the Union Stock Option Plans, or Union's qualified and non-qualified
retirement and dividend reinvestment plans; or (B) in the event of the issuance
of additional shares of Union Common Stock or other securities pursuant to a
public offering, private placement or an acquisition of one or more banks,
corporations or business assets for consideration which the board of directors,
or a duly authorized committee of the board of directors, of Union in its
reasonable business judgment determines to be fair and reasonable.
(e) If, subject to SECTION 6.12, Centrue declares a stock dividend,
stock split or other general distribution of Centrue Common Stock to holders of
Centrue Common Stock and the ex-dividend or ex-distribution date for such stock
dividend, stock split or distribution occurs at any time after the date of this
Agreement and prior to the Closing, then the Exchange Ratio shall be adjusted by
multiplying it by a fraction: (i) the numerator of which shall be the total
number of shares of Centrue Common Stock outstanding immediately prior to such
dividend, split or distribution; and (ii) the denominator of which shall be the
total number of shares of Centrue Common Stock outstanding immediately after
such dividend, split, or distribution. Notwithstanding the foregoing, and
subject to SECTION 6.12, no adjustment shall be made to the Exchange Ratio: (A)
in the event of the issuance of additional shares of Centrue Common Stock
pursuant to the grant or sale of shares to, or for the account of, employees of
Centrue pursuant to the Centrue Stock Incentive Plan, or Centrue's qualified and
non-qualified retirement and dividend reinvestment plans; or (B) in the event of
the issuance of additional shares of Centrue Common Stock or other securities
pursuant to a public offering, private placement or an acquisition of one or
more banks, corporations or business assets for consideration which the board of
directors, or a duly authorized committee of the board of directors, of Centrue
in its reasonable business judgment determines to be fair and reasonable.
SECTION 3.2 STEPS OF TRANSACTION.
(a) The parties shall mutually select a Person to serve as exchange
agent (the "EXCHANGE AGENT") for the parties to effect the surrender of
certificates representing outstanding
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shares of Centrue Common Stock (the "CERTIFICATES") in exchange for Union Common
Stock and/or cash in redemption of fractional shares. The Exchange Agent shall
serve under the terms of an exchange agent agreement reasonably acceptable to
both parties. No later than five Business Days after the Effective Time, the
Exchange Agent shall mail or cause to be mailed to each then current holder of
record of a Certificate or Certificates a form of transmittal letter (the
"LETTER OF TRANSMITTAL") providing instructions for the transmittal of the
Certificates and shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon delivery of the Certificates
(or a lost certificate affidavit and a bond in a form reasonably acceptable to
the Surviving Corporation).
(b) The Surviving Corporation shall cause the Exchange Agent to
deliver promptly to each holder of Centrue Common Stock who submits a properly
completed Letter of Transmittal accompanied by the Certificates covered by such
Letter of Transmittal: (i) certificates representing the number of whole shares
of Union Common Stock into which the shares of Centrue Common Stock previously
represented by the Certificates so surrendered were converted; plus (ii) an
amount in cash, as provided below, for any fractional share of Union Common
Stock that such holder would have been entitled to receive.
(c) Within sixty days after the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to send to each holder of record of
Centrue Common Stock immediately prior to the Effective Time who has not
previously submitted his or her Certificates, an additional Letter of
Transmittal for use in surrendering Certificates to the Exchange Agent and
instructions for use in effecting such surrender in exchange for shares of Union
Common Stock and cash for any fractional shares.
(d) No dividends or other distributions declared after the Effective
Time with respect to Union Common Stock and payable in respect of shares of
Centrue Common Stock held by any former stockholder of record of Centrue shall
be paid to a former stockholder of Centrue who holds any unsurrendered
Certificate with respect to Centrue Common Stock until the stockholder shall
surrender the Certificate. Until so surrendered and exchanged, each outstanding
Certificate shall for all purposes, including the exercise of voting rights, but
not including the payment of dividends or other distributions, if any, in
respect of shares of Centrue Common Stock held by former holders of record of
shares of Centrue Common Stock, represent the shares of Union Common Stock into
and for which such shares have been so converted; provided, however, that upon
surrender of a Certificate, there shall be paid to the record holder or holders
of the Certificate, the amount, without interest thereon, of such dividends and
other distributions, if any, which previously have become payable with respect
to the number of whole shares of Union Common Stock represented by such
Certificate.
(e) No fractional shares of Union Common Stock shall be issued upon
the surrender for exchange of Certificates; no dividend or distribution of Union
shall relate to any fractional share interest; and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Union. Instead, each holder of shares of Centrue Common Stock
having a fractional interest in shares of Union Common Stock arising upon the
conversion of such shares of Centrue Common Stock shall, at the time of
surrender of the Certificates, be paid by the Surviving Corporation an amount in
cash, without interest, determined by multiplying such fractional share of Union
Common Stock by the average of the
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closing sale prices of Union Common Stock for the five trading days immediately
following the Closing Date.
(f) All shares of Union Common Stock, and any required cash payments
for fractional shares, into and for which shares of Centrue Common Stock shall
have been converted and exchanged pursuant to this Agreement, shall be deemed to
have been issued in full satisfaction of all rights pertaining to such converted
and exchanged shares of Centrue Common Stock.
(g) At the Effective Time, Centrue shall deliver to the Exchange Agent
a certified copy of a list of its stockholders, after which there shall be no
further registration or transfers on the stock transfer books of Centrue of the
shares of Centrue Common Stock, all of which were outstanding immediately prior
to the Effective Time. If after the Effective Time Certificates representing
shares of Centrue Common Stock are presented to the Exchange Agent or Union,
they shall be canceled and converted into shares of Union Common Stock as
provided in this Agreement.
(h) If a certificate representing shares of Union Common Stock is to
be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed, accompanied by
all documents required to evidence and effect such transfer and otherwise in
proper form for transfer and that the Person requesting such exchange shall pay
to Union any transfer or other Taxes required by reason of the issuance of a
certificate representing shares of Union Common Stock in any name other than
that of the registered holder of the Certificate surrendered, or otherwise
required, or shall establish to the satisfaction of Union that such Tax has been
paid or is not payable.
SECTION 3.3 TAX FREE REORGANIZATION. The parties to this Agreement intend
for the Merger to qualify as a nontaxable reorganization within the meaning of
Section 368(a)(1)(A) and related sections of the Code and agree to cooperate and
to take such actions as may be reasonably necessary to ensure such result and no
party shall file any Tax Return or take any action or position inconsistent
therewith, except as required pursuant to any Legal Requirement.
SECTION 3.4 OPTIONS; RESTRICTED STOCK.
(a) Prior to the Effective Time, Centrue shall take all action
necessary (including causing the board of directors or any committee thereof to
take such actions as are allowed by the Centrue Stock Incentive Plan) to provide
that each Centrue Stock Option that is outstanding immediately prior to the
Effective Time, other than any Centrue Stock Options that are granted as
provided in the Xxxxxx Employment Agreement or in Exhibit G, shall vest upon the
Effective Time and become free of all restrictions. At and after the Effective
Time, each Centrue Stock Option that is outstanding and unexercised immediately
prior thereto shall cease to represent a right to acquire shares of Centrue
Common Stock and shall be converted automatically into an option to acquire
shares of Union Common Stock (the "CENTRUE CONVERTED STOCK OPTIONS") in an
amount and at an exercise price determined as provided below and otherwise
subject to the terms of the agreements evidencing the grants of such options:
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(i) the number of shares of Union Common Stock to be subject to
each Centrue Converted Stock Option shall be equal to the product of the number
of shares of Centrue Common Stock subject to the original option and the
Exchange Ratio, provided that any fractional shares of Union Common Stock shall
be rounded up to the next highest whole share; and
(ii) the exercise price per share of Union Common Stock under the
Centrue Converted Stock Option shall be equal to the exercise price per share of
Centrue Common Stock under the original option divided by the Exchange Ratio,
provided that such exercise price shall be rounded to the nearest whole cent;
(b) The adjustment provided in this Section with respect to any
options that are "incentive stock options" (as defined in Section 422 of the
Code), shall be and is intended to be effected in a manner which is consistent
with Section 424(a) of the Code. The duration and other terms of the Centrue
Converted Stock Options shall be the same as the original option except that all
references to Centrue shall be deemed to be references to the Surviving
Corporation.
(c) Prior to the Effective Time, Centrue shall take all action
necessary (including causing the board of directors or any committee thereof to
take such actions as are allowed by the Centrue Stock Incentive Plan) to provide
that each share of Centrue Restricted Stock that is outstanding immediately
prior to the Effective Time shall vest upon the Effective Time and become free
of all restrictions. At the Effective Time, each share of Centrue Restricted
Stock issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive the Exchange Shares as provided in and in
accordance with the terms set forth in SECTION 3.1.
(d) Prior to the Effective Time, Union shall take all action necessary
(including causing the board of directors or any committee thereof to take such
actions as are allowed by the Union Stock Option Plans) to provide that each
Union Stock Option that is outstanding immediately prior to the Effective Time,
other than any Union Stock Options that are granted as provided in the Yeoman
Employment Agreement, the Xxxxxxxxx Employment Agreement or in Exhibit G, shall
vest upon the Effective Time and become free of all restrictions. At and after
the Effective Time, each Union Stock Option that is outstanding and unexercised
immediately prior thereto shall otherwise be unaffected by the Merger and shall
thereafter continue to represent a right to acquire shares of Union Common Stock
subject to the terms of the agreements evidencing the grants of such options.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CENTRUE
Centrue hereby represents and warrants to Union as follows:
SECTION 4.1 CENTRUE ORGANIZATION. Centrue: (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is also in good standing in each other jurisdiction in which the
nature of the business conducted or the properties or assets owned or leased by
it makes such qualification necessary; (b) is registered with the
16
Federal Reserve as a bank holding company under the federal Bank Holding Company
Act of 1956, as amended (the "BHCA"); and (c) has full power and authority,
corporate and otherwise, to operate as a bank holding company and to own,
operate and lease its properties as presently owned, operated and leased, and to
carry on its business as it is now being conducted. The copies of the
certificate of incorporation and bylaws of Centrue and all amendments thereto
set forth in the Centrue SEC Reports are complete and correct. Centrue has no
Subsidiaries other than Centrue Bank, except as set forth in the Centrue SEC
Reports.
SECTION 4.2 CENTRUE SUBSIDIARY ORGANIZATION. Centrue Bank is an Illinois
commercial bank duly organized, validly existing and in good standing under the
laws of the State of Illinois. Each other Centrue Subsidiary is duly organized,
validly existing and in good standing in its state or jurisdiction of
organization. Each Centrue Subsidiary has full power and authority, corporate
and otherwise, to own, operate and lease its properties as presently owned,
operated and leased, and to carry on its business as it is now being conducted,
and is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted or the properties or
assets owned or leased by it makes such qualification necessary. The copies of
the charter (or similar organizational documents) and bylaws of each Centrue
Subsidiary and all amendments thereto set forth on Schedule 4.2 are complete and
correct.
SECTION 4.3 AUTHORIZATION; ENFORCEABILITY.
(a) Centrue has the requisite corporate power and authority to enter
into and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement by Centrue, and the consummation by it of its
obligations under this Agreement, have been authorized by all necessary
corporate action, subject to stockholder approval, and this Agreement
constitutes a legal, valid and binding obligation of Centrue enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors' right
generally and subject to general principles of equity.
(b) Except for ordinary corporate requirements, no "business
combination," "moratorium," "control share" or other state anti-takeover statute
or regulation or any provisions contained in the certificate of incorporation or
bylaws of Centrue or any Centrue Subsidiary: (i) prohibits or restricts
Centrue's ability to perform its obligations under this Agreement, or its
ability to consummate the Contemplated Transactions; (ii) would have the effect
of invalidating or voiding this Agreement, or any provision hereof; or (iii)
would subject Centrue to any material impediment or condition in connection with
the exercise of any of its rights under this Agreement. The board of directors
of Centrue has unanimously approved the execution of, and performance by Centrue
of its obligations under, this Agreement.
(c) Centrue has taken all action that may be necessary (including
amending the Centrue Rights Agreement, a complete and correct copy of which
amendment has been delivered to Union) so that: (i) neither the execution and
delivery of this Agreement or any agreements delivered in connection with this
Agreement, nor any amendments thereto approved by the board of directors of
Centrue prior to the termination of this Agreement, nor the consummation of the
transactions contemplated hereby or thereby, including the Merger, shall
17
cause: (A) Union to become an Acquiring Person (as defined in the Centrue Rights
Agreement); (B) the occurrence of a Distribution Date (as defined in the Centrue
Rights Agreement); (C) the occurrence of a Flip-In Event (as defined in the
Centrue Rights Agreement); or (D) the occurrence of a Stock Acquisition Date (as
defined in the Centrue Rights Agreement); and (ii) the rights issuable under the
Centrue Rights Plan shall expire upon the Effective Time.
SECTION 4.4 NO CONFLICT. Except as set forth on Schedule 4.4, neither the
execution nor delivery of this Agreement nor the consummation or performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time): (a) contravene, conflict with or result in a
violation of any provision of the certificate of incorporation or charter (or
similar organizational documents) or bylaws, each as in effect on the date
hereof, or any currently effective resolution adopted by the board of directors
or stockholders of, Centrue or any Centrue Subsidiary; (b) contravene, conflict
with or result in a violation of, or give any Regulatory Authority or other
Person the valid and enforceable right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Centrue or any Centrue Subsidiary, or any of
their respective assets that are owned or used by them, may be subject, except
for any contravention, conflict or violation that is permissible by virtue of
obtaining the regulatory approvals necessitated by the Contemplated
Transactions, including any such approvals under the Federal Deposit Insurance
Act, as amended (the "FDI ACT"), the BHCA, the Securities Act, the Exchange Act,
the DGCL, the laws of the State of Illinois (the "ILLINOIS STATUTES"), including
the Illinois Banking Act (the "ILLINOIS BANKING ACT"), and the listing rules of
the Nasdaq National Market (the "NASDAQ RULES"); (c) contravene, conflict with
or result in a violation or breach of any provision of, or give any Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate or modify any material
Contract to which Centrue or any Centrue Subsidiary is a party or by which any
of their respective assets is bound; or (d) result in the creation of any
material lien, charge or encumbrance upon or with respect to any of the assets
owned or used by Centrue or any Centrue Subsidiary. Except for the approvals
referred to in SECTION 8.1 and the requisite approval of its stockholders,
neither Centrue nor any Centrue Subsidiary is or will be required to give any
notice to or obtain any consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
SECTION 4.5 CENTRUE CAPITALIZATION.
(a) The authorized capital stock of Centrue currently consists
exclusively of: (a) 7,000,000 shares of Centrue Common Stock, of which, on the
date of this Agreement: (i) 2,232,189 shares are duly issued and outstanding,
fully paid and non-assessable; (ii) 1,966,361 shares are held in the treasury of
Centrue; (iii) 12,400 shares have been issued as restricted stock pursuant to
the Centrue Option Plan; and (iv) 204,800 shares have been reserved for issuance
in respect of Centrue Stock Options; and (b) 500,000 shares of preferred stock,
$0.01 par value per share, none of which are issued and outstanding.
(b) None of the shares of Centrue Common Stock were issued in
violation of any federal or state securities laws or any other Legal
Requirement. To the Knowledge of Centrue and except as disclosed in this
Agreement or on the Centrue Schedules, none of the shares of authorized capital
stock of Centrue are, nor on the Closing Date will they be, subject to
18
any claim of right inconsistent with this Agreement. Except as contemplated in
this Agreement or as set forth on Schedule 4.5, there are, as of the date of
this Agreement, no outstanding subscriptions, contracts, conversion privileges,
options, warrants, calls or other rights obligating Centrue or any Centrue
Subsidiary to issue, sell or otherwise dispose of, or to purchase, redeem or
otherwise acquire, any shares of capital stock of Centrue or any Centrue
Subsidiary, and Centrue is not a party to any Contract relating to the issuance,
sale or transfer of any equity securities or other securities of Centrue. Since
December 31, 2003, except as disclosed in or permitted by this Agreement or as
provided on Schedule 4.5, no shares of Centrue capital stock have been
purchased, redeemed or otherwise acquired, directly or indirectly, by Centrue or
any Centrue Subsidiary and no dividends or other distributions payable in any
equity securities of Centrue or any Centrue Subsidiary have been declared, set
aside, made or paid to the stockholders of Centrue.
SECTION 4.6 CENTRUE SUBSIDIARY CAPITALIZATION. The authorized capital stock
of Centrue Bank consists, and immediately prior to the Effective Time, will
consist exclusively of 3,000 shares of capital stock, $100.00 par value per
share (the "CENTRUE BANK SHARES"), all of which shares are, and immediately
prior to the Closing will be, duly authorized, validly issued and outstanding,
fully paid and nonassessable. Except as set forth on Schedule 4.6, Centrue is,
and will be on the Closing Date, the record and beneficial owner of 100% of the
Centrue Bank Shares and all of the issued and outstanding shares of capital
stock of each other Centrue Subsidiary, free and clear of any lien or
encumbrance whatsoever. Except as set forth on Schedule 4.6, the Centrue Bank
Shares are, and will be on the Closing Date, freely transferable and are, and
will be on the Closing Date, subject to no claim of right inconsistent with this
Agreement. There are no unexpired or pending preemptive rights with respect to
any shares of capital stock of any Centrue Subsidiary, except for such rights
held exclusively by Centrue. There are no outstanding securities of any Centrue
Subsidiary that are convertible into or exchangeable for any shares of such
Centrue Subsidiary's capital stock, except for such rights held exclusively by
Centrue, and no Centrue Subsidiary is a party to any Contract relating to the
issuance, sale or transfer of any equity securities or other securities of such
Centrue Subsidiary. Neither Centrue nor any Centrue Subsidiary owns or has any
Contract to acquire any equity securities or other securities of any Person or
any direct or indirect equity or ownership interest in any other business,
except for the capital stock of Centrue Bank and as set forth on Schedule 4.6.
SECTION 4.7 FINANCIAL STATEMENTS AND REPORTS. True, correct and complete
copies of the following financial statements and reports are included on
Schedule 4.7:
(a) audited Consolidated Balance Sheets for Centrue as of December 31,
2003, 2004 and 2005, and the related Consolidated Statements of Income and
Comprehensive Income, Consolidated Statements of Cash Flows and Consolidated
Statements of Stockholders' Equity of Centrue for the years ended December 31,
2003, 2004 and 2005;
(b) unaudited Consolidated Balance Sheet for Centrue as of March 31,
2006, and the related unaudited Consolidated Statement of Income and
Comprehensive Income and Consolidated Statement of Cash Flows for the three
months ended March 31, 2006; and
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(c) Call Reports for Centrue Bank as of the close of business on
December 31, 2003, 2004 and 2005, and on March 31, 2006.
The financial statements described in clause (a) have been prepared in
conformity with GAAP and comply in all material respects with all applicable
Legal Requirements. The reports described in clauses (b) and (c) above have been
prepared on a basis consistent with past accounting practices and as required by
applicable Legal Requirements and fairly present the consolidated financial
condition and results of operations at the dates and for the periods presented.
Taken together, the financial statements and reports described in clauses (a),
(b) and (c) above (collectively, the "CENTRUE FINANCIAL STATEMENTS") are
complete and correct in all respects and fairly and accurately present the
respective financial position, assets, liabilities and results of operations of
Centrue and the Centrue Subsidiaries at the respective dates of and for the
periods referred to in the Centrue Financial Statements, subject to normal
year-end non-material audit adjustments in the case of unaudited Centrue
Financial Statements. The Centrue Financial Statements do not include any
material assets or omit to state any material liabilities, absolute or
contingent, or other facts, which inclusion or omission would render the Centrue
Financial Statements misleading in any material respect as of the respective
dates and for the periods referred to in the respective Centrue Financial
Statements.
SECTION 4.8 BOOKS AND RECORDS. The books of account, minute books, stock
record books and other records of Centrue and each Centrue Subsidiary are
complete and correct in all material respects and have been maintained in
accordance with Centrue's business practices and all applicable Legal
Requirements, including the maintenance of any adequate system of internal
controls required by the Legal Requirements. The minute books of Centrue and
each Centrue Subsidiary contain accurate and complete records in all material
respects of all meetings held of, and corporate action taken by, its respective
stockholders, boards of directors and committees of the boards of directors. At
the Closing, all of those books and records will be in the possession of Centrue
and the Centrue Subsidiaries. Centrue has provided Union with full and complete
access to unredacted copies of all finally approved minutes of the meetings of
Centrue's board of directors held in 2005 and 2006.
SECTION 4.9 TITLE TO PROPERTIES. Centrue and each Centrue Subsidiary has
good and marketable title to all assets and properties, whether real or
personal, tangible or intangible, that it purports to own, subject to no valid
liens, mortgages, security interests, encumbrances or charges of any kind
except: (a) as noted in the most recent Centrue Financial Statement or on
Schedule 4.9; (b) statutory liens for Taxes not yet delinquent or being
contested in good faith by appropriate Proceedings and for which appropriate
reserves have been established and reflected on the Centrue Financial
Statements; (c) pledges or liens required to be granted in connection with the
acceptance of government deposits, granted in connection with repurchase or
reverse repurchase agreements, pursuant to borrowings from Federal Home Loan
Banks or otherwise incurred in the Ordinary Course of Business; and (d) minor
defects and irregularities in title and encumbrances that do not materially
impair the use thereof for the purposes for which they are held. Except as set
forth on Schedule 4.9, Centrue and each Centrue Subsidiary as lessee has the
right under valid and existing leases to occupy, use, possess and control any
and all of the respective property leased by it. Except where any failure would
not be expected to have a Material Adverse Effect on Centrue on a consolidated
basis, all buildings and structures owned by Centrue and each Centrue Subsidiary
lie wholly within the boundaries of the real property
20
owned or validly leased by it, and do not encroach upon the property of, or
otherwise conflict with the property rights of, any other Person
SECTION 4.10 CONDITION AND SUFFICIENCY OF ASSETS. The buildings, structures
and equipment of Centrue and each Centrue Subsidiary are structurally sound, are
in good operating condition and repair, and are adequate for the uses to which
they are being put, and none of such buildings, structures or equipment is in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in the aggregate in nature or in cost. Except
where any failure would not reasonably be expected to have a Material Adverse
Effect on Centrue on a consolidated basis, the real property, buildings,
structures and equipment owned or leased by Centrue and each Centrue Subsidiary
are in compliance with the Americans with Disabilities Act of 1990, as amended,
and the regulations promulgated thereunder, and all other building and
development codes and other restrictions, including subdivision regulations,
building and construction regulations, drainage codes, health, fire and safety
laws and regulations, utility tariffs and regulations, conservation laws and
zoning laws and ordinances. The assets and properties, whether real or personal,
tangible or intangible, that Centrue or any Centrue Subsidiary purport to own or
lease are sufficient for the continued conduct of the business of Centrue and
each Centrue Subsidiary after the Closing in substantially the same manner as
conducted prior to the Closing.
SECTION 4.11 LOANS; LOAN LOSS RESERVE. All loans and loan commitments
extended by Centrue Bank and any extensions, renewals or continuations of such
loans and loan commitments (the "CENTRUE LOANS") were made materially in
accordance with the lending policies of Centrue Bank in the Ordinary Course of
Business. The Centrue Loans are evidenced by appropriate and sufficient
documentation and constitute valid and binding obligations to Centrue Bank
enforceable in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and subject to general principles of equity. All
such Centrue Loans are, and at the Closing will be, free and clear of any
encumbrance or other charge, except for pledges or liens required to be granted
pursuant to borrowings from Federal Home Loan Banks, and Centrue Bank has
complied, and at the Closing will have complied with all Legal Requirements
relating to such Centrue Loans, except where any such failure to comply would
not reasonably be expected to have a Material Adverse Effect on Centrue on a
consolidated basis. The allowance for loan and lease losses of Centrue Bank is
and will be on the Closing Date adequate in all material respects to provide for
possible or specific losses, net of recoveries relating to loans previously
charged off, and contains and will contain an additional amount of unallocated
reserves for unanticipated future losses at an adequate level. To the Knowledge
of Centrue: (a) none of the Centrue Loans is subject to any material offset or
claim of offset; and (b) the aggregate loan balances in excess of Centrue's
consolidated allowance for loan and lease losses are, based on past loan loss
experience, collectible in accordance with their terms and all uncollectible
loans have been charged off.
SECTION 4.12 UNDISCLOSED LIABILITIES; ADVERSE CHANGES. Except as set forth
on Schedule 4.12, neither Centrue nor any Centrue Subsidiary has any material
liabilities or obligations of any nature (whether absolute, accrued, contingent
or otherwise), except for liabilities or obligations reflected or reserved
against in the Centrue Financial Statements and current liabilities incurred in
the Ordinary Course of Business since the respective dates thereof.
21
Since the date of the latest Centrue Financial Statement, there has not been any
change in the business, operations, properties, prospects, assets or condition
of Centrue or any Centrue Subsidiary, and, to Centrue's Knowledge, no event has
occurred or circumstance exists, that has had or would reasonably be expected to
have a Material Adverse Effect on Centrue on a consolidated basis.
SECTION 4.13 TAXES. Centrue and each Centrue Subsidiary has duly filed all
material Tax Returns required to be filed by it, and each such Tax Return is
complete and accurate in all material respects. Centrue and each Centrue
Subsidiary has paid, or made adequate provision for the payment of, all Taxes
(whether or not reflected in Tax Returns as filed or to be filed) due and
payable by Centrue or any Centrue Subsidiary, or claimed to be due and payable
by any Regulatory Authority, and is not delinquent in the payment of any Tax,
except such Taxes as are being contested in good faith and as to which adequate
reserves have been provided. There is no claim or assessment pending or, to the
Knowledge of Centrue, Threatened against Centrue or any Centrue Subsidiary for
any Taxes owed by any of them. Except as set forth on Schedule 4.13, no audit,
examination or investigation related to Taxes paid or payable by Centrue or any
Centrue Subsidiary is presently being conducted or, to the Knowledge of Centrue,
Threatened by any Regulatory Authority. Centrue has delivered to Union true,
correct and complete copies of all Tax Returns previously filed with respect to
the last three fiscal years by Centrue and each Centrue Subsidiary and any Tax
examination reports and statements of deficiencies assessed or agreed to for any
of Centrue or any Centrue Subsidiary for any such time period.
SECTION 4.14 COMPLIANCE WITH ERISA. Except as set forth on Schedule 4.14,
all employee benefit plans (as defined in Section 3(3) of ERISA) established or
maintained by Centrue or any Centrue Subsidiary or to which Centrue or any
Centrue Subsidiary contributes, are in compliance with all applicable
requirements of ERISA, and are in compliance with all applicable requirements
(including qualification and non-discrimination requirements in effect as of the
Closing) of the Code for obtaining the Tax benefits the Code thereupon permits
with respect to such employee benefit plans. No such employee benefit plan has
any amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA) for which Centrue or any Centrue Subsidiary would be liable to any Person
under Title IV of ERISA if any such employee benefit plan were terminated as of
the Closing. Such employee benefit plans are funded in accordance with Section
412 of the Code (if applicable). There would be no obligations of Centrue or any
Centrue Subsidiary under Title IV of ERISA relating to any such employee benefit
plan that is a multi-employer plan if any such plan were terminated or if
Centrue or such Centrue Subsidiary withdrew from any such plan as of the
Closing. All contributions and premium payments due prior to the date hereof
have been made, and all contributions and premium payments due prior to Closing
will be made, by Centrue or any Centrue Subsidiary, as applicable, on a timely
basis.
SECTION 4.15 COMPLIANCE WITH LEGAL REQUIREMENTS. Centrue and each Centrue
Subsidiary holds all licenses, certificates, permits, franchises and rights from
all appropriate Regulatory Authorities necessary for the conduct of its
respective business. Except as set forth on Schedule 4.15, each of Centrue and
each Centrue Subsidiary is, and at all times since January 1, 2003, has been, in
compliance with each Legal Requirement that is or was applicable to it or to the
conduct or operation of its respective businesses or the ownership or use of any
of its respective assets, except where the failure to comply would not
reasonably be expected to
22
have a Material Adverse Effect on Centrue on a consolidated basis. No event has
occurred or circumstance exists that (with or without notice or lapse of time):
(a) may constitute or result in a violation by Centrue or any Centrue Subsidiary
of, or a failure on the part of Centrue or any Centrue Subsidiary to comply
with, any Legal Requirement; or (b) may give rise to any obligation on the part
of Centrue or any Centrue Subsidiary to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature in connection with a failure
to comply with any Legal Requirement; except, in either case, where the failure
to comply or the violation would not reasonably be expected to have a Material
Adverse Effect on Centrue on a consolidated basis. Except as set forth on
Schedule 4.15, neither Centrue nor any Centrue Subsidiary has received, at any
time since January 1, 2003, any notice or other communication (whether oral or
written) from any Regulatory Authority or any other Person regarding: (x) any
actual, alleged, possible, or potential violation of, or failure to comply with,
any Legal Requirement; or (y) any actual, alleged, possible, or potential
obligation on the part of Centrue or any Centrue Subsidiary to undertake, or to
bear all or any portion of the cost of, any remedial action of any nature in
connection with a failure to comply with any Legal Requirement, except where any
such violation, failure or obligation would not reasonably be expected to have a
Material Adverse Effect on Centrue on a consolidated basis.
SECTION 4.16 LEGAL PROCEEDINGS; ORDERS.
(a) Schedule 4.16 is a true and correct list of all Proceedings and
Orders pending, entered into or, to the Knowledge of Centrue, Threatened against
or affecting Centrue or any Centrue Subsidiary or any of their respective assets
or businesses, or the Contemplated Transactions, since January 1, 2003, that has
not been fully satisfied or terminated and that would reasonably be expected to
have a Material Adverse Effect on Centrue on a consolidated basis, and there is
no fact to Centrue's Knowledge that would provide a basis for any such
Proceeding or Order. To the Knowledge of Centrue, no officer, director, agent or
employee of Centrue or any Centrue Subsidiary is subject to any Order that
prohibits such officer, director, agent or employee from engaging in or
continuing any conduct, activity or practice relating to the businesses of
Centrue or any Centrue Subsidiary as currently conducted.
(b) Neither Centrue nor any Centrue Subsidiary: (i) is subject to any
cease and desist or other Order or enforcement action issued by, or (ii) is a
party to any written agreement, consent agreement or memorandum of understanding
with, or (iii) is a party to any commitment letter or similar undertaking to, or
(iv) is subject to any order or directive by, or (v) is subject to any
supervisory letter from, or (vi) has been ordered to pay any civil money
penalty, which has not been paid, by, or (vii) has adopted any policies,
procedures or board resolutions at the request of any Regulatory Authority that
currently (w) restricts in any material respect the conduct of its business, or
(x) that in any material manner relates to its capital adequacy, or (y)
restricts its ability to pay dividends, or (z) limits in any material manner its
credit or risk management policies, its management or its business; nor has
Centrue or any Centrue Subsidiary been advised by any Regulatory Authority that
it is considering issuing, initiating, ordering or requesting any of the
foregoing.
SECTION 4.17 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth on
Schedule 4.17, since December 31, 2005, Centrue and each Centrue Subsidiary have
conducted
23
their respective businesses only in the Ordinary Course of Business. Without
limiting the foregoing, with respect to each, since December 31, 2005, there has
not been any:
(a) change in its authorized or issued capital stock; grant of any
stock option or right to purchase shares of its capital stock; issuance of any
security convertible into such capital stock or evidences of indebtedness
(except in connection with customer deposits); grant of any registration rights;
purchase, redemption, retirement or other acquisition by it of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of its capital stock;
(b) amendment to its certificate of incorporation or charter (or
similar organizational documents) or bylaws or adoption of any resolutions by
its board of directors or stockholders with respect to the same;
(c) payment or increase of any bonus, salary or other compensation to
any of its stockholders, directors, officers or employees, except, with respect
to employees, for normal salary and bonus increases made in the Ordinary Course
of Business or made in accordance with any then existing Centrue Employee
Benefit Plan (as defined below), or entry by it into any employment, consulting,
non-competition, change in control, severance or similar Contract with any
stockholder, director, officer or employee;
(d) adoption, amendment (except for any amendment necessary to comply
with any Legal Requirement) or termination of, or increase in the payments to or
benefits under, any Centrue Employee Benefit Plan;
(e) damage to or destruction or loss of any of its assets or property,
whether or not covered by insurance and where the resulting diminution in value
individually or in the aggregate was greater than $100,000;
(f) entry into, termination or extension of, or receipt of notice of
termination of any joint venture or similar agreement pursuant to any Contract
or any similar transaction;
(g) except for this Agreement, entry into any new, or modification,
amendment, renewal or extension (through action or inaction) of the terms of any
existing lease, Contract or license that has a term of more than one year or
that involves the payment by Centrue or any Centrue Subsidiary of more than
$100,000 in the aggregate;
(h) Centrue Loan or commitment to make any Centrue Loan other than in
the Ordinary Course of Business;
(i) Centrue Loan or commitment to make, renew, extend the term or
increase the amount of any Loan to any Person if such Centrue Loan or any other
Centrue Loans to such Person or an Affiliate of such Person is on the "watch
list" or similar internal report of Centrue or any Centrue Subsidiary, or has
been classified as "substandard," "doubtful," "loss," or "other loans specially
mentioned" or listed as a "potential problem loan"; provided, however, that
nothing in this SECTION 4.17(I) shall prohibit Centrue or any Centrue Subsidiary
from honoring any contractual obligation in existence on the date of this
Agreement;
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(j) sale (other than any sale in the Ordinary Course of Business),
lease or other disposition of any of its assets or properties or mortgage,
pledge or imposition of any lien or other encumbrance upon any of its material
assets or properties except for Tax and other liens that arise by operation of
law and with respect to which payment is not past due and except for pledges or
liens: (i) required to be granted in connection with the acceptance by Centrue
Bank of government deposits; (ii) granted in connection with repurchase or
reverse repurchase agreements; or (iii) otherwise incurred in the Ordinary
Course of Business;
(k) incurrence by it of any obligation or liability (fixed or
contingent) other than in the Ordinary Course of Business;
(l) cancellation or waiver by it of any claims or rights with a value
in excess of $100,000;
(m) aggregate investments by it of a capital nature exceeding
$100,000;
(n) except for the Contemplated Transactions, merger or consolidation
with or into any other Person, or acquisition of any stock, equity interest or
business of any other Person;
(o) transaction for the borrowing or loaning of monies, or any
increase in any outstanding indebtedness, other than in the Ordinary Course of
Business;
(p) material change in any policies and practices with respect to
liquidity management and cash flow planning, marketing, deposit origination,
lending, budgeting, profit and Tax planning, accounting or any other material
aspect of its business or operations, except for such changes as may be required
in the opinion of the management of Centrue to respond to then current market or
economic conditions or as may be required by any Regulatory Authorities;
(q) filing of any applications for additional branches, opening of any
new office or branch, closing of any current office or branch or relocation of
operations from existing locations;
(r) discharge or satisfaction of any material lien or encumbrance on
its assets or repayment of any material indebtedness for borrowed money, except
for obligations incurred and repaid in the Ordinary Course of Business;
(s) entry into any Contract or agreement to buy, sell, exchange or
otherwise deal in any assets or series of assets in a single transaction in
excess of $100,000 in aggregate value, except for sales of Centrue "other real
estate owned" and other repossessed properties or the acceptance of a deed in
lieu of foreclosure;
(t) purchase or other acquisition of any investments, direct or
indirect, in any derivative securities, financial futures or commodities or
entry into any interest rate swap, floors and option agreements or other similar
interest rate management agreements;
25
(u) hiring of any employee with an annual salary in excess of
$100,000, except for employees at will who are hired to replace employees who
have resigned or whose employment has otherwise been terminated; or
(v) agreement, whether oral or written, by it to do any of the
foregoing.
SECTION 4.18 PROPERTIES, CONTRACTS AND EMPLOYEE BENEFIT PLANS. Except for
Contracts evidencing Loans made by Centrue Bank in the Ordinary Course of
Business, Schedule 4.18 lists or describes the following with respect to Centrue
and each Centrue Subsidiary:
(a) all real property owned by Centrue and each Centrue Subsidiary and
the principal buildings and structures located thereon, together with the
address of such real estate, and each lease of real property to which Centrue
and each Centrue Subsidiary is a party, identifying the parties thereto, the
annual rental payable, the expiration date thereof and a brief description of
the property covered, and in each case of either owned or leased real property,
the proper identification, if applicable, of each such property as a branch or
main office or other office of Centrue or such Centrue Subsidiary;
(b) all loan and credit agreements, conditional sales contracts or
other title retention agreements or security agreements relating to money
borrowed by Centrue or any Centrue Subsidiary, exclusive of deposit agreements
with customers of Centrue Bank entered into in the Ordinary Course of Business,
agreements for the purchase of federal funds and repurchase agreements;
(c) each Contract that involves the performance of services or
delivery of goods or materials by Centrue or any Centrue Subsidiary of an amount
or value in excess of $100,000;
(d) each Contract that was not entered into in the Ordinary Course of
Business and that involves expenditures or receipts of Centrue or any Centrue
Subsidiary in excess of $100,000;
(e) each Contract not referred to elsewhere in this Section that:
(i) relates to the future purchase of goods or services that
materially exceeds the requirements of its respective business at current levels
or for normal operating purposes; or
(ii) materially affects the business or financial condition of
Centrue or any Centrue Subsidiary;
(f) each lease, rental, license, installment and conditional sale
agreement and other Contract affecting the ownership of, leasing of, title to or
use of, any personal property (except personal property leases and installment
and conditional sales agreements having a value per item or aggregate payments
of less than $100,000 or with terms of less than one year);
26
(g) each licensing agreement or other Contract with respect to
patents, trademarks, copyrights, or other intellectual property (collectively,
"INTELLECTUAL PROPERTY ASSETS"), including agreements with current or former
employees, consultants or contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property Assets of Centrue or any
Centrue Subsidiary;
(h) each collective bargaining agreement and other Contract to or with
any labor union or other Person representing one or more employees;
(i) each joint venture, partnership and other Contract (however named)
involving a sharing of profits, losses, costs or liabilities by Centrue or any
Centrue Subsidiary with any other Person;
(j) each Contract containing covenants that in any way purport to
restrict the business activity of Centrue or any Centrue Subsidiary or any
Affiliate of any of the foregoing, or limit the ability of Centrue or any
Centrue Subsidiary or any Affiliate of the foregoing to engage in any line of
business or to compete with any Person;
(k) each Contract providing for payments to or by any Person based on
sales, purchases or profits, other than direct payments for goods;
(l) the name and annual salary of each director, officer or employee
of Centrue and each Centrue Subsidiary, and the profit sharing, bonus or other
form of compensation (other than salary) paid or payable by Centrue, each
Centrue Subsidiary or a combination of any of them to or for the benefit of each
such person in question for the year ended December 31, 2005, and for the
current year, and any employment agreement, consulting agreement,
non-competition, severance or change in control agreement or similar arrangement
or plan with respect to each such person;
(m) each profit sharing, group insurance, hospitalization, stock
option, pension, retirement, bonus, severance, change of control, deferred
compensation, stock bonus, stock purchase, employee stock ownership or other
employee welfare or benefit agreements, plans or arrangements established,
maintained, sponsored or undertaken by Centrue or any Centrue Subsidiary for the
benefit of the officers, directors or employees of Centrue or any Centrue
Subsidiary, including each trust or other agreement with any custodian or any
trustee for funds held under any such agreement, plan or arrangement, and all
other Contracts or arrangements under which pensions, deferred compensation or
other retirement benefits are being paid or may become payable by Centrue or any
Centrue Subsidiary for the benefit of the employees of Centrue or any Centrue
Subsidiary (collectively, the "CENTRUE EMPLOYEE BENEFIT PLANS"), and, in respect
to any of them, the latest reports or forms, if any, filed with the Department
of Labor and Pension Benefit Guaranty Corporation under ERISA, any current
financial or actuarial reports and any currently effective Internal Revenue
Service private rulings or determination letters obtained by or for the benefit
of Centrue or any Centrue Subsidiary;
(n) the name of each Person who is or would be entitled pursuant to
any Contract or Centrue Employee Benefit Plan to receive any payment from
Centrue or any Centrue Subsidiary as a result of the consummation of the
Contemplated Transactions (including any
27
payment that is or would be due as a result of any actual or constructive
termination of a Person's employment or position following such consummation)
and the maximum amount of such payment;
(o) each holder of a Centrue Stock Option and the number of underlying
shares to which each such holder may be entitled to acquire;
(p) each Contract entered into other than in the Ordinary Course of
Business that contains or provides for an express undertaking by Centrue or any
Centrue Subsidiary to be responsible for consequential damages;
(q) each Contract for capital expenditures in excess of $100,000;
(r) each written warranty, guaranty or other similar undertaking with
respect to contractual performance extended by Centrue or any Centrue Subsidiary
other than in the Ordinary Course of Business; and
(s) each amendment, supplement and modification (whether oral or
written) in respect of any of the foregoing.
Copies of each document, plan or Contract listed and described on Schedule
4.18 are appended to such Schedule.
SECTION 4.19 NO DEFAULTS. Except as set forth on Schedule 4.19, to the
Knowledge of Centrue, each Contract identified or required to be identified on
Schedule 4.18 is in full force and effect and is valid and enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors rights
generally and subject to general principles of equity. Centrue and each Centrue
Subsidiary is, and at all times since January 1, 2003, has been, in full
compliance with all applicable terms and requirements of each Contract under
which either Centrue or any Centrue Subsidiary has or had any obligation or
liability or by which Centrue or any Centrue Subsidiary or any of their
respective assets owned or used by them is or was bound, except where the
failure to be in full compliance would not reasonably be expected to have a
Material Adverse Effect on Centrue on a consolidated basis. To the Knowledge of
Centrue, each other Person that has or had any obligation or liability under any
such Contract under which Centrue or any Centrue Subsidiary has or had any
rights is, and at all times since January 1, 2003, has been, in full compliance
with all applicable terms and requirements of such Contract, except where the
failure to be in full compliance would not reasonably be expected to have a
Material Adverse Effect on Centrue on a consolidated basis. No event has
occurred or circumstance exists that (with or without notice or lapse of time)
may contravene, conflict with or result in a material violation or breach of, or
give Centrue, any Centrue Subsidiary or other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any Contract. Except in the
Ordinary Course of Business with respect to any Centrue Loan, neither Centrue
nor any Centrue Subsidiary has given to or received from any other Person, at
any time since January 1, 2003, any notice or other communication (whether oral
or written) regarding any actual, alleged, possible or potential violation or
breach of, or default under, any Contract, that has not been terminated or
satisfied prior to the date of this Agreement. Other than
28
in the Ordinary Course of Business in connection with workouts and restructured
loans, there are no renegotiations of, attempts to renegotiate or outstanding
rights to renegotiate, any material amounts paid or payable to Centrue or any
Centrue Subsidiary under current or completed Contracts with any Person and no
such Person has made written demand for such renegotiation.
SECTION 4.20 INSURANCE. Schedule 4.20 lists the policies and material terms
of insurance (including bankers' blanket bond and insurance providing benefits
for employees) owned or held by Centrue or any Centrue Subsidiary on the date
hereof. Each policy is in full force and effect (except for any expiring policy
which is replaced by coverage at least as extensive). All premiums due on such
policies have been paid in full.
SECTION 4.21 COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth on
Schedule 4.21: (a) there are no Proceedings or Orders against Centrue or any
Centrue Subsidiary, or, to the Knowledge of Centrue any predecessor thereof,
with respect to alleged violation of, or liability under, Environmental Laws;
(b) to the Knowledge of Centrue, there is no Threatened Proceeding or Order
against Centrue or any Centrue Subsidiary, or any predecessor thereof, with
respect to the alleged violation of, or liability under, Environmental Laws; (c)
to the Knowledge of Centrue, there is no factual basis for the assertion or
commencement of a Proceeding or Order against Centrue and no factual basis for
the assertion or commencement of a Proceeding or Order against Centrue or any
Centrue Subsidiary, or any predecessor thereof, with respect to the violation
of, or liability under, Environmental Laws; and (d) to the Knowledge of Centrue,
there are no pending or Threatened Proceedings or Orders against or involving
the assets of Centrue or any Centrue Subsidiary. For purposes of this SECTION
4.21 and SECTION 5.21: (x) "ENVIRONMENTAL LAWS" means any federal, state or
local law, statute, ordinance, rule, regulation, code, order, permit or other
legally binding requirement applicable to the business or assets of Centrue or
any Centrue Subsidiary, or Union or any Union Subsidiary, as applicable under
SECTION 5.21, that imposes liability or standards of conduct with respect to the
Environment and/or Hazardous Materials; (y) "ENVIRONMENT" means surface or
subsurface soil or strata, surface waters and sediments, navigable waters,
groundwater, drinking water supply and ambient air; and (z) "HAZARDOUS
MATERIALS" means any hazardous, toxic or dangerous substance, waste,
contaminant, pollutant, gas or other material that is classified as such under
Environmental Laws or is otherwise regulated under Environmental Laws.
SECTION 4.22 REGULATORY FILINGS.
(a) Except as set forth on Schedule 4.22, Centrue and each Centrue
Subsidiary have filed all forms, reports and documents required to be filed
with: (i) the SEC, and as of the date of this Agreement have delivered or made
available to Union, in the form filed with the SEC: (A) its Annual Reports on
Form 10-K for the fiscal years ended December 31, 2003, 2004 and 2005; (B) all
proxy statements relating to Centrue's meetings of stockholders (whether annual
or special) held since December 31, 2003; (C) all reports on Form 8-K filed by
Centrue with the SEC since December 31, 2003; (D) all other reports or
registration statements filed by Centrue with the SEC since December 31, 2003;
and (E) all amendments and supplements to all such reports and registration
statements filed by Centrue with the SEC since December 31, 2003; and (ii) the
FDIC, the Federal Reserve Board, the Department and any other applicable federal
or state securities or banking authorities (all such reports and statements are
collectively referred to with the Centrue SEC Reports as the "CENTRUE REPORTS").
The Centrue
29
Reports (x) were prepared in accordance with the requirements of applicable
Legal Requirements, and (y) did not at the time they were filed, after giving
effect to any amendment thereto filed prior to the date hereof, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, except that
information as of a later date (but before the date of this Agreement) is deemed
to modify information as of an earlier date.
(b) Centrue and, to Centrue's Knowledge, each of its executive
officers and directors have complied in all material respects with (i) the
applicable provisions of the Exchange Act, including the Xxxxxxxx-Xxxxx Act of
2002 and the regulations promulgated thereunder, as amended, and (ii) the
applicable listing and corporate governance rules and regulations of The Nasdaq
Stock Market.
SECTION 4.23 FIDUCIARY ACCOUNTS. Centrue Bank has properly administered in
all material respects all accounts for which it acts as fiduciary, including
accounts for which it serves as trustee, agent, custodian or investment advisor,
in accordance with the material terms of the governing documents and applicable
state and federal law and regulations and common law. None of Centrue Bank or
any of its directors, officers or employees has committed any breach of trust
with respect to any such fiduciary account, and the accountings for each such
fiduciary account are true and correct in all material respects and accurately
reflect the assets of such fiduciary account.
SECTION 4.24 INDEMNIFICATION CLAIMS. To Centrue's Knowledge, no action or
failure to take action by any director, officer, employee or agent of Centrue or
any Centrue Subsidiary has occurred that may give rise to a claim or a potential
claim by any such Person for indemnification against Centrue or any Centrue
Subsidiary under any agreement with, or the corporate indemnification provisions
of, Centrue or any Centrue Subsidiary, or under any Legal Requirements.
SECTION 4.25 INSIDER INTERESTS. Except as set forth on Schedule 4.25, no
officer or director of Centrue or any Centrue Subsidiary, any member of the
Family of any such Person, and no entity that any such Person "controls" within
the meaning of Regulation O of the Federal Reserve, has any loan, deposit
account or any other agreement with Centrue or any Centrue Subsidiary, any
interest in any material property, real, personal or mixed, tangible or
intangible, used in or pertaining to the business of Centrue or any Centrue
Subsidiary.
SECTION 4.26 BROKERAGE COMMISSIONS. Except as set forth on Schedule 4.26,
none of Centrue, any Centrue Subsidiary or any of their respective
Representatives has incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement.
SECTION 4.27 APPROVAL DELAYS. To the Knowledge of Centrue, there is no
reason why the granting of any of the regulatory approvals referred to in
SECTION 8.1 would be denied or unduly delayed. Centrue Bank's most recent CRA
rating is "satisfactory" or better.
30
SECTION 4.28 DISCLOSURE. Neither any representation nor warranty of Centrue
in, nor any schedule to, this Agreement contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements herein or therein, in light of the circumstances in which they were
made, not misleading. No notice given pursuant to SECTION 6.5 will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UNION
Union hereby represents and warrants to Centrue as follows:
SECTION 5.1 UNION ORGANIZATION. Union: (a) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is also in good standing in each other jurisdiction in which the nature of
business conducted or the properties or assets owned or leased by it makes such
qualification necessary; (b) is registered with the Federal Reserve as a bank
holding company under the BHCA; and (c) has full power and authority, corporate
and otherwise, to operate as a bank holding company and to own, operate and
lease its properties as presently owned, operated and leased, and to carry on
its business as it is now being conducted. The copies of the certificate of
incorporation and bylaws of Union and all amendments thereto set forth in the
Union SEC Reports are complete and correct. Union has no Subsidiaries other than
UnionBank, except as set forth in the Union SEC Reports.
SECTION 5.2 BANK ORGANIZATION. UnionBank is an Illinois commercial bank
duly organized, validly existing and in good standing under the laws of the
State of Illinois. Each other Union Subsidiary is duly organized, validly
existing and in good standing in its state or jurisdiction of organization. Each
Union Subsidiary has full power and authority, corporate and otherwise, to own,
operate and lease its properties as presently owned, operated and leased, and to
carry on its business as it is now being conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of the
business conducted or the properties or assets owned or leased by it makes such
qualification necessary. The copies of the charter (or similar organizational
document) and bylaws of each Union Subsidiary and all amendments thereto set
forth on Schedule 5.2 are complete and correct.
SECTION 5.3 AUTHORIZATION; ENFORCEABILITY.
(a) Union has the requisite corporate power and authority to enter
into and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement by Union, and the consummation by it of its
obligations under this Agreement, have been authorized by all necessary
corporate action, subject to stockholder approval, and this Agreement
constitutes a legal, valid and binding obligation of Union enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors' rights
generally and subject to general principles of equity.
(b) Except for ordinary corporate requirements, no "business
combination," "moratorium," "control share" or other state anti-takeover statute
or regulation or any provisions
31
contained in the certificate of incorporation or bylaws of Union or any Union
Subsidiary: (i) prohibits or restricts Union's ability to perform its
obligations under this Agreement, or its ability to consummate the Contemplated
Transactions; (ii) would have the effect of invalidating or voiding this
Agreement, or any provision hereof; or (iii) would subject Centrue to any
material impediment or condition in connection with the exercise of any of its
rights under this Agreement. The board of directors of Union has unanimously
approved the execution of, and performance by Union of its obligations under,
this Agreement.
(c) Union has taken all action that may be necessary (including
amending the Union Rights Agreement, a complete and correct copy of which
amendment has been delivered to Centrue) so that neither the execution and
delivery of this Agreement or any agreements delivered in connection with this
Agreement, nor any amendments thereto approved by the board of directors of
Union prior to the termination of this Agreement, nor the consummation of the
transactions contemplated hereby or thereby, including the Merger, shall cause:
(i) Centrue to become an Acquiring Person (as defined in the Union Rights
Agreement); (ii) the occurrence of a Distribution Date (as defined in the Union
Rights Agreement); (iii) the occurrence of a Flip-In Event (as defined in the
Union Rights Agreement); or (iv) the occurrence of a Stock Acquisition Date (as
defined in the Union Rights Agreement).
SECTION 5.4 NO CONFLICT. Except as set forth on Schedule 5.4, neither the
execution nor delivery of this Agreement nor the consummation or performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time): (a) contravene, conflict with or result in a
violation of any provision of the certificate of incorporation or charter (or
similar organizational documents) or bylaws, each as in effect on the date
hereof, or any currently effective resolution adopted by the board of directors
or stockholders of, Union or any Union Subsidiary; (b) contravene, conflict with
or result in a violation of, or give any Regulatory Authority or other Person
the valid and enforceable right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Union or any Union Subsidiary, or any of their
respective assets that are owned or used by them, may be subject, except for any
contravention, conflict or violation that is permissible by virtue of obtaining
the regulatory approvals necessitated by the Contemplated Transactions,
including any such approvals under the FDI Act, the BHCA, the Securities Act,
the Exchange Act, the DGCL, the Illinois Statutes, including the Illinois
Banking Act, and the Nasdaq Rules; (c) contravene, conflict with or result in a
violation or breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify any material Contract to which
Union or any Union Subsidiary is a party or by which any of their respective
assets is bound; or (d) result in the creation of any material lien, charge or
encumbrance upon or with respect to any of the assets owned or used by Union or
any Union Subsidiary. Except for the approvals referred to in SECTION 8.1 and
the requisite approval of its stockholders, neither Union nor any Union
Subsidiary is or will be required to give any notice to or obtain any consent
from any Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the Contemplated Transactions.
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SECTION 5.5 UNION CAPITALIZATION.
(a) The authorized capital stock of Union currently consists
exclusively of: (a) 10,000,000 shares of Union Common Stock, of which, on the
date of this Agreement: (i) 4,697,893 shares are duly issued and outstanding,
fully paid and non-assessable; (ii) 955,142 shares are held in the treasury of
Union; and (iii) 288,175 shares have been reserved for issuance in respect of
outstanding stock options that have been or may be granted under the Union Stock
Option Plans; and (b) 200,000 shares of preferred stock, no par value, of which
(i) 2,765 shares have been designated as Series A Stock, of which 2,762.24
shares are duly issued and outstanding, fully paid and non-assessable, and which
are convertible in the aggregate into 172,140 shares of Union Common Stock; (ii)
1,092 shares have been designated as Series B Stock, of which 831 shares are
duly issued and outstanding, fully paid and non-assessable; and (iii) 4,500
shares have been designated as Series C Junior Participating Preferred Stock,
none of which are issued and outstanding.
(b) None of the shares of Union Common Stock were issued in violation
of any federal or state securities laws or any other Legal Requirement. To the
Knowledge of Union and except as disclosed in this Agreement or on the Union
Schedules, none of the shares of authorized capital stock of Union are, nor on
the Closing Date will they be, subject to any claim of right inconsistent with
this Agreement. Except as contemplated in this Agreement or as set forth on
Schedule 5.5, there are, as of the date of this Agreement, no outstanding
subscriptions, contracts, conversion privileges, options, warrants, calls or
other rights obligating Union or any Union Subsidiary to issue, sell or
otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares of
capital stock of Union or any Union Subsidiary, and Union is not a party to any
Contract relating to the issuance, sale or transfer of any equity securities or
other securities of Union. Since December 31, 2003, except as disclosed in or
permitted by this Agreement or as provided on Schedule 5.5, no shares of Union
capital stock have been purchased, redeemed or otherwise acquired, directly or
indirectly, by Union or any Union Subsidiary and no dividends or other
distributions payable in any equity securities of Union or any Union Subsidiary
have been declared, set aside, made or paid to the stockholders of Union.
SECTION 5.6 UNIONBANK CAPITALIZATION. The authorized capital stock of
UnionBank consists, and at the Effective Time will consist, exclusively of
12,700 shares of common stock, $100.00 par value per share (the "UNIONBANK
SHARES"), all of which shares are, and immediately prior to the Closing will be,
duly authorized, validly issued and outstanding, fully paid and nonassessable.
Except as set forth on Schedule 5.6, Union is, and will be on the Closing Date,
the record and beneficial owner of 100% of the UnionBank Shares and all of the
issued and outstanding shares of capital stock of each other Union Subsidiary,
free and clear of any lien or encumbrance whatsoever. Except as set forth on
Schedule 5.6, the UnionBank Shares are, and will be on the Closing Date, freely
transferable and are, and will be on the Closing Date, subject to no claim of
right inconsistent with this Agreement. There are no unexpired or pending
preemptive rights with respect to any shares of capital stock of any Union
Subsidiary, except for such rights held exclusively by Union. There are no
outstanding securities of any Union Subsidiary that are convertible into, or
exchangeable for, any shares of such Union Subsidiary's capital stock, except
for such rights held exclusively by Union, and no Union Subsidiary is a party to
any Contract relating to the issuance, sale or transfer of any equity securities
or other securities of such Union Subsidiary. Neither Union nor any Union
Subsidiary owns or has any
33
Contract to acquire any equity securities or other securities of any Person or
any direct or indirect equity or ownership interest in any other business,
except for the capital stock of UnionBank and as set forth on Schedule 5.6.
SECTION 5.7 FINANCIAL STATEMENTS AND REPORTS. True, correct and complete
copies of the following financial statements and reports are included on
Schedule 5.7:
(a) audited Consolidated Balance Sheets for Union as of December 31,
2003, 2004 and 2005, and the related Consolidated Statements of Income and
Comprehensive Income, Statements of Cash Flows and Consolidated Statements of
Stockholders' Equity of Union for the years ended December 31, 2003, 2004 and
2005;
(b) unaudited Consolidated Balance Sheet for Union as of March 31,
2006, and the related unaudited Consolidated Statement of Income and
Comprehensive Income and Unaudited Consolidated Statement of Cash Flows for the
three months ended March 31, 2006; and
(c) Call Reports for UnionBank as of the close of business on December
31, 2003, 2004 and 2005, and on March 31, 2006.
The financial statements described in clause (a) have been prepared in
conformity with GAAP and comply in all material respects with all applicable
Legal Requirements. The reports described in clauses (b) and (c) above have been
prepared on a basis consistent with past accounting practices and as required by
applicable Legal Requirements and fairly present the consolidated financial
condition and results of operations at the dates and for the periods presented.
Taken together, the financial statements and reports described in clauses (a),
(b) and (c) above (collectively, the "UNION FINANCIAL STATEMENTS") are complete
and correct in all respects and fairly and accurately present the respective
financial position, assets, liabilities and results of operations of Union and
the Union Subsidiaries at the respective dates of and for the periods referred
to in the Union Financial Statements, subject to normal year-end non-material
audit adjustments in the case of unaudited Union Financial Statements. The Union
Financial Statements do not include any material assets or omit to state any
material liabilities, absolute or contingent, or other facts, which inclusion or
omission would render the Union Financial Statements misleading in any material
respect as of the respective dates and for the periods referred to in the
respective Union Financial Statements.
SECTION 5.8 BOOKS AND RECORDS. The books of account, minute books, stock
record books and other records of Union and each Union Subsidiary are complete
and correct in all material respects and have been maintained in accordance with
Union's business practices and all applicable Legal Requirements, including the
maintenance of any adequate system of internal controls required by the Legal
Requirements. The minute books of Union and each Union Subsidiary contain
accurate and complete records in all material respects of all meetings held of,
and corporate action taken by, its respective stockholders, boards of directors
and committees of the boards of directors. At the Closing, all of those books
and records will be in the possession of Union and the Union Subsidiaries. Union
has provided Centrue with full and complete access to unredacted copies of all
finally approved minutes of the meetings of Union's board of directors held in
2005 and 2006.
34
SECTION 5.9 TITLE TO PROPERTIES. Union and each Union Subsidiary has good
and marketable title to all assets and properties, whether real or personal,
tangible or intangible, that it purports to own, subject to no valid liens,
mortgages, security interests, encumbrances or charges of any kind except: (a)
as noted in the most recent Union Financial Statement or on Schedule 5.9; (b)
statutory liens for Taxes not yet delinquent or being contested in good faith by
appropriate Proceedings and for which appropriate reserves have been established
and reflected on the Union Financial Statements; (c) pledges or liens required
to be granted in connection with the acceptance of government deposits, granted
in connection with repurchase or reverse repurchase agreements, pursuant to
borrowings from Federal Home Loan Banks or Federal Reserve Banks or otherwise
incurred in the Ordinary Course of Business; and (d) minor defects and
irregularities in title and encumbrances that do not materially impair the use
thereof for the purposes for which they are held. Except as set forth on
Schedule 5.9, Union and each Union Subsidiary as lessee has the right under
valid and existing leases to occupy, use, possess and control any and all of the
respective property leased by it. Except where any failure would not reasonably
be expected to have a Material Adverse Effect on Union on a consolidated basis,
all buildings and structures owned by Union and each Union Subsidiary lie wholly
within the boundaries of the real property owned or validly leased by it, and do
not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.
SECTION 5.10 CONDITION AND SUFFICIENCY OF ASSETS. The buildings, structures
and equipment of Union and each Union Subsidiary are structurally sound, are in
good operating condition and repair, and are adequate for the uses to which they
are being put, and none of such buildings, structures or equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in the aggregate in nature or in cost. Except where any failure
would not reasonably be expected to have a Material Adverse Effect on Union on a
consolidated basis, the real property, buildings, structures and equipment owned
or leased by Union and each Union Subsidiary are in compliance with the
Americans with Disabilities Act of 1990, as amended, and the regulations
promulgated thereunder, and all other building and development codes and other
restrictions, including subdivision regulations, building and construction
regulations, drainage codes, health, fire and safety laws and regulations,
utility tariffs and regulations, conservation laws and zoning laws and
ordinances. The assets and properties, whether real or personal, tangible or
intangible, that Union or any Union Subsidiary purport to own or lease are
sufficient for the continued conduct of the business of Union and each Union
Subsidiary after the Closing in substantially the same manner as conducted prior
to the Closing.
SECTION 5.11 LOAN LOSS RESERVE. All loans and loan commitments extended by
UnionBank and any extensions, renewals or continuations of such loans and loan
commitments (the "UNION LOANS") were made materially in accordance with the
lending policies of UnionBank in the Ordinary Course of Business. The Union
Loans are evidenced by appropriate and sufficient documentation and constitute
valid and binding obligations to UnionBank enforceable in accordance with their
terms, except as enforceability may be limited by any bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally and subject
to general principles of equity. All such Union Loans are, and at the Closing
will be, free and clear of any encumbrance or other charge, except for pledges
or liens required to be granted pursuant to borrowings from Federal Home Loan
Banks or Federal Reserve Banks, and UnionBank has complied, and at the Closing
will have complied with, all Legal Requirements relating to
35
such Union Loans, except where any such failure to comply would not reasonably
be expected to have a Material Adverse Effect on Union on a consolidated basis.
The allowance for loan and lease losses of UnionBank is, and will be on the
Closing Date, adequate in all material respects to provide for probable or
specific losses, net of recoveries relating to loans previously charged off, and
continuous and contains and will contain an additional amount of unallocated
reserves for unanticipated future losses at an adequate level. To the Knowledge
of Union: (a) none of the Union Loans is subject to any material offset or claim
of offset; and (b) the aggregate loan balances in excess of Union's consolidated
allowance for loan and lease losses are based on past loan loss experience,
collectible in accordance with their terms (except as limited above) and all
uncollectible loans have been charged off.
SECTION 5.12 UNDISCLOSED LIABILITIES; ADVERSE CHANGES. Except as set forth
on Schedule 5.12, neither Union nor any Union Subsidiary has any material
liabilities or obligations of any nature (whether absolute, accrued, contingent
or otherwise), except for liabilities or obligations reflected or reserved
against in the Union Financial Statements, and current liabilities incurred in
the Ordinary Course of Business since the respective dates thereof. Since the
date of the latest Union Financial Statement, there has not been any change in
the business, operations, properties, prospects, assets or condition of Union or
any Union Subsidiary, and, to Union's Knowledge, no event has occurred or
circumstance exists, that has had, or would reasonably be expected to have, a
Material Adverse Effect on Union on a consolidated basis.
SECTION 5.13 TAXES. Union and each Union Subsidiary has duly filed all
material Tax Returns required to be filed by it, and each such Tax Return is
complete and accurate in all material respects. Union and each Union Subsidiary
has paid, or made adequate provision for the payment of, all Taxes (whether or
not reflected in Tax Returns as filed or to be filed) due and payable by Union
or any Union Subsidiary, or claimed to be due and payable by any Regulatory
Authority, and is not delinquent in the payment of any Tax, except such Taxes as
are being contested in good faith and as to which adequate reserves have been
provided. There is no claim or assessment pending or, to the Knowledge of Union,
Threatened against Union or any Union Subsidiary for any Taxes owed by any of
them. No audit, examination or investigation related to Taxes paid or payable by
Union or any Union Subsidiary is presently being conducted or, to the Knowledge
of Union, Threatened by any Regulatory Authority. Union has delivered to Union
true, correct and complete copies of all Tax Returns previously filed with
respect to the last three fiscal years by Union and each Union Subsidiary and
any Tax examination reports and statements of deficiencies assessed or agreed to
for any of Union or any Union Subsidiary for any such time period.
SECTION 5.14 COMPLIANCE WITH ERISA. Except as set forth on Schedule 5.14,
all employee benefit plans (as defined in Section 3(3) of ERISA) established or
maintained by Union or any Union Subsidiary or to which Union or any Union
Subsidiary contributes, are in compliance with all applicable requirements of
ERISA, and are in compliance with all applicable requirements (including
qualification and non-discrimination requirements in effect as of the Closing)
of the Code for obtaining the Tax benefits the Code thereupon permits with
respect to such employee benefit plans. No such employee benefit plan has any
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA) for which Union or any Union Subsidiary would be liable to any Person
under Title IV of ERISA if any such employee benefit plan were terminated as of
the Closing. Such employee benefit plans are funded in accordance
36
with Section 412 of the Code (if applicable). There would be no obligations of
Union or any Union Subsidiary under Title IV of ERISA relating to any such
employee benefit plan that is a multi-employer plan if any such plan were
terminated or if Union or such Union Subsidiary withdrew from any such plan as
of the Closing. All contributions and premium payments due prior to the date
hereof have been made, and all contributions and premium payments due prior to
Closing will be made by Union or any Union Subsidiary, as applicable, on a
timely basis.
SECTION 5.15 COMPLIANCE WITH LEGAL REQUIREMENTS. Union and each Union
Subsidiary holds all licenses, certificates, permits, franchises and rights from
all appropriate Regulatory Authorities necessary for the conduct of its
respective business. Except as set forth on Schedule 5.15, Union and each Union
Subsidiary is, and at all times since January 1, 2003, has been, in compliance
with each Legal Requirement that is or was applicable to it or to the conduct or
operation of its respective businesses or the ownership or use of any of its
respective assets, except where the failure to comply would not reasonably be
expected to have a Material Adverse Effect on Union on a consolidated basis. No
event has occurred or circumstance exists that (with or without notice or lapse
of time): (a) may constitute or result in a violation by Union or any Union
Subsidiary of, or a failure on the part of Union or any Union Subsidiary to
comply with, any Legal Requirement; or (b) may give rise to any obligation on
the part of Union or any Union Subsidiary to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature in connection with a
failure to comply with any Legal Requirement; except, in either case, where the
failure to comply or the violation would not reasonably be expected to have a
Material Adverse Effect on Union on a consolidated basis. Except as set forth on
Schedule 5.15, neither Union nor any Union Subsidiary has received, at any time
since January 1, 2003, any notice or other communication (whether oral or
written) from any Regulatory Authority or any other Person, nor does Union have
any Knowledge, regarding: (x) any actual, alleged, possible or potential
violation of, or failure to comply with, any Legal Requirement; or (y) any
actual, alleged, possible, or potential obligation on the part of Union or any
Union Subsidiary to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature in connection with a failure to comply with any
Legal Requirement, except where any such violation, failure or obligation would
not reasonably be expected to have a Material Adverse Effect on Union on a
consolidated basis
SECTION 5.16 LEGAL PROCEEDINGS; ORDERS.
(a) Schedule 5.16 is a true and correct list of all Proceedings and
Orders pending, entered into or, to the Knowledge of Union, Threatened against,
affecting or involving Union or any Union Subsidiary or any of their respective
assets or businesses, or the Contemplated Transactions, since January 1, 2003,
that has not been fully satisfied or terminated and that would reasonably be
expected to have a Material Adverse Effect on Union on a consolidated basis, and
there is no fact to Union's Knowledge that would provide a basis for any such
Proceeding or Order. To the Knowledge of Union, no officer, director, agent or
employee of Union or any Union Subsidiary is subject to any Order that prohibits
such officer, director, agent or employee from engaging in or continuing any
conduct, activity or practice relating to the businesses of Union or any Union
Subsidiary as currently conducted.
(b) Neither Union nor any Union Subsidiary: (i) is subject to any
cease and desist or other Order or enforcement action issued by, or (ii) is a
party to any written agreement,
37
consent agreement or memorandum of understanding with, or (iii) is a party to
any commitment letter or similar undertaking to, or (iv) is subject to any order
or directive by, or (v) is subject to any supervisory letter from, or (vi) has
been ordered to pay any civil money penalty, which has not been paid, by, or
(vii) has adopted any policies, procedures or board resolutions at the request
of any Regulatory Authority that currently (w) restricts in any material respect
the conduct of its business, or (x) that in any material manner relates to its
capital adequacy, or (y) restricts its ability to pay dividends, or (z) limits
in any material manner its credit or risk management policies, its management or
its business; nor has Union or any Union Subsidiary been advised by any
Regulatory Authority that it is considering issuing, initiating, ordering or
requesting any of the foregoing.
SECTION 5.17 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth on
Schedule 5.17, since December 31, 2005, Union and each Union Subsidiary have
conducted their respective businesses only in the Ordinary Course of Business.
Without limiting the foregoing, with respect to each, since December 31, 2005,
there has not been any:
(a) change in its authorized or issued capital stock; grant of any
stock option or right to purchase shares of its capital stock; issuance of any
security convertible into such capital stock or evidences of indebtedness
(except in connection with customer deposits); grant of any registration rights;
purchase, redemption, retirement or other acquisition by it of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of its capital stock;
(b) amendment to its certificate of incorporation or charter (or
similar organizational documents) or bylaws or adoption of any resolutions by
its board of directors or stockholders with respect to the same;
(c) payment or increase of any bonus, salary or other compensation to
any of its stockholders, directors, officers or employees, except, with respect
to employees, for normal salary and bonus increases made in the Ordinary Course
of Business or made in accordance with any then existing Union Employee Benefit
Plan (as defined below), or entry by it into any employment, consulting,
non-competition, change in control, severance or similar Contract with any
stockholder, director, officer or employee;
(d) adoption, amendment (except for any amendment necessary to comply
with any Legal Requirement) or termination of, or increase in the payments to or
benefits under, any Union Employee Benefit Plan;
(e) damage to or destruction or loss of any of its assets or property,
whether or not covered by insurance and where the resulting diminution in value
individually or in the aggregate was greater than $100,000;
(f) entry into, termination or extension of, or receipt of notice of
termination of any joint venture or similar agreement pursuant to any Contract
or any similar transaction;
(g) except for this Agreement, entry into any new, or modification,
amendment, renewal or extension (through action or inaction) of the terms of any
existing lease,
38
Contract or license that has a term of more than one year or that involves the
payment by Union or any Union Subsidiary of more than $100,000 in the aggregate;
(h) Union Loan or commitment to make any Union Loan other than in the
Ordinary Course of Business;
(i) Union Loan or commitment to make, renew, extend the term or
increase the amount of any Loan to any Person if such Union Loan or any other
Union Loans to such Person or an Affiliate of such Person is on the "watch list"
or similar internal report of Union or any Union Subsidiary, or has been
classified as "substandard," "doubtful," "loss," or "other loans specially
mentioned" or listed as a "potential problem loan"; provided, however, that
nothing in this SECTION 5.17(I) shall prohibit Union or any Union Subsidiary
from honoring any contractual obligation in existence on the date of this
Agreement;
(j) sale (other than any sale in the Ordinary Course of Business),
lease or other disposition of any of its assets or properties or mortgage,
pledge or imposition of any lien or other encumbrance upon any of its material
assets or properties except for Tax and other liens that arise by operation of
law and with respect to which payment is not past due and except for pledges or
liens: (i) required to be granted in connection with the acceptance by UnionBank
of government deposits; (ii) granted in connection with repurchase or reverse
repurchase agreements; or (iii) otherwise incurred in the Ordinary Course of
Business;
(k) incurrence by it of any obligation or liability (fixed or
contingent) other than in the Ordinary Course of Business;
(l) cancellation or waiver by it of any claims or rights with a value
in excess of $100,000;
(m) aggregate investments by it of a capital nature exceeding
$100,000;
(n) except for the Contemplated Transactions, merger or consolidation
with or into any other Person, or acquisition of any stock, equity interest or
business of any other Person;
(o) transaction for the borrowing or loaning of monies, or any
increase in any outstanding indebtedness, other than in the Ordinary Course of
Business;
(p) material change in any policies and practices with respect to
liquidity management and cash flow planning, marketing, deposit origination,
lending, budgeting, profit and Tax planning, accounting or any other material
aspect of its business or operations, except for such changes as may be required
in the opinion of the management of Union to respond to then current market or
economic conditions or as may be required by any Regulatory Authorities;
(q) filing of any applications for additional branches, opening of any
new office or branch, closing of any current office or branch or relocation of
operations from existing locations;
39
(r) discharge or satisfaction of any material lien or encumbrance on
its assets or repayment of any material indebtedness for borrowed money, except
for obligations incurred and repaid in the Ordinary Course of Business;
(s) entry into any Contract or agreement to buy, sell, exchange or
otherwise deal in any assets or series of assets in a single transaction in
excess of $100,000 in aggregate value, except for sales of Union "other real
estate owned" and other repossessed properties or the acceptance of a deed in
lieu of foreclosure;
(t) purchase or other acquisition of any investments, direct or
indirect, in any derivative securities, financial futures or commodities or
entry into any interest rate swap, floors and option agreements or other similar
interest rate management agreements;
(u) hiring of any employee with an annual salary in excess of
$100,000, except for employees at will who are hired to replace employees who
have resigned or whose employment has otherwise been terminated; or
(v) agreement, whether oral or written, by it to do any of the
foregoing.
SECTION 5.18 PROPERTIES, CONTRACTS AND EMPLOYEE BENEFIT PLANS. Except for
Contracts evidencing Loans made by UnionBank in the Ordinary Course of Business,
Schedule 5.18 lists or describes the following with respect to Union and each
Union Subsidiary:
(a) all real property owned by Union and each Union Subsidiary and the
principal buildings and structures located thereon, together with the address of
such real estate, and each lease of real property to which Union and each Union
Subsidiary is a party, identifying the parties thereto, the annual rental
payable, the expiration date thereof and a brief description of the property
covered, and in each case of either owned or leased real property, the proper
identification, if applicable, of each such property as a branch or main office
or other office of Union or such Union Subsidiary;
(b) all loan and credit agreements, conditional sales contracts or
other title retention agreements or security agreements relating to money
borrowed by Union or any Union Subsidiary, exclusive of deposit agreements with
customers of UnionBank entered into in the Ordinary Course of Business,
agreements for the purchase of federal funds and repurchase agreements;
(c) each Contract that involves the performance of services or
delivery of goods or materials by Union or any Union Subsidiary of an amount or
value in excess of $100,000;
(d) each Contract that was not entered into in the Ordinary Course of
Business and that involves expenditures or receipts of Union or any Union
Subsidiary in excess of $100,000;
(e) each Contract not referred to elsewhere in this Section that:
40
(i) relates to the future purchase of goods or services that
materially exceeds the requirements of its respective business at current levels
or for normal operating purposes; or
(ii) materially affects the business or financial condition of
Union or any Union Subsidiary;
(f) each lease, rental, license, installment and conditional sale
agreement and other Contract affecting the ownership of, leasing of, title to or
use of, any personal property (except personal property leases and installment
and conditional sales agreements having a value per item or aggregate payments
of less than $100,000 or with terms of less than one year);
(g) each licensing agreement or other Contract with respect to
Intellectual Property Assets, including agreements with current or former
employees, consultants or contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property Assets of Union or any Union
Subsidiary;
(h) each collective bargaining agreement and other Contract to or with
any labor union or other Person representing one or more employees;
(i) each joint venture, partnership and other Contract (however named)
involving a sharing of profits, losses, costs or liabilities by Union or any
Union Subsidiary with any other Person;
(j) each Contract containing covenants that in any way purport to
restrict the business activity of Union or any Union Subsidiary or any Affiliate
of any of the foregoing, or limit the ability of Union or any Union Subsidiary
or any Affiliate of the foregoing to engage in any line of business or to
compete with any Person;
(k) each Contract providing for payments to or by any Person based on
sales, purchases or profits, other than direct payments for goods;
(l) the name and annual salary of each director, officer or employee
of Union and each Union Subsidiary, and the profit sharing, bonus or other form
of compensation (other than salary) paid or payable by Union, each Union
Subsidiary or a combination of any of them to or for the benefit of each such
person in question for the year ended December 31, 2005, and for the current
year, and any employment agreement, consulting agreement, non-competition,
severance or change in control agreement or similar arrangement or plan with
respect to each such person;
(m) each profit sharing, group insurance, hospitalization, stock
option, pension, retirement, bonus, severance, change of control, deferred
compensation, stock bonus, stock purchase, employee stock ownership or other
employee welfare or benefit agreements, plans or arrangements established,
maintained, sponsored or undertaken by Union or any Union Subsidiary for the
benefit of the officers, directors or employees of Union or any Union
Subsidiary, including each trust or other agreement with any custodian or any
trustee for funds held under any such agreement, plan or arrangement, and all
other Contracts or arrangements under which pensions, deferred compensation or
other retirement benefits are being paid or may
41
become payable by Union or any Union Subsidiary for the benefit of the employees
of Union or any Union Subsidiary (collectively, the "UNION EMPLOYEE BENEFIT
PLANS"), and, in respect to any of them, the latest reports or forms, if any,
filed with the Department of Labor and Pension Benefit Guaranty Corporation
under ERISA, any current financial or actuarial reports and any currently
effective Internal Revenue Service private rulings or determination letters
obtained by or for the benefit of Union or any Union Subsidiary;
(n) the name of each Person who is or would be entitled pursuant to
any Contract or Union Employee Benefit Plan to receive any payment from Union or
any Union Subsidiary as a result of the consummation of the Contemplated
Transactions (including any payment that is or would be due as a result of any
actual or constructive termination of a Person's employment or position
following such consummation) and the maximum amount of such payment;
(o) each holder of a Union Stock Option and the number of underlying
shares to which each such holder may be entitled to acquire;
(p) each Contract entered into other than in the Ordinary Course of
Business that contains or provides for an express undertaking by Union or any
Union Subsidiary to be responsible for consequential damages;
(q) each Contract for capital expenditures in excess of $100,000;
(r) each written warranty, guaranty or other similar undertaking with
respect to contractual performance extended by Union or any Union Subsidiary
other than in the Ordinary Course of Business; and
(s) each amendment, supplement and modification (whether oral or
written) in respect of any of the foregoing.
Copies of each document, plan or Contract listed and described on Schedule
5.18 are appended to such Schedule.
SECTION 5.19 NO DEFAULTS. Except as set forth on Schedule 5.19, to the
Knowledge of Union, each Contract identified or required to be identified on
Schedule 5.18 is in full force and effect and is valid and enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors rights
generally and subject to general principles of equity. Union and each Union
Subsidiary is, and at all times since January 1, 2003, has been, in full
compliance with all applicable terms and requirements of each Contract under
which Union or any Union Subsidiary has or had any obligation or liability or by
which Union or any Union Subsidiary or any of their respective assets owned or
used by them is or was bound, except where the failure to be in full compliance
would not reasonably be expected to have a Material Adverse Effect on Union. To
the Knowledge of Union, each other Person that has or had any obligation or
liability under any such Contract under which Union or any Union Subsidiary has
or had any rights is, and at all times since January 1, 2003, has been in
compliance with applicable terms and requirements of such Contract, except where
the failure to be in full compliance would not reasonably be expected to have a
Material Adverse Effect on Union. No event has occurred or circumstance exists
that
42
(with or without notice or lapse of time) may contravene, conflict with or
result in a material violation or breach of, or give Union, any Union Subsidiary
or other Person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or to cancel, terminate or modify,
any Contract. Except in the Ordinary Course of Business with respect to any
Union Loan, neither Union nor any Union Subsidiary has given to or received from
any other Person, at any time since January 1, 2003, any notice or other
communication (whether oral or written) regarding any actual, alleged, possible
or potential material violation or breach of, or default under, any Contract,
that has not been terminated or satisfied prior to the date of this Agreement.
Other than in the Ordinary Course of Business in connection with workouts and
restructured loans, there are no renegotiations of, attempts to renegotiate or
outstanding rights to renegotiate any material amounts paid or payable to Union
or any Union Subsidiary under current or completed Contracts with any Person,
and no such Person has made written demand for such renegotiation.
SECTION 5.20 INSURANCE. Schedule 5.20 lists the policies and material terms
of insurance (including bankers' blanket bond and insurance providing benefits
for employees) owned or held by Union or any Union Subsidiary on the date
hereof. Each policy is in full force and effect (except for any expiring policy
which is replaced by coverage at least as extensive). All premiums due on such
policies have been paid in full.
SECTION 5.21 COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth on
Schedule 5.21: (a) there are no Proceedings or Orders against Union or any Union
Subsidiary, or, to the Knowledge of Union, any predecessor thereof, with respect
to alleged violation of, or liability under, Environmental Laws; (b) to the
Knowledge of Union, there is no Threatened Proceeding or Order against Union or
any Union Subsidiary, or any predecessor thereof, with respect to the alleged
violation of, or liability under, Environmental Laws; (c) to the Knowledge of
Union, there is no factual basis for the assertion or commencement of a
Proceeding or Order against Union or any Union Subsidiary, or any predecessor
thereof, with respect tot the violation of, or liability under, Environmental
Laws; and (d) to the Knowledge of Union there are no pending or Threatened
Proceedings or Orders against or involving the assets of Union or any Union
Subsidiary.
SECTION 5.22 REGULATORY FILINGS.
(a) Except as set forth on Schedule 5.22, Union and each Union
Subsidiary have filed all forms, reports and documents required to be filed
with: (i) the SEC, and as of the date of this Agreement have delivered or made
available to the Seller, in the form filed with the SEC: (A) its Annual Reports
on Form 10-K for the fiscal years ended December 31, 2003, 2004 and 2005; (B)
all proxy statements relating to Union's meetings of stockholders (whether
annual or special) held since December 31, 2003; (C) all reports on Form 8-K
filed by Union with the SEC since December 31, 2003; (D) all other reports or
registration statements filed by Union with the SEC since December 31, 2003; and
(E) all amendments and supplements to all such reports and registration
statements filed by Union with the SEC since December 31, 2003; and (ii) the
FDIC, the Federal Reserve Board, the Department and any other applicable federal
or state securities or banking authorities (all such reports and statements are
collectively referred to with the Union SEC Reports as the "UNION REPORTS"). The
Union Reports (x) were prepared in accordance with the requirements of
applicable Legal Requirements, and (y) did not at the time
43
they were filed, after giving effect to any amendment thereto filed prior to the
date hereof, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that information as of a later date (but before the date
of this Agreement) is deemed to modify information as of an earlier date.
(b) Union and, to Union's Knowledge, each of its executive officers
and directors have complied in all material respects with (i) the applicable
provisions of the Exchange Act, including the Xxxxxxxx-Xxxxx Act of 2002 and the
regulations promulgated thereunder, as amended, and (ii) the applicable listing
and corporate governance rules and regulations of The Nasdaq Stock Market.
SECTION 5.23 FIDUCIARY ACCOUNTS. UnionBank has properly administered in all
material respects all accounts for which it acts as fiduciary, including
accounts for which it serves as trustee, agent, custodian or investment advisor,
in accordance with the material terms of the governing documents and applicable
state and federal law and regulations and common law. None of UnionBank or any
of its directors, officers or employees has committed any breach of trust with
respect to any such fiduciary account, and the accountings for each such
fiduciary account are true and correct in all material respects and accurately
reflect the assets of such fiduciary account.
SECTION 5.24 INDEMNIFICATION CLAIMS. To Union's Knowledge, no action or
failure to take action by any director, officer, employee or agent of Union or
any Union Subsidiary has occurred that may give rise to a claim or a potential
claim by any such Person for indemnification against Union or any Union
Subsidiary under any agreement with, or the corporate indemnification provisions
of, Union or any Union Subsidiary, or under any Legal Requirements.
SECTION 5.25 INSIDER INTERESTS. Except as set forth on Schedule 5.25, no
officer or director of Union or any Union Subsidiary, any member of the Family
of any such Person, and no entity that any such Person "controls" within the
meaning of Regulation O of the Federal Reserve, has any loan, deposit account or
any other agreement with Union or any Union Subsidiary, any interest in any
material property, real, personal or mixed, tangible or intangible, used in or
pertaining to the business of Union or any Union Subsidiary.
SECTION 5.26 BROKERAGE COMMISSIONS. Except as set forth on Schedule 5.26,
none of Union or any Union Subsidiary or any of their respective Representatives
has incurred any obligation or liability, contingent or otherwise, for brokerage
or finders' fees or agents' commissions or other similar payment in connection
with this Agreement.
SECTION 5.27 APPROVAL DELAYS. To the Knowledge of Union, there is no reason
why the granting of any of the regulatory approvals referred to in SECTION 8.1
would be denied or unduly delayed. UnionBank's most recent CRA rating is
"satisfactory" or better.
SECTION 5.28 DISCLOSURE. Neither any representation nor of Union in, nor
any schedule to, this Agreement by Union contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements contained herein or therein, in light of the
44
circumstances under which they were made, not misleading. No notice given
pursuant to SECTION 7.5 will contain any untrue statement or omit to state a
material fact necessary to make the statements therein, or in this Agreement, in
light of the circumstances in which they were made, not misleading.
ARTICLE 6
CENTRUE'S COVENANTS
SECTION 6.1 ACCESS AND INVESTIGATION.
(a) Union and its Representatives shall, at all times during normal
business hours and with reasonable advance notice prior to the Closing Date,
have full and continuing access to the facilities, operations, records and
properties of Centrue and each Centrue Subsidiary in accordance with the
provisions of this Section. Union and its Representatives may, prior to the
Closing Date, make or cause to be made such reasonable investigation of the
operations, records and properties of Centrue and each Centrue Subsidiary and of
their respective financial and legal conditions as Union shall deem necessary or
advisable to familiarize itself with such records, properties and other matters;
provided, however, that such access or investigation shall not interfere
materially with the normal operations of Centrue or any Centrue Subsidiary. Upon
request, Centrue and each Centrue Subsidiary will furnish Union or its
Representatives, attorneys' responses to auditors' requests for information
regarding Centrue or such Centrue Subsidiary, as the case may be, and such
financial and operating data and other information reasonably requested by Union
(provided, with respect to attorneys, such disclosure would not result in the
waiver by Centrue or any Centrue Subsidiary of any claim of attorney-client
privilege), and will permit Union and its Representatives to discuss such
information directly with any individual or firm performing auditing or
accounting functions for Centrue or such Centrue Subsidiary, and such auditors
and accountants shall be directed to furnish copies of any reports or financial
information as developed to Union or its Representatives. No investigation by
Union or any of its Representatives shall affect the representations and
warranties made by Centrue. This Section shall not require the disclosure of any
information the disclosure of which to Union would be prohibited by any Legal
Requirement.
(b) Centrue shall allow a representative of Union reasonably
acceptable to Centrue to attend as an observer: (i) all meetings of the board of
directors of Centrue and each Centrue Subsidiary; and (ii) all meetings of the
committees thereof, except for any such meeting if and to the extent that any
amendment to this Agreement or the merits of any Acquisition Transaction
described in SECTION 6.6 is discussed, or Centrue is advised by its counsel that
the participation by such observer would result in a waiver of Centrue's
attorney-client privilege. Centrue shall give reasonable notice to Union of any
such meeting and, if known, the agenda for or business to be discussed at such
meeting. Centrue shall provide to Union all information provided to the
directors on all such boards and committees in connection with all such meetings
or otherwise provided to the directors, except to the extent that such
information relates to any amendment to this Agreement or the merits of any
Acquisition Transaction is discussed, or Centrue is advised by its counsel that
the participation by such observer would result in a waiver of Centrue's
attorney-client privilege. It is understood by the parties that Union's
representative will not have any voting rights with respect to matters discussed
at these meetings and shall
45
remain silent during all proceedings, and that Union is not managing the
business or affairs of Centrue. All information obtained by Union at these
meetings shall be treated in confidence as provided in that certain
Confidentiality Agreement dated November 15, 2005, between Centrue and Union
(the "CONFIDENTIALITY AGREEMENT").
SECTION 6.2 OPERATION OF CENTRUE AND CENTRUE SUBSIDIARIES. Except with the
prior written consent of Union, which consent shall not be unreasonably withheld
or delayed, between the date of this Agreement and the Closing Date, Centrue
will, and will cause each Centrue Subsidiary, to
(a) conduct its business only in the Ordinary Course of Business;
(b) use its Best Efforts to preserve intact its current business
organization, keep available the services of its current officers, employees and
agents, and maintain the relations and goodwill with its suppliers, customers,
landlords, creditors, employees, agents and others having business relationships
with it;
(c) confer with Union concerning operational matters of a material
nature;
(d) enter into loan and deposit transactions only in accordance with
sound credit practices and only on terms and conditions that are not materially
more favorable than those available to the borrower or depositor, as the case
may be, from competitive sources in arm's-length transactions, and, in that
connection, from the date hereof to the Closing Date, shall not enter into any
new credit or new lending relationship in excess of $3,000,000 to any Person and
any director or officer of, or any owner of a 10% or greater equity interest in,
such Person; provided, however, that Centrue Bank shall be permitted to make any
such loan with the prior written consent of Union, or if Centrue Bank has made a
written request for permission to make an otherwise prohibited loan and has
provided Union with all information necessary for Union to make an informed
decision with respect to such request, and Union has failed to respond to such
request within two Business Days after Union's receipt of such request;
(e) consistent with past practice, maintain an allowance for possible
loan and lease losses which is adequate in all material respects under the
requirements of GAAP to provide for possible losses, net of recoveries relating
to loans previously charged off, on loans outstanding (including accrued
interest receivable);
(f) maintain all of its assets necessary for the conduct of its
business in good operating condition and repair, reasonable wear and tear and
damage by fire or unavoidable casualty excepted, and maintain policies of
insurance upon its assets and with respect to the conduct of its business in
amounts and kinds comparable to that in effect on the date hereof and pay all
premiums on such policies when due;
(g) file in a timely manner all required filings with all Regulatory
Authorities and cause such filings to be true and correct in all material
respects; and
(h) maintain its books, accounts and records in the usual, regular and
ordinary manner, on a basis consistent with prior years and comply with all
Legal Requirements.
46
SECTION 6.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by
this Agreement, and as contemplated by Schedule 4.17, between the date of this
Agreement and the Closing Date, Centrue will not, and will cause each Centrue
Subsidiary not to, without the prior written consent of Union, which consent
shall not be unreasonably withheld or delayed, take any affirmative action, or
fail to take any reasonable action within its control, as a result of which any
of the changes or events listed in SECTION 4.17 is likely to occur.
SECTION 6.4 SUBSEQUENT CENTRUE FINANCIAL STATEMENTS; SEC REPORTS. As soon
as available after the date hereof, Centrue will furnish Union copies of (a) the
quarterly unaudited consolidated balance sheets, consolidated statements of
income, consolidated statements of cash flows and consolidated statements of
stockholders' equity, of Centrue prepared for its internal use, (b) Centrue
Bank's Call Reports for each quarterly period completed after March 31, 2006,
(c) all monthly financial reports or statements submitted after the date hereof
by Centrue or Centrue Bank to the board of directors of Centrue or Centrue Bank,
and (d) all other financial reports or statements submitted after the date
hereof by Centrue or Centrue Bank to Regulatory Authorities, to the extent
permitted by law (collectively, the "SUBSEQUENT CENTRUE FINANCIAL STATEMENTS").
Without limitation of the foregoing, as soon as available, if at all, Centrue
will deliver to Union complete copies of any reports filed with the SEC after
March 31, 2006 (collectively, the "CENTRUE SEC FILINGS"). Except as may be
required by changes in GAAP effective after the date hereof, the Subsequent
Centrue Financial Statements shall be prepared on a basis consistent with past
accounting practices and shall fairly present in all material respects the
consolidated financial condition and results of operations for the dates and
periods presented. The Subsequent Centrue Financial Statements will not include
any material assets or omit to state any material liabilities, absolute or
contingent, or other facts, which inclusion or omission would render such
Subsequent Centrue Financial Statements misleading in any material respect. The
Centrue SEC Filings will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements contained therein not misleading.
SECTION 6.5 ADVICE OF CHANGES. Between the date of this Agreement and the
Closing Date, Centrue will promptly notify Union in writing if Centrue or any
Centrue Subsidiary becomes aware of any fact or condition that causes or
constitutes a breach of any of Centrue's representations and warranties as of
the date of this Agreement, or if Centrue or any Centrue Subsidiary becomes
aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. If any such fact or condition would require any
change in the Centrue Schedules if such Centrue Schedules were dated the date of
the occurrence or discovery of any such fact or condition, Centrue will promptly
deliver to Union a supplement to the Centrue Schedules specifying such change.
During the same period, Centrue will promptly notify Union of the occurrence of
any breach of any covenant of Centrue in this Article or of the occurrence of
any event that might reasonably be expected to make the satisfaction of the
conditions in ARTICLE 9 impossible or unlikely.
SECTION 6.6 OTHER OFFERS. Until such time, if any, as this Agreement is
terminated pursuant to ARTICLE 11, Centrue will not, and will cause each Centrue
Subsidiary and their respective Representatives not to, directly or indirectly
solicit, initiate or encourage any inquiries
47
or proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or proposals from, any
Person (other than Union) relating to any Acquisition Transaction or a potential
Acquisition Transaction involving Centrue or any Centrue Subsidiary.
Notwithstanding the foregoing, Centrue may provide information at the request
of, or enter into negotiations with, a third party with respect to an
Acquisition Transaction if the board of directors of Centrue determines, in good
faith, that the exercise of its fiduciary duties to Centrue's stockholders under
applicable law, as advised by its counsel, requires it to take such action, and,
provided further, that Centrue may not, in any event, provide to such third
party any information which it has not provided to Union. Centrue shall promptly
notify Union orally, confirmed in writing, in the event it receives any such
inquiry or proposal and shall provide reasonable detail of all relevant facts
relating to such inquiries.
SECTION 6.7 VOTING AGREEMENT. Concurrently with the execution and delivery
of this Agreement, Centrue shall deliver to Union a voting agreement in the form
of Exhibit D, signed by all directors of Centrue and Centrue Bank who are
holders of Centrue Common Stock.
SECTION 6.8 STOCKHOLDERS' MEETING. Centrue shall cause a meeting of its
stockholders for the purpose of acting upon this Agreement to be held at the
earliest practicable date after the Registration Statement (as defined below)
has been declared effective by the SEC. Centrue shall mail to its stockholders
at least twenty Business Days prior to such meeting, notice of such meeting
together with the Proxy Statement-Prospectus (as defined below), which shall
include a copy of this Agreement. Subject to its fiduciary duties, Centrue and
its board of directors shall recommend to stockholders the approval of this
Agreement and shall solicit proxies voting only in favor thereof from the
stockholders of Centrue. For the avoidance of doubt, the parties acknowledge
that the failure of Centrue to cause a meeting of its stockholders to be held
for the purposes set forth in the Agreement or otherwise to make the
recommendations required by or to withdraw, modify or change such recommendation
as provided in the provisions of this SECTION 6.8 shall be deemed to have a
Material Adverse Effect on Centrue on a consolidated basis and on Union's and
its stockholders' rights under this Agreement.
SECTION 6.9 INFORMATION PROVIDED TO UNION. Centrue agrees that the
information concerning Centrue or any Centrue Subsidiary that is provided or to
be provided by Centrue to Union for inclusion or that is included in the
Registration Statement or Proxy Statement-Prospectus and any other documents to
be filed with any Regulatory Authority in connection with the Contemplated
Transactions will, at the respective times such documents are filed and, in the
case of the Registration Statement, when it becomes effective and, with respect
to the Proxy Statement-Prospectus, when mailed, will not be false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements therein not misleading or, in the case of the
Proxy Statement-Prospectus, or any amendment thereof or supplement thereto, at
the time of the meeting of Centrue's stockholders referred to above, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the meeting in connection with which the Proxy
Statement-Prospectus shall be mailed. Notwithstanding the foregoing, Centrue
shall have no responsibility for the truth or accuracy of any information with
respect to Union or any Union Subsidiary or any of their Affiliates contained in
the Registration Statement or the Proxy Statement-Prospectus or in any document
submitted to, or other communication with, any Regulatory Authority.
48
SECTION 6.10 TERMINATION OF EMPLOYEE BENEFIT PLANS. To the extent permitted
by applicable Legal Requirements and except as otherwise agreed to pursuant to
SECTION 7.11, upon the written request of Union, Centrue shall take such action
as may be necessary to terminate any Centrue Employee Benefit Plan on or before
the Closing on terms reasonably acceptable to Union; provided, however, that
Centrue or Centrue Bank shall not be obligated to take any such requested action
that is irrevocable until immediately prior to the Closing.
SECTION 6.11 ACCOUNTING AND OTHER ADJUSTMENTS. Centrue agrees that it
shall, and shall cause each Centrue Subsidiary, to: (a) make any accounting
adjustments or entries to its books of account and other financial records; (b)
make additional provisions to any allowance for loan and lease losses; (c) sell
or transfer any investment securities held by it; (d) charge-off any loan or
lease; (e) create any new reserve account or make additional provisions to any
other existing reserve account; (f) make changes in any accounting method; (g)
accelerate, defer or accrue any anticipated obligation, expense or income item;
and (h) make any other adjustments that would affect the financial reporting of
Union, on a consolidated basis after the Effective Time, in any case as Union
shall reasonably request, provided, however, that neither Centrue nor any
Centrue Subsidiary shall be obligated to take any such requested action until
immediately prior to the Closing and at such time as Centrue shall have received
reasonable assurances that all conditions precedent to Centrue's obligations
under this Agreement (except for the completion of actions to be taken at the
Closing) have been satisfied.
SECTION 6.12 CAPITAL STOCK. Except as otherwise permitted in or
contemplated by this Agreement, including in connection with the Xxxxxx
Employment Agreement and the employment agreements contemplated by SECTION 8.4,
and without the prior written consent of Union, from the date of this Agreement
to the earlier of the Effective Time or the termination of this Agreement,
Centrue shall not, and shall not enter into any agreement to, issue, sell or
otherwise permit to become outstanding any additional shares of Centrue Common
Stock or any other capital stock of Centrue, or any stock appreciation rights,
or any option, warrant, conversion or other right to acquire any such stock, or
any security convertible into any such stock, other than pursuant to (a) the
Centrue Stock Incentive Plan, the aggregate number of shares of Centrue Common
Stock covered by all existing grants (not taking into account the grants
contemplated by the Xxxxxx Employment Agreement and the employment agreements
contemplated by SECTION 8.4) being no more than 204,800 shares, (b) the Centrue
401(k) Savings Plan or (c) the Centrue Deferred Compensation Plan. No additional
shares of Centrue Common Stock shall become subject to new grants of employee
stock options, stock appreciation rights or similar stock based employee
compensation rights, except as otherwise provided in SECTION 8.7.
SECTION 6.13 EMPLOYMENT AGREEMENT. Concurrently with the execution and
delivery of this Agreement, Centrue shall cause to be delivered to Union an
employment agreement in the form of Exhibit F-1, signed by Xxxxxx X. Xxxxxx (the
"XXXXXX EMPLOYMENT AGREEMENT") to be effective at the Effective Time.
49
ARTICLE 7
UNION'S COVENANTS
SECTION 7.1 ACCESS AND INVESTIGATION.
(a) Centrue and its Representatives shall, at all times during normal
business hours and with reasonable advance notice prior to the Closing Date,
have full and continuing access to the facilities, operations, records and
properties of Union and each Union Subsidiary in accordance with the provisions
of this Section. Centrue and its Representatives may, prior to the Closing Date,
make or cause to be made such reasonable investigation of the operations,
records and properties of Union and each Union Subsidiary and of their
respective financial and legal conditions as Centrue shall deem necessary or
advisable to familiarize itself with such records, properties and other matters,
provided, however, that such access or investigation shall not interfere
materially with the normal operations of Union or any Union Subsidiary. Upon
request, Union and each Union Subsidiary will furnish Centrue or its
Representatives, attorneys' responses to auditors' requests for information
regarding Union or such Union Subsidiary, as the case may be, and such financial
and operating data and other information reasonably requested by Centrue
(provided, with respect to attorneys, such disclosure would not result in the
waiver by Union or UnionBank of any claim of attorney-client privilege), and
will permit Centrue and its Representatives to discuss such information directly
with any individual or firm performing auditing or accounting functions for
Union or such Union Subsidiary, and such auditors and accountants shall be
directed to furnish copies of any reports or financial information as developed
to Centrue or its Representatives. No investigation by Centrue or any of its
Representatives shall affect the representations and warranties made by Union.
This Section shall not require the disclosure of any information the disclosure
of which to Centrue would be prohibited by any Legal Requirement.
(b) Union shall allow a representative of Centrue to attend as an
observer: (i) all meetings of the board of directors of Union and each Union
Subsidiary; and (ii) all meetings of the committees thereof, except for any such
meeting if and to the extent that any of the Contemplated Transactions is
discussed, or Union is advised by its counsel that the participation by such
observer would result in a waiver of Union's attorney-client privilege. Union
shall give reasonable notice to Centrue of any such meeting and, if known, the
agenda for or business to be discussed at such meeting. Union shall provide to
Centrue all information provided to the directors on all such boards and
committees in connection with all such meetings or otherwise provided to the
directors, except to the extent that such information relates to any amendment
to this Agreement or the merits of any Acquisition Transaction is discussed, or
Union is advised by its counsel that the participation by such observer would
result in a waiver of Union's attorney-client privilege. It is understood by the
parties that Centrue's representative will not have any voting rights with
respect to matters discussed at these meetings and shall remain silent during
all proceedings, and that Centrue is not managing the business or affairs of
Union. All information obtained by Centrue at these meetings shall be treated in
confidence as provided in the Confidentiality Agreement.
SECTION 7.2 OPERATION OF UNION AND UNION SUBSIDIARIES. Except with the
prior written consent of Centrue, which consent shall not be unreasonably
withheld or delayed,
50
between the date of this Agreement and the Closing Date, Union will, and will
cause each Union Subsidiary, to
(a) conduct its business only in the Ordinary Course of Business;
(b) use its Best Efforts to preserve intact its current business
organization, keep available the services of its current officers, employees and
agents, and maintain the relations and goodwill with its suppliers, customers,
landlords, creditors, employees, agents and others having business relationships
with it;
(c) confer with Centrue concerning operational matters of a material
nature;
(d) enter into loan and deposit transactions only in accordance with
sound credit practices and only on terms and conditions that are not materially
more favorable than those available to the borrower or depositor, as the case
may be, from competitive sources in arm's-length transactions, and, in that
connection, from the date hereof to the Closing Date, shall not enter into any
new credit or new lending relationship in excess of $3,000,000 to any Person and
any director or officer of, or any owner of a 10% or greater equity interest in,
such Person; provided, however, that UnionBank shall be permitted to make any
such loan with the prior written consent of Centrue, or if UnionBank has made a
written request for permission to make an otherwise prohibited loan and has
provided Centrue with all information necessary for Centrue to make an informed
decision with respect to such request, and Centrue has failed to respond to such
request within two Business Days after Centrue's receipt of such request;
(e) consistent with past practice, maintain an allowance for possible
loan and lease losses which is adequate in all material respects under the
requirements of GAAP to provide for possible losses, net of recoveries relating
to loans previously charged off, on loans outstanding (including accrued
interest receivable);
(f) maintain all of its assets necessary for the conduct of its
business in good operating condition and repair, reasonable wear and tear and
damage by fire or unavoidable casualty excepted, and maintain policies of
insurance upon its assets and with respect to the conduct of its business in
amounts and kinds comparable to that in effect on the date hereof and pay all
premiums on such policies when due;
(g) file in a timely manner all required filings with all Regulatory
Authorities and cause such filings to be true and correct in all material
respects; and
(h) maintain its books, accounts and records in the usual, regular and
ordinary manner, on a basis consistent with prior years and comply with all
Legal Requirements.
SECTION 7.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by
this Agreement, and as contemplated by Schedule 5.17, between the date of this
Agreement and the Closing Date, Union will not, and will cause each Union
Subsidiary not to, without the prior written consent of Centrue, which consent
shall not be unreasonably withheld or delayed, take any affirmative action, or
fail to take any reasonable action within its control, as a result of which any
of the changes or events listed in SECTION 5.17 is likely to occur.
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SECTION 7.4 SUBSEQUENT UNION FINANCIAL STATEMENTS; SECURITIES REPORTS. As
soon as available after the date hereof, Union will furnish Centrue copies of
(a) the quarterly unaudited consolidated balance sheets, consolidated statements
of income, consolidated statements of cash flows and consolidated statements of
stockholders' equity, of Union prepared for its internal use, (b) UnionBank's
Call Reports for each quarterly period completed after March 31, 2006, (c) all
monthly financial reports or statements submitted after the date hereof by Union
or UnionBank to the board of directors of Union or UnionBank, and (d) all other
financial reports or statements submitted after the date hereof by Union or
UnionBank to Regulatory Authorities, to the extent permitted by law
(collectively, the "SUBSEQUENT UNION FINANCIAL STATEMENTS"). Without limitation
of the foregoing, as soon as available, if at all, Union will deliver to Centrue
complete copies of any reports filed with the SEC after March 31, 2006
(collectively, the "UNION SEC FILINGS"). Except as may be required by changes in
GAAP effective after the date hereof, the Subsequent Union Financial Statements
shall be prepared on a basis consistent with past accounting practices and shall
fairly present in all material respects the consolidated financial condition and
results of operations for the dates and periods presented. The Subsequent Union
Financial Statements will not include any material assets or omit to state any
material liabilities, absolute or contingent, or other facts, which inclusion or
omission would render such Subsequent Union Financial Statements misleading in
any material respect. The Union SEC Filings will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements contained therein
not misleading.
SECTION 7.5 ADVICE OF CHANGES. Between the date of this Agreement and the
Closing Date, Union will promptly notify Centrue in writing if Union or any
Union Subsidiary becomes aware of any fact or condition that causes or
constitutes a breach of any of Union's representations and warranties as of the
date of this Agreement, or if Union or any Union Subsidiary becomes aware of the
occurrence after the date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. If any such fact or condition would require any change in the Union
Schedules if such Union Schedules were dated the date of the occurrence or
discovery of any such fact or condition, Union will promptly deliver to Centrue
a supplement to the Union Schedules specifying such change. During the same
period, Union will promptly notify Centrue of the occurrence of any breach of
any covenant of Union in this Article or of the occurrence of any event that
might reasonably be expected to make the satisfaction of the conditions in
ARTICLE 10 impossible or unlikely.
SECTION 7.6 OTHER OFFERS. Until such time, if any, as this Agreement is
terminated pursuant to ARTICLE 11, Union will not, and will cause each Union
Subsidiary and their respective Representatives not to, directly or indirectly
solicit, initiate or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any Person relating to any
Acquisition Transaction or a potential Acquisition Transaction involving Union
or any Union Subsidiary. Notwithstanding the foregoing, Union may provide
information at the request of, or enter into negotiations with, a third party
with respect to an Acquisition Transaction if the board of directors of Union
determines, in good faith, that the exercise of its fiduciary duties to Union's
stockholders under applicable law, as advised by its counsel, requires it to
take such action, and,
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provided further, that Union may not, in any event, provide to such third party
any information which it has not provided to Centrue. Union shall promptly
notify Centrue orally, confirmed in writing, in the event it receives any such
inquiry or proposal and shall provide reasonable detail of all relevant facts
relating to such inquiries.
SECTION 7.7 VOTING AGREEMENT. Concurrently with the execution and delivery
of this Agreement, Union shall deliver to Centrue a voting agreement in the form
of Exhibit E, signed by all directors of Union and UnionBank who are holders of
Union Common Stock.
SECTION 7.8 STOCKHOLDERS' MEETING. Union shall cause a meeting of its
stockholders for the purpose of acting upon this Agreement, and, in Union's
discretion, for the purpose of amending and restating its certificate of
incorporation and bylaws as set forth herein, to be held at the earliest
practicable date after the Registration Statement has been declared effective by
the SEC. Union shall mail to its stockholders at least twenty Business Days
prior to such meeting, notice of such meeting together with the Proxy
Statement-Prospectus, which shall include a copy of this Agreement. Subject to
its fiduciary duties, Union and its board of directors shall recommend to
stockholders the approval of this Agreement and shall solicit proxies voting
only in favor thereof from the stockholders of Union. For the avoidance of
doubt, the parties acknowledge that the failure of Union to cause a meeting of
its stockholders to be held for the purposes set forth in the Agreement or
otherwise to make the recommendations required by or to withdraw, modify or
change such recommendation as provided in the provisions of this SECTION 7.8
shall be deemed to have a Material Adverse Effect on Union on a consolidated
basis and on Centrue's and its stockholders' rights under this Agreement.
SECTION 7.9 INFORMATION PROVIDED TO CENTRUE. Union agrees that none of the
information concerning Union or any Union Subsidiary that is provided or to be
provided by Union to Centrue for inclusion or that is included in the
Registration Statement or Proxy Statement-Prospectus and any other documents to
be filed with any Regulatory Authority in connection with the Contemplated
Transactions will, at the respective times such documents are filed and, in the
case of the Registration Statement, when it becomes effective and, with respect
to the Proxy Statement-Prospectus, when mailed, be false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements therein not misleading or, in the case of the Proxy
Statement-Prospectus, or any amendment thereof or supplement thereto, at the
time of the meeting of Union's stockholders referred to above, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the meeting in connection with which the Proxy
Statement-Prospectus shall be mailed. Notwithstanding the foregoing, Union shall
have no responsibility for the truth or accuracy of any information with respect
to Centrue or any Centrue Subsidiary or any of their Affiliates contained in the
Registration Statement or the Proxy Statement-Prospectus or in any document
submitted to, or other communication with, any Regulatory Authority.
SECTION 7.10 INDEMNIFICATION. Except as may be limited by applicable Legal
Requirements, Union shall honor any of Centrue's obligations in respect of
indemnification and advancement of expenses currently provided by Centrue in its
certificate of incorporation or bylaws in favor of the current and former
directors and officers of Centrue and Centrue Bank for not less than six years
from the Effective Time with respect to matters occurring prior to the
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Effective Time. Notwithstanding any provision of SECTION 7.2, Union shall
acquire and maintain for a period of six years extended insurance coverage of
acts or omissions occurring at or prior to the Effective Time with respect to
those persons who are currently covered by Centrue's director and officer
liability policies of insurance (commonly referred to as "tail coverage") on
terms with respect to such coverage and amount substantially similar to the
terms and conditions of Centrue's director and officer liability policies of
insurance in effect immediately prior to the Effective Time, so long as such
coverage is available on commercially reasonable terms, in the reasonable
judgment of Centrue and Union.
SECTION 7.11 EMPLOYEE BENEFITS. Union agrees that all former employees of
Centrue or Centrue Bank who become employees of Union or any of its Subsidiaries
shall receive credit for their past service with Centrue or Centrue Bank for
purposes of eligibility and vesting under Union's profit sharing plan. Centrue
and Union shall use their respective Best Efforts to determine prior to the
Closing the types of benefits to be offered after the Effective Time by the
Surviving Corporation to former employees of Centrue or Centrue Bank and
continuing employees of Union and UnionBank who become employees of the
Surviving Corporation or the Resulting Bank, as applicable.
SECTION 7.12 AUTHORIZATION AND RESERVATION OF UNION COMMON STOCK. The board
of directors of Union shall, as of the date hereof, authorize and reserve the
maximum number of shares of Union Common Stock to be issued pursuant to this
Agreement and take all other necessary corporate action to consummate the
Contemplated Transactions.
SECTION 7.13 NASDAQ LISTING. Union shall use its Best Efforts to list on
the Nasdaq National Market, subject to official notice of issuance, the shares
of Union Common Stock to be issued in connection with the Merger.
SECTION 7.14 UNION BOARD. Union shall take all action necessary to ensure
that the board of directors, including all committees thereof, of the Surviving
Corporation will be as set forth in Exhibit C.
SECTION 7.15 CAPITAL STOCK. Except as otherwise permitted in or
contemplated by this Agreement, including in connection with the Yeoman
Employment Agreement, the Xxxxxxxxx Employment Agreement and the employment
agreements contemplated by SECTION 8.4, and without the prior written consent of
Centrue, from the date of this Agreement to the earlier of the Effective Time or
the termination of this Agreement, Union shall not, and shall not enter into any
agreement to, issue, sell or otherwise permit to become outstanding any
additional shares of Union Common Stock or any other capital stock of Union, or
any stock appreciation rights, or any option, warrant, conversion or other right
to acquire any such stock, or any security convertible into any such stock,
other than (a) pursuant to the Union Stock Option Plans, the aggregate number of
shares of Union Common Stock covered by all existing grants (not taking into
account the grants contemplated by the Yeoman Employment Agreement, the
Xxxxxxxxx Employment Agreement and the employment agreements contemplated by
SECTION 8.4) being no more than 288,175 shares, (b) the Union 401(k) Profit
Sharing Plan or (c) the 172,140 shares of Union Common Stock issuable upon
conversion of the currently outstanding shares of Series A Stock. No additional
shares of Union Common Stock shall become subject to new grants of
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employee stock options, stock appreciation rights or similar stock based
employee compensation rights, except as otherwise provided in SECTION 8.7.
SECTION 7.16 DIVIDENDS. Notwithstanding anything contained herein to the
contrary, between the date of this Agreement and the Effective Time, Union may
continue to declare and pay to its stockholders, on dates consistent with its
past practices, its normal quarterly cash dividend not to exceed $0.12 per share
of Union Common Stock, and shall declare, pay or make no other dividend or other
distribution or payment in respect of, or redemption of, shares of Union Common
Stock, provided, however, that Union shall not declare the record date for any
dividend, or pay or make any such dividend or other distribution or payment, in
the quarter in which the Effective Time shall occur, unless such record date and
payment date take place after the Effective Time. If Union does not declare and
pay permitted dividends on its Union Common Stock in a particular calendar
quarter because of Union's reasonable expectation that the Effective Time would
occur in such quarter, and the Effective Time does not in fact occur in said
calendar quarter, then, as a result thereof, Union shall be entitled to declare
and pay a permitted dividend on said shares of Union Common Stock for said
calendar quarter as soon as reasonably practicable.
SECTION 7.17 EMPLOYMENT AGREEMENTS. Concurrently with the execution and
delivery of this Agreement, Union shall cause to be executed and delivered: (a)
by both parties: (i) an employment agreement in the form of Exhibit F-2, signed
by Xxxxx X. Xxxxxx (the "YEOMAN EMPLOYMENT AGREEMENT"); and (ii) an employment
agreement in the form of Exhibit F-3, signed by Xxxx Xxxxxxxxx (the "XXXXXXXXX
EMPLOYMENT AGREEMENT"), each to be effective at the Effective Time; and (b) by
Union, the Xxxxxx Employment Agreement.
ARTICLE 8
COVENANTS OF ALL PARTIES
SECTION 8.1 REGULATORY APPROVALS. By no later than thirty days after the
date of this Agreement, Centrue shall make or cause to be made all appropriate
filings with Regulatory Authorities for approval of the Contemplated
Transactions, including the preparation of an application or any amendment
thereto or any other required statements or documents filed or to be filed by
any party with: (a) the Federal Reserve pursuant to the BHCA; (b) the Department
pursuant to the Illinois Banking Act; (c) the FDIC pursuant to the FDI Act; and
(d) any other Person or Regulatory Authority pursuant to any applicable Legal
Requirement, for authority to consummate the Contemplated Transactions. Centrue
shall pursue in good faith the regulatory approvals necessary to consummate the
Contemplated Transactions. In advance of any filing made under this Section,
Union and its counsel shall be provided with the opportunity to comment thereon,
and Centrue agrees promptly to advise Union and its counsel of any material
communication received by it or its counsel from any Regulatory Authorities with
respect to such filings, and to provide copies of any such written communication
to Union and its counsel.
SECTION 8.2 SEC REGISTRATION. By no later than sixty days after the date of
this Agreement, Union shall file with the SEC a registration statement on an
appropriate form under the Securities Act covering the shares of Union Common
Stock to be issued pursuant to this Agreement and shall use all reasonable
efforts to cause the same to become effective and
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thereafter, until the Effective Time or lawful termination of this Agreement, to
keep the same effective and, if necessary, amend and supplement the same (such
registration statement, and any amendments and supplements thereto, is referred
to as the "REGISTRATION STATEMENT"). The Registration Statement shall include a
proxy statement-prospectus prepared by Union and Centrue (the "PROXY
STATEMENT-PROSPECTUS"), for use in connection with the meetings of the
stockholders of Union and Centrue referred to in SECTION 7.8 and SECTION 6.8,
respectively, all in accordance with the rules and regulations of the SEC. Union
shall, as soon as practicable after the execution of this Agreement, make all
filings required to obtain all permits, authorizations, consents or approvals
required under any applicable Legal Requirements (including all state securities
laws) for the issuance of the shares of Union Common Stock to stockholders of
Centrue. In advance of any filing made under this Section, Union and Centrue and
their respective counsel shall be provided with the opportunity to comment
thereon, and Union and Centrue each agree promptly to advise each other and each
other's counsel of any material communication received by it or its counsel from
the SEC or any other Regulatory Authorities with respect to such filings, and to
provide to the other party and its counsel copies of any such written
communications.
SECTION 8.3 NECESSARY APPROVALS. Union and Centrue agree that Union's
counsel will have primary responsibility for preparation of the Registration
Statement and Centrue will have primary responsibility for the preparation of
the necessary applications for regulatory approval of the Contemplated
Transactions. Each of Union and Centrue and their respective Subsidiaries agree
fully and promptly to cooperate with each other and their respective counsels
and accountants in connection with any steps to be taken as part of their
obligations under this Agreement.
SECTION 8.4 CUSTOMER AND EMPLOYEE RELATIONSHIPS. Each of Union and Centrue
agrees that its respective Representatives may jointly:
(a) participate in meetings or discussions with officers and employees
of Centrue and Union and their Subsidiaries in connection with employment
opportunities with Union after the Effective Time, and, in connection therewith,
the parties acknowledge that Union may, after consultation with and upon the
consent of Centrue, enter into employment agreements in the applicable form
attached as Exhibit G with the individuals listed, and pursuant to the terms
identified, on Exhibit G; and
(b) contact Persons having dealings with Centrue or Union or any of
its respective Subsidiaries for the purpose of informing such Persons of the
services to be offered by Union after the Effective Time.
SECTION 8.5 PUBLICITY. Prior to the Effective Time, the parties to this
Agreement will consult with each other before issuing any press releases or
otherwise making any public statements with respect to this Agreement or the
Contemplated Transactions and shall not issue any such press release or make any
such public statement without the prior consent of the other parties, except as
may be required by law.
SECTION 8.6 BEST EFFORTS; COOPERATION. Each of Union and Centrue agrees to
exercise good faith and use its Best Efforts to satisfy the various covenants
and conditions to
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Closing in this Agreement, and to consummate the transactions contemplated
hereby as promptly as possible. Neither Union nor Centrue will intentionally
take or intentionally permit to be taken any action that would be a breach of
the terms or provisions of this Agreement. Between the date of this Agreement
and the Closing Date, each of Union and Centrue will, and will cause each Union
Subsidiary and Centrue Subsidiary, respectively, and all of their respective
Affiliates and Representatives to, cooperate with respect to all filings that
any party is required by Legal Requirements to make in connection with the
Contemplated Transactions.
SECTION 8.7 STAY BONUSES. The parties hereto acknowledge that Centrue and
Union shall be permitted to commit to pay certain stay bonus payments to
employees of Centrue or any Centrue Subsidiary, or Union or any Union
Subsidiary, as applicable; and Union shall be permitted to commit to make, at or
after the Effective Time, new grants of employee stock options to employees of
Centrue or any Centrue Subsidiary, or Union or any Union Subsidiary, each as
reasonably and mutually agreed to be Centrue and Union, provided, however, that
neither Centrue nor Union shall be obligated to pay any bonus payment or make
any option grant unless and until such employee executes and delivers a Stay
Bonus Agreement in a form that is reasonably and mutually agreed to by Centrue,
Union and their respective counsel, which agreement shall govern the obligation
to make any such bonus payment or option grant.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF UNION
The obligations of Union to consummate the Contemplated Transactions and to
take the other actions required to be taken by Union at the Closing are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Union, in whole or in part):
SECTION 9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of Centrue set forth in this Agreement, when read
without regard to any qualification as to materiality or Material Adverse Effect
contained therein, shall be true and correct with the same force and effect as
if all of such representations and warranties were made at the Closing Date
(provided, however, that to the extent such representations and warranties
expressly relate to an earlier date, such representations shall be true and
correct on and as of such earlier date), except for any untrue or incorrect
representations or warranties that individually or in the aggregate do not have
a Material Adverse Effect on Centrue on a consolidated basis or on Union's or
its stockholders' rights under this Agreement.
SECTION 9.2 CENTRUE'S PERFORMANCE. All of the covenants and obligations to
be performed or complied with by Centrue under the terms of this Agreement on or
prior to the Closing Date, when read without regard to any qualification as to
materiality or Material Adverse Effect contained therein, shall have been
performed or complied with by Centrue, except where any non-performance or
noncompliance would not have a Material Adverse Effect on Centrue on a
consolidated basis or on Union's or its stockholders' rights under this
Agreement.
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SECTION 9.3 DOCUMENTS SATISFACTORY. All proceedings, corporate or other, to
be taken by Centrue in connection with the Contemplated Transactions, and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to counsel for Union.
SECTION 9.4 CORPORATE APPROVAL. This Agreement and the Contemplated
Transactions shall have been duly and validly approved as necessary under
applicable Legal Requirements by the stockholders of Union and Centrue.
SECTION 9.5 NO PROCEEDINGS. Since the date of this Agreement, there must
not have been commenced or Threatened against Centrue or any Centrue Subsidiary
any Proceeding: (a) involving any challenge to, or seeking damages or other
relief in connection with, any of the Contemplated Transactions; or (b) that may
have the effect of preventing, delaying, making illegal or otherwise interfering
with any of the Contemplated Transactions, in either case that would have a
Material Adverse Effect on Centrue on a consolidated basis or on Union's or its
stockholders' rights under this Agreement.
SECTION 9.6 ABSENCE OF MATERIAL ADVERSE CHANGES. From the date hereof to
the Closing, there shall be and have been no event or occurrence that had or
would have a Material Adverse Effect on Centrue on a consolidated basis.
SECTION 9.7 CONSENTS AND APPROVALS. Any consents or approvals required to
be secured by either party by the terms of this Agreement shall have been
obtained and shall be reasonably satisfactory to Union, and all applicable
waiting periods shall have expired, except to the extent that the failure to
obtain any such consents or approvals would not have a Material Adverse Effect
on Centrue on a consolidated basis or on Union's or its stockholders' rights
under this Agreement.
SECTION 9.8 NO PROHIBITION. Neither the consummation nor the performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), contravene, or conflict with or result in a
violation of: (a) any applicable Legal Requirement or Order; or (b) any Legal
Requirement or Order that has been published, introduced, or otherwise proposed
by or before any Regulatory Authority.
SECTION 9.9 REGISTRATION STATEMENT. The Registration Statement shall have
become effective and no stop order suspending such effectiveness shall have been
issued or threatened by the SEC that suspends the effectiveness of the
Registration Statement and no Proceeding shall have been commenced or be pending
or Threatened for such purpose.
SECTION 9.10 FAIRNESS OPINION. As of the date of this Agreement and prior
to distribution of the Proxy Statement-Prospectus to the stockholders of Union,
Union shall have received an opinion from Sandler X'Xxxxx & Partners, L.P. to
the effect that the consideration to be paid to Centrue's stockholders in
connection with the Merger is fair from a financial point of view, and the same
shall not have been withdrawn prior to the Closing.
SECTION 9.11 ADDITIONAL AGREEMENTS. Each of the Xxxxxx Employment
Agreement, the Yeoman Employment Agreement and the Xxxxxxxxx Employment
Agreement shall be in full force and effect, Xxxxxx X. Xxxxxx shall be an active
employee of Centrue, and Xxxxx X. Xxxxxx and Xxxx Xxxxxxxxx shall be active
employees of Union.
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SECTION 9.12 TAX OPINION. Union and Centrue shall have received the opinion
described in SECTION 10.10 hereof.
ARTICLE 10
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CENTRUE
Centrue's obligation to consummate the Contemplated Transactions and to
take the other actions required to be taken by Centrue at the Closing is subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Centrue, in whole or in part):
SECTION 10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of Union set forth in this Agreement, when read
without regard to any qualifications as to materiality or Material Adverse
Effect contained therein, shall be true and correct with the same force and
effect as if all of such representations and warranties were made at the Closing
Date (provided, however, that to the extent such representations and warranties
expressly relate to an earlier date, such representations shall be true and
correct on and as of such earlier date), except for any untrue or incorrect
representations or warranties that individually or in the aggregate do not have
a Material Adverse Effect on Union on a consolidated basis or on Centrue's or
its stockholders' rights under this Agreement.
SECTION 10.2 UNION'S PERFORMANCE. All of the covenants and obligations to
be performed or complied with by Union under the terms of this Agreement on or
prior to the Closing Date, when read without regard to any qualification as to
materiality or Material Adverse Effect contained therein, shall have been
performed or complied with by Union, except where any non-performance or
noncompliance would not have a Material Adverse Effect on Union on a
consolidated basis or on Centrue's rights under this Agreement.
SECTION 10.3 DOCUMENTS SATISFACTORY. All proceedings, corporate or other,
to be taken by Union in connection with the Contemplated Transactions, and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to counsel for Centrue.
SECTION 10.4 CORPORATE APPROVAL. This Agreement and the Contemplated
Transactions shall have been duly and validly approved as necessary under
applicable Legal Requirements by the stockholders of Union and the stockholders
of Centrue.
SECTION 10.5 NO PROCEEDINGS. Since the date of this Agreement, there must
not have been commenced or Threatened against Union or any Union Subsidiary any
Proceeding: (a) involving any challenge to, or seeking damages or other relief
in connection with, any of the Contemplated Transactions; or (b) that may have
the effect of preventing, delaying, making illegal or otherwise interfering with
any of the Contemplated Transactions, in either case that would have a Material
Adverse Effect on Union on a consolidated basis or on Centrue's or its
stockholders' rights under this Agreement.
SECTION 10.6 ABSENCE OF MATERIAL ADVERSE CHANGES. From the date hereof to
the Closing, there shall be and have been no event or occurrence that had or
would have a Material Adverse Effect on Union on a consolidated basis.
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SECTION 10.7 CONSENTS AND APPROVALS. Any consents or approvals
required to be secured by either party by the terms of this Agreement shall have
been obtained and shall be reasonably satisfactory to Centrue, and all
applicable waiting periods shall have expired, except to the extent that the
failure to obtain any such consents or approvals would not have a Material
Adverse Effect on Union on a consolidated basis or on Centrue's or its
stockholders' rights under this Agreement.
SECTION 10.8 NO PROHIBITIONS. Neither the consummation nor the
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time), contravene, or conflict with or
result in a violation of: (a) any applicable Legal Requirement or Order; or (b)
any Legal Requirement or Order that has been published, introduced, or otherwise
proposed by or before any Regulatory Authority.
SECTION 10.9 REGISTRATION STATEMENT. The Registration Statement shall
have become effective and no stop order suspending such effectiveness shall have
been issued or threatened by the SEC that suspends the effectiveness of the
Registration Statement and no Proceeding shall have been commenced or be pending
or Threatened for such purpose.
SECTION 10.10 TAX OPINION. At Union's expense, Union and Centrue shall
have received a written opinion of Xxxxx, Xxxxxx and Company, LLP, in form and
substance reasonably satisfactory to Union and Centrue, dated as of the date of
the Registration Statement and updated through the Closing Date, substantially
to the effect that: (i) the Merger will constitute a tax-free reorganization
under Section 368(a)(1)(A) of the Code; (ii) no gain or loss will be recognized
by Centrue as a result of the Merger; and (iii) no gain or loss will be
recognized by the stockholders of Centrue who exchange all their Centrue Common
Stock solely for Union Common Stock pursuant to the Merger (except with respect
to any cash paid in lieu of fractional shares).
SECTION 10.11 FAIRNESS OPINION. As of the date of this Agreement and
prior to distribution of the Proxy Statement-Prospectus to the stockholders of
Centrue, Centrue shall have received an opinion from Xxxxx Xxxxxxxx & Xxxxx,
Inc. to the effect that the consideration to be received by Centrue's
stockholders in connection with the Merger is fair, from a financial point of
view, to Centrue's stockholders, and the same shall not have been withdrawn
prior to the Closing.
SECTION 10.12 ADDITIONAL AGREEMENTS. Each of the Xxxxxx Employment
Agreement, the Yeoman Employment Agreement and the Xxxxxxxxx Employment
Agreement shall be in full force and effect, Xxxxxx X. Xxxxxx shall be an active
employee of Centrue, and Xxxxx X. Xxxxxx and Xxxx Xxxxxxxxx shall be active
employees of Union.
ARTICLE 11
TERMINATION
SECTION 11.1 REASONS FOR TERMINATION AND ABANDONMENT. This Agreement,
by prompt written notice given to the other parties prior to or at the Closing,
may be terminated:
(a) by mutual consent of the boards of directors of Union and Centrue;
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(b) by Union if: (i) any of the conditions in ARTICLE 9 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Union to comply with its
obligations under this Agreement); and (ii) Union has not waived such condition
on or before the Closing Date;
(c) by Centrue if: (i) any of the conditions in ARTICLE 10 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Centrue to comply with
its obligations under this Agreement), and (ii) Centrue has not waived such
condition on or before the Closing Date;
(d) by either Union or Centrue if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) by March 1, 2007, or
such later date as the parties may agree (the "TERMINATION DATE"); provided,
however, that the Termination Date shall be extended for up to ninety days if
the sole reason that the Closing has not occurred is due to the fact that (i)
the regulatory approvals contemplated by SECTION 8.1 have not been received, so
long as no Regulatory Authority has denied approval of any of the Contemplated
Transactions, or (ii) the Registration Statement has not become effective;
provided further, however, that the Termination Date shall not be so extended if
the failure to obtain any such regulatory approval or the failure of the
Registration Statement to become effective is the result of a failure by either
Union or Centrue to comply fully with its obligations under this Agreement;
(e) by Centrue, by giving written notice of such termination to Union,
and subject to the special termination fee set forth in SECTION 11.3(D), if
Centrue receives an Acquisition Proposal that is determined in good faith by the
Centrue board of directors, in connection with the exercise of its fiduciary
duties to Centrue's stockholders under applicable law, as advised by its
counsel, after consultation with Centrue's financial advisor, to be on terms
that are more favorable to the stockholders of Centrue than the Merger and that
has a reasonable prospect of being consummated in accordance with its terms (a
"SUPERIOR CENTRUE PROPOSAL"); provided, however, that Centrue shall not be
permitted to terminate this Agreement pursuant to this SECTION 11.1(E) unless
Centrue shall have given Union five Business Days' prior written notice thereof
(or, if there are less than five Business Days remaining prior to the Closing,
written notice prior to the Closing) of its intent to terminate this Agreement
pursuant to this SECTION 11.1(E), together with a summary of the terms of, and
the identity of the Person making, such Superior Centrue Proposal; and
(f) by Union, by giving written notice of such termination to Centrue,
and subject to the special termination fee set forth in SECTION 11.4(D), if
Union receives an Acquisition Proposal that is determined in good faith by the
Union board of directors, in connection with the exercise of its fiduciary
duties to Union's stockholders under applicable law, as advised by its counsel,
after consultation with Union's financial advisor, to be on terms that are more
favorable to the stockholders of Union than the Merger and that has a reasonable
prospect of being consummated in accordance with its terms (a "SUPERIOR UNION
PROPOSAL"), provided, however, that Union shall not be permitted to terminate
this Agreement pursuant to this SECTION 11.1(F) unless Union shall have given
Centrue five Business Days' prior written notice thereof (or, if there are less
than five Business Days remaining prior to the Closing, written notice prior to
the Closing) of its intent to terminate this Agreement pursuant to this SECTION
61
11.1(F), together with a summary of the terms of, and the identity of the Person
making, such Superior Union Proposal.
SECTION 11.2 EFFECT OF TERMINATION; EXPENSES.
(a) Except as provided in SECTION 11.3 and SECTION 11.4, if this
Agreement is terminated pursuant to SECTION 11.1, this Agreement shall forthwith
become void, there shall be no liability under this Agreement on the part of
Union, Centrue or any of their respective Representatives, and all rights and
obligations of each party hereto shall cease; provided, however, that, subject
to SECTION 11.3 and SECTION 11.4, nothing herein shall relieve any party from
liability for the breach of any of its representations and warranties or the
breach of any of its covenants or agreements set forth in this Agreement.
(b) Except as provided below, all Expenses (as defined below) incurred
in connection with this Agreement and the Contemplated Transactions shall be
paid by the party incurring such expenses, whether or not the Merger is
consummated. "EXPENSES" as used in this Agreement shall consist of all
out-of-pocket expenses (including all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
Affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and performance of
this Agreement, the solicitation of stockholder approvals and all other matters
related to the consummation of the Merger.
SECTION 11.3 CENTRUE TERMINATION PAYMENTS.
(a) If this Agreement is terminated by Union in accordance with
SECTION 11.1(B) or SECTION 11.1(D), and Centrue knowingly or willfully breached
or committed an act (or failed to take any action) with the intent to breach,
its covenants, agreements, representations or warranties under this Agreement,
and such breach has caused or would cause the condition set forth in SECTION 9.1
or SECTION 9.2 not to be satisfied, unless such breach is a result of the
failure by Union to perform and comply in all material respects with any of its
material obligations under this Agreement that are to be performed or complied
with by it prior to or on the date required hereunder, then, provided Union is
in material compliance with all of its material obligations under this
Agreement, Centrue shall pay to Union, upon its written demand, an amount equal
to $2,700,000.
(b) If this Agreement is terminated by Centrue or Union because
Centrue's stockholders fail to approve the Contemplated Transactions on or
before the Termination Date (a "CENTRUE STOCKHOLDER TERMINATION"); then,
provided Union is in material compliance with all of its material obligations
under this Agreement, Centrue shall pay to Union, upon its written demand, an
amount equal to $500,000.
(c) In addition to the payment described in SECTION 11.3(A), if any,
if there is a Centrue Stockholder Termination and, within twelve (12) months
after such Centrue Stockholder Termination, Centrue enters into a Contract with
any party other than Union (or any Affiliate of Union) providing for the
acquisition of control of Centrue or Centrue Bank by such other party, then,
provided Union was in material compliance with all of its material obligations
under this Agreement at the time of the Centrue Stockholder Termination, Centrue
shall pay to
62
Union, upon its written demand, the additional sum of $2,200,000; provided,
however, that in such case, the provisions of this Section shall in no way limit
Union's rights against such third party.
(d) If Centrue terminates this Agreement pursuant to SECTION 11.1(E),
then Centrue shall pay to Union, upon its written demand, an amount equal to
$2,700,000; provided, however, that in such case, the provisions of this Section
shall in no way limit Union's rights against any third party in connection with
the Superior Centrue Proposal.
(e) For purposes of this Section, the phrase "CONTROL OF CENTRUE OR
CENTRUE BANK" means the acquisition by any such third party of: (i) legal or
beneficial ownership (as defined by Rule 13d-4 promulgated under the Exchange
Act) of greater than 20% of the then issued and outstanding voting stock of
Centrue or Centrue Bank through any transaction to which Centrue, Centrue Bank
or any Affiliate of Centrue or Centrue Bank is a party (other than by transfers
among or between members of a Family, caused by redemptions or repurchases of
Centrue capital stock by Centrue or by issuances of shares of Centrue Common
Stock or other securities to holders of record of Centrue Common Stock as of the
date of this Agreement); or (ii) all or substantially all of the assets of
Centrue or Centrue Bank (except transfers to an Affiliate of Centrue or Centrue
Bank).
(f) All payments made pursuant to this Section shall be made by wire
transfer of immediately available funds to such account as Union shall
designate. Such sums shall constitute liquidated damages and the receipt thereof
shall be the sole and exclusive remedy of Union and the Union Subsidiaries
against Centrue, the Centrue Subsidiaries and their respective officers,
directors, employees, stockholders and agentsfor any claims arising from or
relating in any way to this Agreement or the transactions contemplated herein;
provided, however, that nothing herein shall preclude or bar Union from
asserting or enforcing any such claim against any Person other than Centrue, the
Centrue Subsidiaries and their respective officers, directors, employees,
stockholders and agents.
SECTION 11.4 UNION TERMINATION PAYMENTS.
(a) If this Agreement is terminated by Centrue in accordance with
SECTION 11.1(C) or SECTION 11.1(D), and Union knowingly or willfully breached or
committed an act (or failed to take any action) with the intent to breach, its
covenants, agreements, representations or warranties under this Agreement, and
such breach has caused or would cause the condition set forth in SECTION 10.1 or
SECTION 10.2 not to be satisfied, unless such breach is a result of the failure
by Centrue to perform and comply in all material respects with any of its
material obligations under this Agreement that are to be performed or complied
with by it prior to or on the date required hereunder, then, provided Centrue is
in material compliance with all of its material obligations under this
Agreement, Union shall pay to Centrue, upon its written demand, an amount equal
to $2,700,000.
(b) If this Agreement is terminated by Union or Centrue because
Union's stockholders fail to approve the Contemplated Transactions on or before
the Termination Date, or (a "UNION STOCKHOLDER TERMINATION"); then, provided
Centrue is in material compliance
63
with all of its material obligations under this Agreement, Union shall pay to
Centrue, upon its written demand, an amount equal to $500,000.
(c) In addition to the payment described in SECTION 11.4(A), if any,
if there is a Union Stockholder Termination and, within twelve (12) months after
such Union Stockholder Termination, Union enters into a Contract with any party
other than Centrue (or any Affiliate of Centrue) providing for the acquisition
of control of Union or UnionBank by such other party, then, provided Centrue was
in material compliance with all of its material obligations under this Agreement
at the time of the Union Stockholder Termination, Union shall pay to Centrue,
upon its written demand, the additional sum of $2,200,000; provided, however,
that in such case, the provisions of this Section shall in no way limit
Centrue's rights against any such third party.
(d) If Union terminates this Agreement pursuant to SECTION 11.1(F),
then, then Union shall pay to Centrue, upon its written demand, and amount equal
to $2,700,000; provided, however, that in such case, the provisions of this
Section shall in no way limit Centrue's rights against any third party in
connection with the Superior Union Proposal.
(e) For purposes of this Section, the phrase "CONTROL OF UNION OR
UNIONBANK" means the acquisition by any such third party of: (i) legal or
beneficial ownership (as defined by Rule 13d-4 promulgated under the Exchange
Act) of greater than 20% of the then issued and outstanding voting stock of
Union or UnionBank through any transaction to which Union, UnionBank or any
Affiliate of Union or UnionBank is a party (other than by transfers among or
between members of a Family, caused by redemptions or repurchases of Union
capital stock by Union or by issuances of shares of Union Common Stock or other
securities to holders of record of Union Common Stock as of the date of this
Agreement); or (ii) all or substantially all of the assets of Union or UnionBank
(except transfers to an Affiliate of Union or UnionBank).
(f) All payments made pursuant to this Section shall be made by wire
transfer of immediately available funds to such account as Centrue shall
designate. Such sums shall constitute liquidated damages and the receipt thereof
shall be the sole and exclusive remedy of Centrue and the Centrue Subsidiaries
against Union, the Union Subsidiaries and their respective officers, directors,
employees, stockholders and agents for any claims arising from or relating in
any way to this Agreement or the transactions contemplated herein; provided,
however, that nothing herein shall preclude or bar Centrue from asserting or
enforcing any such claim against any Person other than Union, the Union
Subsidiaries and their respective officers, directors, employees, stockholders
and agents.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1 GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement shall be governed by the internal laws of
the State of Illinois applicable to Contracts made and wholly to be performed in
such state without regard to conflicts of laws.
64
SECTION 12.2 ASSIGNMENTS, SUCCESSORS AND NO THIRD PARTY RIGHTS. None of the
parties to this Agreement may assign any of its rights under this Agreement
without the prior consent of the other parties. Subject to the preceding
sentence, this Agreement and every representation, warranty, covenant, agreement
and provision hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of this
Agreement, other than SECTION 7.10, which is intended to be for the benefit of
the individuals covered thereby.
SECTION 12.3 WAIVER. Except as provided in SECTION 11.3 and SECTION 11.4,
the rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power or privilege, and
no single or partial exercise of any such right, power or privilege will
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege. To the maximum extent permitted
by applicable law: (a) no claim or right arising out of this Agreement or the
documents referred to in this Agreement can be discharged by one party, in whole
or in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
SECTION 12.4 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, each of Union and Centrue will maintain in confidence, and will
cause each of its respective Representatives to maintain in confidence, and not
use to the detriment of the other or its Subsidiaries any written, oral, or
other information obtained in confidence from the other of any of its
Subsidiaries in connection with this Agreement or the Contemplated Transactions,
unless: (a) such information is already known to such party or to others not
bound by a duty of confidentiality or such information becomes publicly
available through no fault of such party; (b) the use of such information is
necessary or appropriate in making any filing or obtaining any consent or
approval required for the consummation of the Contemplated Transactions; or (c)
the furnishing or use of such information is required by or necessary or
appropriate in connection with any legal proceedings. If the Contemplated
Transactions are not consummated, each party will return or destroy as much of
such written information as the other party may reasonably request.
SECTION 12.5 NOTICES. All notices, consents, waivers and other
communications under this Agreement must be in writing (which shall include
facsimile communication) and will be deemed to have been duly given if delivered
by hand or by nationally recognized overnight delivery service (receipt
requested), mailed by registered or certified U.S. mail (return receipt
requested) postage prepaid or telecopied, if confirmed immediately thereafter by
also mailing a copy of any notice, request or other communication by U.S. mail
as provided in this Section:
65
If to Union, to:
UnionBancorp, Inc.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxxx
with copies to:
Xxxxxx & Xxxxxx Attorneys PC
Comerica Building
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to Centrue, to:
Centrue Financial Corporation
000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxxx
with copies to:
Barack Xxxxxxxxxx Xxxxxxxxxx
Xxxxxxx & Xxxxxxxxx LLP
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
or to such other Person or place as Centrue shall furnish to Union or Union
shall furnish to Centrue in writing. Except as otherwise provided herein, all
such notices, consents, waivers and other communications shall be effective: (a)
if delivered by hand, when delivered; (b) if mailed in the manner provided in
this Section, five Business Days after deposit with the United States Postal
Service; (c) if delivered by overnight express delivery service, on the next
Business Day after deposit with such service; and (d) if by facsimile, on the
next Business Day if also confirmed by mail in the manner provided in this
Section.
66
SECTION 12.6 ENTIRE AGREEMENT. This Agreement and any documents executed by
the parties pursuant to this Agreement and referred to herein, and the
Confidentiality Agreement, constitute the entire understanding and agreement of
the parties hereto and supersede all other prior agreements and understandings,
written or oral, relating to such subject matter between the parties.
SECTION 12.7 MODIFICATION. This Agreement may not be amended except by a
written agreement signed by each of Centrue and Union. Without limiting the
foregoing, Centrue and Union may by written agreement signed by each of them:
(a) extend the time for the performance of any of the obligations or other acts
of the parties hereto; (b) waive any inaccuracies in the representations or
warranties contained in this Agreement or in any document delivered pursuant to
this Agreement; and (c) waive compliance with or modify, amend or supplement any
of the conditions, covenants, agreements, representations or warranties
contained in this Agreement or waive or modify performance of any of the
obligations of any of the parties hereto, which are for the benefit of the
waiving party; provided, however, that no such modification, amendment or
supplement agreed to after authorization of this Agreement by the stockholders
of Union and Centrue shall affect the rights of Union's or Centrue's
stockholders, respectively, in any manner which is materially adverse to such
Persons.
SECTION 12.8 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement unless the
consummation of the Contemplated Transactions is adversely affected thereby.
SECTION 12.9 FURTHER ASSURANCES. The parties agree: (a) to furnish upon
request to each other such further information; (b) to execute and deliver to
each other such other documents; and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
SECTION 12.10 SURVIVAL. Except for covenants that are expressly to be
performed after the Closing, the representations, warranties and covenants
contained herein shall not survive beyond the Closing.
SECTION 12.11 COUNTERPARTS. This Agreement and any amendments thereto may
be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
* * * * *
67
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers on the day and year first written above.
UNIONBANCORP, INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and CEO
CENTRUE FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
68
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
UNIONBANCORP, INC.
The Restated Certificate of Incorporation for UnionBancorp, Inc. was duly
filed on May 13, 1991, and was amended by a Certificate of Amendment filed on
March 1, 1994, and further amended by a Certificate of Amendment filed on July
24, 1996. In accordance with Sections 242 and 245 of the General Corporation Law
of the State of Delaware, UnionBancorp, Inc. further amends its certificate of
incorporation by adopting the following amended and restated certificate of
incorporation.
The name of the Corporation is Centrue Financial Corporation.
The address of its registered office in the State of Delaware is 00
Xxxxxxxxxx Xxxxxx, Xxxxx X-000, in the City of Dover, County of Kent. The name
of its registered agent at such address is The Xxxxxxxx-Xxxx Corporation System,
Inc.
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware, as amended from time to time.
The total number of shares of capital stock which the corporation shall
have authority to issue is 15,000,000 shares of Common Stock, par value $1.00
per share, and 200,000 shares of Preferred Stock, no par value per share.
The Board of Directors is expressly authorized to adopt, from time to time,
a resolution or resolutions providing for the issue of one or more series of
Preferred Stock, with such voting powers, full or limited, or no voting powers,
and with such designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions thereof,
as shall be stated and expressed in the resolution or resolutions adopted by the
Board of Directors.
Any and all right, title, interest and claim in or to any dividends
declared by the corporation, whether in cash, stock, or otherwise, which are
unclaimed by the stockholder
A-1
entitled thereto for a period of six years after the close of business on the
payment date, shall be and be deemed to be extinguished and abandoned; and such
unclaimed dividends in the possession of the corporation, its transfer agents or
other agents or depositaries shall at such time become the absolute property of
the corporation, free and clear of any and all claims of any persons whatsoever.
Intentionally omitted.
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized:
to exercise all such powers and do all such acts as may be exercised or
done by the corporation, subject to the provisions of the laws of the State
of Delaware, this Certificate of Incorporation and the bylaws of the
corporation, and
to make, alter or repeal any bylaws of the corporation pursuant to a
resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously
authorized directorships at the time any such resolution is presented to
the Board of Directors for adoption)(the "Whole Board").
A director of the corporation shall not in the absence of fraud be
disqualified by his office from dealing or contracting with the corporation
either as a vendor, purchaser or otherwise, nor in the absence of fraud shall a
director of the corporation be liable to account to the corporation for any
profit realized by him from or through any transaction or contract of the
corporation by reason of the fact that he, or any firm of which he is a member,
or any corporation of which he is an officer, director or stockholder, was
interested in such transaction or contract if such transaction or contract has
bean authorized, approved or ratified in the manner provided in the General
Corporation Law of Delaware for authorization, approval or ratification of
transactions or contracts between the corporation and one or more of its
directors or officers, or between the corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest.
The corporation shall, to the full extent permitted by Section 145 of the
General Corporation Law of Delaware, as amended from time to time, indemnify all
persons who it may indemnify pursuant thereto.
A-2
Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof, or on the application of
any receiver or receivers appointed for this corporation under the provision of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors, or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all stockholders or class of stockholders of this corporation, as the case may
be, and also on this corporation.
The number of directors of the corporation shall be fifteen, or such other
number as may be determined from time to time by the affirmative vote of the
holders of at least seventy percent (70%) of all shares of the corporation than
entitled to vote in the election of directors, considered for this purpose as
one class, or pursuant to a resolution adopted by at least two-thirds of the
Whole Board (immediately prior to such proposed change).
Elections of directors need not be by written ballot unless the bylaws of
the corporation so provide.
The directors, other than those who may be elected by the holders of any
class or series of stock having preference over the common stock as to dividends
or upon liquidation, shall be classified, with respect to the time for which
they severally hold office, into three classes, as nearly equal in number as
possible, as shall ha provided in the manner specified in the bylaws, each class
to hold office initially for a term expiring at the annual meeting of
stockholders held in the third year following the year of their election, with
the members of each class to hold office until their successors are elected and
qualified. At each annual meeting of the stockholders of the corporation, the
successors to the class of directors whose term expires at that meeting shall be
elected to hold office for a term expiring at the annual meeting of stockholders
held in the third year following the year of their election.
Newly created directorships resulting from any increase in the number of
directors and any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be filled solely by
the affirmative vote of a majority of the remaining directors then in office,
even though less than a quorum of the Board of Directors. Any director elected
in accordance with the preceding sentence shall hold office for the
A-3
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor shall have been elected and qualified. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
Subject to the rights of any class or series of stock having preference
over the common stock as to dividends or upon liquidation to elect directors
under specified circumstances, a director may be removed from office only for
cause and only by the affirmative vote of the holders of seventy percent (70%)
of all shares of stock of the corporation then entitled to vote in the election
of directors, considered for this purpose as a single class.
Except as otherwise expressly provided in this Article XI, the affirmative
vote of the holders of seventy percent (70%) of all shares of stock of the
corporation then entitled to vote in the election of directors, considered for
this purpose as one class, shall be required for any one of the following
actions:
for the adoption of any amendment, alteration, change or repeal of Articles
VI, X or XI of this Certificate of Incorporation;
for the adoption of any agreement for the merger or consolidation of the
corporation with or into any other corporation;
to authorize any sale, lease or exchange of all or substantially all of the
assets of the corporation; or
to authorize the dissolution of the corporation.
The above voting requirement shall not be applicable to any one of the
foregoing actions and any such action shall only require the affirmative vote of
the holders of a simple majority of all shares of stock of the corporation then
entitled to vote in the election of directors, considered for this purpose as
one class, if the action shall have been approved at any time prior to its
consummation by resolution adopted by no less than two-thirds of the Whole
Board.
The provisions of this Article XI shall not be applicable to any merger or
consolidation of this corporation with or into any other corporation of which
this corporation is the owner of at least 80% of the outstanding shares of each
class of stock.
Any action required or permitted to be taken by the holders of capital
stock of the corporation must be effected at a duly called annual or special
meeting of holders of capital stock of the corporation and may not be effected
by any consent in writing by such holders.
A-4
No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty by such directors as a director; provided, however, that this Articles XIII
shall not eliminate or limit the liability of a director to the extent provided
by applicable law (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article XIII shall apply to or have any effect on
the liability or alleged liability of any director of the corporation for or
with respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
The corporation reserves the right to emend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted to this reservation.
A-5
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
UNIONBANCORP, INC.
1. ISSUANCE. The board of directors (the "Board") of UnionBancorp, Inc., a
Delaware corporation (the "Company"), has designated 2,765 shares of the
Company's authorized and unissued preferred stock as "Series A Convertible
Preferred Stock," has authorized such shares for issuance at a price of $1,000
per share (the "Series A Preferred Stock") and has determined that no further
shares of Series A Preferred Stock shall be issued.
2. DIVIDENDS.
(a) The holders of record of the then outstanding shares of Series A
Preferred Stock shall be entitled to receive when, as and if declared by the
Board out of any funds legally available therefor, cumulative dividends at the
annual rate of $75.00 per share payable in four equal cash payments on the 20th
day (or if not a business day, as defined below, on the next business day
thereafter) of April, July, October and January commencing October, 1996,
provided, however, that any such quarterly cash payment shall be prorated with
respect to any shares of Series A Preferred Stock that were outstanding less
than the total number of days in the calendar quarter immediately preceding any
such payment date. The amount of any such prorated cash payment shall be
computed on the basis of the actual number of days in any calendar quarter
during which such shares of Series A Preferred Stock were outstanding. Each such
dividend shall be payable to holders of record as they appear on the stock books
of the Company on such record dates, not less than 10 and not more than 60 days
preceding the dividend payment date, as shall be fixed by the Board. No
dividends, other than those payable solely in the Company's common stock, $1.00
par value ("Common Stock"), shall be paid during any fiscal year of the Company
with respect to shares of Common Stock or any other security issued by the
Company, except for outstanding shares of the Company's Series B Preferred Stock
(the "Series B Preferred Stock"), until dividends in the total amount of $75.00
per share on Series A Preferred Stock shall have been paid. Such dividends shall
accrue on each share of Series A Preferred Stock from the date of issuance and
from day to day thereafter, whether or not earned or declared. Notwithstanding
the foregoing, such dividends shall be cumulative so that if such dividends in
respect of any previous or current annual dividend period, at the annual rate
specified above, shall not have been paid or declared and a sum sufficient for
the payment thereof set apart, the deficiency for any prior year and the amount
owed in the current year shall first be fully paid before any dividend or other
distribution shall be paid on or declared and set apart for the shares of Common
Stock. A "business day" shall be deemed to be any day when trading of securities
occurs on the New York Stock Exchange.
(b) Unless full dividends on Series A Preferred Stock for all past
dividend periods and the then current dividend period shall have been paid or
declared and a sum sufficient for the payment thereof set apart: no dividend
whatsoever whether in cash, securities
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or other property (other than a dividend payable solely in shares of Common
Stock) shall be paid or declared and set aside for payment, and no distribution
shall be made, on any shares of Common Stock or other class of preferred stock
authorized after the date hereof except for the Series B Preferred Stock; and no
shares of Common Stock or other class of preferred stock authorized after the
date hereof, except the Series B Preferred Stock, shall be purchased, redeemed
or otherwise acquired by the Company and no funds shall be paid into or set
aside or made available for a sinking fund for the purchase, redemption or other
acquisition thereof without the approval of the holders of at least a majority
of the then outstanding shares of Series A Preferred Stock.
(c) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (b) of this Section 2,
purchase or otherwise acquire such shares at such time and such manner.
3. CONVERSION. The holders of Series A Preferred Stock shall have the
following conversion rights (the "Conversion Rights") and be subject to the
following provisions with respect to the conversion of the shares of Series A
Preferred Stock:
(a) RIGHT TO CONVERT. The shares of Series A Preferred Stock shall be
convertible at the holder's option into the number of fully paid and
nonassessable shares of Common Stock that is calculated in accordance with the
terms of this Section 3. Unless earlier permitted by the Company, the
outstanding shares of Series A Preferred Stock are convertible at the holder's
option after the fourth anniversary of the date of issuance. The number of
shares of Common Stock into which the outstanding Series A Preferred Stock is
convertible shall be determined for all purposes on the first date such shares
of Series A Preferred Stock become convertible (referred to as the
"Determination Date"). Notwithstanding the occurrence of the Determination Date
for any outstanding shares of Series A Preferred Stock, the holder of such
shares may continue to hold these shares of Series A Preferred Stock and may at
any time thereafter, subject to the provisions of this Section 3, convert those
shares into Common Stock.
(b) CONVERSION PRICE. The Conversion Price shall be equal to 1.075
times the per share book value of Common Stock, computed in accordance with
generally accepted accounting principles, as of the end of the month immediately
prior to the Determination Date. Each share of Series A Preferred Stock shall be
convertible into the number of shares of Common Stock that results from dividing
$1,000 by the Conversion Price.
(c) MECHANICS OF VOLUNTARY CONVERSION; UNPAID DIVIDENDS.
(i) Before any holder of shares of Series A Preferred Stock shall
be entitled to convert the same into shares of Common Stock, he shall surrender
the certificate or certificates therefor, duly endorsed, at the office of the
Company or of any transfer agent of Series A Preferred Stock or Common Stock,
with a written notice that he elects to convert the same and shall state therein
the number of shares of Series A Preferred Stock being converted and the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued. Except as otherwise expressly provided for herein, the date the
Company receives
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such surrendered certificates and written notice shall be deemed to be the
Conversion Date. Thereupon the Company shall promptly issue and deliver at such
office to such holder of shares of Series A Preferred Stock or to the nominee or
nominees of such holder a certificate or certificates representing: the number
of shares of Common Stock to which he shall be entitled; and any shares of
Series A Preferred Stock that were represented by any certificate surrendered as
required by the provisions of this paragraph, but which were not converted and
which he continues to own.
(ii) Such conversion shall be deemed to have been made
immediately prior to the close of business on the Conversion Date and the person
or persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date. A holder of shares of Series A
Preferred Stock who surrenders shares of Series A Preferred Stock for conversion
shall be entitled to receive from the Company on the date of such surrender an
amount in cash equal to the accrued dividends on such surrendered shares of
Series A Preferred Stock through such Conversion Date, less the aggregate amount
of dividends which would have accrued since the last dividend payment date for
Series A Preferred Stock on the number of shares of the Common Stock into which
such shares of Series A Preferred Stock are converted if dividends on such
shares of Common Stock accrued at an annual rate based upon the dividends paid
by the Company on the Common Stock for the most recently ended fiscal period for
which Common Stock dividends were paid, but any future dividends with respect to
the surrendered shares of Series A Preferred Stock shall cease to accrue after
such surrender and all rights with respect to such shares shall forthwith after
such surrender terminate.
(d) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the event
the Company at any time or from time to time after the Issuance Date shall make
or issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Company other than shares of Common Stock, then and in each such event
provision shall be made so that the holders of Series A Preferred Stock shall
receive upon conversion thereof in addition to the number of shares of Common
Stock receivable thereupon, the amount of securities of the Company that they
would have received had their Series A Preferred Stock been converted into
Common Stock on the date of such event and had thereafter, during the period
from the date of such event to and including the conversion date, retained such
securities receivable by them as aforesaid during such period giving application
to all adjustments called for during such period under this paragraph 3 with
respect to the rights of the holders of Series A Preferred Stock.
(e) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. If the
shares of Common Stock issuable upon the conversion of the shares of Series A
Preferred Stock shall be changed into the same or a different number of shares
of any class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than an event provided for elsewhere in
this paragraph 3), then and in each such event the holder of each share of
Series A Preferred Stock shall have the right thereafter to convert such share
into the kind and amounts of shares of stock and other securities and property
receivable upon such reorganization, reclassification or other change, by
holders of the number of shares of Common Stock into which such shares of Series
A Preferred Stock might have been converted
A-8
immediately prior to such reorganization, reclassification or change, all
subject to further adjustment as provided herein.
(f) REORGANIZATION, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If at
a any time or from time to time there shall be a capital reorganization of the
Common Stock (other than an event provided for elsewhere in this paragraph 3) or
a merger, consolidation or statutory exchange of securities of the Company with
or into another corporation, or the sale of all or substantially all the
Company's properties and assets to any other person, then, as a part of such
reorganization, merger, consolidation or sale, provision shall be made so that
the holders of Series A Preferred Stock shall thereafter be entitled to receive
upon conversion of the shares of Series A Preferred Stock, the number of shares
of stock or other securities or property of the Company, or of the successor
corporation resulting from such merger or consolidation or sale, to which a
holder of that number of shares of Common Stock deliverable upon conversion of
the shares of Series A Preferred Stock would have been entitled on such capital
reorganization, merger, consolidation or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of this paragraph
3 with respect to the rights of the holders of Series A Preferred Stock after
the reorganization, merger, consolidation or sale to the end that the provisions
of this paragraph 3 (including, if necessary, adjustment of the Conversion Price
then in effect and the number of shares purchasable upon conversion of the
shares of Series A Preferred Stock) shall be applicable after that event as
nearly equivalent as may be practicable. The foregoing provisions shall
similarly apply to successive consolidations, mergers, statutory exchanges,
sales or conveyances.
(g) SALE OF SHARES BELOW CONVERSION PRICE.
(i) If at any time or from time to time after the Issuance Date,
the Company shall issue or sell Additional Shares of Common Stock (as
hereinafter defined), other than as a dividend as provided in paragraph 3(e)
above, for a consideration per share less than the then existing Conversion
Price for Series A Preferred Stock (or, if an adjusted Conversion Price shall be
in effect by reason of a previous adjustment, then less than such adjusted
Conversion Price), then and in each case the then applicable Conversion Price
for Series A Preferred Stock shall be reduced, as of the opening of business on
the date of such issue or sale, to a price determined by multiplying the
Conversion Price by a fraction, the numerator of which shall be the sum of: the
number of shares of Common Stock outstanding immediately prior to such issue or
sale; plus the number of shares of Common Stock that the aggregate consideration
received by the Company for the total number of Additional Shares of Common
Stock so issued would purchase at the Conversion Price, and the denominator of
which shall be the sum of: (X) the number of shares of Common Stock outstanding
immediately prior to such issue or sale; plus (Y) the number of such Additional
Shares of Common Stock so issued.
(ii) For the purpose of making any adjustment in the Conversion
Price or number of shares of Common Stock purchasable on the conversion of the
shares of Series A Preferred Stock as provided above, the consideration received
by the Company for any issue or sale of securities shall:
(A) to the extent it consists of cash, be computed at the
net amount of cash received by the Company after deduction of any underwriting
or similar
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commissions, concessions or compensation paid or allowed by the Company in
connection with such issue or sale;
(B) to the extent it consists of services or property other
than cash, be computed at the fair value of such services or property as
determined in good faith by the Board; and
(C) if Additional Shares of Common Stock, Convertible
Securities (as defined below), or rights or options to purchase either
Additional Shares of Common Stock or Convertible Securities are issued or sold
together with other stock or securities or other assets of the Company for a
consideration that covers both, be computed as the portion of the consideration
so received that may be reasonably determined in good faith by the Board to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
rights or options.
(iii) For the purpose of the adjustment provided in subparagraph
(i) of this paragraph 3(g), if at any time or from time to time after the
Issuance Date the Company shall issue any rights or options for the purchase of,
or stock or other securities convertible into, Additional Shares of Common Stock
(such convertible stock or securities being referred to as "Convertible
Securities"), then, in each case, if the Effective Price (as defined below) of
such rights, options or Convertible Securities shall be less than the then
existing Conversion Price for Series A Preferred Stock, the Company shall be
deemed to have issued at the time of the issuance of such rights or options or
Convertible Securities the maximum number of Additional Shares of Common Stock
issuable upon exercise or conversion thereof and to have received as
consideration for the issuance of such shares an amount equal to the total
amount of the consideration, if any, received by the Company for the rights or
options or Convertible Securities, plus, in the case of such options or rights,
the minimum amounts of consideration, if any, payable to the Company upon
exercise or conversion of such options or rights. For purposes of the foregoing,
"Effective Price" shall mean the quotient determined by dividing the total of
all such consideration by such maximum number of Additional Shares of Common
Stock. No further adjustment of the Conversion Price adjusted upon the issuance
of such rights, options or Convertible Securities shall be made as a result of
the actual issuance of Additional Shares of Common Stock on the exercise of any
such rights or options or the conversion of any such Convertible Securities. If
any such rights or options or the conversion privilege represented by any such
Convertible Securities shall expire without having been exercised, the
Conversion Price adjusted upon the issuance of such rights, options or
Convertible Securities shall be readjusted to the Conversion Price that would
have been in effect had an adjustment been made on the basis that the only
Additional Shares of Common Stock so issued were the Additional Shares of Common
Stock, if any, actually issued or sold on the exercise of such rights or options
or rights of conversion of such Convertible Securities, and such Additional
Shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise, plus the consideration, if
any, actually received by the Company for the granting of all such rights or
options, whether or not exercised, plus the consideration received for issuing
or selling the Convertible Securities actually converted plus the consideration,
if any, actually received by the Company on the conversion of such Convertible
Securities.
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(iv) For the purpose of the adjustment provided for in
subparagraph (i) of this paragraph 3(g), if at any time or from time to time
after the Issuance Date the Company shall issue any rights or options for the
purchase of Convertible Securities, then, in each such case, if the Effective
Price thereof is less than the current Conversion Price, the Company shall be
deemed to have issued at the time of the issuance of such rights or options the
maximum number of Additional Shares of Common Stock issuable upon conversion of
the total amount of Convertible Securities covered by such rights or options and
to have received as consideration for the issuance of such Additional Shares of
Common Stock an amount equal to the amount of consideration, if any, received by
the Company for the issuance of such rights or options, plus the minimum amounts
of consideration, if any, payable to the Company upon the conversion of such
Convertible Securities. For purposes of the foregoing, "Effective Price" shall
mean the quotient determined by dividing the total amount of such consideration
by such maximum number of Additional Shares of Common Stock. No further
adjustment of such Conversion Price adjusted upon the issuance of such rights or
options shall be made as a result of the actual issuance of the Convertible
Securities upon the exercise of such rights or options or upon the actual
issuance of Additional Shares of Common Stock upon the conversion of such
Convertible Securities. The provisions of subparagraph (iii) of this paragraph
3(h) for the readjustment of such Conversion Price upon the expiration of rights
or options or the rights of conversion of Convertible Securities, shall apply
mutatis mutandis to the rights, options and Convertible Securities referred to
in this subparagraph (iv).
(h) DEFINITION OF ADDITIONAL SHARES. The term "Additional Shares of
Common Stock" as used herein shall mean all shares of Common Stock issued or
deemed issued by the Company after the Issuance Date, whether or not
subsequently reacquired or retired by the Company, other than: shares of Common
Stock issued upon conversion of the shares of Series A Preferred Stock; any
shares of Common Stock (as adjusted for all stock dividends, stock splits,
subdivisions and combinations) issued to employees, officers, directors,
consultants or other persons performing services for the Company (if so issued
solely because of any such person's status as an officer, director, employee,
consultant or other person performing services for the Company and not as part
of any general offering of the Company's securities) pursuant to any stock
option plan, stock purchase plan or management incentive plan, agreement or
arrangement approved by the Board; and (iii) any shares of Common Stock issued
by the Company as full or partial consideration by the Company in connection
with a merger, consolidation, purchase of assets or other transaction resulting
in the acquisition by the Company of greater than 25% of the voting securities
of any other corporation, financial institution or other entity, provided that
the Common Stock used in such transaction is valued for purposes thereof at not
less than its then book value.
(i) ACCOUNTANTS' CERTIFICATE OF ADJUSTMENT. In each case of an
adjustment or readjustment of the Conversion Price for the number of shares of
Common Stock or other securities issuable upon conversion of the shares of
Series A Preferred Stock, the Company, at its expense, shall cause independent
certified public accountants of recognized standing selected by the Company (who
may be the independent certified public accountants then auditing the books of
the Company) to compute such adjustment or readjustment in accordance herewith
and prepare a certificate showing such adjustment or readjustment, and shall
mail such certificate, by first class mail, postage prepaid, to each registered
holder of shares of Series A Preferred Stock at the holder's address as shown on
the Company's books. The
A-11
certificate shall set forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based including a
statement of: (i) the consideration received or to be received by the Company
for any Additional Shares of Common Stock issued or sold or deemed to have been
issued or sold; the Conversion Price at the time in effect for each series of
Series A Preferred Stock; and the number of Additional Shares of Common Stock
and the type and amount, if any, of other property which at the time would be
received upon conversion of the shares of Series A Preferred Stock.
(j) NOTICES OF RECORD DATE. In the event of any taking by the Company
of a record of the holders of any class or series of securities for the purpose
of determining the holders thereof who are entitled to receive any dividend or
other distribution, or any reclassification or recapitalization of the capital
stock of the Company, any merger, consolidation or share exchange involving the
Company, or any transfer of all or substantially all the assets of the Company
to any other corporation, entity or person, or any voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, the
Company shall mail to each holder of shares of Series A Preferred Stock (other
than any such holder who is also a holder of record, or the affiliate of a
holder of record, of shares of Common Stock, or is a director or executive
officer, or an affiliate of a director or executive officer, of the Company) at
least 30 days prior to the record date specified therein, a notice specifying:
the date on which any such record is to be taken for the purpose of such
dividend or distribution and a description of such dividend or distribution; the
date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to
become effective; and the time, if any is to be fixed, as to when the holders of
record of Common Stock (or other securities) shall be entitled to exchange their
shares of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up.
(k) FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon conversion of shares of Series A Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the Company
shall pay cash equal to the product of such fraction multiplied by the
Conversion Price on the Conversion Date. Whether or not the fractional shares
are issuable upon such conversion shall be determined on the basis of the total
number of shares of Series A Preferred Stock the holder is at the time
converting into shares of Common Stock and the number of shares of Common Stock
issuable upon such aggregate conversion.
(l) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of Series A Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series A Preferred Stock. As a condition precedent to the
taking of any action which would cause an adjustment to the Conversion Price,
the Company will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient in order that it may
validly and legally issue the shares of its Common Stock issuable based upon
such adjusted Conversion Price.
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(m) NOTICES. Any notice required or permitted by the provisions of
this paragraph 3 to be given to the holder of shares of Series A Preferred Stock
or the Company, respectively, shall be deemed given when personally delivered to
such holder or the Company or five business days after the same has been
deposited in the United States mail, first class postage prepaid and addressed
to each holder of record at his address appearing on the books of the Company or
the Company's registered office in the state of Illinois, as the case may be,
provided, however, that the written notice to be delivered to the Company by the
holder of shares of Series A Preferred Stock in connection with the conversion
of such stock shall be effective only upon actual receipt by the Company.
(n) PAYMENT OF TAXES. The Company will pay all taxes and other
governmental charges (other than taxes measured by the revenue or income of the
holders of shares of Series A Preferred Stock) that may be imposed in respect of
the issue or delivery of shares of Common Stock upon conversion of shares of
Series A Preferred Stock.
(o) NO DILUTION OR IMPAIRMENT. The Company shall not amend its
Certificate of Incorporation or participate in any reorganization,
recapitalization, transfer of assets, consolidation, merger, share exchange,
dissolution, issue or sale of securities or any other voluntary action, for the
purpose of avoiding or seeking to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in carrying out all such action as may be reasonably
necessary or appropriate to protect the conversion rights of the holders of
shares of Series A Preferred Stock against dilution or other impairment.
(p) DUTY TO MAKE FAIR ADJUSTMENTS IN CERTAIN CASES. If any event
occurs as to which the other provisions of this paragraph 3 are not strictly
applicable or if strictly applicable would not fairly protect the Conversion
Rights of the holders of shares of Series A Preferred Stock in accordance with
the essential intent and principles of such provisions, then the Board shall
make an adjustment in the application of such provisions, in accordance with
such essential intent and principles, so as adequately to protect such
Conversion Rights.
4. VOTING RIGHTS. The holders of each share of Series A Preferred Stock
shall not be entitled to vote, except: as required by law; to approve the
authorization or issuance of any shares of any class or series of stock which
ranks senior or on a parity with, the Series A Preferred Stock in respect of
dividends and distributions upon the dissolution, liquidation or winding up of
the Company; and the holders of Series A Preferred Stock shall have full voting
rights in the following situations: during any period of time when two dividend
payments on shares of Series A Preferred Stock have accrued but have remained
unpaid; upon conversion of the shares of Series A Preferred Stock into shares of
Common Stock; and if the holders of Common Stock vote on a proposal to merge or
otherwise enter into a transaction with a third party pursuant to which Union is
not the surviving entity. In such event, the holder of shares of Series A
Preferred Stock shall be entitled to notice of any holders' meeting in
accordance with the bylaws of the Company unless such holder is also a holder of
record, or the affiliate of a holder of record, of shares of Common Stock, or is
a director or executive officer, or an affiliate of a director or executive
officer, of the Company, and shall be entitled to a number of votes equal to the
number of full shares of Common Stock into which such shares of Series A
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Preferred Stock are fully convertible pursuant to paragraph 3 above, at the
record date for the determination of stockholders entitled to vote on such
matters or, if no such record date is established, at the date such vote is
taken or any written consent of stockholders is solicited.
(b) Notwithstanding anything contained herein to the contrary, the
holders of Series A Preferred Stock shall vote as a separate class when required
by law and to approve the matters set forth in Section 4(a)(ii). In such
circumstances, the affirmative vote of the holders of a majority (or such
greater percentage as may be required by law or the Company's certificate of
incorporation or bylaws) of the Common Stock and of the voting rights provided
in this Section for the Series A Preferred Stock, with each voting separately as
a class, shall be necessary to approve such proposed action. In all other
circumstances described in Section 4(a), the holders of Series A Preferred Stock
shall vote with the holders of Common Stock and the affirmative vote of the
holders of a majority (or such greater percentage as may be required by law or
the Company's certificate of incorporation or bylaws) of the Common Stock and of
the voting rights provided in this Section for the Series A Preferred Stock,
voting together as a single group, shall be necessary to approve such proposed
action.
5. LIQUIDATION. Upon the dissolution, liquidation or winding up of the
Company, whether voluntary or involuntary, the holders of shares of Series A
Preferred Stock shall be entitled to receive out of the assets of the Company
available for distribution to stockholders, the amount of $1,000 per share, plus
any dividends whether or not declared or due which have accrued thereon through
the date of such distribution, but which remain unpaid, before any payment or
distribution shall be made on shares of Common Stock or any other securities
issued by the Company, except that holders of shares of Series A Preferred Stock
shall share pro rata in any such payment or distribution with the holders of
Series B Preferred Stock. In the event the assets of the Company available for
distribution to the holders of shares of Series A Preferred Stock upon any
dissolution, liquidation or winding up of the Company shall be insufficient to
pay in full all amounts to which such holders are entitled pursuant to this
paragraph, then all of the assets of the Company to be distributed shall be
distributed ratably to the holders of Series A Preferred Stock and Series B
Preferred Stock. After the payment to the holders of the shares of Series A
Preferred Stock of the full amounts provided for in this paragraph, the holders
of shares of Series A Preferred Stock as such shall have no right or claim to
any of the remaining assets of the Company.
6. INFORMATION RIGHTS. The holders of shares of Series A Preferred Stock
shall be entitled to receive audited annual financial statements of the Company,
as soon as such statements become available.
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CERTIFICATE OF DESIGNATION
OF
SERIES B PREFERRED STOCK
OF
UNIONBANCORP, INC.
1. DESIGNATION AND AMOUNT. The board of directors (the "Board") of
UnionBancorp, Inc., a Delaware corporation (the "Company"), has designated 1,092
shares of the Company's authorized and unissued preferred stock as "Series B
Preferred Stock," has authorized such shares for issuance at a price of $1,000
per share (the "Series B Preferred Stock") and has determined that no further
shares of Series B Preferred Stock shall be issued.
2. DIVIDENDS.
(a) The holders of record of the then outstanding shares of Series B
Preferred Stock shall be entitled to receive when, as and if declared by the
Board out of any funds legally available therefor, cumulative dividends at the
annual rate of $60.00 per share payable in four equal cash payments on the 20th
day (or if not a business day, as defined below, on the next business day
thereafter) of April, July, October and January commencing October, 1996,
provided, however, that any such quarterly cash payment shall be prorated with
respect to any shares of Series B Preferred Stock that were outstanding less
than the total number of days in the calendar quarter immediately preceding any
such payment date. The amount of any such prorated cash payment shall be
computed on the basis of the actual number of days in any calendar quarter
during which such shares of Series B Preferred Stock were outstanding. Each such
dividend shall be payable to holders of record as they appear on the stock books
of the Company on such record dates, not less than 10 and not more than 60 days
preceding the dividend payment date, as shall be fixed by the Board. No
dividends, other than those payable solely in the Company's common stock, $1.00
par value ("Common Stock"), shall be paid during any fiscal year of the Company
with respect to shares of Common Stock or any other security issued by the
Company other than Series A until dividends in the total amount of $60.00 per
share on Series B Preferred Stock shall have been paid. Such dividends shall
accrue on each share of Series B Preferred Stock from the date of issuance and
from day to day thereafter, whether or not earned or declared. Notwithstanding
the foregoing, such dividends shall be cumulative so that if such dividends in
respect of any previous or current annual dividend period, at the annual rate
specified above, shall not have been paid or declared and a sum sufficient for
the payment thereof set apart, the deficiency for any prior year and the amount
owed in the current year shall first be fully paid before any dividend or other
distribution shall be paid on or declared and set apart for the shares of Common
Stock. A "business day" shall be deemed to be any day when trading of securities
occurs on the New York Stock Exchange.
(b) Unless full dividends on Series B Preferred Stock for all past
dividend periods and the then current dividend period shall have been paid or
declared and a sum sufficient for the payment thereof set apart: (i) no dividend
whatsoever whether in cash, securities or other property (other than a dividend
payable solely in shares of Common Stock)
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shall be paid or declared and set aside for payment, and no distribution shall
be made, on any shares of Common Stock or other class of preferred stock
authorized after the date hereof except for the Series A Convertible Preferred
Stock (the "Series A Preferred Stock"); and (ii) no shares of Common Stock or
other class of preferred stock authorized after the date hereof except the
Series A Preferred Stock shall be purchased, redeemed or otherwise acquired by
the Company and no funds shall be paid into or set aside or made available for a
sinking fund for the purchase, redemption or other acquisition thereof without
the approval of the holders of at least a majority of the then outstanding
shares of Series B Preferred Stock.
(c) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (b) of this Section 2,
purchase or otherwise acquire such shares at such time and such manner.
3. REDEMPTION.
(a) Each issued and outstanding share of Series B Preferred Stock may
be redeemed at the option of the holder or his or her estate for cash as set
forth below at any time after the first to occur of: (i) the death of the
original holder of such share of Series B Preferred Stock; or (ii) the tenth
anniversary of the original issuance of such share, in either case at a price of
$1,000 per share, plus any accrued but unpaid dividends thereon whether or not
declared, through the Redemption Date, as defined below (collectively, the
"Redemption Price").
(b) Before any holder of shares of Series B Preferred Stock shall be
entitled to redeem any such shares for cash, he shall surrender the certificate
or certificates therefor, duly endorsed, at the office of the Company or of any
transfer agent of Series B Preferred Stock or Common Stock, with a written
notice that he elects to redeem the same and shall state therein the number of
shares of Series B Preferred Stock being redeemed for cash and the name or names
to whom such payment shall be made. The date the Company receives such
surrendered certificates and written notice shall be deemed to be the Redemption
Date. Thereupon the Redemption Price for such shares shall be payable to the
order of the person whose name appears on such certificate or certificates as
the owner thereof, and each surrendered certificate shall be cancelled and
retired.
(c) If on the Redemption Date the Redemption Price is paid, then the
dividends with respect to the shares of Series B Preferred Stock redeemed shall
cease to accrue after the Redemption Date.
(d) Notwithstanding anything contained in this paragraph 3(c) to the
contrary, the Company shall not be obligated to redeem for cash any shares of
Series B Preferred Stock if such redemption would cause the Company to be in
violation of any statute, rule, order, regulation or agreement to which the
Company is a party relating to minimum capital requirements. The Company shall
use its best efforts promptly to remedy any such violation if the same has the
effect of preventing the redemption of any shares of Series B Preferred Stock,
and shall promptly complete the redemption of shares after such violation has
been cured.
4. VOTING RIGHTS.
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(a) The holders of each share of Series B Preferred Stock shall not be
entitled to vote, except: (i) as required by law; and (ii) to approve the
authorization or issuance of any shares of any class or series of stock which
ranks senior or on a parity with, the Series B Preferred Stock in respect of
dividends and distributions upon the dissolution, liquidation or winding up of
the Company.
(b) Notwithstanding anything contained herein to the contrary, the
holders of Series B Preferred Stock shall vote as a separate class when required
by law and to approve the matters set forth in Section 4(a)(ii). In such
circumstances, the affirmative vote of the holders of a majority (or such
greater percentage as may be required by law or the Company's certificate of
incorporation or bylaws) of the voting rights provided in this Section for the
Series B Preferred Stock, voting separately as a class, shall be necessary to
approve such proposed action by the holders of Series B Preferred Stock.
5. LIQUIDATION. Upon the dissolution, liquidation or winding up of the
Company, whether voluntary or involuntary, the holders of shares of Series B
Preferred Stock shall be entitled to receive out of the assets of the Company
available for distribution to stockholders, the amount of $1,000 per share, plus
any dividends whether or not declared or due which have accrued thereon through
the date of such distribution, but which remain unpaid, before any payment or
distribution shall be made on shares of Common Stock or any other securities
issued by the Company, except that holders of shares of Series B Preferred Stock
shall share pro rata in any such payment or distribution with the holders of
Series A Preferred Stock. In the event the assets of the Company available for
distribution to the holders of shares of Series B Preferred Stock upon any
dissolution, liquidation or winding up of the Company shall be insufficient to
pay in full all amounts to which such holders are entitled pursuant to this
paragraph, then all of the assets of the Company to be distributed shall be
distributed ratably to the holders of Series B Preferred Stock and Series A
Preferred Stock. After the payment to the holders of the shares of Series B
Preferred Stock of the full amounts provided for in this paragraph, the holders
of shares of Series B Preferred Stock as such shall have no right or claim to
any of the remaining assets of the Company.
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IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation was duly adopted in accordance with the applicable provisions of
Sections 242 and 245 of the General Corporation Law of the State of Delaware, as
amended. This Amended and Restated Certificate of Incorporation has bean signed
by the President, and attested by the Secretary of UnionBancorp, Inc., this ____
of ___________, 2006.
By:
------------------------------------
ATTEST:
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EXHIBIT B
AMENDED AND RESTATED BYLAWS
As Adopted on June 17, 2004
UNIONBANCORP, INC.
TABLE OF CONTENTS
Page
Number
------
ARTICLE I NAME......................................................... 1
Section 1.1 Name................................................. 1
ARTICLE II OFFICES..................................................... 1
Section 2.1 Registered Office.................................... 1
Section 2.2 Principal Office..................................... 1
Section 2.3 Other Offices........................................ 1
ARTICLES III MEETINGS OF STOCKHOLDERS.................................. 1
Section 3.1 Place of Meetings.................................... 1
Section 3.2 Annual Meetings...................................... 1
3.2.1 Time and Place.................................... 1
3.2.2 New Business...................................... 1
Section 3.3 Notice............................................... 2
Section 3.4 Nominations For Director............................. 2
Section 3.5 Special Meetings..................................... 3
Section 3.6 Voting Lists......................................... 4
Section 3.7 Quorum............................................... 4
Section 3.8 Adjourned Meeting and Notice Thereof................. 4
Section 3.9 Voting............................................... 4
3.9.1 Record Date....................................... 4
3.9.2 Method; Vote Required............................. 4
3.9.3 Voting of Shares by Certain Holders............... 5
Section 3.10 Conduct of Meeting................................... 5
Section 3.11 Proxies.............................................. 5
Section 3.12 Inspectors of Election............................... 5
ARTICLES IV DIRECTORS.................................................. 6
Section 4.1 Powers............................................... 6
Section 4.2 Number and Qualifications............................ 6
Section 4.3 Election and Vacancies............................... 6
Section 4.4 Regular Meetings..................................... 7
Section 4.5 Organization Meeting................................. 7
Section 4.6 Special Meetings..................................... 7
Section 4.7 Quorum; Majority Action.............................. 7
Section 4.8 Action Without Meeting............................... 7
Section 4.9 Telephonic Meetings.................................. 7
Section 4.10 Fees and Compensation................................ 8
Section 4.11 Removal.............................................. 8
Section 4.12 Directors Emeritus/Advisory Directors................ 8
ARTICLE V OFFICERS..................................................... 8
Section 5.1 Executive Officers................................... 8
Section 5.2 Election............................................. 8
Section 5.3 Subordinate Officers................................. 8
Section 5.4 Removal and Resignation.............................. 9
Section 5.5 Vacancies............................................ 9
Section 5.6 Compensation......................................... 9
Section 5.7 Chairman of the Board................................ 9
Section 5.8 Chief Executive Officer.............................. 9
Section 5.9 President............................................ 9
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Section 5.10 Chief Financial Officer.............................. 9
Section 5.11 Secretary............................................ 10
ARTICLE VI COMMITTEES.................................................. 10
Section 6.1 Committee of the Board............................... 10
ARTICLE VII INDEMNIFICATION............................................ 11
Section 7.1 Indemnification...................................... 11
7.1.1 Actions, Suits or Proceedings other than by or in
the Right of the Corporation................... 11
7.1.2 Actions or Suits by or in the right of the
Corporation.................................... 12
7.1.3 Indemnification for Costs, Charges and Expenses of
Successful Party............................... 12
7.1.4 Determination of Right to Indemnification......... 12
7.1.5 Advance of Costs, Charges and Expenses............ 13
7.1.6 Procedure for Indemnification..................... 13
7.1.7 Settlement........................................ 13
Section 7.2 Subsequent Amendment................................. 14
Section 7.3 Other Rights; Continuation of Right to
Indemnification................................... 14
Section 7.4 Insurance............................................ 14
Section 7.5 Certain Definitions. For purposes of this
Article VII....................................... 14
Section 7.6 Savings Clause....................................... 15
Section 7.7 Subsequent Legislation............................... 15
Section 8.1 Records.............................................. 15
Section 8.2 Checks and Drafts.................................... 15
Section 8.3 Execution of Instruments............................. 16
Section 8.4 Fiscal Year.......................................... 16
Section 8.5 Annual Audit......................................... 16
ARTICLE IX DIVIDENDS ON STOCK.......................................... 16
Section 9.1 Dividends on Stock................................... 16
ARTICLE X CERTIFICATES................................................ 16
Section 10.1 Issuance............................................. 16
Section 10.2 Certificates for Shares.............................. 16
Section 10.3 Statements on Certificates........................... 16
Section 10.4 Lost or Destroyed Certificates....................... 16
Section 10.5 Transfer............................................. 17
ARTICLE XI MISCELLANEOUS............................................... 17
Section 11.1 Record Date.......................................... 17
11.1.1 Stockholders Meetings............................. 17
11.1.2 Other Actions..................................... 17
11.1.3 Subsequent Transfers and Closing Transfer Books... 17
Section 11.2 Inspection of Corporate Records...................... 17
11.2.1 By Stockholders................................... 17
11.2.2 By Directors...................................... 18
Section 11.3 Corporate Seal....................................... 18
ARTICLE XII AMENDMENT OF BYLAWS........................................ 18
Section 12.1 Amendment of Bylaws.................................. 18
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ARTICLE I
NAME
Section 1.1 Name. The name of this corporation is "UnionBancorp, Inc."
ARTICLE II
OFFICES
Section 2.1 Registered Office. The corporation shall at all times maintain
a registered office in the State of Delaware, which, except as otherwise
determined by the Board of Directors of the corporation (the "Board"), shall be
in the City of Wilmington, County of New Castle.
Section 2.2 Principal Office. The principal office of the corporation shall
be maintained at such place within or without the State of Delaware as the Board
shall designate.
Section 2.3 Other Offices. The corporation may also have offices at such
other places within or without the State of Delaware as the Board shall from
time to time designate or the business of the corporation shall require.
ARTICLE III
MEETINGS OF STOCKHOLDERS
Section 3.1 Place of Meetings. All annual and special meetings of
stockholders shall be held at such places within or without the State of
Delaware as the Board may determine.
Section 3.2 Annual Meetings.
3.2.1 Time and Place. The regular annual meeting of stockholders for
the election of directors and for the transaction of any other business of
the corporation shall be held each year on the fourth Tuesday of April, if
not a legal holiday, or, if a legal holiday, then on the next succeeding
day not a Saturday, Sunday or legal holiday, or at such other time, date or
place as the Board may determine.
3.2.2 New Business. At the annual meetings, directors shall be elected
and any other business properly proposed and filed with the Secretary of
the corporation as in these Bylaws provided may be transacted which is
within the powers of the stockholders.
Any new business to be conducted at the annual meeting of the
stockholders shall be stated in writing and filed with the Secretary of the
corporation on or before thirty (30) days in advance of the first
anniversary date (month and day) of the previous year's annual meeting, and
all business so stated, proposed and filed shall, unless prior action
thereon is required by the Board, be considered at the annual meeting. Any
stockholder may make any other proposal at the annual meeting and the same
may be discussed and considered, but unless stated in writing and filed
with the Secretary of the corporation on or before thirty (30) days in
advance of the first anniversary date (month or day) of the previous year's
annual meeting, such proposal may only be voted upon at a meeting held at
least thirty (30) days after the annual meeting at which it is presented.
No other proposal may be acted upon at the annual meeting. This provision
shall not prevent the consideration, approval or disapproval at the annual
meeting of the reports of officers and committees, but in connection with
such reports no business shall be acted upon at such annual meeting unless
stated and filed as herein provided.
Section 3.3 Notice. Written notice stating the place, day and hour of the
meeting and the purpose or purposes for which the meeting of the stockholders is
called shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting, either personally or by mail, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be given when deposited in the U.S. mail, postage prepaid,
and addressed to the stockholder at his or her address as it appears on the
records of the corporation as of the record date prescribed in Section 3.9.1 and
Section 11.1.1 of these Bylaws.
Section 3.4 Nominations For Director. Nominations of candidates for
election as directors at any meeting of stockholders may be made: (a) by, or at
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the direction of, a majority of the Corporate Governance and Nominating
Committee of the Board, or, if there is no Corporate Governance and Nominating
Committee of the Board at such time, by a majority of the Board; or (b) by any
stockholder of record entitled to vote at such meeting; provided that only
persons nominated in accordance with procedures set forth in this Section shall
be eligible for election as directors.
Nominations, other than those made by, or at the direction of, the
Corporate Governance and Nominating Committee or the Board, may only be made
pursuant to timely notice in writing to the Secretary of the corporation as set
forth in this Section 3.4. To be timely, a stockholder's notice shall be
delivered to, or mailed and received by the Secretary of the corporation, for an
annual meeting, not less than sixty (60) days nor more than ninety (90) days in
advance of the first anniversary date (month and day) of the previous year's
annual meeting, and for a special meeting, not less than sixty (60) days nor
more than ninety (90) days in advance of the date (month and day) of the special
meeting, regardless of any postponement or adjournments of that meeting to a
later date. Such stockholder notice shall set forth: (a) as to each person whom
the stockholder proposes to nominate for election as a director: (i) the name,
age, business address and residential address of such person; (ii) the principal
occupation or employment of such person; (iii) the class and number of shares of
the corporation's stock which are beneficially owned by such person on the date
of such stockholder notice; and (iv) any other information relating to such
person that would be required to be disclosed on Schedule 13D pursuant to
Regulation 13D-G under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in connection with the acquisition of stock, and pursuant to
Regulation 14A under the Exchange Act, in connection with the solicitation of
proxies with respect to nominees for election as directors, regardless of
whether such person is subject to the provisions of such regulations, including,
but not limited to, information required to be disclosed by Items 4(b) and 6 of
Schedule 14A of Regulation 14A with the Securities and Exchange Commission; and
(b) as to the stockholder giving the notice: (a) the name and address, as they
appear on the corporation's books, of such stockholder and the name and
principal business or residential address of any other beneficial stockholders
known by such stockholder to support such nominees; and (b) the class and number
of shares of the corporation's stock which are beneficially owned by such
stockholder on the date of such stockholder notice and the number of shares
owned beneficially by any other record or beneficial stockholders known by such
stockholder to be supporting such nominees on the date of such stockholder
notice. At the request of the Corporate Governance and Nominating Committee or
the Board, any person nominated by, or at the request of, the Corporate
Governance and Nominating Committee or the Board for election as a director
shall furnish to the Secretary of the corporation that information required to
be set forth in a stockholder's notice of nomination which pertains to the
nominee.
The Corporate Governance and Nominating Committee or the Board may reject
any nomination by a stockholder not timely made in accordance with the
requirements of this Section 3.4. If the Corporate Governance and Nominating
Committee or the Board determines that the information provided in a
stockholder's notice does not satisfy the informational requirements of this
Section 3.4 in any material respect, the Secretary of the corporation shall
promptly notify such stockholder of the deficiency in the notice. The
stockholder may cure the deficiency by providing additional information to the
Secretary within such period of time, not less than five days from the date such
deficiency notice is given to the stockholder, as the Corporate Governance and
Nominating Committee or the Board shall determine. If the deficiency is not
cured within such period, or if the Corporate Governance and Nominating
Committee or the Board determines that the additional information provided by
the stockholder, together with information previously provided, does not satisfy
the requirements of this Section 3.4 in any material respect, then the Corporate
Governance and Nominating Committee or the Board may reject such stockholder's
notice and the proposed nominations shall not be accepted if presented at the
stockholder meeting to which the notice relates. The Secretary of the
corporation shall notify a stockholder in writing whether his or her nomination
has been made in accordance with the time and informational requirements of this
Section 3.4. Notwithstanding the procedure set forth in this Section 3.4, if
neither the Corporate Governance and Nominating Committee nor the Board makes a
determination as to the validity of any nominations by a stockholder, the
presiding officer of the stockholder's meeting shall determine and declare at
the meeting whether a nomination was not made in accordance with the terms of
this Section 3.4. If the presiding officer determines that a nomination was not
made in accordance with the terms of this Section 3.4, he or she shall so
declare at the meeting and the defective nomination shall not be accepted.
Section 3.5 Special Meetings. Special meetings of stockholders for
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the purpose of taking any action permitted the stockholders by law and the
Certificate of Incorporation of this corporation may be called at any time by at
least 66 2/3% of directors then in office. Except in special cases where other
express provision is made by statute, notice of such special meetings shall be
given in the same manner as for annual meetings of stockholders.
Section 3.6 Voting Lists. The officer having charge of the stock transfer
books for shares of the capital stock of the corporation shall make at least ten
(10) days before each meeting of the stockholders a complete list of the
stockholders entitled to vote at such meeting, with the address of and the
number of shares registered in the name of, each stockholder. Such list shall be
subject to inspection by any stockholder, for any purpose germane to the
meeting, at any time during the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified in the notice of the meeting, at the place
where the meeting is to be held. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder during the whole time of the meeting. The original stock
transfer books shall be prima facie evidence as to who are the stockholders
entitled to examine such list or transfer books or to vote at any meeting of
stockholders.
Section 3.7 Quorum. A majority of the shares entitled to vote, represented
in person or by proxy, shall constitute a quorum for the transaction of business
at a meeting of the stockholders. The stockholders present at a duly called or
held meeting at which a quorum is present may continue to transact business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
Section 3.8 Adjourned Meeting and Notice Thereof. Any stockholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares present, whether in
person or represented by proxy, but in the absence of a quorum no other business
may be transacted at such meeting, except as provided in Section 3.7 above. When
any stockholders' meeting, either annual or special, is adjourned for more than
thirty (30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting. Except as provided above,
it shall not be necessary to give any notice of the adjourned meeting if the
time and place thereof are announced at the meeting at which such adjournment is
taken.
Section 3.9 Voting.
3.9.1 Record Date. Unless a record date for voting purposes is fixed
as provided in Section 11.1.1 of these Bylaws then, subject to the
provisions of Section 217 of the General Corporation Law of the State of
Delaware (the "Delaware General Corporation Law") (relating to voting of
shares held by fiduciaries, pledgors and joint owners), only persons in
whose names shares entitled to vote stand on the stock records of the
corporation at the close of business on the business day next preceding the
day on which notice of the meeting is given or, if such notice is waived,
at the close of business on the business day next preceding the day on
which the meeting of stockholders is held, shall be entitled to vote at
such meeting, and such day shall be the record date for such meeting.
3.9.2 Method; Vote Required. Unless otherwise required by law, voting
may be oral or by written ballot; provided, however, that all elections for
directors must be by ballot if demanded by a stockholder before such voting
begins. Except as provided in Section 3.7 and except with respect to
election of directors, the affirmative vote of the majority of the shares
represented and voting at a duly held meeting at which a quorum is present
(which shares voting affirmatively also constitute at least a majority of
the required quorum) shall be the act of the stockholders, unless the vote
of a greater number or voting by classes is required by the Delaware
General Corporation Law or the Certificate of Incorporation or these
Bylaws. Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and
entitled to vote on the election of directors.
3.9.3 Voting of Shares by Certain Holders. Shares standing in the name
of another corporation may be voted by any officer, agent
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or proxy as the bylaws of such corporation may prescribe, or, in the
absence of such provision, as the board of directors of such corporation
may determine. Shares held by an administrator, executor, guardian or
conservator may be voted by him or her, either in person or by proxy,
without a transfer of such shares into his or her name. Shares standing in
the name of a trustee may be voted by the trustee, either in person or by
proxy, but no trustee shall be entitled to vote shares held by him or her
without a transfer of such shares into the trustee's name.
Neither treasury shares of its own stock held by the corporation, nor
shares held by another corporation, if a majority of the shares entitled to
vote for the election of directors of such other corporation are held
directly or indirectly by the corporation, shall be voted at any meeting or
counted in determining the total number of outstanding shares at any given
time for purposes of any meeting.
Section 3.10 Conduct of Meeting. The presiding officer at any meeting of
stockholders, either annual or special, shall be the Chairman of the Board or,
in his or her absence, the President or, in the absence of both the Chairman of
the Board and the President, anyone selected by a majority of the Board. The
secretary at such meetings shall be the Secretary of the corporation or, in his
or her absence, anyone appointed by the presiding officer.
Section 3.11 Proxies. At all meetings of the stockholders, every
stockholder having the right to vote shall be entitled to vote in person or by
proxy appointed by an instrument in writing and complying with the requirements
of the Delaware General Corporation Law. No proxy shall be valid after the
expiration of three (3) years from the date thereof unless otherwise provided in
the proxy. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only so long as, it is coupled with an interest in the
stock of the corporation or in the corporation generally which is sufficient in
law to support an irrevocable power.
Section 3.12 Inspectors of Election. In advance of any meeting of
stockholders, the Board may appoint any persons other than nominees for office
as inspectors of election to act at such meeting or any adjournment thereof. If
inspectors of election are not so appointed, or if any persons so appointed fail
to appear or refuse to act, the presiding officer of any such meeting may, and
on the request of any stockholder or a stockholder's proxy shall, make such
appointment at the meeting. The number of inspectors shall be either one or
three. If appointed at a meeting on the request of one or more stockholders or
proxies, the majority of shares represented in person or by proxy shall
determine whether one or three inspectors are to be appointed. The duties of
such inspectors shall include: (a) determining the number of shares of stock and
the voting power of each share, the shares of stock represented at the meeting,
the existence of a quorum, and the authenticity, validity and effect of the
proxies; (b) receiving votes, ballots or consents; (c) hearing and determining
all challenges and questions in any way arising in connection with the right to
vote; (d) counting and tabulating all votes or consents; (e) determining the
result; and (f) such acts as may be proper to conduct the election or vote with
fairness to all stockholders.
ARTICLE IV
DIRECTORS
Section 4.1 Powers. Subject to any limitations imposed by law, the
Certificate of Incorporation and these Bylaws as to actions which shall be
authorized or approved by the stockholders, and subject to the duties of
directors as prescribed thereby, the business and affairs of the corporation
shall be managed and all corporate powers shall be exercised by or under the
direction of the Board.
Section 4.2 Number and Qualifications. (a) The exact number of directors
shall be fixed from time to time by the Board pursuant to a resolution adopted
of not less than 66 2/3 % of the number of directors which immediately prior to
such change had been fixed, in the manner prescribed herein, by the Board,
subject to the provisions of the Certificate of Incorporation of the
corporation.
(b) Notwithstanding any other provisions of the Certificate of
Incorporation of the corporation or these bylaws (and notwithstanding the fact
that some lesser percentage may be specified by law, the certificate of
incorporation or these bylaws of the corporation), any director or the entire
board of directors of the corporation may be removed at any time, but only for
cause and only by the affirmative vote of the holders of not less than 66 2/3%
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of the outstanding shares of stock of the corporation entitled to vote generally
in the election of directors (considered for this purpose as one class) cast at
an annual meeting of stockholders or at a meeting of the stockholders called for
that purpose.
Section 4.3 Election and Vacancies. Each class of directors to be elected
shall be elected at the annual meeting of the stockholders of the corporation
and shall hold office until their successors are elected and qualified or until
their earlier death, resignation or removal. Any director may resign at any time
upon written notice to the corporation. Thereafter, directors who are elected at
an annual meeting of stockholders, and directors who are elected in the interim
to fill vacancies and newly created directorships, shall hold office until the
next annual meeting of stockholders at which directors of such class are to be
elected and until their successors are elected and qualified or until their
earlier death, resignation or removal. In the interim between annual meetings of
stockholders or of special meetings of stockholders called for the election of
directors and/or for the removal of one or more directors and for the filling of
any vacancy in that connection, newly created directorships and any vacancies in
the board of directors, including vacancies resulting from the removal of
directors, may be filled by the vote of a majority of the remaining directors
then in office, although less than a quorum, or by the sole remaining director.
Section 4.4 Regular Meetings. The Board shall meet regularly at the time
and place designated in a resolution of the Board or by written consent of all
members of the Board, whether within or without the State of Delaware, and no
notice of such regular meetings need be given to the directors.
Section 4.5 Organization Meeting. Following each annual meeting of
stockholders, the Board shall hold a regular meeting at the place of said annual
meeting or at such other place as shall be fixed by the Board, for the purpose
of organization, election of officers, and the transaction of other business.
Call and notice of such meetings are hereby dispensed with.
Section 4.6 Special Meetings. Special meetings of the Board may be called
by the Chairman of the Board, the President, the Chief Executive Officer, the
Secretary, or any two directors. Notice of each such meeting shall be given to
each director by the Secretary or by the person or persons calling the meeting.
Such notice shall specify the time and place of the meeting, which may be within
or without the State of Delaware, and the general nature of the business to be
transacted, and no other business may be transacted at the meeting. Such notice
shall be deposited in the mail, postage prepaid, at least four (4) days prior to
the meeting, directed to the address of the director on the records of the
corporation, or delivered in person or by telephone or telegram, telecopy or
other means of electronic transmission to the director at least 48 hours before
the meeting. Notice of a meeting need not be given to any director who signs a
waiver of notice or a consent to holding the meeting, or an approval of the
minutes thereof, whether before or after such meeting, or who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such director. All such waivers, consents and approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Section 4.7 Quorum; Majority Action. A majority of the authorized number of
directors shall constitute a quorum for the transaction of business at any
meeting of the Board, but if less than such majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time.
Notice of any adjourned meeting shall be given in the same manner as prescribed
in Section 4.6 of these Bylaws. Every act or decision of a majority of the
directors present at a meeting at which a quorum is present, made or done at a
meeting duly held, shall be valid as the act of the Board, unless a greater
number is required by law or the Certificate of Incorporation or these Bylaws.
Section 4.8 Action Without Meeting. Any action required or permitted to be
taken by the Board or a committee of the Board may be taken without a meeting if
all members of the Board or a committee of the Board shall individually or
collectively consent in writing to such action. Such written consent or consents
shall be filed with the minutes of the proceedings of the Board and shall have
the same force and effect as a unanimous vote of the Board.
Section 4.9 Telephonic Meetings. Members of the Board may participate in
any regular or special meeting, including meetings of committees of the Board,
through use of conference telephone or similar communications equipment, so long
as all members participating in such meeting can hear one another. Participation
in a meeting pursuant to this section constitutes presence in person at such
meeting.
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Section 4.10 Fees and Compensation. Fees and compensation of directors and
members of committees for their services, and reimbursement for expenses, shall
be fixed or determined by a resolution of the Board after considering
recommendations of the Corporate Governance and Nominating Committee. Nothing
herein contained shall be construed to preclude any director from serving the
corporation in any other capacity as an officer, employee, agent or otherwise,
and receiving compensation therefor.
Section 4.11 Removal. A director may be removed only for cause as
determined by the affirmative vote of the holders of at least 66 2/3% of the
shares then entitled to vote in an election of directors, which vote may only be
taken at an annual meeting or a special meeting. Cause for removal shall be
deemed to exist only if the director whose removal is proposed has been
convicted of a felony by a court of competent jurisdiction or has been adjudged
by a court of competent jurisdiction to be liable for gross negligence or
misconduct in the performance of such director's duty to the corporation and
such adjudication is no longer subject to direct appeal.
Section 4.12 Directors Emeritus/Advisory Directors. The Board of Directors
may by resolution appoint directors emeritus or advisory directors who shall
have such authority and receive such compensation and reimbursement as the Board
of Directors shall provide. Directors emeritus or advisory directors shall not
have the authority to participate by vote in the transaction of business.
ARTICLE V
OFFICERS
Section 5.1 Executive Officers. The executive officers of the corporation
shall be the Chairman of the Board, the Chief Executive Officer, the President,
each Executive Vice President, the Secretary, the Treasurer, the Chief Financial
Officer and any other individual performing functions similar to those performed
by the foregoing persons, including any Senior Vice President or Vice President
designated by the Board as performing such functions.
Section 5.2 Election. The officers of the corporation, except such officers
as may be appointed in accordance with the provisions of Section 5.3 or Section
5.5 of this article shall be chosen annually by the Board. Each officer shall
hold his or her office until he or she shall resign or shall be removed or
otherwise disqualified to serve, or his or her successor shall be elected and
qualified, and shall perform such duties as are prescribed in the Bylaws or as
the Board may from time to time determine.
Section 5.3 Subordinate Officers. The corporation may have, at the
discretion of the Board, one or more Senior Vice Presidents, Vice Presidents and
Assistant Vice Presidents, one or more Assistant Secretaries, one or more
Assistant Financial Officers and such other officers as may be appointed by the
Board, or by a committee of the Board to which the authority to appoint
subordinate officers has been delegated, each of whom shall hold office for such
period, have such authority and perform such duties as the Board or such
committee may from time to time determine. Any person may hold more than one
office, executive or subordinate.
Section 5.4 Removal and Resignation. Any officer may be removed, either
with or without cause, by the Board, at any regular or special meeting thereof,
or by any officer upon whom such power of removal may be conferred by the Board
(without prejudice, however, to the rights, if any, of an officer under any
contract of employment with the corporation).
Any officer may resign at any time by giving written notice to the Board or
to the President or to the Secretary of the corporation, without prejudice,
however, to the rights, if any, of the corporation under any contract to which
such officer is a party. Any such resignation shall take effect at the date of
the receipt or at any later time specified therein.
Section 5.5 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled by the
Board for the unexpired portion of the term.
Section 5.6 Compensation. The Board shall fix the compensation of the chief
executive officer of the corporation. The compensation of all of the other
officers of the corporation shall be fixed by the Board or by an officer of the
corporation to whom the authority to fix compensation has been delegated by the
Board.
Section 5.7 Chairman of the Board. The Chairman of the Board shall,
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if present, preside at all meetings of the Board and exercise and perform such
other powers and duties as may be from time to time assigned to him or her by
the Board or prescribed by these Bylaws.
Section 5.8 Chief Executive Officer. Subject to any powers that may be
given by the Board to the Chairman of the Board, the Chief Executive Officer
shall be the chief executive officer of the corporation and shall, subject to
the control of the Board, have general supervision, direction and control of the
business and affairs of the corporation.
Section 5.9 President. Subject to any powers that may be given by the Board
to the Chairman of the Board and to the Chief Executive Officer, the President
shall be the chief operating officer of the corporation and shall, subject to
the control of the Board, have the general powers and duties of management
usually vested in the office of the president of a corporation, and shall have
such other powers and duties as the Board shall from time to time prescribe.
Section 5.10 Chief Financial Officer. The Chief Financial Officer shall
keep and maintain, or cause to be kept and maintained, adequate and correct
accounts of the properties and business transactions of the corporation, shall
receive and keep all the funds of the corporation and shall pay out corporate
funds on the check of the corporation, signed in such manner as shall be
authorized by the Board. The Chief Financial Officer shall have such other
powers and duties as the Board shall from time to time prescribe.
Section 5.11 Secretary. The Secretary shall keep, or cause to be kept,
minutes of all meetings of the stockholders and Board in a book to be provided
for that purpose, and shall attend to the giving and serving of all notices of
meetings of stockholders and directors, and any other notices required by law to
be given. The Secretary shall be custodian of the corporate seal, if any, and
shall affix the seal to all documents and papers requiring such seal. The
Secretary shall have such other powers and duties as the Board from time to time
shall prescribe.
ARTICLE VI
COMMITTEES
Section 6.1 Committees of the Board. (1) The Board may designate one or
more committees, each consisting of three or more directors of the corporation,
with such powers and authority as these Bylaws or the Board, by resolution or by
approval of a committee charter, may provide. The Board may designate one member
of the committee to act as chair of the committee.
(2) There shall be a standing Audit Committee and a standing Corporate
Governance and Nominating Committee and a standing Compensation Committee, each
consisting entirely of directors who are not employees of the corporation and
who qualify as independent directors ("Independent Directors") under the
standards for Nasdaq National Market issuers or such other exchange or system
upon which the Corporation's securities are listed, quoted or traded ("Nasdaq")
and any standards of independence as may be prescribed for purpose of any
federal securities, tax, banking or other laws relating to the committee's
duties and responsibilities. No member of such committee shall be removed except
by majority vote of the Independent Directors then in office.
(3) The Board may, by a resolution adopted by a majority of the authorized
number of directors, but shall not be required to, designate an Executive
Committee consisting of three or more directors, one of which shall be the
Chairman of the Board or the Chief Executive Officer, to serve at the pleasure
of the Board. If an Executive Committee is designated, it shall have, to the
extent provided in the resolution of the Board or in these Bylaws, all the
authority of the Board, except with respect to:
(a) Amending the Certificate of Incorporation (except that a committee
may, to the extent authorized in the resolution or resolutions providing
for the issuance of shares of stock adopted by the Board as provided in
Section 151(a) of the Delaware General Corporation Law, fix the
designations and any of the preferences or rights of such shares relating
to dividends, redemption, dissolution, any distribution of assets of the
corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation or fix the number of
shares of any series of stock or authorize the increase or decrease of the
shares of any series);
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(b) Adopting an agreement of merger or consolidation under Sections
251 or 252 of the Delaware General Corporation Law;
(c) Recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets;
(d) Recommending to the stockholders a dissolution of the corporation
or a revocation of a dissolution;
(e) Amending the Bylaws of the corporation; and
(f) Unless the resolution, Bylaws, or Certificate of Incorporation
expressly so provide, no such committee shall have the power or authority
to declare a dividend, to authorize the issuance of stock or to adopt a
certificate of ownership and merger pursuant to Section 253 of the Delaware
General Corporation Law.
(4) A committee may by resolution fix the regular meeting date of such
committee, and notice of any such regular meeting date shall be dispensed with.
Special meetings of a committee may be held at the principal office of the
corporation, or at any place which has been designated from time to time by
resolution of the committee or by written consent of all members thereof.
Committee meetings may be called by the Board, by the Chairman of the Board, by
the CEO of the corporation, by the chair of the committee or any two or more
members of such committee. Written notice to the members of a committee of the
time and place of such special meeting shall be given in the manner provided for
the giving of written notice to members of the Board of the time and place of
special meetings of the Board. Vacancies in the membership of a committee may be
filled by the Board. A majority of the authorized number of members of a
committee shall constitute a quorum for the transaction of business; and
transactions of any meeting of a committee, however called and noticed, or
wherever held, shall be as valid as though at a meeting duly held after regular
call and notice, if a quorum is present and if, either before or after the
meeting, each of the members not present signs a written waiver of notice or a
consent to holding such meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporation's records or
made a part of the minutes of the meeting.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Indemnification.
7.1.1 Actions, Suits or Proceedings other than by or in the Right of
the Corporation. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
or by reason of any action alleged to have been taken or omitted in such
capacity, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or
her or on his or her behalf in connection with such action, suit or
proceeding and any appeal therefrom, if he or she acted in good faith and
in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed
to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful.
7.1.2 Actions or Suits by or in the right of the Corporation. The
corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he or she is
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or was a director, officer, employee or agent of the corporation or is or
was serving or has agreed to serve at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, or by reason of any action
alleged to have been taken or omitted in such capacity, against expenses
(including attorneys' fees) actually and reasonably incurred by him or her
or on his or her behalf in connection with the defense or settlement of
such action or suit and any appeal therefrom, if he or she acted in good
faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of such liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such costs, charges and expenses which
the Court of Chancery or such other court shall deem proper.
7.1.3 Indemnification for Costs, Charges and Expenses of Successful
Party. Notwithstanding the other provisions of this Section 7.1, to the
extent that a director, officer, employee or agent has been successful, on
the merits or otherwise, including, without limitation, to the extent
permitted by applicable law, the dismissal of an action without prejudice,
in defense of any action, suit or proceeding referred to in Sections 7.1.1
and 7.1.2, or in defense of any claim, issue or matter therein, he or she
shall be indemnified against all costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or her or on his
or her behalf in connection therewith.
7.1.4 Determination of Right to Indemnification. Any indemnification
under Sections 7.1.1 and 7.1.2, (unless ordered by a court) shall be paid
by the corporation, if a determination is made (a) by the board of
directors by a majority vote of the directors who were not parties to such
action, suit or proceeding, or (b) if such majority of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(c) by the stockholders, that indemnification of the director or officer is
proper in the circumstances because he or she has met the applicable
standard of conduct set forth in Sections 7.1.1 and 7.1.2.
7.1.5 Advance of Costs, Charges and Expenses. Expenses (including
attorneys' fees) incurred by a person referred to in Sections 7.1.1 and
7.1.2 in defending a civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the corporation in advance of
the final disposition of such action, suit or proceeding; provided,
however, that the payment of such costs, charges and expenses incurred by a
director or officer in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such
person while a director or officer) in advance of the final disposition of
such action, suit or proceeding shall be made only upon receipt of an
undertaking by or on behalf of the director or officer to repay all amounts
so advanced in the event that it shall ultimately be determined that such
director or officer is not entitled to be indemnified by the corporation as
authorized in this Article VII. Such costs, charges and expenses incurred
by other employees and agents may be so paid upon such terms and
conditions, if any, as the majority of the directors deems appropriate. The
majority of the directors may, in the manner set forth above, and upon
approval of such director or officer of the corporation, authorize the
corporation's counsel to represent such person, in any action, suit or
proceeding, whether or not the corporation is a party to such action, suit
or proceeding.
7.1.6 Procedure for Indemnification. Any indemnification under
Sections 7.1.1, 7.1.2 and 7.1.3, or advance of costs, charges and expenses
under Section 7.1.5, shall be made promptly, and in any event within 60
days, upon the written request of the director, officer, employee or agent.
The right to indemnification or advances as granted by this Article VII
shall be enforceable by the director, officer, employee or agent in any
court of competent jurisdiction, if the corporation denies such request, in
whole or in part, or if no disposition thereof is made within 60 days. Such
person's costs and expenses incurred in connection with successfully
establishing his or
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her right to indemnification, in whole or in part, in any such action shall
also be indemnified by the corporation. It shall be a defense to any such
action (other than an action brought to enforce a claim for the advance of
costs, charges and expenses under Section 7.1.5, where the required
undertaking, if any, has been received by the corporation) that the
claimant has not met the standard of conduct set forth in Sections 7.1.1
and 7.1.2, but the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation (including its board of
directors, its independent legal counsel and its stockholders) to have made
a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in Sections
7.1.1 and 7.1.2, nor the fact that there has been an actual determination
by the corporation (including its board of directors, its independent legal
counsel and its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of
conduct.
7.1.7 Settlement. The corporation shall not be obligated to reimburse
the costs of any settlement to which it has not agreed. If in any action,
suit or proceeding, including any appeal, within the scope
of Sections 7.1.1 and 7.1.2, the person to be indemnified shall have
unreasonably failed to enter into a settlement thereof offered or assented
to by the opposing party or parties in such action, suit or proceeding,
then, notwithstanding any other provision hereof, the indemnification
obligation of the corporation to such person in connection with such
action, suit or proceeding shall not exceed the total of the amount at
which settlement could have been made and the expenses incurred by such
person prior to the time such settlement could reasonably have been
effected.
Section 7.2 Subsequent Amendment. No amendment, termination or repeal of
this Article VII or of relevant provisions of the Delaware General Corporation
Law or any other applicable law shall affect or diminish in any way the rights
of any director or officer of the corporation to indemnification under the
provisions hereof with respect to any action, suit or proceeding arising out of,
or relating to, any actions, transactions or facts occurring prior to the final
adoption of such amendment, termination or repeal.
Section 7.3 Other Rights; Continuation of Right to Indemnification. The
indemnification provided by this Article VII shall not be deemed exclusive of
any other rights to which a director, officer, employee or agent seeking
indemnification may be entitled under any law (common or statutory), agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his or her official capacity and as to action in any other capacity while
holding office or while employed by or acting as agent for the corporation, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent, and shall inure to the benefit of the estate, heirs, executors and
administrators of such person. Nothing contained in this Article VII shall be
deemed to prohibit, and the corporation is specifically authorized to enter
into, agreements with officers and directors providing indemnification rights
and procedures different from those set forth herein. All rights to
indemnification under this Article VII shall be deemed to be a contract between
the corporation and each director or officer of the corporation who serves or
served in such capacity at any time while this Article VII is in effect. The
corporation shall not consent to any acquisition, merger, consolidation or other
similar transaction unless the successor corporation assumes by operation of law
or by agreement the obligations set forth in this Article VII.
Section 7.4 Insurance. The corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify him or her against such liability under this Article
VII.
Section 7.5 Certain Definitions. For purposes of this Article VII:
(i) references to "the corporation" shall include, in addition to the
resulting corporation, any constituent corporation
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(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued,
would have had the power and authority to indemnify its directors,
officers, employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprises, shall stand in the same position under
this Article VII with respect to the resulting or surviving corporation as
he or she would have with respect to such constituent corporation if its
separate existence had continued;
(ii) references to "other enterprises" shall include employee benefit
plans;
(iii) references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan;
(iv) references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and
(v) a person who acted in good faith and in a manner he or she
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in
a manner "not opposed to the best interests of the corporation, " as
referred to in this Article VII.
Section 7.6 Savings Clause. If this Article VII or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director or officer of the
corporation as to any costs, charges, expenses (including attorney's fees),
judgments, fines and amounts paid in settlement with respect to any action, suit
or proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the corporation, to the full extent
permitted by any applicable portion of this Article VII that shall not have been
invalidated and to the full extant permitted by applicable law.
Section 7.7 Subsequent Legislation. If the Delaware General Corporation Law
is amended after the date hereof to further expand the indemnification permitted
to directors and officers of the corporation, then the corporation shall
indemnify such person to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
ARTICLE VIII
RECORDS AND REPORTS
Section 8.1 Records. The corporation shall maintain adequate and correct
books and records of account of its business and properties.
Section 8.2 Checks and Drafts. All checks, drafts and other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as shall be determined from time to time by
resolution of the Board.
Section 8.3 Execution of Instruments. The Board may authorize any officer
or officers or agent or agents to enter into any contract or execute any
instrument in the name of and on behalf of the corporation. Such authority may
be general or confined to specific instances. Unless so authorized by the Board,
no officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement, or to pledge its credit, or to render
it liable for any purpose or for any amount.
Section 8.4 Fiscal Year. The fiscal year of the corporation shall be a
December 31 fiscal year.
Section 8.5 Annual Audit. The corporation shall be subject to an annual
audit as of the end of its fiscal year by independent accountants appointed by,
and responsible to, the Board.
ARTICLE IX
DIVIDENDS ON STOCK
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Section 9.1 Dividends on Stock. Subject to applicable law, the Certificate
of Incorporation and these Bylaws, the Board may, from time to time, declare,
and the corporation may pay, dividends on the outstanding shares of capital
stock of the corporation.
ARTICLE X
CERTIFICATES
Section 10.1 Issuance. The corporation, as authorized by the Board, may
issue any and all forms of certificates of stock not inconsistent with law.
Section 10.2 Certificates for Shares. Every holder of shares of the stock
of the corporation or shares of any other class or series of stock that may be
validly authorized and issued by the corporation shall be entitled to have a
certificate signed in the name of the corporation by the Chairman of the Board
or the President or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, certifying the number of
shares and the class or series of shares owned by the stockholder. Any of the
signatures on the certificate may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the corporation
with the same effect as if such person were an officer, transfer agent or
registrar at the date of issue.
Section 10.3 Statements on Certificates. Any certificates for shares of
stock shall contain such legend or other statement as may be required by law or
applicable rule or regulation, by these Bylaws or by any agreements between the
corporation and the issue thereof.
Section 10.4 Lost or Destroyed Certificates. In case any certificate for
stock or other security issued by this corporation is lost or destroyed, the
Board may authorize the issuance of a new certificate or instrument therefor, on
such terms and conditions as it may determine, after proof of such loss or
destruction satisfactory to the Board. The Board may require a bond or other
security in an adequate amount as indemnity for any such certificate or
instrument when, in the Board's judgment, it is proper to do so.
Section 10.5 Transfer. Stock of the corporation shall be transferable on
the books of the corporation by the person named in the certificate, or by the
person entitled thereto, on surrender of the certificate for cancellation,
accompanied by proper evidence of succession, assignment or authority to
transfer. The corporation shall be entitled to treat the holder of record of any
stock certificate as owner thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to, or interest in, such stock on the
part of any other person, whether or not it shall have express or other notice
thereof, save as expressly provided by the laws of the State of Delaware.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Record Date.
11.1.1 Stockholders Meetings. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or adjournment thereof, the Board may fix, in advance, a
record date, which shall not be more than sixty (60) nor less than ten (10)
days before the date of such meeting. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board
may fix a new record date for the adjourned meeting.
11.1.2 Other Actions. In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders entitled to
exercise any rights in respect of any change, conversion or exchange of
stock, the Board may fix, in advance, a record date, which shall not be
more than sixty (60) days prior to such action.
11.1.3 Subsequent Transfers and Closing Transfer Books. When a record
date is fixed, only stockholders of record at the close of business on that
date are entitled to notice and to vote or to receive the dividend,
distribution or allotment of rights or to exercise the rights, as the case
may be, notwithstanding any transfer of any shares
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on the books of the corporation after the record date, except as otherwise
provided in the Certificate of Incorporation or by agreement or in the
Delaware General Corporation Law. The Board may close the books of the
corporation against transfers of shares during the whole, or any part, of
any such period.
Section 11.2 Inspection of Corporate Records.
11.2.1 By Stockholders. Any stockholder, in person or by attorney or
other agent, shall, upon written demand under oath stating the purpose
thereof, have the right during the usual hours of business to inspect for
any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or
extracts therefrom. A proper purpose shall mean a purpose reasonably
related to such person's interest as a stockholder. In every instance where
an attorney or other agent shall be the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of
attorney or such other writing which authorizes the attorney or other agent
to so act on behalf of the stockholder.
11.2.2 By Directors. Each director shall have the right at any
reasonable time to inspect all books, records, documents of every kind, and
the physical properties of the corporation. The inspection may be made in
person or by agent or attorney, and the right of inspection includes the
right to make extracts and copies thereof.
Section 11.3 Corporate Seal. The corporate seal of the corporation, if any,
shall be in such form as the Board shall prescribe.
ARTICLE XII
AMENDMENT OF BYLAWS
Section 12.1 Amendment of Bylaws. These Bylaws may be adopted, amended or
repealed by the affirmative vote of the holders of at least 66 2/3% of the total
votes eligible to be cast at a legal meeting of the stockholders or by a
resolution adopted by a majority of the directors then in office.
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EXHIBIT C
DIRECTORS AND EXECUTIVE OFFICERS OF SURVIVING CORPORATION
From and after the Effective Time of the Merger contemplated per the
agreement entered into as of June 30, 2006, among UNIONBANCORP, INC., a Delaware
corporation ("UNION"), CENTRUE FINANCIAL CORPORATION, a Delaware corporation
("CENTRUE"), the directors and executive officers of the Surviving Corporation
and the Subsidiary Bank, including committee chairmen, shall be as follows:
DIRECTORS:
Class III Directors (2007) Xxxxxx X. XxXxxxxxx* Xxxxxx X. Xxxxxx
Xxxxx Xxxxxxxx Xxxx X. Xxxxx
Class I Directors (2008) Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxx
Class II Directors (2009) Xxxx Xxxxxxx Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
* Chairman
BOARD COMMITTEE CHAIRS:
EXECUTIVE/COMPENSATION COMMITTEE: Xxxxxxx X. Xxxxxxxx, Chairman
GOVERNANCE AND NOMINATING COMMITTEE: Xxxxxx X. XxXxxxxxx, Chairman
AUDIT COMMITTEE: Xxxx X. Xxxxx, Chairman
EXECUTIVE OFFICERS:
Xxxxxx X. XxXxxxxxx Chairman of the Board
Xxxxxx X. Xxxxxx President and CEO
Xxxxx X. Xxxxxx COO
Xxxx X. Xxxxxxxxx Senior Executive Vice President and CFO
X-0
XXXXXXX X
XXXX XX XXXXXXX VOTING AGREEMENT
THIS VOTING AGREEMENT (this "AGREEMENT") is entered into as of June 30,
2006, among UNIONBANCORP, INC., a Delaware corporation ("UNION"), CENTRUE
FINANCIAL CORPORATION, a Delaware corporation ("CENTRUE"), and each of the
undersigned stockholders of Centrue (collectively referred to in this Agreement
as the "PRINCIPAL STOCKHOLDERS," and individually as a "PRINCIPAL STOCKHOLDER.")
RECITALS
A. As of the date hereof, each Principal Stockholder is the owner of the
number of shares of Centrue's common stock, $0.01 par value per share ("CENTRUE
COMMON STOCK"), as is set forth opposite such Principal Stockholder's name on
the signature page attached hereto and such total number of shares represents
approximately the percentage of the issued and outstanding shares of Centrue's
voting stock that is also set forth thereon opposite such Principal
Stockholder's name.
B. Centrue and Union are contemplating a reorganization through the merger
(the "MERGER") of Centrue with and into Union pursuant to an Agreement and Plan
of Merger dated of even date herewith (the "MERGER AGREEMENT").
C. Union is unwilling to expend the substantial time, effort and expense
necessary to implement the Merger, including applying for and obtaining
necessary approvals of regulatory authorities, unless all of the Principal
Stockholders, which consist as a group of the directors of Centrue and Centrue
Bank who are holders of Centrue Common Stock, enter into this Agreement.
D. Each Principal Stockholder believes it is in his or her best interest as
well as the best interest of Centrue to consummate the Merger.
AGREEMENTS
In consideration of the foregoing premises, which are incorporated herein
by this reference, and the covenants and agreements of the parties herein
contained, and as an inducement to Union to enter into the Merger Agreement and
to incur the expenses associated with the Merger, the parties hereto, intending
to be legally bound, hereby agree as follows:
SECTION 1. DEFINITIONS; CONSTRUCTION. All terms that are capitalized and
used herein (and are not otherwise specifically defined herein) shall be used in
this Agreement as defined in the Merger Agreement. The parties hereby
incorporate by this reference the principles of construction set forth in
Section 1.2 of the Merger Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES. Each Principal Stockholder
represents and warrants that as of the date hereof, he or she:
(A) owns beneficially and of record the number of shares of Centrue
Common Stock as is set forth opposite such Principal Stockholder's name on the
signature page attached hereto, all of which shares are free and clear of all
liens, pledges, security interests, claims, encumbrances, options, voting
agreements, proxies, agreements to sell and commitments of every kind
(collectively, "ENCUMBRANCES");
(B) has the sole, or joint with any other Principal Stockholder,
voting power with respect to such shares of Centrue Common Stock, and that,
except for any Centrue Stock Options or Centrue Common Stock held under any
Centrue Employee Benefit Plan, he or she does not own or hold any rights to
acquire any additional shares of Centrue's capital stock or any interest therein
or any voting rights with respect to any additional shares; and
(C) has all necessary power and authority to enter into this Agreement
and further represents and warrants that this Agreement is the legal, valid and
binding agreement of such Principal Stockholder, and is enforceable against such
Principal Stockholder in accordance with its terms.
SECTION 3. VOTING AGREEMENT. Each Principal Stockholder hereby agrees that
at any meeting of Centrue's stockholders however called, and in any action by
written consent of Centrue's stockholders, such Principal Stockholder shall vote
all shares of Centrue Common Stock now or at any time hereafter owned or
controlled by him or her:
(A) in favor of the Merger and the other Contemplated Transactions as
described in the Merger Agreement, and any action or agreement that would
reasonably be expected to facilitate the Contemplated Transactions;
(B) against any acquisition of any capital stock of Centrue or Centrue
Bank through purchase, merger, consolidation or otherwise, or the acquisition by
any method of a substantial portion of the assets of Centrue or Centrue Bank, in
any such case by any party other than Union or its Subsidiaries (an "ACQUISITION
TRANSACTION");
(C) against any action or agreement that would reasonably be expected
to result in a material breach of any covenant, representation or warranty or
any other obligation of Centrue under the Merger Agreement; and
(D) against any action or agreement that would reasonably be expected
to impede or interfere with the Contemplated Transactions, including any: (i)
change in Centrue's board of directors; (ii) change in Centrue's present
capitalization; or (iii) other material change in Centrue's corporate structure
or business, in each such case except as expressly contemplated by the Merger
Agreement or otherwise agreed to in writing by Union.
SECTION 4. ADDITIONAL COVENANTS. Except as required by law, each Principal
Stockholder agrees that he or she will:
(A) not, and will not permit any of his or her Affiliates, prior to
the Effective Time to sell, assign, transfer or otherwise dispose of, create an
Encumbrance with respect to, or permit to be sold, assigned, transferred or
otherwise disposed of, any Centrue Common Stock owned of record or beneficially
by such Principal Stockholder, whether such shares of Centrue
D-2
Common Stock are owned of record or beneficially by such Principal Stockholder
on the date of this Agreement or are subsequently acquired by any method,
except: (i) for transfers by will or by operation of law (in which case this
Agreement shall bind the transferee); (ii) with the prior written consent of
Union (which consent shall not be unreasonably withheld), for any sales,
assignments, transfers or other dispositions necessitated by hardship; or (iii)
as Union may otherwise agree in writing;
(B) not, and will not permit any of his or her Affiliates, directly or
indirectly (including through its Representatives), to initiate, solicit or
encourage any discussions, inquiries or proposals with any third party relating
to an Acquisition Transaction, or provide any such person with information or
assistance or negotiate with any such person with respect to an Acquisition
Transaction or agree to or otherwise assist in the effectuation of any
Acquisition Transaction;
(C) not vote or execute any written consent to rescind or amend in any
manner any prior vote or written consent to approve or adopt the Merger
Agreement or any of the other Contemplated Transactions;
(D) at Union's request, use his or her best efforts to cause any
necessary meeting of Centrue's stockholders to be duly called and held, or any
necessary consent of stockholders to be obtained, for the purpose of approving
or adopting the Merger Agreement and the other Contemplated Transactions;
(E) cause any of his or her Affiliates to cooperate fully with Union
in connection with the Merger Agreement and the Contemplated Transactions; and
(F) execute and deliver such additional instruments and documents and
take such further action as may be reasonably necessary to effectuate and comply
with his or her respective obligations under this Agreement.
SECTION 5. TERMINATION. Notwithstanding any other provision of this
Agreement, this Agreement shall automatically terminate on the earlier of: (i)
the date of termination of the Merger Agreement as set forth in Article 11
thereof, as such termination provisions may be amended by Centrue and Union from
time to time; or (ii) the Effective Time.
SECTION 6. REMEDIES. Each Principal Stockholder understands and
acknowledges that if he or she should breach any of his or her covenants
contained in this Agreement, the damage to Union would be indeterminable in view
of the inability to measure the ultimate value and benefit to Union resulting
from its contemplated combination with Centrue, and that Union therefore would
not have an adequate remedy at law to compensate Union for any such breach. Each
Principal Stockholder agrees that in addition to any other remedy available to
Union at law or in equity, Union shall be entitled to specific performance of
this Agreement by such Principal Stockholder upon application to any court
having jurisdiction over the parties. Accordingly, each Principal Stockholder:
(a) irrevocably waives, to the extent permitted by law, any defense that he or
she might have based on the adequacy of a remedy at law that might be asserted
as a bar to specific performance, injunctive relief or other equitable relief;
and (b) agrees to the
D-3
granting of injunctive relief without the posting of any bond and further agrees
that if any bond shall be required, such bond shall be in a nominal amount.
SECTION 7. AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented at any time by the written approval of such amendment,
modification or supplement by Centrue, Union and all of the Principal
Stockholders.
SECTION 8. ENTIRE AGREEMENT. This Agreement evidences the entire agreement
among the parties hereto with respect to the matters provided for herein and
there are no agreements, representations or warranties with respect to the
matters provided for herein other than those set forth herein and in the Merger
Agreement and written agreements related thereto. Except for the Merger
Agreement, this Agreement supersedes any agreements among any of Centrue, its
stockholders or Union concerning the acquisition, disposition or control of any
Centrue Common Stock.
SECTION 9. ABSENCE OF CONTROL. Subject to any specific provisions of this
Agreement, it is the intent of the parties to this Agreement that neither Union
nor Centrue by reason of this Agreement shall be deemed (until consummation of
the Contemplated Transactions) to control, directly or indirectly, any other
party and shall not exercise, or be deemed to exercise, directly or indirectly,
a controlling influence over the management or policies of any such other party.
Pursuant to Section 2.11 in the Merger Agreement, nothing contained herein shall
be deemed to grant Union an ownership interest in any shares of Centrue Common
Stock.
SECTION 10. INFORMED ACTION. Each Principal Stockholder acknowledges that
he or she has had an opportunity to be advised by counsel of his or her choosing
with regard to this Agreement and the transactions and consequences contemplated
hereby. Each Principal Stockholder further acknowledges that he or she has
received a copy of the Merger Agreement and is familiar with its terms.
SECTION 11. SEVERABILITY. The parties agree that if any provision of this
Agreement shall under any circumstances be deemed invalid or inoperative, this
Agreement shall be construed with the invalid or inoperative provisions deleted
and the rights and obligations of the parties shall be construed and enforced
accordingly.
SECTION 12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
SECTION 13. GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement shall be governed by the internal laws of
the State of Illinois applicable to agreements made and wholly to be performed
in such state without regard to conflicts of laws.
SECTION 14. JURISDICTION AND SERVICE OF PROCESS. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement shall be brought only in the courts of the State of Illinois, County
of LaSalle or, if it has or can acquire jurisdiction, in the United States
District Court serving the County of LaSalle, and each of the
D-4
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
SECTION 15. SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of Centrue and Union, and their successors and
permitted assigns, and the Principal Stockholders and their respective spouses,
executors, personal representatives, administrators, heirs, legatees, guardians
and other legal representatives. This Agreement shall survive the death or
incapacity of any Principal Stockholder. This Agreement may not be assigned by
any party.
SECTION 16. DIRECTORS. The parties hereto acknowledge that each Principal
Stockholder is entering into this agreement solely in his or her capacity as a
Centrue stockholder and, notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement is intended or shall be construed to
require any Principal Stockholder, in his or her capacity as a director of
Centrue or a director of Centrue Bank, to act or fail to act in accordance with
his or her fiduciary duties in such director capacity. Furthermore, no Principal
Stockholder makes any agreement or understanding herein in his or her capacity
as a director of Centrue. For the avoidance of doubt, nothing in this SECTION 16
shall in any way limit, modify or abrogate any of the obligations of the
Principal Stockholders hereunder to vote the shares owned by him or her in
accordance with the terms of the Agreement and not to transfer any shares except
as permitted by this Agreement.
[THIS SPACE LEFT INTENTIONALLY BLANK]
D-5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
individually, or have caused this Agreement to be executed by their respective
officers, on the day and year first written above.
CENTRUE FINANCIAL CORPORATION UNIONBANCORP, INC.
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
D-6
[SIGNATURE PAGE OF VOTING AGREEMENT CONTINUED]
PRINCIPAL STOCKHOLDERS SHARES OWNED(1) PERCENTAGE OWNERSHIP
---------------------- --------------- --------------------
50,235 2.25%
-------------------------------------
Signature
Xxxxxx X. Xxxxxx
Printed Name
11,000 0.49%
-------------------------------------
Signature
Xxxxxxx X. Xxxxx
Printed Name
67,000 3.00%
-------------------------------------
Signature
Xxxxxxx X. Xxxxxxxx
Printed Name
25,792 1.16%
-------------------------------------
Signature
Xxxxxxx X. Xxxxx
Printed Name
26,700 1.20%
-------------------------------------
Signature
Xxxx X. Xxxxx
Printed Name
----------
(1) Includes shares subject to options that are presently exerciseable.
D-7
EXHIBIT E
FORM OF UNION VOTING AGREEMENT
THIS VOTING AGREEMENT (this "AGREEMENT") is entered into as of June 30,
2006, among UNIONBANCORP, INC., a Delaware corporation ("UNION"), CENTRUE
FINANCIAL CORPORATION, a Delaware corporation ("CENTRUE"), and each of the
undersigned stockholders of Union (collectively referred to in this Agreement as
the "PRINCIPAL STOCKHOLDERS," and individually as a "PRINCIPAL STOCKHOLDER.")
RECITALS
A. As of the date hereof, each Principal Stockholder is the owner of the
number of shares of Union common stock, $1.00 par value per share ("UNION COMMON
STOCK"), as is set forth opposite such Principal Stockholder's name on the
signature page attached hereto and such total number of shares represents
approximately the percentage of the issued and outstanding shares of Union's
voting stock that is also set forth thereon opposite such Principal
Stockholder's name.
B. Centrue and Union are contemplating a reorganization through the merger
(the "MERGER") of Centrue with and into Union pursuant to an Agreement and Plan
of Merger dated of even date herewith (the "MERGER AGREEMENT").
C. Centrue is unwilling to expend the substantial time, effort and expense
necessary to implement the Merger, including applying for and obtaining
necessary approvals of regulatory authorities, unless all of the Principal
Stockholders, which consist as a group of the directors of Union and UnionBank
who are holders of Union Common Stock, enter into this Agreement.
D. Each Principal Stockholder believes it is in his or her best interest as
well as the best interest of Union to consummate the Merger.
AGREEMENTS
In consideration of the foregoing premises, which are incorporated herein
by this reference, and the covenants and agreements of the parties herein
contained, and as an inducement to Centrue to enter into the Merger Agreement
and to incur the expenses associated with the Merger, the parties hereto,
intending to be legally bound, hereby agree as follows:
SECTION 1. DEFINITIONS; CONSTRUCTION. All terms that are capitalized and
used herein (and are not otherwise specifically defined herein) shall be used in
this Agreement as defined in the Merger Agreement. The parties hereby
incorporate by this reference the principles of construction set forth in
Section 1.2 of the Merger Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES. Each Principal Stockholder
represents and warrants that as of the date hereof, he or she:
(A) owns beneficially and of record the number of shares of Union
Common Stock as is set forth opposite such Principal Stockholder's name on the
signature page attached hereto, all of which shares are, except as set forth on
Schedule 1 to this Agreement, free and clear of all liens, pledges, security
interests, claims, encumbrances, options, voting agreements, proxies, agreements
to sell and commitments of every kind (collectively, "ENCUMBRANCES");
(B) has the sole, or joint with any other Principal Stockholder,
voting power with respect to such shares of Union Common Stock, and that, except
for any Union Stock Options or Union Common Stock held under any Union Employee
Benefit Plan, he or she does not own or hold any rights to acquire any
additional shares of Union's capital stock or any interest therein or any voting
rights with respect to any additional shares; and
(C) has all necessary power and authority to enter into this Agreement
and further represents and warrants that this Agreement is the legal, valid and
binding agreement of such Principal Stockholder, and is enforceable against such
Principal Stockholder in accordance with its terms.
SECTION 3. VOTING AGREEMENT. Each Principal Stockholder hereby agrees
that at any meeting of Union's stockholders however called, and in any action by
written consent of Union's stockholders, such Principal Stockholder shall vote
all shares of Union Common Stock now or at any time hereafter owned or
controlled by him or her:
(A) in favor of the Merger and the other Contemplated Transactions as
described in the Merger Agreement, and any action or agreement that would
reasonably be expected to facilitate the Contemplated Transactions;
(B) against any acquisition of any capital stock of Union or UnionBank
through purchase, merger, consolidation or otherwise, or the acquisition by any
method of a substantial portion of the assets of Union or UnionBank, in any such
case by any party other than Centrue or its Subsidiaries (an "ACQUISITION
TRANSACTION");
(C) against any action or agreement that would reasonably be expected
to result in a material breach of any covenant, representation or warranty or
any other obligation of Union under the Merger Agreement; and
(D) against any action or agreement that would reasonably be expected
to impede or interfere with the Contemplated Transactions, including any: (i)
change in Union's board of directors; (ii) change in Union's present
capitalization; or (iii) other material change in Union's corporate structure or
business, in each such case except as expressly contemplated by the Merger
Agreement or otherwise agreed to in writing by Centrue.
SECTION 4. ADDITIONAL COVENANTS. Except as required by law, each Principal
Stockholder agrees that he or she will:
(A) not, and will not permit any of his or her Affiliates, prior to
the Effective Time to sell, assign, transfer or otherwise dispose of, create an
Encumbrance with respect to, or permit to be sold, assigned, transferred or
otherwise disposed of, any Union Common Stock owned of record or beneficially by
such Principal Stockholder, whether such shares of Union
E-2
Common Stock are owned of record or beneficially by such Principal Stockholder
on the date of this Agreement or are subsequently acquired by any method,
except: (i) for transfers by will or by operation of law (in which case this
Agreement shall bind the transferee); (ii) with the prior written consent of
Centrue (which consent shall not be unreasonably withheld), for any sales,
assignments, transfers or other dispositions necessitated by hardship; or (iii)
as Centrue may otherwise agree in writing;
(B) not, and will not permit any of his or her Affiliates, directly or
indirectly (including through its Representatives), to initiate, solicit or
encourage any discussions, inquiries or proposals with any third party relating
to an Acquisition Transaction, or provide any such person with information or
assistance or negotiate with any such person with respect to an Acquisition
Transaction or agree to or otherwise assist in the effectuation of any
Acquisition Transaction;
(C) not vote or execute any written consent to rescind or amend in any
manner any prior vote or written consent to approve or adopt the Merger
Agreement or any of the other Contemplated Transactions;
(D) at Centrue's request, use his or her best efforts to cause any
necessary meeting of Union's stockholders to be duly called and held, or any
necessary consent of stockholders to be obtained, for the purpose of approving
or adopting the Merger Agreement and the other Contemplated Transactions;
(E) cause any of his or her Affiliates to cooperate fully with Centrue
in connection with the Merger Agreement and the Contemplated Transactions; and
(F) execute and deliver such additional instruments and documents and
take such further action as may be reasonably necessary to effectuate and comply
with his or her respective obligations under this Agreement.
SECTION 5. TERMINATION. Notwithstanding any other provision of this
Agreement, this Agreement shall automatically terminate on the earlier of: (i)
the date of termination of the Merger Agreement as set forth in Article 11
thereof, as such termination provisions may be amended by Centrue and Union from
time to time; or (ii) the Effective Time.
SECTION 6. REMEDIES. Each Principal Stockholder understands and
acknowledges that if he or she should breach any of his or her covenants
contained in this Agreement, the damage to Centrue would be indeterminable in
view of the inability to measure the ultimate value and benefit to Centrue
resulting from its contemplated combination with Union, and that Centrue
therefore would not have an adequate remedy at law to compensate Centrue for any
such breach. Each Principal Stockholder agrees that in addition to any other
remedy available to Centrue at law or in equity, Centrue shall be entitled to
specific performance of this Agreement by such Principal Stockholder upon
application to any court having jurisdiction over the parties. Accordingly, each
Principal Stockholder: (a) irrevocably waives, to the extent permitted by law,
any defense that he or she might have based on the adequacy of a remedy at law
that might be asserted as a bar to specific performance, injunctive relief or
other equitable relief; and (b) agrees
E-3
to the granting of injunctive relief without the posting of any bond and further
agrees that if any bond shall be required, such bond shall be in a nominal
amount.
SECTION 7. AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented at any time by the written approval of such amendment,
modification or supplement by Centrue, Union and all of the Principal
Stockholders.
SECTION 8. ENTIRE AGREEMENT. This Agreement evidences the entire agreement
among the parties hereto with respect to the matters provided for herein and
there are no agreements, representations or warranties with respect to the
matters provided for herein other than those set forth herein and in the Merger
Agreement and written agreements related thereto. Except for the Merger
Agreement, this Agreement supersedes any agreements among any of Union, its
stockholders or Centrue concerning the acquisition, disposition or control of
any Union Common Stock.
SECTION 9. ABSENCE OF CONTROL. Subject to any specific provisions of this
Agreement, it is the intent of the parties to this Agreement that neither Union
nor Centrue by reason of this Agreement shall be deemed (until consummation of
the Contemplated Transactions) to control, directly or indirectly, any other
party and shall not exercise, or be deemed to exercise, directly or indirectly,
a controlling influence over the management or policies of any such other party.
Pursuant to Section 2.11 in the Merger Agreement, nothing contained herein shall
be deemed to grant Centrue an ownership interest in any shares of Union Common
Stock.
SECTION 10. INFORMED ACTION. Each Principal Stockholder acknowledges that
he or she has had an opportunity to be advised by counsel of his or her choosing
with regard to this Agreement and the transactions and consequences contemplated
hereby. Each Principal Stockholder further acknowledges that he or she has
received a copy of the Merger Agreement and is familiar with its terms.
SECTION 11. SEVERABILITY. The parties agree that if any provision of this
Agreement shall under any circumstances be deemed invalid or inoperative, this
Agreement shall be construed with the invalid or inoperative provisions deleted
and the rights and obligations of the parties shall be construed and enforced
accordingly.
SECTION 12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
SECTION 13. GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement shall be governed by the internal laws of
the State of Illinois applicable to agreements made and wholly to be performed
in such state without regard to conflicts of laws.
SECTION 14. JURISDICTION AND SERVICE OF PROCESS. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement shall be brought only in the courts of the State of Illinois, County
of LaSalle or, if it has or can acquire jurisdiction, in the United States
District Court serving the County of LaSalle, and each of the
E-4
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
SECTION 15. SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of Centrue and Union, and their successors and
permitted assigns, and the Principal Stockholders and their respective spouses,
executors, personal representatives, administrators, heirs, legatees, guardians
and other legal representatives. This Agreement shall survive the death or
incapacity of any Principal Stockholder. This Agreement may not be assigned by
any party.
SECTION 16. DIRECTORS. The parties hereto acknowledge that each Principal
Stockholder is entering into this agreement solely in his or her capacity as a
Union stockholder and, notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement is intended or shall be construed to
require any Principal Stockholder, in his or her capacity as a director of Union
or a director of UnionBank, as applicable, to act or fail to act in accordance
with his or her fiduciary duties in such director capacity. Furthermore, no
Principal Stockholder makes any agreement or understanding herein in his or her
capacity, if any, as a director of Union or UnionBank. For the avoidance of
doubt, nothing in this SECTION 16 shall in any way limit, modify or abrogate any
of the obligations of the Principal Stockholders hereunder to vote the shares
owned by him or her in accordance with the terms of the Agreement and not to
transfer any shares except as permitted by this Agreement.
[THIS SPACE LEFT INTENTIONALLY BLANK]
E-5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
individually, or have caused this Agreement to be executed by their respective
officers, on the day and year first written above.
CENTRUE FINANCIAL CORPORATION UNIONBANCORP, INC.
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
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[SIGNATURE PAGE OF VOTING AGREEMENT CONTINUED]
PERCENTAGE
PRINCIPAL STOCKHOLDERS SHARES OWNED OWNERSHIP
---------------------------------- --------------------- ----------
29,529 .789%
----------------------------------
Signature
Xxxxxxx X. Xxxxx
Printed Name
17,829 .476%
----------------------------------
Signature
Xxxxxx X. Xxxxxxxx
Printed Name
2,984 .0080%
----------------------------------
Signature
Xxxxxx X. Xxxx
Printed Name
653,158* 17.451%
----------------------------------
Signature
*includes 86,070
Xxxxxx X. XxXxxxxxx preferred convertible
Printed Name shares
12,300 .329%
----------------------------------
Signature
X.X. Xxxxxxxxx, Xx.
Printed Name
E-7
PERCENTAGE
PRINCIPAL STOCKHOLDERS SHARES OWNED OWNERSHIP
---------------------------------- --------------------- ----------
7,040 .188%
----------------------------------
Signature
Xxxx X. Xxxxxxx
Printed Name
12,968 .346%
----------------------------------
Signature
Xxxxx X. Xxxxxxxx
Printed Name
22,464 .600%
----------------------------------
Signature
Xxxx X. Xxxxxxx
Printed Name
3,300 .088%
----------------------------------
Signature
Xxxxx X. Xxxxxx
Printed Name
Total 761,572 20.348%
E-8
SCHEDULE 1
PLEDGES
NAME PLEDGE INFORMATION
---- ------------------
Xxxxxxx X. Xxxxx None are pledged.
Xxxxxx X. Xxxxxxxx None are pledged.
Xxxxxx X. Xxxx None are pledged.
Xxxxxx X. XxXxxxxxx 142,100 shares are pledged in a margin account at Xxxxxx
Xxxxxxx-Xxxxxx X. XxXxxxxxx Trust Account;
40,000 shares are pledged in a margin account at
Wachovia-Xxxxxx X. and Xxxxxxxx XxXxxxxxx
X. X. Xxxxxxxxx, Xx. None are pledged.
Xxxx X. Xxxxxxx 4,220 shares are pledged in a margin account at Xxxxxx
Xxxxxxxx
Xxxxx X. Xxxxxxxx None are pledged.
Xxxx X. Xxxxxxx None are pledged.
Xxxxx X. Xxxxxx All shares are pledged in a margin account at eTrade.
E-9
EXHIBIT F-1
XXXXXX X. XXXXXX
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT"), is made and entered into as
of June 30, 2006 by and between UNIONBANCORP, INC., a Delaware corporation (the
"EMPLOYER"), and XXXXXX X. XXXXXX (the "EXECUTIVE"), and shall be effective
immediately upon the consummation of the merger contemplated by the Agreement
and Plan of Merger (the "MERGER AGREEMENT") between the Employer and Centrue
Financial Corporation ("CENTRUE") dated June 30, 2006 (the "EFFECTIVE DATE").
RECITALS
A. The Executive serves as an officer of Centrue, and its wholly-owned
subsidiary, Centrue Bank, pursuant to the terms of an employment agreement dated
December 31, 2004 (the "CENTRUE AGREEMENT").
B. The Employer desires to employ the Executive as President and Chief
Executive Officer of Employer and as Chief Executive Officer of UnionBank (the
"BANK"), a wholly-owned subsidiary of the Employer, and the Executive desires to
be employed in such positions.
C. The Employer and the Executive have made commitments to each other on a
variety of important issues concerning the Executive's employment, including the
performance that will be expected of the Executive, the compensation the
Executive will be paid, how long and under what circumstances the Executive will
remain employed and the financial details relating to any decision that either
the Employer or the Executive might ever make to terminate this Agreement.
D. The Employer and the Executive desire to enter into this Agreement as of
the Effective Date and as of such date this Agreement shall supersede all terms
of any other employment or severance agreement, with Centrue or Employer,
providing for benefits similar in nature to those contained herein (a "PRIOR
AGREEMENT").
E. The Employer recognizes that circumstances may arise in which a future
change of control of the Employer through acquisition or otherwise may occur
thereby causing uncertainty of employment without regard to the competence or
past contributions of the Executive, which uncertainty may result in the loss of
valuable services of the Executive and the Employer and the Employer wishes to
provide reasonable security to the Executive against changes in the employment
relationship in the event of any such change of control.
NOW, THEREFORE, in consideration of the premises and of the covenants
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Employer and the Executive
agree as follows:
AGREEMENT
SECTION 1. TERM WITH AUTOMATIC RENEWAL PROVISIONS. The term of this
Agreement and the Executive's employment hereunder shall be for a term of three
(3) years commencing on the Effective Date, and shall automatically be extended
for one (1) additional day on the second anniversary of the Effective Date and
on each day thereafter, unless and until either party to this Agreement provides
written notice of non-renewal to the other party.
SECTION 2. POSITION AND DUTIES. The Employer hereby employs the Executive
as set forth above or in such other senior executive capacity or capacities as
shall be mutually agreed between the Employer and the Executive. During the
period of the Executive's employment hereunder, the Executive shall devote his
best efforts and full business time, energy, skills and attention to the
business and affairs of the Employer, the Bank, and the other direct and
indirect subsidiaries of the Employer (together with the Bank, the
"SUBSIDIARIES" or a "SUBSIDIARY"). The Executive's duties and authority shall
consist of and include all duties and authority customarily performed and held
by persons holding equivalent positions with business organizations similar in
nature and size to the Employer, as such duties and authority are reasonably
defined, modified and delegated from time to time by the Board of Directors of
the Employer to which the Executive shall report during the term of this
Agreement (the "BOARD"). The Executive shall have the powers necessary to
perform the duties assigned to him and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accoutrements as shall be reasonably necessary and appropriate in the light of
such assigned duties.
SECTION 3. COMPENSATION. As compensation for the services to be provided by
the Executive hereunder, the Executive shall receive the following compensation,
expense reimbursement and other benefits:
(A) BASE COMPENSATION. The Executive shall receive an aggregate annual
minimum Base Salary of Two hundred ninety thousand dollars ($290,000) payable in
installments in accordance with the regular payroll schedule of the Bank ("BASE
SALARY"). Such Base Salary shall be subject to review annually commencing in
2007 and shall be maintained or increased during the term of this Agreement in
accordance with the Employer's established management compensation policies and
plans.
(B) PERFORMANCE BONUS. The Executive shall be eligible to receive an
annual performance bonus, payable within sixty (60) days after the end of the
fiscal year of the Employer, in an amount not to exceed fifty percent (50%) of
the Executive's Base Salary for the applicable year. The amount, if any, shall
be determined by the Board, or the appropriate committee thereof, and shall
generally be based on a combination of organization-wide and individual
performance criteria.
(C) REIMBURSEMENT OF EXPENSES. The Executive shall be reimbursed, upon
submission of appropriate vouchers and supporting documentation, for all travel,
entertainment and other out-of-pocket expenses reasonably and necessarily
incurred by the Executive in the performance of his duties hereunder and shall
be entitled to attend seminars, conferences and
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meetings relating to the business of the Employer consistent with the Employer's
or the Bank's established policies in that regard.
(D) OTHER BENEFITS. The Executive shall be entitled to all benefits
specifically established for him and, when and to the extent he is eligible
therefor, to participate in all plans and benefits generally accorded to senior
executives of the Employer and the Bank, including, but not limited to, pension,
profit-sharing, supplemental retirement, incentive compensation, bonus,
disability income, group life medical and hospitalization insurance, and similar
or comparable plans, and also to perquisites extended to similarly situated
senior executives, provided, however, that such plans, benefits and perquisites
shall be no less than those made available to all other employees of the
Employer and the Bank.
(E) VACATIONS. The Executive shall be entitled to annual paid time off
("PTO") which shall accrue each calendar year and which shall be taken at a time
or times mutually agreeable to the Employer and the Executive; provided,
however, that the Executive shall be entitled to at least twenty three (23) PTO
days annually.
(F) WITHHOLDING. The Employer shall be entitled to withhold from
amounts payable to the Executive hereunder, any federal, state or local
withholding or other taxes which it is from time to time required to withhold.
The Employer shall be entitled to rely upon the opinion of its legal counsel
with regard to any question concerning the amount or requirement of any such
withholding.
(G) STOCK AWARDS. Effective July 7, 2006, Centrue shall grant to the
Executive an option to purchase Ten Thousand Four Hundred Seventeen (10,417)
shares of Centrue's common stock (the "OPTION"). One fifth (1/5) of the Option
shall vest upon the first anniversary of the Effective Date and one fifth (1/5)
shall vest on each anniversary thereafter, until fully vested on the fifth (5th)
anniversary. Notwithstanding any provision of the Centrue's stock plan ("STOCK
PLAN") to the contrary, the Option award agreement will specifically provide
that the award will not fully vest upon the consummation of the transactions
provided for in the Merger Agreement. The Option award shall provide that it
shall fully vest upon a subsequent Change in Control (as defined in the Stock
Plan), death, disability, termination of the Executive without Cause or by the
Executive due to a Constructive Discharge (with the terms Cause and Constructive
Discharge as defined herein). The Option will expire, to the extent not
exercised, as of the seventh (7th) anniversary of the Effective Date. The
exercise price of the Option shall be based on the fair market value of
Centrue's common stock on the date of grant.
(H) RELOCATION AND TEMPORARY HOUSING. In connection with the
Executive's relocation to the Chicago metropolitan area, the Employer will
advance and/or reimburse the Executive for reasonable household packing, moving,
storage, related insurance and other costs of the move (including the sales
commission cost incurred in the sale of his current residence), plus an amount
equal to the federal income tax applicable to the amount of such reimbursement
(at an assumed tax rate of 35%), provided that (i) such relocation occurs not
later than the second (2nd) anniversary of the Effective Date; and (ii) the
aggregate of the amounts to be reimbursed and the tax-related payment with
respect thereto shall not exceed Seventy Five thousand dollars ($75,000), except
to the extent a greater amount may be approved
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by the Board. The Employer shall provide the Executive with temporary housing in
the Chicago metropolitan area for up to six (6) months.
SECTION 4. CONFIDENTIALITY AND LOYALTY. The Executive acknowledges that
during the course of his employment he may produce and have access to material,
records, data, trade secrets and information not generally available to the
public regarding the Employer and its Subsidiaries (collectively, "CONFIDENTIAL
INFORMATION"). Accordingly, during the Term and during the Restricted Period
(defined below), the Executive shall hold in confidence and not directly or
indirectly disclose, use, copy or make lists of any such Confidential
Information, except to the extent that such information is or thereafter becomes
lawfully available from public sources, or such disclosure is authorized in
writing by the Employer, required by a law or any competent administrative
agency or judicial authority, or otherwise as reasonably necessary or
appropriate in connection with the performance by the Executive of his duties
hereunder. All records, files, documents and other materials or copies thereof
relating to the business of the Employer and its Subsidiaries which the
Executive shall prepare or use, shall be and remain the sole property of the
Employer, shall not be removed from the premises of the Employer or its
Subsidiaries, as the case may be, without the written consent of the Employer's
Chairman of the Board, except as reasonably necessary or appropriate in
connection with the performance by the Executive of his duties hereunder, and
shall be promptly returned to the Employer upon termination of the Executive's
employment hereunder. The Executive agrees to abide by the reasonable policies
of the Employer, as in effect from time to time, respecting avoidance of
interests conflicting with those of the Employer and its Subsidiaries.
SECTION 5. TERMINATION.
(A) TERMINATION WITHOUT CAUSE. Either the Employer or the Executive
may terminate this Agreement and the Executive's employment hereunder for any
reason by delivering written notice of termination to the other party no less
than thirty (30) days before the effective date of termination, which date will
be specified in the notice of termination.
(B) VOLUNTARY TERMINATION BY THE EXECUTIVE. If the Executive
voluntarily terminates his employment under this Agreement other than pursuant
to Section 5(d) (Constructive Discharge) or Section 5(h) (Termination Upon
Change of Control), then the Employer shall only be required to pay the
Executive such Base Salary as shall have accrued through the effective date of
such termination plus the amount of any expense reimbursements for expenses
incurred prior to the effective date of such termination, provided that
Executive shall have submitted all reimbursement requests within ten (10)
business days of the effective date of such termination, and none of the
Employer or any of its Subsidiaries shall have any further obligations to the
Executive.
(C) PREMATURE TERMINATION.
(i) In the event of the termination of this Agreement by the
Employer prior to the last day of the then current term for any reason other
than a termination in accordance with the provisions of Section 5(e)
(Termination for Cause), then notwithstanding any mitigation of damages by the
Executive, the Employer shall pay the Executive a sum equal to Executive's
Annual Compensation for the remainder of the current term of this agreement, but
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in no event less than twenty four (24) months. In addition, the Employer shall
reimburse the Executive for continued coverage (COBRA continuation coverage) for
the Executive and the Executive's dependents (if applicable) under the health
insurance programs maintained by the Employer during the period of the
Executive's COBRA eligibility; provided, however, that the continued payment of
these amounts by the Employer shall not offset or diminish any compensation or
benefits accrued as of the date of termination. The term "ANNUAL COMPENSATION"
shall mean the Executive's then current Base Salary and the Executive's
performance bonus for the most recently completed annual performance period
(including prior payments made under the incentive plans of Centrue).
(ii) Payment to the Executive will be made on a monthly basis
over the twenty four (24) month period immediately following the Executive's
termination of employment. Payment of the amounts due under Section 5(c)(i)
shall not be reduced in the event the Executive obtains other employment
following the termination of employment by the Employer.
(iii) If the Employer is not in compliance with its minimum
capital requirements or if the payments required under subsection (i) above
would cause the Employer's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Employer is
in capital compliance.
(D) CONSTRUCTIVE DISCHARGE. If at any time during the term of this
Agreement, except in instances where Employer has valid grounds to terminate the
Executive's employment pursuant to Section 5(e) (Termination for Cause), the
Executive is Constructively Discharged (as hereinafter defined), then the
Executive shall have the right, by written notice given to the Employer not
later than ninety (90) days after such Constructive Discharge, to terminate his
services hereunder, effective as of thirty (30) days after the date of such
notice, and the Executive shall have no rights or obligations under this
Agreement other than as provided in this Section 5(d), Section 4
(Confidentiality and Loyalty) and Section 6 (Non-Competition Covenant). In such
event, the Executive shall be entitled to the payments and benefits provided to
the Executive as if such termination of his employment were pursuant to Section
5(c) (Premature Termination).
For purposes of this Agreement, the Executive shall be "CONSTRUCTIVELY
DISCHARGED" upon the occurrence, without the Executive's express written
consent, of any of the following events, provided that the Executive gives at
least thirty (30) days prior written notice of the Executive's termination:
(i) a reduction in the Executive's Base Salary;
(ii) any change in the Executive's duties and responsibilities
that is inconsistent in any adverse respect with the Executive's position(s),
duties or responsibilities, or an adverse change in the Executive's place in the
organization chart or in the seniority of the individual (or Board, where
applicable) to whom the Executive shall report;
(iii) a material and adverse change in the Executive's titles or
offices (including, if applicable, membership on a board of directors);
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(iv) a material reduction in the Executive's annual target bonus
opportunity (if any) (for this purpose, a reduction for any year of over twenty
percent (20%) of the Executive's annual target bonus opportunity (if any)
measured by the preceding year shall be considered "material");
(v) requiring the Executive to be based more than fifty (50)
miles from the location of the Executive's place of employment as of the
Effective Date, except for normal business travel in connection with the
Executive's duties; provided, however, that the relocation of the Executive to
the Chicago metropolitan area with Executive's consent, in connection with
Section 3(h), shall not constitute a Constructive Discharge;
(vi) a material breach of this Agreement by the Employer; or
(vii) a decision by the Executive to terminate this Agreement
within the twelve (12) month time period following a Change of Control for any
reason.
An isolated, insubstantial and inadvertent action taken in good faith and
that is remedied within ten (10) days after receipt of notice thereof given by
the Executive shall not constitute a Constructive Discharge. The Executive's
right to terminate employment due to a Constructive Discharge shall not be
affected by incapacities due to mental or physical illness and the Executive's
continued employment or lack of notice hereunder shall not constitute consent
to, or a waiver of rights with respect to, any event or condition constituting a
Constructive Discharge.
(E) TERMINATION FOR CAUSE. This Agreement may be terminated for Cause
as hereinafter defined. "CAUSE" shall mean:
(i) the Executive's death;
(ii) the Executive's Permanent Disability, which shall mean the
Executive's inability, as a result of physical or mental incapacity,
substantially to perform his duties hereunder for a period of six (6)
consecutive months, with the determination of the Executive's Permanent
Disability to be determined by a physician chosen by two other physicians, each
of which is selected by the Employer and the Executive, respectively;
(iii) the willful and continued failure by the Executive to
perform substantially the Executive's duties (other than any such failure
resulting from the Executive's incapacity due to physical or mental illness or
any such failure subsequent to the delivery to the Executive of a notice of
intent to terminate the Executive's employment without Cause or subsequent to
the Executive's delivery of a notice of the Executive's intent to terminate
employment for Constructive Discharge), and such willful and continued failure
continues after a demand for substantial performance is delivered to the
Executive that specifically identifies the manner in which the Executive has not
substantially performed the Executive's duties;
(iv) the Executive is removed or suspended from banking pursuant
to Section 8(e) of the Federal Deposit Insurance Act, as amended ("FDIA"), or
any other applicable state or federal law; or
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(v) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the business
or reputation of the Employer.
(vi) For purposes of determining whether "Cause" exists, no act
or failure to act on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the action or omission was in, or not opposed to, the
best interests of the Employer. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board, based upon the advice
of counsel for the Employer or upon the instructions to the Executive by a more
senior officer shall be conclusively presumed to be done, or omitted to be done,
by the Executive in good faith and in the best interests of the Employer. Cause
shall not exist unless and until the Employer has delivered to the Executive a
copy of a resolution duly adopted by a majority of the entire Board (excluding
the Executive if the Executive is a Board member) at a meeting of the Board
called and held for such purpose (after reasonable notice to the Executive and
an opportunity for the Executive, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board an event set forth
in clauses (ii), (iii), (iv) or (v) has occurred and specifying the particulars
thereof in detail. The Employer must notify the Executive of any event
constituting Cause within ninety (90) days following its knowledge of its
existence or such event shall not constitute Cause under this Agreement.
(vii) Upon a termination of the Executive's employment with the
Employer for Cause, the Executive shall be entitled to receive from the Employer
only such payments as are due and owing to the Executive as of the effective
date of such termination. If the Executive's employment is terminated for Cause
pursuant to this Section, then the Employer shall only be required to pay the
Executive such Base Salary as shall have accrued through the effective date of
such termination and neither the Employer nor any of its Subsidiaries shall have
any further obligations to the Executive.
(F) PAYMENTS UPON DEATH. In the event payments are due and owing under
this Agreement at the death of the Executive, payment shall be made to such
beneficiary as the Executive may designate in writing, or failing such
designation, to the executor of his estate, in full settlement and satisfaction
of all claims and demands on behalf of the Executive.
(G) PAYMENTS PRIOR TO PERMANENT DISABILITY. The Executive shall be
entitled to the compensation and benefits provided for under this Agreement for
any period during the term of this Agreement and prior to the establishment of
the Executive's Disability during which the Executive is unable to work due to a
physical or mental infirmity. Notwithstanding anything contained in this
Agreement to the contrary, until the date specified in a notice of termination
relating to the Executive's Disability, the Executive shall be entitled to
return to his positions with the Employer as set forth in this Agreement in
which event no Disability of the Executive will be deemed to have occurred.
(H) TERMINATION UPON CHANGE OF CONTROL.
(i) In the event of a Change of Control (as defined below) of the
Employer and the termination of the Executive's employment under either A or B
below, subject
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to Section 5(h)(iii) below, the Executive shall be entitled to receive in lieu
of any other payments provided for in this Agreement a lump sum payment equal to
three (3) times the Executive's Annual Compensation, and the continuation of
benefits as provided in Section 5(c). Either of the following shall constitute
termination of the Executive's employment within the meaning of this Section
5(h):
(A) The Executive voluntarily terminates his employment
within the twelve (12) month period immediately following the Change of Control
due to Constructive Discharge.
(B) This Agreement and the Executive's employment is
terminated by the Employer or its successor within the twelve (12) month period
immediately following the Change of Control, for reasons other than Cause.
(ii) For purposes of this Section, the term "CHANGE OF CONTROL"
shall mean the following:
(A) The consummation of the acquisition by any person (as
such term is defined in Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 ACT")) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the 0000 Xxx) of fifty percent (50%) or more of
the combined voting power of the then outstanding voting securities of the
Employer; or
(B) Consummation of: (1) a merger or consolidation to which
the Employer is a party if the stockholders immediately before such merger or
consolidation do not, as a result of such merger or consolidation, own, directly
or indirectly, more than sixty-seven percent (67%) of the combined voting power
of the then outstanding voting securities of the entity resulting from such
merger or consolidation in substantially the same proportion as their ownership
of the combined voting power of the Employer's voting securities outstanding
immediately before such merger or consolidation; or (2) a complete liquidation
or dissolution or an agreement for the sale or other disposition of all or
substantially all of the assets of the Employer or the Bank.
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
solely because fifty percent (50%) or more of the combined voting power of the
Employer's then outstanding securities is acquired by: (1) a trustee or other
fiduciary holding securities under one or more employee benefit plans maintained
for employees of the entity; or (2) any corporation which, immediately prior to
such acquisition, is owned directly or indirectly by the stockholders in the
same proportion as their ownership of stock immediately prior to such
acquisition.
Notwithstanding the foregoing, the consummation of the merger contemplated by
the Merger Agreement shall not constitute a Change of Control for any purpose of
this Agreement.
(iii) It is the intention of the Employer and the Executive that
no portion of any payment under this Agreement, or payments to or for the
benefit of the Executive under any other agreement or plan, be deemed to be an
"EXCESS PARACHUTE PAYMENT" as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "CODE"), or its successors. It is agreed that the
present value of and payments to or for the benefit of the
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Executive in the nature of compensation, receipt of which is contingent on the
Change of Control of the Employer, and to which Section 280G of the Code applies
(in the aggregate "TOTAL PAYMENTS") shall not exceed an amount equal to one
dollar ($1.00) less than the maximum amount which the Employer may pay without
loss of deduction under Section 280G(a) of the Code. Present value for purposes
of this Agreement shall be calculated in accordance with Section 280G(d)(4) of
the Code. Within ninety (90) days following the earlier of (A) the giving of the
notice of termination or (B) the giving of notice by the Employer to the
Executive of its belief that there is a payment or benefit due the Executive
which will result in an excess parachute payment as defined in Section 280G of
the Code, the Executive and the Employer, at the Employer's expense, shall
obtain the opinion of such legal counsel and certified public accountants as the
Executive may choose (notwithstanding the fact that such persons have acted or
may also be acting as the legal counsel or certified public accountants for the
Employer), which opinions need not be unqualified, which sets forth (I) the
amount of the Base Period Income of the Executive, (II) the present value of
Total Payments and (III) the amount and present value of any excess parachute
payments. In the event that such opinions determine that there would be an
excess parachute payment, the payment hereunder or any other payment determined
by such counsel to be includable in Total Payments shall be modified, reduced or
eliminated as specified by the Executive in writing delivered to the Employer
within sixty (60) days of the Executive's receipt of such opinions or, if the
Executive fails to so notify the Employer, then as the Employer shall reasonably
determine, so that under the bases of calculation set forth in such opinions
there will be no excess parachute payment. The provisions of this subparagraph,
including the calculations, notices and opinions provided for herein shall be
based upon the conclusive presumption that (y) the compensation and benefits
provided for in Section 3 hereof and (z) any other compensation earned by the
Executive pursuant to the Employer's compensation programs which would have been
paid in any event, are reasonable compensation for services rendered, even
though the timing of such payment is triggered by the Change of Control;
provided, however, that in the event such legal counsel so requests in
connection with the opinion required by this subparagraph, the Executive and the
Employer shall obtain, at the Employer's expense, and the legal counsel may rely
on in providing the opinion, the advice of a firm of recognized executive
compensation consultants as to the reasonableness of any item of compensation to
be received by the Executive. In the event that the provisions of Sections 280G
and 4999 of the Code are repealed without succession, this subparagraph shall be
of no further force or effect.
(I) REGULATORY SUSPENSION AND TERMINATION.
(i) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employer's affairs by a
notice served under Section 8(e)(3) (12 U.S.C. Section 1818(e)(3)) or 8(g) (12
U.S.C. Section 1818(g)) of the FDIA, the Employer's obligations under this
contract shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Employer may in its discretion (A) pay the Executive all or part of the
compensation withheld while their contract obligations were suspended and (B)
reinstate (in whole or in part) any of the obligations which were suspended.
(ii) If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Employer's affairs by an order issued
under Section 8(e) (12
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U.S.C. Section 1818(e)) or 8(g) (12 U.S.C. Section 1818(g)) of the FDIA, all
obligations of the Employer under this contract shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(iii) If the Employer is in default as defined in Section 3(x)
(12 U.S.C. Section 1813(x)(1)) of the FDIA, all obligations of the Employer
under this contract shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting parties.
(iv) All obligations of the Employer under this contract shall be
terminated, except to the extent determined that continuation of the contract is
necessary for the continued operation of the institution by the Federal Deposit
Insurance Corporation (the "FDIC"), at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Employer under the
authority contained in Section 13(c) (12 U.S.C. Section 1823(c)) of the FDIA, or
when the Employer is determined by the FDIC to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however, shall
not be affected by such action.
SECTION 6. NON-COMPETITION COVENANT.
(A) RESTRICTIVE COVENANT. The Employer and the Executive have jointly
reviewed the customer lists and operations of the Employer and its Subsidiaries
and have agreed that the primary service area of the Employer's and its
Subsidiaries' lending and deposit taking functions in which the Employer and its
Subsidiaries have and will actively participate extends to an area within twenty
five (25) miles of any office or branch of the Employer and its Subsidiaries
(with such area reduced to five (5) miles if such office or branch is located
within the St. Louis or Chicago metropolitan areas) (the "RESTRICTIVE AREA").
Therefore, as an essential ingredient of and in consideration of this Agreement
and the payment of the amounts described in Section 3, the Executive hereby
agrees that, except with the express prior written consent of the Employer, for
a period of two (2) years after the termination of the Executive's employment
with the Employer, whether such termination of employment occurs during the term
of this Agreement or following the term or termination of this Agreement (the
"RESTRICTIVE PERIOD"):
(i) The Executive will not, directly or indirectly, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation or control of, be employed by, associated with,
or in any manner connected with, lend the Executive's name or any similar name
to, lend the Executive's credit to, or render services or advice to, any person,
firm, partnership, corporation or trust which owns or operates, a bank, savings
and loan association, credit union or similar financial institution (a
"FINANCIAL INSTITUTION") within the Restrictive Area; provided however, that the
ownership by the Executive of shares of the capital stock which are listed on a
securities exchange or quoted on the National Association of Securities Dealers
Automated Quotation System which do not represent more than five percent (5%) of
the outstanding capital stock of any Financial Institution, shall not violate
any terms of this Agreement.
(ii) The Executive will not, directly or indirectly, either for
himself, or any other Financial Institution: (A) induce or attempt to induce any
employee of the Employer or its Subsidiaries to leave the employ of the Employer
or its Subsidiaries; (B) in any way interfere
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with the relationship between Employer or its Subsidiaries and any employee of
Employer or its Subsidiaries; (C) employ, or otherwise engage as an employee,
independent contractor or otherwise, any employee of Employer or its
Subsidiaries; or (D) induce or attempt to induce any customer, supplier,
licensee, or business relation of Employer or its Subsidiaries to cease doing
business with the Employer or its Subsidiaries or in any way interfere with the
relationship between any customer, supplier, licensee or business relation of
Employer or its Subsidiaries.
(iii) The Executive will not, directly or indirectly, either for
himself, or any other Financial Institution, solicit the business of any person
or entity known to the Executive to be a customer of the Employer or its
Subsidiaries, whether or not such Executive had personal contact with such
person or entity, with respect to products or activities which compete in whole
or in part with the products or activities of the Employer or its Subsidiaries.
(iv) The Executive will not, directly or indirectly, serve as the
agent, broker or representative of, or otherwise assist, any person or entity in
obtaining services or products from any Financial Institution within the
Restrictive Area.
(v) The Executive expressly agrees that the covenants contained
in this Section 6(a) are reasonable with respect to their duration, geographical
area, and scope.
(B) VIOLATION OF RESTRICTIVE COVENANT. If the Executive violates the
restrictions contained in Section 6(a) and the Employer brings legal action for
injunctive or other relief, the Employer shall not, as a result of the time
involved in obtaining such relief, be deprived of the benefit of the full period
of the Restrictive Period. Accordingly, the Restrictive Period shall be deemed
to have the duration specified in Section 6(a) computed from the date the relief
is granted but reduced by the time between the period when the Restrictive
Period began to run and the date of the first violation of the restrictions
contained in Section 6(a) by the Executive. In the event that a successor
assumes and agrees to perform this Agreement, the restrictions contained in
Section 6(a) shall continue to apply only to the primary service area of the
Employer as it existed immediately before such assumption and shall not apply to
any of the successor's other offices.
(C) REMEDIES FOR BREACH OF RESTRICTIVE COVENANT. The Executive
acknowledges that the restrictions contained in Section 4 and Section 6(a) of
this Agreement are reasonable and necessary for the protection of the legitimate
business interests of the Employer, that any violation of these restrictions
would cause substantial injury to the Employer and such interests, that the
Employer would not have entered into this Agreement with the Executive without
receiving the additional consideration offered by the Executive in binding
himself to these restrictions and that such restrictions were a material
inducement to the Employer to enter into this Agreement. In the event of any
violation or threatened violation of these restrictions, the Employer, in
addition to and not in limitation of, any other rights, remedies or damages
available to the Employer under this Agreement or otherwise at law or in equity,
shall be entitled to preliminary and permanent injunctive relief to prevent or
restrain any such violation by the Executive and any and all persons directly or
indirectly acting for or with him, as the case may be. In the event of a
violation of the restrictions in Section 4 and Section 6(a) of this Agreement,
the Employer shall have the right to cease making any payments, or providing
benefits, otherwise required hereunder.
F-1-11
SECTION 7. INTERCORPORATE TRANSFERS. If the Executive shall be voluntarily
transferred to a Subsidiary of the Employer, such transfer shall not be deemed
to terminate or modify this Agreement and the employing corporation to which the
Executive shall have been transferred shall, for all purposes of this Agreement,
be construed as standing in the same place and stead as the Employer as of the
date of such transfer, provided however, that this Section 7 shall not modify
Employer's obligations under Section 2, Section 3 and Section 5 hereof.
SECTION 8. INTEREST IN ASSETS. Neither the Executive nor his estate shall
acquire hereunder any rights in funds or assets of the Employer, otherwise than
by and through the actual payment of amounts payable hereunder; nor shall the
Executive or his estate have any power to transfer, assign, anticipate,
hypothecate or otherwise encumber in advance any of said payments; nor shall any
of such payments be subject to seizure for the payment of any debt, judgment,
alimony, separate maintenance or be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise of the Executive.
SECTION 9. INDEMNIFICATION. The Employer shall provide the Executive
(including his heirs, personal representatives, executors and administrators)
for the term of this Agreement with coverage under a standard directors' and
officers' liability insurance policy at its expense.
SECTION 10. GENERAL PROVISIONS.
(A) SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Executive, his heirs, legatees and personal
representatives, the Employer and its successors and assigns, and any successor
or assign of the Employer shall be deemed the "EMPLOYER" hereunder. The Employer
shall require any successor to all or substantially all of the business and/or
assets of the Employer, whether directly or indirectly, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the Employer
would be required to perform if no such succession had taken place.
(B) ENTIRE AGREEMENT; MODIFICATIONS. This Agreement constitutes the
entire agreement between the parties respecting the subject matter hereof, and
supersedes all prior negotiations, undertakings, agreements and arrangements
with respect thereto, whether written or oral, and without limiting the
foregoing (specifically including, but not limited to, and Prior Agreement), the
Executive hereby agrees and acknowledges that this Agreement supersedes, and he
shall have no rights to payments or otherwise under, any Prior Agreement. Except
as otherwise explicitly provided herein, this Agreement may not be amended or
modified except by written agreement signed by the Executive and the Employer;
provided, however, that the Employer may unilaterally modify the Agreement to
comply with applicable law, including, but not limited to, Code Section 409A,
while maintaining the spirit and intent of the Agreement.
(C) SURVIVAL. The provisions of Section 4 and Section 6 shall survive
the expiration or termination of this Agreement, in each case for the period set
forth in such section.
(D) ENFORCEMENT AND GOVERNING LAW. The provisions of this Agreement
shall be regarded as divisible and separate; if any of said provisions should be
declared invalid or
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unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remaining provisions shall not be affected thereby. This
Agreement shall be construed and the legal relations of the parties hereto shall
be determined in accordance with the laws of the State of Illinois without
reference to the conflict of law provisions of any jurisdiction.
(E) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement (with the exception of the remedies set forth in
Section 6(c)) shall be settled exclusively by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by the Executive
within twenty-five (25) miles from the location of the main office of the
Employer, in accordance with the employment rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction; provided, however, that the Executive shall be
entitled to seek specific performance of his right to be paid through the date
of termination during the pendency of any dispute or controversy arising under
or in connection with this Agreement.
(F) WAIVER. No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of this Agreement
to be performed by the other party, shall be deemed a waiver of any similar or
dissimilar provisions or conditions at the same time or any prior or subsequent
time.
(G) NOTICES. Notices pursuant to this Agreement shall be in writing
and shall be deemed given when received; and, if mailed, shall be mailed by
United States registered or certified mail, return receipt requested, postage
prepaid; and if to the Employer, addressed to the principal headquarters of the
Employer, attention: Chairman of the Board; or, if to the Executive, to the
address set forth below the Executive's signature on this Agreement, or to such
other address as the party to be notified shall have given to the other.
(H) INTERNAL REVENUE CODE SECTION 409A. Notwithstanding anything
contained herein to the contrary, if at the time of a termination of employment,
(i) Employee is a "specified employee" as defined in Code Section 409A, and the
regulations and guidance thereunder in effect at the time of such termination
("409A"), and, (ii) any of the payments or benefits provided hereunder may
constitute "deferred compensation" under 409A, then, and only to the extent
required by such provisions, the date of payment of such payments or benefits
otherwise provided shall be delayed for a period of up to six (6) months
following the date of termination.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
UNIONBANCORP, INC. XXXXXX X. XXXXXX
By:
-------------------------------- ----------------------------------------
Its:
------------------------------- ----------------------------------------
----------------------------------------
Address:
WITH RESPECT TO THE STOCK OPTION AWARD IN SECTION 3(G):
CENTRUE FINANCIAL CORPORATION
By:
-----------------------------------
Its:
----------------------------------
F-1-14
EXHIBIT F-2
XXXXX X. XXXXXX
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT"), is made and entered into as
of June 30, 2006 by and between UNIONBANCORP, INC., a Delaware corporation (the
"EMPLOYER"), and Xxxxx X. Xxxxxx (the "EXECUTIVE"), and shall be effective
immediately upon the consummation of the merger contemplated by the Agreement
and Plan of Merger (the "MERGER AGREEMENT") between the Employer and Centrue
Financial Corporation ("CENTRUE") dated June 30, 2006 (the "EFFECTIVE DATE").
RECITALS
A. The Executive serves as an officer of Employer, and its wholly-owned
subsidiary, UnionBank (the "BANK").
B. The Employer desires to employ the Executive as Chief Operating Officer
of Employer and as President and Chief Operating Officer of the Bank, and the
Executive desires to be employed in such positions.
C. The Employer and the Executive have made commitments to each other on a
variety of important issues concerning the Executive's employment, including the
performance that will be expected of the Executive, the compensation the
Executive will be paid, how long and under what circumstances the Executive will
remain employed and the financial details relating to any decision that either
the Employer or the Executive might ever make to terminate this Agreement.
D. The Employer and the Executive desire to enter into this Agreement as of
the Effective Date and as of such date this Agreement shall supersede all terms
of any other employment or severance agreement, with Centrue or Employer,
providing for benefits similar in nature to those contained herein (a "PRIOR
AGREEMENT").
E. The Employer recognizes that circumstances may arise in which a future
change of control of the Employer through acquisition or otherwise may occur
thereby causing uncertainty of employment without regard to the competence or
past contributions of the Executive, which uncertainty may result in the loss of
valuable services of the Executive and the Employer and the Employer wishes to
provide reasonable security to the Executive against changes in the employment
relationship in the event of any such change of control.
NOW, THEREFORE, in consideration of the premises and of the covenants
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Employer and the Executive
agree as follows:
AGREEMENT
SECTION 1. TERM WITH AUTOMATIC RENEWAL PROVISIONS. The term of this
Agreement and the Executive's employment hereunder shall be for a term of three
(3) years commencing on the Effective Date, and shall automatically be extended
for one (1) additional day on the second anniversary of the Effective Date and
on each day thereafter, unless and until either party to this Agreement provides
written notice of non-renewal to the other party.
SECTION 2. POSITION AND DUTIES. The Employer hereby employs the Executive
as set forth above or in such other senior executive capacity or capacities as
shall be mutually agreed between the Employer and the Executive. During the
period of the Executive's employment hereunder, the Executive shall devote his
best efforts and full business time, energy, skills and attention to the
business and affairs of the Employer, the Bank, and the other direct and
indirect subsidiaries of the Employer (together with the Bank, the
"SUBSIDIARIES" or a "SUBSIDIARY"). The Executive's duties and authority shall
consist of and include all duties and authority customarily performed and held
by persons holding equivalent positions with business organizations similar in
nature and size to the Employer, as such duties and authority are reasonably
defined, modified and delegated from time to time by the Board of Directors of
the Employer to which the Executive shall report during the term of this
Agreement (the "BOARD"). The Executive shall have the powers necessary to
perform the duties assigned to him and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accoutrements as shall be reasonably necessary and appropriate in the light of
such assigned duties.
SECTION 3. COMPENSATION. As compensation for the services to be provided by
the Executive hereunder, the Executive shall receive the following compensation,
expense reimbursement and other benefits:
(A) BASE COMPENSATION. The Executive shall receive an aggregate annual
minimum Base Salary of Two hundred twenty thousand dollars ($220,000) payable in
installments in accordance with the regular payroll schedule of the Bank ("BASE
SALARY"). Such Base Salary shall be subject to review annually commencing in
2007 and shall be maintained or increased during the term of this Agreement in
accordance with the Employer's established management compensation policies and
plans.
(B) PERFORMANCE BONUS. The Executive shall be eligible to receive an
annual performance bonus, payable within sixty (60) days after the end of the
fiscal year of the Employer, in an amount not to exceed fifty percent (50%) of
the Executive's Base Salary for the applicable year. The amount, if any, shall
be determined by the Board, or the appropriate committee thereof, and shall
generally be based on a combination of organization-wide and individual
performance criteria.
(C) REIMBURSEMENT OF EXPENSES. The Executive shall be reimbursed, upon
submission of appropriate vouchers and supporting documentation, for all travel,
entertainment and other out-of-pocket expenses reasonably and necessarily
incurred by the Executive in the performance of his duties hereunder and shall
be entitled to attend seminars, conferences and
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meetings relating to the business of the Employer consistent with the Employer's
or the Bank's established policies in that regard.
(D) OTHER BENEFITS. The Executive shall be entitled to all benefits
specifically established for him and, when and to the extent he is eligible
therefor, to participate in all plans and benefits generally accorded to senior
executives of the Employer and the Bank, including, but not limited to, pension,
profit-sharing, supplemental retirement, incentive compensation, bonus,
disability income, group life medical and hospitalization insurance, and similar
or comparable plans, and also to perquisites extended to similarly situated
senior executives, provided, however, that such plans, benefits and perquisites
shall be no less than those made available to all other employees of the
Employer and the Bank.
(E) VACATIONS. The Executive shall be entitled to annual paid time off
("PTO") which shall accrue each calendar year and which shall be taken at a time
or times mutually agreeable to the Employer and the Executive; provided,
however, that the Executive shall be entitled to at least twenty three (23) PTO
days annually.
(F) WITHHOLDING. The Employer shall be entitled to withhold from
amounts payable to the Executive hereunder, any federal, state or local
withholding or other taxes which it is from time to time required to withhold.
The Employer shall be entitled to rely upon the opinion of its legal counsel
with regard to any question concerning the amount or requirement of any such
withholding.
(G) STOCK AWARDS. Effective July 7, 2006, Employer shall grant to the
Executive an option to purchase Ten Thousand (10,000) shares of Employer's
common stock (the "OPTION"). One fifth (1/5) of the Option shall vest upon the
first anniversary of the Effective Date and one fifth (1/5) shall vest on each
anniversary thereafter, until fully vested on the fifth (5th) anniversary.
Notwithstanding any provision of the Employer's stock option plan ("Stock Plan")
to the contrary, the Option award agreement will specifically provide that the
award will not fully vest upon the consummation of the transactions provided for
in the Merger Agreement. The Option award shall provide that it shall fully vest
upon a subsequent Change in Control (as defined in the Stock Plan), death,
disability, termination of the Executive without Cause or by the Executive due
to a Constructive Discharge (with the terms Cause and Constructive Discharge as
defined herein). The Option will expire, to the extent not exercised, as of the
seventh (7th) anniversary of the Effective Date. The exercise price of the
Option shall be based on the fair market value of the Employer's common stock on
the date of grant.
(H) RELOCATION AND TEMPORARY HOUSING. In connection with the
Executive's relocation to the Chicago metropolitan area, the Employer will
advance and/or reimburse the Executive for reasonable household packing, moving,
storage, related insurance and other costs of the move (including the sales
commission cost incurred in the sale of his current residence), plus an amount
equal to the federal income tax applicable to the amount of such reimbursement
(at an assumed tax rate of 35%), provided that (i) such relocation occurs not
later than the second (2nd) anniversary of the Effective Date; and (ii) the
aggregate of the amounts to be reimbursed and the tax-related payment with
respect thereto shall not exceed Fifty thousand dollars ($50,000), except to the
extent a greater amount may be approved by the Board.
F-2-3
The Employer shall provide the Executive with temporary housing in the Chicago
metropolitan area for up to six (6) months.
SECTION 4. CONFIDENTIALITY AND LOYALTY. The Executive acknowledges that
during the course of his employment he may produce and have access to material,
records, data, trade secrets and information not generally available to the
public regarding the Employer and its Subsidiaries (collectively, "CONFIDENTIAL
INFORMATION"). Accordingly, during the Term and during the Restricted Period
(defined below), the Executive shall hold in confidence and not directly or
indirectly disclose, use, copy or make lists of any such Confidential
Information, except to the extent that such information is or thereafter becomes
lawfully available from public sources, or such disclosure is authorized in
writing by the Employer, required by a law or any competent administrative
agency or judicial authority, or otherwise as reasonably necessary or
appropriate in connection with the performance by the Executive of his duties
hereunder. All records, files, documents and other materials or copies thereof
relating to the business of the Employer and its Subsidiaries which the
Executive shall prepare or use, shall be and remain the sole property of the
Employer, shall not be removed from the premises of the Employer or its
Subsidiaries, as the case may be, without the written consent of the Employer's
Chairman of the Board, except as reasonably necessary or appropriate in
connection with the performance by the Executive of his duties hereunder, and
shall be promptly returned to the Employer upon termination of the Executive's
employment hereunder. The Executive agrees to abide by the reasonable policies
of the Employer, as in effect from time to time, respecting avoidance of
interests conflicting with those of the Employer and its Subsidiaries.
SECTION 5. TERMINATION.
(A) TERMINATION WITHOUT CAUSE. Either the Employer or the Executive
may terminate this Agreement and the Executive's employment hereunder for any
reason by delivering written notice of termination to the other party no less
than thirty (30) days before the effective date of termination, which date will
be specified in the notice of termination.
(B) VOLUNTARY TERMINATION BY THE EXECUTIVE. If the Executive
voluntarily terminates his employment under this Agreement other than pursuant
to Section 5(d) (Constructive Discharge) or Section 5(h) (Termination Upon
Change of Control), then the Employer shall only be required to pay the
Executive such Base Salary as shall have accrued through the effective date of
such termination plus the amount of any expense reimbursements for expenses
incurred prior to the effective date of such termination, provided that
Executive shall have submitted all reimbursement requests within ten (10)
business days of the effective date of such termination, and none of the
Employer or any of its Subsidiaries shall have any further obligations to the
Executive.
(C) PREMATURE TERMINATION.
(i) In the event of the termination of this Agreement by the
Employer prior to the last day of the then current term for any reason other
than a termination in accordance with the provisions of Section 5(e)
(Termination for Cause), then notwithstanding any mitigation of damages by the
Executive, the Employer shall pay the Executive a sum equal to Executive's
Annual Compensation for the remainder of the current term of this agreement, but
F-2-4
in no event less than twenty four (24) months. In addition, the Employer shall
reimburse the Executive for continued coverage (COBRA continuation coverage) for
the Executive and the Executive's dependents (if applicable) under the health
insurance programs maintained by the Employer during the period of the
Executive's COBRA eligibility; provided, however, that the continued payment of
these amounts by the Employer shall not offset or diminish any compensation or
benefits accrued as of the date of termination. The term "ANNUAL COMPENSATION"
shall mean the Executive's then current Base Salary and the Executive's
performance bonus for the most recently completed annual performance period.
(ii) Payment to the Executive will be made on a monthly basis
over the twenty four (24) month period immediately following the Executive's
termination of employment. Payment of the amounts due under Section 5(c)(i)
shall not be reduced in the event the Executive obtains other employment
following the termination of employment by the Employer.
(iii) If the Employer is not in compliance with its minimum
capital requirements or if the payments required under subsection (i) above
would cause the Employer's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Employer is
in capital compliance.
(D) CONSTRUCTIVE DISCHARGE. If at any time during the term of this
Agreement, except in instances where Employer has valid grounds to terminate the
Executive's employment pursuant to Section 5(e) (Termination for Cause), the
Executive is Constructively Discharged (as hereinafter defined), then the
Executive shall have the right, by written notice given to the Employer not
later than ninety (90) days after such Constructive Discharge, to terminate his
services hereunder, effective as of thirty (30) days after the date of such
notice, and the Executive shall have no rights or obligations under this
Agreement other than as provided in this Section 5(d), Section 4
(Confidentiality and Loyalty) and Section 6 (Non-Competition Covenant). In such
event, the Executive shall be entitled to the payments and benefits provided to
the Executive as if such termination of his employment were pursuant to Section
5(c) (Premature Termination).
For purposes of this Agreement, the Executive shall be "CONSTRUCTIVELY
DISCHARGED" upon the occurrence, without the Executive's express written
consent, of any of the following events, provided that the Executive gives at
least thirty (30) days prior written notice of the Executive's termination:
(i) a reduction in the Executive's Base Salary;
(ii) any change in the Executive's duties and responsibilities
that is inconsistent in any adverse respect with the Executive's position(s),
duties or responsibilities, or an adverse change in the Executive's place in the
organization chart or in the seniority of the individual (or Board, where
applicable) to whom the Executive shall report;
(iii) a material and adverse change in the Executive's titles or
offices (including, if applicable, membership on a board of directors);
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(iv) a material reduction in the Executive's annual target bonus
opportunity (if any) (for this purpose, a reduction for any year of over twenty
percent (20%) of the Executive's annual target bonus opportunity (if any)
measured by the preceding year shall be considered "material");
(v) requiring the Executive to be based more than fifty (50)
miles from the location of the Executive's place of employment as of the
Effective Date, except for normal business travel in connection with the
Executive's duties; provided, however, that the relocation of the Executive to
the Chicago metropolitan area with Executive's consent, in connection with
Section 3(g), shall not constitute a Constructive Discharge;
(vi) a material breach of this Agreement by the Employer; or
(vii) a decision by the Executive to terminate this Agreement
within the twelve (12) month time period following a Change of Control for any
reason.
An isolated, insubstantial and inadvertent action taken in good faith and
that is remedied within ten (10) days after receipt of notice thereof given by
the Executive shall not constitute a Constructive Discharge. The Executive's
right to terminate employment due to a Constructive Discharge shall not be
affected by incapacities due to mental or physical illness and the Executive's
continued employment or lack of notice hereunder shall not constitute consent
to, or a waiver of rights with respect to, any event or condition constituting a
Constructive Discharge.
(E) TERMINATION FOR CAUSE. This Agreement may be terminated for Cause
as hereinafter defined. "CAUSE" shall mean:
(i) the Executive's death;
(ii) the Executive's Permanent Disability, which shall mean the
Executive's inability, as a result of physical or mental incapacity,
substantially to perform his duties hereunder for a period of six (6)
consecutive months, with the determination of the Executive's Permanent
Disability to be determined by a physician chosen by two other physicians, each
of which is selected by the Employer and the Executive, respectively;
(iii) the willful and continued failure by the Executive to
perform substantially the Executive's duties (other than any such failure
resulting from the Executive's incapacity due to physical or mental illness or
any such failure subsequent to the delivery to the Executive of a notice of
intent to terminate the Executive's employment without Cause or subsequent to
the Executive's delivery of a notice of the Executive's intent to terminate
employment for Constructive Discharge), and such willful and continued failure
continues after a demand for substantial performance is delivered to the
Executive that specifically identifies the manner in which the Executive has not
substantially performed the Executive's duties;
(iv) the Executive is removed or suspended from banking pursuant
to Section 8(e) of the Federal Deposit Insurance Act, as amended ("FDIA"), or
any other applicable state or federal law; or
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(v) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the business
or reputation of the Employer.
(vi) For purposes of determining whether "Cause" exists, no act
or failure to act on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the action or omission was in, or not opposed to, the
best interests of the Employer. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board, based upon the advice
of counsel for the Employer or upon the instructions to the Executive by a more
senior officer shall be conclusively presumed to be done, or omitted to be done,
by the Executive in good faith and in the best interests of the Employer. Cause
shall not exist unless and until the Employer has delivered to the Executive a
copy of a resolution duly adopted by a majority of the entire Board (excluding
the Executive if the Executive is a Board member) at a meeting of the Board
called and held for such purpose (after reasonable notice to the Executive and
an opportunity for the Executive, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board an event set forth
in clauses (ii), (iii), (iv) or (v) has occurred and specifying the particulars
thereof in detail. The Employer must notify the Executive of any event
constituting Cause within ninety (90) days following its knowledge of its
existence or such event shall not constitute Cause under this Agreement.
(vii) Upon a termination of the Executive's employment with the
Employer for Cause, the Executive shall be entitled to receive from the Employer
only such payments as are due and owing to the Executive as of the effective
date of such termination. If the Executive's employment is terminated for Cause
pursuant to this Section, then the Employer shall only be required to pay the
Executive such Base Salary as shall have accrued through the effective date of
such termination and neither the Employer nor any of its Subsidiaries shall have
any further obligations to the Executive.
(F) PAYMENTS UPON DEATH. In the event payments are due and owing under
this Agreement at the death of the Executive, payment shall be made to such
beneficiary as the Executive may designate in writing, or failing such
designation, to the executor of his estate, in full settlement and satisfaction
of all claims and demands on behalf of the Executive.
(G) PAYMENTS PRIOR TO PERMANENT DISABILITY. The Executive shall be
entitled to the compensation and benefits provided for under this Agreement for
any period during the term of this Agreement and prior to the establishment of
the Executive's Disability during which the Executive is unable to work due to a
physical or mental infirmity. Notwithstanding anything contained in this
Agreement to the contrary, until the date specified in a notice of termination
relating to the Executive's Disability, the Executive shall be entitled to
return to his positions with the Employer as set forth in this Agreement in
which event no Disability of the Executive will be deemed to have occurred.
(H) TERMINATION UPON CHANGE OF CONTROL.
(i) In the event of a Change of Control (as defined below) of the
Employer and the termination of the Executive's employment under either A or B
below, subject
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to Section 5(h)(iii) below, the Executive shall be entitled to receive in lieu
of any other payments provided for in this Agreement a lump sum payment equal to
three (3) times the Executive's Annual Compensation, and the continuation of
benefits as provided in Section 5(c). Either of the following shall constitute
termination of the Executive's employment within the meaning of this Section
5(h):
(A) The Executive voluntarily terminates his employment
within the twelve (12) month period immediately following the Change of Control
due to Constructive Discharge.
(B) This Agreement and the Executive's employment is
terminated by the Employer or its successor within the twelve (12) month period
immediately following the Change of Control, for reasons other than Cause.
(ii) For purposes of this Section, the term "CHANGE OF CONTROL"
shall mean the following:
(A) The consummation of the acquisition by any person (as
such term is defined in Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 ACT")) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the 0000 Xxx) of fifty percent (50%) or more of
the combined voting power of the then outstanding voting securities of the
Employer; or
(B) Consummation of: (1) a merger or consolidation to which
the Employer is a party if the stockholders immediately before such merger or
consolidation do not, as a result of such merger or consolidation, own, directly
or indirectly, more than sixty-seven percent (67%) of the combined voting power
of the then outstanding voting securities of the entity resulting from such
merger or consolidation in substantially the same proportion as their ownership
of the combined voting power of the Employer's voting securities outstanding
immediately before such merger or consolidation; or (2) a complete liquidation
or dissolution or an agreement for the sale or other disposition of all or
substantially all of the assets of the Employer or the Bank.
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
solely because fifty percent (50%) or more of the combined voting power of the
Employer's then outstanding securities is acquired by: (1) a trustee or other
fiduciary holding securities under one or more employee benefit plans maintained
for employees of the entity; or (2) any corporation which, immediately prior to
such acquisition, is owned directly or indirectly by the stockholders in the
same proportion as their ownership of stock immediately prior to such
acquisition.
Notwithstanding the foregoing, the consummation of the merger contemplated by
the Merger Agreement shall not constitute a Change of Control for any purpose of
this Agreement.
(iii) It is the intention of the Employer and the Executive that
no portion of any payment under this Agreement, or payments to or for the
benefit of the Executive under any other agreement or plan, be deemed to be an
"EXCESS PARACHUTE PAYMENT" as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "CODE"), or its successors. It is agreed that the
present value of and payments to or for the benefit of the
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Executive in the nature of compensation, receipt of which is contingent on the
Change of Control of the Employer, and to which Section 280G of the Code applies
(in the aggregate "TOTAL PAYMENTS") shall not exceed an amount equal to one
dollar ($1.00) less than the maximum amount which the Employer may pay without
loss of deduction under Section 280G(a) of the Code. Present value for purposes
of this Agreement shall be calculated in accordance with Section 280G(d)(4) of
the Code. Within ninety (90) days following the earlier of (A) the giving of the
notice of termination or (B) the giving of notice by the Employer to the
Executive of its belief that there is a payment or benefit due the Executive
which will result in an excess parachute payment as defined in Section 280G of
the Code, the Executive and the Employer, at the Employer's expense, shall
obtain the opinion of such legal counsel and certified public accountants as the
Executive may choose (notwithstanding the fact that such persons have acted or
may also be acting as the legal counsel or certified public accountants for the
Employer), which opinions need not be unqualified, which sets forth (I) the
amount of the Base Period Income of the Executive, (II) the present value of
Total Payments and (III) the amount and present value of any excess parachute
payments. In the event that such opinions determine that there would be an
excess parachute payment, the payment hereunder or any other payment determined
by such counsel to be includable in Total Payments shall be modified, reduced or
eliminated as specified by the Executive in writing delivered to the Employer
within sixty (60) days of the Executive's receipt of such opinions or, if the
Executive fails to so notify the Employer, then as the Employer shall reasonably
determine, so that under the bases of calculation set forth in such opinions
there will be no excess parachute payment. The provisions of this subparagraph,
including the calculations, notices and opinions provided for herein shall be
based upon the conclusive presumption that (y) the compensation and benefits
provided for in Section 3 hereof and (z) any other compensation earned by the
Executive pursuant to the Employer's compensation programs which would have been
paid in any event, are reasonable compensation for services rendered, even
though the timing of such payment is triggered by the Change of Control;
provided, however, that in the event such legal counsel so requests in
connection with the opinion required by this subparagraph, the Executive and the
Employer shall obtain, at the Employer's expense, and the legal counsel may rely
on in providing the opinion, the advice of a firm of recognized executive
compensation consultants as to the reasonableness of any item of compensation to
be received by the Executive. In the event that the provisions of Sections 280G
and 4999 of the Code are repealed without succession, this subparagraph shall be
of no further force or effect.
(I) REGULATORY SUSPENSION AND TERMINATION.
(i) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employer's affairs by a
notice served under Section 8(e)(3) (12 U.S.C. Section 1818(e)(3)) or 8(g) (12
U.S.C. Section 1818(g)) of the FDIA, the Employer's obligations under this
contract shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Employer may in its discretion (A) pay the Executive all or part of the
compensation withheld while their contract obligations were suspended and (B)
reinstate (in whole or in part) any of the obligations which were suspended.
(ii) If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Employer's affairs by an order issued
under Section 8(e) (12
F-2-9
U.S.C. Section 1818(e)) or 8(g) (12 U.S.C. Section 1818(g)) of the FDIA, all
obligations of the Employer under this contract shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(iii) If the Employer is in default as defined in Section 3(x)
(12 U.S.C. Section 1813(x)(1)) of the FDIA, all obligations of the Employer
under this contract shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting parties.
(iv) All obligations of the Employer under this contract shall be
terminated, except to the extent determined that continuation of the contract is
necessary for the continued operation of the institution by the Federal Deposit
Insurance Corporation (the "FDIC"), at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Employer under the
authority contained in Section 13(c) (12 U.S.C. Section 1823(c)) of the FDIA, or
when the Employer is determined by the FDIC to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however, shall
not be affected by such action.
SECTION 6. NON-COMPETITION COVENANT.
(A) RESTRICTIVE COVENANT. The Employer and the Executive have jointly
reviewed the customer lists and operations of the Employer and its Subsidiaries
and have agreed that the primary service area of the Employer's and its
Subsidiaries' lending and deposit taking functions in which the Employer and its
Subsidiaries have and will actively participate extends to an area within twenty
five (25) miles of any office or branch of the Employer and its Subsidiaries
(with such area reduced to five (5) miles if such office or branch is located
within the St. Louis or Chicago metropolitan areas) (the "RESTRICTIVE AREA").
Therefore, as an essential ingredient of and in consideration of this Agreement
and the payment of the amounts described in Section 3, the Executive hereby
agrees that, except with the express prior written consent of the Employer, for
a period of two (2) years after the termination of the Executive's employment
with the Employer, whether such termination of employment occurs during the term
of this Agreement or following the term or termination of this Agreement (the
"RESTRICTIVE PERIOD"):
(i) The Executive will not, directly or indirectly, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation or control of, be employed by, associated with,
or in any manner connected with, lend the Executive's name or any similar name
to, lend the Executive's credit to, or render services or advice to, any person,
firm, partnership, corporation or trust which owns or operates, a bank, savings
and loan association, credit union or similar financial institution (a
"FINANCIAL INSTITUTION") within the Restrictive Area; provided however, that the
ownership by the Executive of shares of the capital stock which are listed on a
securities exchange or quoted on the National Association of Securities Dealers
Automated Quotation System which do not represent more than five percent (5%) of
the outstanding capital stock of any Financial Institution, shall not violate
any terms of this Agreement.
(ii) The Executive will not, directly or indirectly, either for
himself, or any other Financial Institution: (A) induce or attempt to induce any
employee of the Employer or its Subsidiaries to leave the employ of the Employer
or its Subsidiaries; (B) in any way interfere
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with the relationship between Employer or its Subsidiaries and any employee of
Employer or its Subsidiaries; (C) employ, or otherwise engage as an employee,
independent contractor or otherwise, any employee of Employer or its
Subsidiaries; or (D) induce or attempt to induce any customer, supplier,
licensee, or business relation of Employer or its Subsidiaries to cease doing
business with the Employer or its Subsidiaries or in any way interfere with the
relationship between any customer, supplier, licensee or business relation of
Employer or its Subsidiaries.
(iii) The Executive will not, directly or indirectly, either for
himself, or any other Financial Institution, solicit the business of any person
or entity known to the Executive to be a customer of the Employer or its
Subsidiaries, whether or not such Executive had personal contact with such
person or entity, with respect to products or activities which compete in whole
or in part with the products or activities of the Employer or its Subsidiaries.
(iv) The Executive will not, directly or indirectly, serve as the
agent, broker or representative of, or otherwise assist, any person or entity in
obtaining services or products from any Financial Institution within the
Restrictive Area.
(v) The Executive expressly agrees that the covenants contained
in this Section 6(a) are reasonable with respect to their duration, geographical
area, and scope.
(B) VIOLATION OF RESTRICTIVE COVENANT. If the Executive violates the
restrictions contained in Section 6(a) and the Employer brings legal action for
injunctive or other relief, the Employer shall not, as a result of the time
involved in obtaining such relief, be deprived of the benefit of the full period
of the Restrictive Period. Accordingly, the Restrictive Period shall be deemed
to have the duration specified in Section 6(a) computed from the date the relief
is granted but reduced by the time between the period when the Restrictive
Period began to run and the date of the first violation of the restrictions
contained in Section 6(a) by the Executive. In the event that a successor
assumes and agrees to perform this Agreement, the restrictions contained in
Section 6(a) shall continue to apply only to the primary service area of the
Employer as it existed immediately before such assumption and shall not apply to
any of the successor's other offices.
(C) REMEDIES FOR BREACH OF RESTRICTIVE COVENANT. The Executive
acknowledges that the restrictions contained in Section 4 and Section 6(a) of
this Agreement are reasonable and necessary for the protection of the legitimate
business interests of the Employer, that any violation of these restrictions
would cause substantial injury to the Employer and such interests, that the
Employer would not have entered into this Agreement with the Executive without
receiving the additional consideration offered by the Executive in binding
himself to these restrictions and that such restrictions were a material
inducement to the Employer to enter into this Agreement. In the event of any
violation or threatened violation of these restrictions, the Employer, in
addition to and not in limitation of, any other rights, remedies or damages
available to the Employer under this Agreement or otherwise at law or in equity,
shall be entitled to preliminary and permanent injunctive relief to prevent or
restrain any such violation by the Executive and any and all persons directly or
indirectly acting for or with him, as the case may be. In the event of a
violation of the restrictions in Section 4 and Section 6(a) of this Agreement,
the Employer shall have the right to cease making any payments, or providing
benefits, otherwise required hereunder.
F-2-11
SECTION 7. INTERCORPORATE TRANSFERS. If the Executive shall be voluntarily
transferred to a Subsidiary of the Employer, such transfer shall not be deemed
to terminate or modify this Agreement and the employing corporation to which the
Executive shall have been transferred shall, for all purposes of this Agreement,
be construed as standing in the same place and stead as the Employer as of the
date of such transfer, provided however, that this Section 7 shall not modify
Employer's obligations under Section 2, Section 3 and Section 5 hereof.
SECTION 8. INTEREST IN ASSETS. Neither the Executive nor his estate shall
acquire hereunder any rights in funds or assets of the Employer, otherwise than
by and through the actual payment of amounts payable hereunder; nor shall the
Executive or his estate have any power to transfer, assign, anticipate,
hypothecate or otherwise encumber in advance any of said payments; nor shall any
of such payments be subject to seizure for the payment of any debt, judgment,
alimony, separate maintenance or be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise of the Executive.
SECTION 9. INDEMNIFICATION. The Employer shall provide the Executive
(including his heirs, personal representatives, executors and administrators)
for the term of this Agreement with coverage under a standard directors' and
officers' liability insurance policy at its expense.
SECTION 10. GENERAL PROVISIONS.
(A) SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Executive, his heirs, legatees and personal
representatives, the Employer and its successors and assigns, and any successor
or assign of the Employer shall be deemed the "EMPLOYER" hereunder. The Employer
shall require any successor to all or substantially all of the business and/or
assets of the Employer, whether directly or indirectly, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the Employer
would be required to perform if no such succession had taken place.
(B) ENTIRE AGREEMENT; MODIFICATIONS. This Agreement constitutes the
entire agreement between the parties respecting the subject matter hereof, and
supersedes all prior negotiations, undertakings, agreements and arrangements
with respect thereto, whether written or oral, and without limiting the
foregoing (specifically including, but not limited to, and Prior Agreement), the
Executive hereby agrees and acknowledges that this Agreement supersedes, and he
shall have no rights to payments or otherwise under, any Prior Agreement. Except
as otherwise explicitly provided herein, this Agreement may not be amended or
modified except by written agreement signed by the Executive and the Employer;
provided, however, that the Employer may unilaterally modify the Agreement to
comply with applicable law, including, but not limited to, Code Section 409A,
while maintaining the spirit and intent of the Agreement.
(C) SURVIVAL. The provisions of Section 4 and Section 6 shall survive
the expiration or termination of this Agreement, in each case for the period set
forth in such section.
(D) ENFORCEMENT AND GOVERNING LAW. The provisions of this Agreement
shall be regarded as divisible and separate; if any of said provisions should be
declared invalid or
F-2-12
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remaining provisions shall not be affected thereby. This
Agreement shall be construed and the legal relations of the parties hereto shall
be determined in accordance with the laws of the State of Illinois without
reference to the conflict of law provisions of any jurisdiction.
(E) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement (with the exception of the remedies set forth in
Section 6(c)) shall be settled exclusively by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by the Executive
within twenty-five (25) miles from the location of the main office of the
Employer, in accordance with the employment rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction; provided, however, that the Executive shall be
entitled to seek specific performance of his right to be paid through the date
of termination during the pendency of any dispute or controversy arising under
or in connection with this Agreement.
(F) WAIVER. No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of this Agreement
to be performed by the other party, shall be deemed a waiver of any similar or
dissimilar provisions or conditions at the same time or any prior or subsequent
time.
(G) NOTICES. Notices pursuant to this Agreement shall be in writing
and shall be deemed given when received; and, if mailed, shall be mailed by
United States registered or certified mail, return receipt requested, postage
prepaid; and if to the Employer, addressed to the principal headquarters of the
Employer, attention: Chairman of the Board; or, if to the Executive, to the
address set forth below the Executive's signature on this Agreement, or to such
other address as the party to be notified shall have given to the other.
(H) INTERNAL REVENUE CODE SECTION 409A. Notwithstanding anything
contained herein to the contrary, if at the time of a termination of employment,
(i) Employee is a "specified employee" as defined in Code Section 409A, and the
regulations and guidance thereunder in effect at the time of such termination
("409A"), and, (ii) any of the payments or benefits provided hereunder may
constitute "deferred compensation" under 409A, then, and only to the extent
required by such provisions, the date of payment of such payments or benefits
otherwise provided shall be delayed for a period of up to six (6) months
following the date of termination.
[Remainder of Page Intentionally Left Blank]
F-2-13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
UNIONBANCORP, INC. XXXXX X. XXXXXX
By:
--------------------------------- ----------------------------------------
Its:
--------------------------------
----------------------------------------
----------------------------------------
Address:
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EXHIBIT F-3
XXXX X. XXXXXXXXX
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT"), is made and entered into as
of June 30, 2006 by and between UNIONBANCORP, INC., a Delaware corporation (the
"EMPLOYER"), and Xxxx X. Xxxxxxxxx (the "EXECUTIVE"), and shall be effective
immediately upon the consummation of the merger contemplated by the Agreement
and Plan of Merger (the "MERGER AGREEMENT") between the Employer and Centrue
Financial Corporation ("CENTRUE") dated June 30, 2006 (the "EFFECTIVE DATE").
RECITALS
A. The Executive serves as an officer of Employer, and its wholly-owned
subsidiary, UnionBank (the "BANK").
B. The Employer desires to employ the Executive as Senior Executive Vice
President and Chief Financial Officer of Employer and as Senior Executive Vice
President and Chief Financial Officer of UnionBank, and the Executive desires to
be employed in such positions.
C. The Employer and the Executive have made commitments to each other on a
variety of important issues concerning the Executive's employment, including the
performance that will be expected of the Executive, the compensation the
Executive will be paid, how long and under what circumstances the Executive will
remain employed and the financial details relating to any decision that either
the Employer or the Executive might ever make to terminate this Agreement.
D. The Employer and the Executive desire to enter into this Agreement as of
the Effective Date and as of such date this Agreement shall supersede all terms
of any other employment or severance agreement, with Centrue or Employer,
providing for benefits similar in nature to those contained herein (a "PRIOR
AGREEMENT").
E. The Employer recognizes that circumstances may arise in which a future
change of control of the Employer through acquisition or otherwise may occur
thereby causing uncertainty of employment without regard to the competence or
past contributions of the Executive, which uncertainty may result in the loss of
valuable services of the Executive and the Employer and the Employer wishes to
provide reasonable security to the Executive against changes in the employment
relationship in the event of any such change of control.
NOW, THEREFORE, in consideration of the premises and of the covenants
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Employer and the Executive
agree as follows:
AGREEMENT
SECTION 1. TERM WITH AUTOMATIC RENEWAL PROVISIONS. The term of this
Agreement and the Executive's employment hereunder shall be for a term of three
(3) years commencing on the Effective Date, and shall automatically be extended
for one (1) additional day on the second anniversary of the Effective Date and
on each day thereafter, unless and until either party to this Agreement provides
written notice of non-renewal to the other party.
SECTION 2. POSITION AND DUTIES. The Employer hereby employs the Executive
as set forth above or in such other senior executive capacity or capacities as
shall be mutually agreed between the Employer and the Executive. During the
period of the Executive's employment hereunder, the Executive shall devote his
best efforts and full business time, energy, skills and attention to the
business and affairs of the Employer, the Bank, and the other direct and
indirect subsidiaries of the Employer (together with the Bank, the
"SUBSIDIARIES" or a "SUBSIDIARY"). The Executive's duties and authority shall
consist of and include all duties and authority customarily performed and held
by persons holding equivalent positions with business organizations similar in
nature and size to the Employer, as such duties and authority are reasonably
defined, modified and delegated from time to time by the Board of Directors of
the Employer to which the Executive shall report during the term of this
Agreement (the "BOARD"). The Executive shall have the powers necessary to
perform the duties assigned to him and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accoutrements as shall be reasonably necessary and appropriate in the light of
such assigned duties.
SECTION 3. COMPENSATION. As compensation for the services to be provided by
the Executive hereunder, the Executive shall receive the following compensation,
expense reimbursement and other benefits:
(A) BASE COMPENSATION. The Executive shall receive an aggregate annual
minimum Base Salary of One hundred and Seventy Thousand Dollars ($170,000)
payable in installments in accordance with the regular payroll schedule of the
Bank ("BASE SALARY"). Such Base Salary shall be subject to review annually
commencing in 2007 and shall be maintained or increased during the term of this
Agreement in accordance with the Employer's established management compensation
policies and plans.
(B) PERFORMANCE BONUS. The Executive shall be eligible to receive an
annual performance bonus, payable within sixty (60) days after the end of the
fiscal year of the Employer, in an amount not to exceed thirty percent (30%) of
the Executive's Base Salary for the applicable year. The amount, if any, shall
be determined by the Board, or the appropriate committee thereof, and shall
generally be based on a combination of organization-wide and individual
performance criteria.
(C) REIMBURSEMENT OF EXPENSES. The Executive shall be reimbursed, upon
submission of appropriate vouchers and supporting documentation, for all travel,
entertainment and other out-of-pocket expenses reasonably and necessarily
incurred by the Executive in the performance of his duties hereunder and shall
be entitled to attend seminars, conferences and
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meetings relating to the business of the Employer consistent with the Employer's
or the Bank's established policies in that regard.
(D) OTHER BENEFITS. The Executive shall be entitled to all benefits
specifically established for him and, when and to the extent he is eligible
therefor, to participate in all plans and benefits generally accorded to senior
executives of the Employer and the Bank, including, but not limited to, pension,
profit-sharing, supplemental retirement, incentive compensation, bonus,
disability income, group life medical and hospitalization insurance, and similar
or comparable plans, and also to perquisites extended to similarly situated
senior executives, provided, however, that such plans, benefits and perquisites
shall be no less than those made available to all other employees of the
Employer and the Bank.
(E) VACATIONS. The Executive shall be entitled to annual paid time off
("PTO") which shall accrue each calendar year and which shall be taken at a time
or times mutually agreeable to the Employer and the Executive; provided,
however, that the Executive shall be entitled to at least twenty three (23) PTO
days annually.
(F) WITHHOLDING. The Employer shall be entitled to withhold from
amounts payable to the Executive hereunder, any federal, state or local
withholding or other taxes which it is from time to time required to withhold.
The Employer shall be entitled to rely upon the opinion of its legal counsel
with regard to any question concerning the amount or requirement of any such
withholding.
(G) STOCK AWARDS. Effective July 7, 2006, Employer shall grant to the
Executive an option to purchase Seven Thousand Five Hundred (7,500) shares of
Employer's common stock (the "OPTION"). One fifth (1/5) of the Option shall vest
upon the first anniversary of the Effective Date and one fifth (1/5) shall vest
on each anniversary thereafter, until fully vested on the fifth (5th)
anniversary. Notwithstanding any provision of the Employer's stock option plan
("Stock Plan") to the contrary, the Option award agreement will specifically
provide that the award will not fully vest upon the consummation of the
transactions provided for in the Merger Agreement. The Option award shall
provide that it shall fully vest upon a subsequent Change in Control (as defined
in the Stock Plan), death, disability, termination of the Executive without
Cause or by the Executive due to a Constructive Discharge (with the terms Cause
and Constructive Discharge as defined herein). The Option will expire, to the
extent not exercised, as of the seventh (7th) anniversary of the Effective Date.
The exercise price of the Option shall be based on the fair market value of the
Employer's common stock on the date of grant.
(H) RELOCATION AND TEMPORARY HOUSING. In connection with the
Executive's relocation to the Chicago metropolitan area, the Employer will
advance and/or reimburse the Executive for reasonable household packing, moving,
storage, related insurance and other costs of the move (including the sales
commission cost incurred in the sale of his current residence), plus an amount
equal to the federal income tax applicable to the amount of such reimbursement
(at an assumed tax rate of 35%), provided that (i) such relocation occurs not
later than the second (2nd) anniversary of the Effective Date; and (ii) the
aggregate of the amounts to be reimbursed and the tax-related payment with
respect thereto shall not exceed Fifty thousand dollars ($50,000), except to the
extent a greater amount may be approved by the Board.
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The Employer shall provide the Executive with temporary housing in the Chicago
metropolitan area for up to six (6) months.
SECTION 4. CONFIDENTIALITY AND LOYALTY. The Executive acknowledges that
during the course of his employment he may produce and have access to material,
records, data, trade secrets and information not generally available to the
public regarding the Employer and its Subsidiaries (collectively, "CONFIDENTIAL
INFORMATION"). Accordingly, during the Term and during the Restricted Period
(defined below), the Executive shall hold in confidence and not directly or
indirectly disclose, use, copy or make lists of any such Confidential
Information, except to the extent that such information is or thereafter becomes
lawfully available from public sources, or such disclosure is authorized in
writing by the Employer, required by a law or any competent administrative
agency or judicial authority, or otherwise as reasonably necessary or
appropriate in connection with the performance by the Executive of his duties
hereunder. All records, files, documents and other materials or copies thereof
relating to the business of the Employer and its Subsidiaries which the
Executive shall prepare or use, shall be and remain the sole property of the
Employer, shall not be removed from the premises of the Employer or its
Subsidiaries, as the case may be, without the written consent of the Employer's
Chairman of the Board, except as reasonably necessary or appropriate in
connection with the performance by the Executive of his duties hereunder, and
shall be promptly returned to the Employer upon termination of the Executive's
employment hereunder. The Executive agrees to abide by the reasonable policies
of the Employer, as in effect from time to time, respecting avoidance of
interests conflicting with those of the Employer and its Subsidiaries.
SECTION 5. TERMINATION.
(A) TERMINATION WITHOUT CAUSE. Either the Employer or the Executive
may terminate this Agreement and the Executive's employment hereunder for any
reason by delivering written notice of termination to the other party no less
than thirty (30) days before the effective date of termination, which date will
be specified in the notice of termination.
(B) VOLUNTARY TERMINATION BY THE EXECUTIVE. If the Executive
voluntarily terminates his employment under this Agreement other than pursuant
to Section 5(d) (Constructive Discharge) or Section 5(h) (Termination Upon
Change of Control), then the Employer shall only be required to pay the
Executive such Base Salary as shall have accrued through the effective date of
such termination plus the amount of any expense reimbursements for expenses
incurred prior to the effective date of such termination, provided that
Executive shall have submitted all reimbursement requests within ten (10)
business days of the effective date of such termination, and none of the
Employer or any of its Subsidiaries shall have any further obligations to the
Executive.
(C) PREMATURE TERMINATION.
(i) In the event of the termination of this Agreement by the
Employer prior to the last day of the then current term for any reason other
than a termination in accordance with the provisions of Section 5(e)
(Termination for Cause), then notwithstanding any mitigation of damages by the
Executive, the Employer shall pay the Executive a sum equal to Executive's
Annual Compensation for the remainder of the current term of this agreement, but
F-3-4
in no event less than twenty four (24) months. In addition, the Employer shall
reimburse the Executive for continued coverage (COBRA continuation coverage) for
the Executive and the Executive's dependents (if applicable) under the health
insurance programs maintained by the Employer during the period of the
Executive's COBRA eligibility; provided, however, that the continued payment of
these amounts by the Employer shall not offset or diminish any compensation or
benefits accrued as of the date of termination. The term "ANNUAL COMPENSATION"
shall mean the Executive's then current Base Salary and the Executive's
performance bonus for the most recently completed annual performance period.
(ii) Payment to the Executive will be made on a monthly basis
over the twenty four (24) month period immediately following the Executive's
termination of employment. Payment of the amounts due under Section 5(c)(i)
shall not be reduced in the event the Executive obtains other employment
following the termination of employment by the Employer.
(iii) If the Employer is not in compliance with its minimum
capital requirements or if the payments required under subsection (i) above
would cause the Employer's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Employer is
in capital compliance.
(D) CONSTRUCTIVE DISCHARGE. If at any time during the term of this
Agreement, except in instances where Employer has valid grounds to terminate the
Executive's employment pursuant to Section 5(e) (Termination for Cause), the
Executive is Constructively Discharged (as hereinafter defined), then the
Executive shall have the right, by written notice given to the Employer not
later than ninety (90) days after such Constructive Discharge, to terminate his
services hereunder, effective as of thirty (30) days after the date of such
notice, and the Executive shall have no rights or obligations under this
Agreement other than as provided in this Section 5(d), Section 4
(Confidentiality and Loyalty) and Section 6 (Non-Competition Covenant). In such
event, the Executive shall be entitled to the payments and benefits provided to
the Executive as if such termination of his employment were pursuant to Section
5(c) (Premature Termination).
For purposes of this Agreement, the Executive shall be "CONSTRUCTIVELY
DISCHARGED" upon the occurrence, without the Executive's express written
consent, of any of the following events, provided that the Executive gives at
least thirty (30) days prior written notice of the Executive's termination:
(i) a reduction in the Executive's Base Salary;
(ii) any change in the Executive's duties and responsibilities
that is inconsistent in any adverse respect with the Executive's position(s),
duties or responsibilities, or an adverse change in the Executive's place in the
organization chart or in the seniority of the individual (or Board, where
applicable) to whom the Executive shall report;
(iii) a material and adverse change in the Executive's titles or
offices (including, if applicable, membership on a board of directors);
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(iv) a material reduction in the Executive's annual target bonus
opportunity (if any) (for this purpose, a reduction for any year of over twenty
percent (20%) of the Executive's annual target bonus opportunity (if any)
measured by the preceding year shall be considered "material");
(v) requiring the Executive to be based more than fifty (50)
miles from the location of the Executive's place of employment as of the
Effective Date, except for normal business travel in connection with the
Executive's duties; provided, however, that the relocation of the Executive to
the Chicago metropolitan area with Executive's consent, in connection with
Section 3(g), shall not constitute a Constructive Discharge;
(vi) a material breach of this Agreement by the Employer; or
(vii) a decision by the Executive to terminate this Agreement
within the twelve (12) month time period following a Change of Control for any
reason.
An isolated, insubstantial and inadvertent action taken in good faith and
that is remedied within ten (10) days after receipt of notice thereof given by
the Executive shall not constitute a Constructive Discharge. The Executive's
right to terminate employment due to a Constructive Discharge shall not be
affected by incapacities due to mental or physical illness and the Executive's
continued employment or lack of notice hereunder shall not constitute consent
to, or a waiver of rights with respect to, any event or condition constituting a
Constructive Discharge.
(E) TERMINATION FOR CAUSE. This Agreement may be terminated for Cause
as hereinafter defined. "CAUSE" shall mean:
(i) the Executive's death;
(ii) the Executive's Permanent Disability, which shall mean the
Executive's inability, as a result of physical or mental incapacity,
substantially to perform his duties hereunder for a period of six (6)
consecutive months, with the determination of the Executive's Permanent
Disability to be determined by a physician chosen by two other physicians, each
of which is selected by the Employer and the Executive, respectively;
(iii) the willful and continued failure by the Executive to
perform substantially the Executive's duties (other than any such failure
resulting from the Executive's incapacity due to physical or mental illness or
any such failure subsequent to the delivery to the Executive of a notice of
intent to terminate the Executive's employment without Cause or subsequent to
the Executive's delivery of a notice of the Executive's intent to terminate
employment for Constructive Discharge), and such willful and continued failure
continues after a demand for substantial performance is delivered to the
Executive that specifically identifies the manner in which the Executive has not
substantially performed the Executive's duties;
(iv) the Executive is removed or suspended from banking pursuant
to Section 8(e) of the Federal Deposit Insurance Act, as amended ("FDIA"), or
any other applicable state or federal law; or
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(v) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the business
or reputation of the Employer.
(vi) For purposes of determining whether "Cause" exists, no act
or failure to act on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the action or omission was in, or not opposed to, the
best interests of the Employer. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board, based upon the advice
of counsel for the Employer or upon the instructions to the Executive by a more
senior officer shall be conclusively presumed to be done, or omitted to be done,
by the Executive in good faith and in the best interests of the Employer. Cause
shall not exist unless and until the Employer has delivered to the Executive a
copy of a resolution duly adopted by a majority of the entire Board (excluding
the Executive if the Executive is a Board member) at a meeting of the Board
called and held for such purpose (after reasonable notice to the Executive and
an opportunity for the Executive, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board an event set forth
in clauses (ii), (iii), (iv) or (v) has occurred and specifying the particulars
thereof in detail. The Employer must notify the Executive of any event
constituting Cause within ninety (90) days following its knowledge of its
existence or such event shall not constitute Cause under this Agreement.
(vii) Upon a termination of the Executive's employment with the
Employer for Cause, the Executive shall be entitled to receive from the Employer
only such payments as are due and owing to the Executive as of the effective
date of such termination. If the Executive's employment is terminated for Cause
pursuant to this Section, then the Employer shall only be required to pay the
Executive such Base Salary as shall have accrued through the effective date of
such termination and neither the Employer nor any of its Subsidiaries shall have
any further obligations to the Executive.
(F) PAYMENTS UPON DEATH. In the event payments are due and owing under
this Agreement at the death of the Executive, payment shall be made to such
beneficiary as the Executive may designate in writing, or failing such
designation, to the executor of his estate, in full settlement and satisfaction
of all claims and demands on behalf of the Executive.
(G) PAYMENTS PRIOR TO PERMANENT DISABILITY. The Executive shall be
entitled to the compensation and benefits provided for under this Agreement for
any period during the term of this Agreement and prior to the establishment of
the Executive's Disability during which the Executive is unable to work due to a
physical or mental infirmity. Notwithstanding anything contained in this
Agreement to the contrary, until the date specified in a notice of termination
relating to the Executive's Disability, the Executive shall be entitled to
return to his positions with the Employer as set forth in this Agreement in
which event no Disability of the Executive will be deemed to have occurred.
(H) TERMINATION UPON CHANGE OF CONTROL.
(i) In the event of a Change of Control (as defined below) of the
Employer and the termination of the Executive's employment under either A or B
below, subject
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to Section 5(h)(iii) below, the Executive shall be entitled to receive in lieu
of any other payments provided for in this Agreement a lump sum payment equal to
three (3) times the Executive's Annual Compensation, and the continuation of
benefits as provided in Section 5(c). Either of the following shall constitute
termination of the Executive's employment within the meaning of this Section
5(h):
(A) The Executive voluntarily terminates his employment
within the twelve (12) month period immediately following the Change of Control
due to Constructive Discharge.
(B) This Agreement and the Executive's employment is
terminated by the Employer or its successor within the twelve (12) month period
immediately following the Change of Control, for reasons other than Cause.
(ii) For purposes of this Section, the term "CHANGE OF CONTROL"
shall mean the following:
(A) The consummation of the acquisition by any person (as
such term is defined in Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 ACT")) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the 0000 Xxx) of fifty percent (50%) or more of
the combined voting power of the then outstanding voting securities of the
Employer; or
(B) Consummation of: (1) a merger or consolidation to which
the Employer is a party if the stockholders immediately before such merger or
consolidation do not, as a result of such merger or consolidation, own, directly
or indirectly, more than sixty-seven percent (67%) of the combined voting power
of the then outstanding voting securities of the entity resulting from such
merger or consolidation in substantially the same proportion as their ownership
of the combined voting power of the Employer's voting securities outstanding
immediately before such merger or consolidation; or (2) a complete liquidation
or dissolution or an agreement for the sale or other disposition of all or
substantially all of the assets of the Employer or the Bank.
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
solely because fifty percent (50%) or more of the combined voting power of the
Employer's then outstanding securities is acquired by: (1) a trustee or other
fiduciary holding securities under one or more employee benefit plans maintained
for employees of the entity; or (2) any corporation which, immediately prior to
such acquisition, is owned directly or indirectly by the stockholders in the
same proportion as their ownership of stock immediately prior to such
acquisition.
Notwithstanding the foregoing, the consummation of the merger contemplated by
the Merger Agreement shall not constitute a Change of Control for any purpose of
this Agreement.
(iii) It is the intention of the Employer and the Executive that
no portion of any payment under this Agreement, or payments to or for the
benefit of the Executive under any other agreement or plan, be deemed to be an
"EXCESS PARACHUTE PAYMENT" as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "CODE"), or its successors. It is agreed that the
present value of and payments to or for the benefit of the
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Executive in the nature of compensation, receipt of which is contingent on the
Change of Control of the Employer, and to which Section 280G of the Code applies
(in the aggregate "TOTAL PAYMENTS") shall not exceed an amount equal to one
dollar ($1.00) less than the maximum amount which the Employer may pay without
loss of deduction under Section 280G(a) of the Code. Present value for purposes
of this Agreement shall be calculated in accordance with Section 280G(d)(4) of
the Code. Within ninety (90) days following the earlier of (A) the giving of the
notice of termination or (B) the giving of notice by the Employer to the
Executive of its belief that there is a payment or benefit due the Executive
which will result in an excess parachute payment as defined in Section 280G of
the Code, the Executive and the Employer, at the Employer's expense, shall
obtain the opinion of such legal counsel and certified public accountants as the
Executive may choose (notwithstanding the fact that such persons have acted or
may also be acting as the legal counsel or certified public accountants for the
Employer), which opinions need not be unqualified, which sets forth (I) the
amount of the Base Period Income of the Executive, (II) the present value of
Total Payments and (III) the amount and present value of any excess parachute
payments. In the event that such opinions determine that there would be an
excess parachute payment, the payment hereunder or any other payment determined
by such counsel to be includable in Total Payments shall be modified, reduced or
eliminated as specified by the Executive in writing delivered to the Employer
within sixty (60) days of the Executive's receipt of such opinions or, if the
Executive fails to so notify the Employer, then as the Employer shall reasonably
determine, so that under the bases of calculation set forth in such opinions
there will be no excess parachute payment. The provisions of this subparagraph,
including the calculations, notices and opinions provided for herein shall be
based upon the conclusive presumption that (y) the compensation and benefits
provided for in Section 3 hereof and (z) any other compensation earned by the
Executive pursuant to the Employer's compensation programs which would have been
paid in any event, are reasonable compensation for services rendered, even
though the timing of such payment is triggered by the Change of Control;
provided, however, that in the event such legal counsel so requests in
connection with the opinion required by this subparagraph, the Executive and the
Employer shall obtain, at the Employer's expense, and the legal counsel may rely
on in providing the opinion, the advice of a firm of recognized executive
compensation consultants as to the reasonableness of any item of compensation to
be received by the Executive. In the event that the provisions of Sections 280G
and 4999 of the Code are repealed without succession, this subparagraph shall be
of no further force or effect.
(I) REGULATORY SUSPENSION AND TERMINATION.
(i) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employer's affairs by a
notice served under Section 8(e)(3) (12 U.S.C. Section 1818(e)(3)) or 8(g) (12
U.S.C. Section 1818(g)) of the FDIA, the Employer's obligations under this
contract shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Employer may in its discretion (A) pay the Executive all or part of the
compensation withheld while their contract obligations were suspended and (B)
reinstate (in whole or in part) any of the obligations which were suspended.
(ii) If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Employer's affairs by an order issued
under Section 8(e) (12
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U.S.C. Section 1818(e)) or 8(g) (12 U.S.C. Section 1818(g)) of the FDIA, all
obligations of the Employer under this contract shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(iii) If the Employer is in default as defined in Section 3(x)
(12 U.S.C. Section 1813(x)(1)) of the FDIA, all obligations of the Employer
under this contract shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting parties.
(iv) All obligations of the Employer under this contract shall be
terminated, except to the extent determined that continuation of the contract is
necessary for the continued operation of the institution by the Federal Deposit
Insurance Corporation (the "FDIC"), at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Employer under the
authority contained in Section 13(c) (12 U.S.C. Section 1823(c)) of the FDIA, or
when the Employer is determined by the FDIC to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however, shall
not be affected by such action.
SECTION 6. NON-COMPETITION COVENANT.
(A) RESTRICTIVE COVENANT. The Employer and the Executive have jointly
reviewed the customer lists and operations of the Employer and its Subsidiaries
and have agreed that the primary service area of the Employer's and its
Subsidiaries' lending and deposit taking functions in which the Employer and its
Subsidiaries have and will actively participate extends to an area within twenty
five (25) miles of any office or branch of the Employer and its Subsidiaries
(with such area reduced to five (5) miles if such office or branch is located
within the St. Louis or Chicago metropolitan areas) (the "RESTRICTIVE AREA").
Therefore, as an essential ingredient of and in consideration of this Agreement
and the payment of the amounts described in Section 3, the Executive hereby
agrees that, except with the express prior written consent of the Employer, for
a period of two (2) years after the termination of the Executive's employment
with the Employer, whether such termination of employment occurs during the term
of this Agreement or following the term or termination of this Agreement (the
"RESTRICTIVE PERIOD"):
(i) The Executive will not, directly or indirectly, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation or control of, be employed by, associated with,
or in any manner connected with, lend the Executive's name or any similar name
to, lend the Executive's credit to, or render services or advice to, any person,
firm, partnership, corporation or trust which owns or operates, a bank, savings
and loan association, credit union or similar financial institution (a
"FINANCIAL INSTITUTION") within the Restrictive Area; provided however, that the
ownership by the Executive of shares of the capital stock which are listed on a
securities exchange or quoted on the National Association of Securities Dealers
Automated Quotation System which do not represent more than five percent (5%) of
the outstanding capital stock of any Financial Institution, shall not violate
any terms of this Agreement.
(ii) The Executive will not, directly or indirectly, either for
himself, or any other Financial Institution: (A) induce or attempt to induce any
employee of the Employer or its Subsidiaries to leave the employ of the Employer
or its Subsidiaries; (B) in any way interfere
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with the relationship between Employer or its Subsidiaries and any employee of
Employer or its Subsidiaries; (C) employ, or otherwise engage as an employee,
independent contractor or otherwise, any employee of Employer or its
Subsidiaries; or (D) induce or attempt to induce any customer, supplier,
licensee, or business relation of Employer or its Subsidiaries to cease doing
business with the Employer or its Subsidiaries or in any way interfere with the
relationship between any customer, supplier, licensee or business relation of
Employer or its Subsidiaries.
(iii) The Executive will not, directly or indirectly, either for
himself, or any other Financial Institution, solicit the business of any person
or entity known to the Executive to be a customer of the Employer or its
Subsidiaries, whether or not such Executive had personal contact with such
person or entity, with respect to products or activities which compete in whole
or in part with the products or activities of the Employer or its Subsidiaries.
(iv) The Executive will not, directly or indirectly, serve as the
agent, broker or representative of, or otherwise assist, any person or entity in
obtaining services or products from any Financial Institution within the
Restrictive Area.
(v) The Executive expressly agrees that the covenants contained
in this Section 6(a) are reasonable with respect to their duration, geographical
area, and scope.
(B) VIOLATION OF RESTRICTIVE COVENANT. If the Executive violates the
restrictions contained in Section 6(a) and the Employer brings legal action for
injunctive or other relief, the Employer shall not, as a result of the time
involved in obtaining such relief, be deprived of the benefit of the full period
of the Restrictive Period. Accordingly, the Restrictive Period shall be deemed
to have the duration specified in Section 6(a) computed from the date the relief
is granted but reduced by the time between the period when the Restrictive
Period began to run and the date of the first violation of the restrictions
contained in Section 6(a) by the Executive. In the event that a successor
assumes and agrees to perform this Agreement, the restrictions contained in
Section 6(a) shall continue to apply only to the primary service area of the
Employer as it existed immediately before such assumption and shall not apply to
any of the successor's other offices.
(C) REMEDIES FOR BREACH OF RESTRICTIVE COVENANT. The Executive
acknowledges that the restrictions contained in Section 4 and Section 6(a) of
this Agreement are reasonable and necessary for the protection of the legitimate
business interests of the Employer, that any violation of these restrictions
would cause substantial injury to the Employer and such interests, that the
Employer would not have entered into this Agreement with the Executive without
receiving the additional consideration offered by the Executive in binding
himself to these restrictions and that such restrictions were a material
inducement to the Employer to enter into this Agreement. In the event of any
violation or threatened violation of these restrictions, the Employer, in
addition to and not in limitation of, any other rights, remedies or damages
available to the Employer under this Agreement or otherwise at law or in equity,
shall be entitled to preliminary and permanent injunctive relief to prevent or
restrain any such violation by the Executive and any and all persons directly or
indirectly acting for or with him, as the case may be. In the event of a
violation of the restrictions in Section 4 and Section 6(a) of this Agreement,
the Employer shall have the right to cease making any payments, or providing
benefits, otherwise required hereunder.
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SECTION 7. INTERCORPORATE TRANSFERS. If the Executive shall be voluntarily
transferred to a Subsidiary of the Employer, such transfer shall not be deemed
to terminate or modify this Agreement and the employing corporation to which the
Executive shall have been transferred shall, for all purposes of this Agreement,
be construed as standing in the same place and stead as the Employer as of the
date of such transfer, provided however, that this Section 7 shall not modify
Employer's obligations under Section 2, Section 3 and Section 5 hereof.
SECTION 8. INTEREST IN ASSETS. Neither the Executive nor his estate shall
acquire hereunder any rights in funds or assets of the Employer, otherwise than
by and through the actual payment of amounts payable hereunder; nor shall the
Executive or his estate have any power to transfer, assign, anticipate,
hypothecate or otherwise encumber in advance any of said payments; nor shall any
of such payments be subject to seizure for the payment of any debt, judgment,
alimony, separate maintenance or be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise of the Executive.
SECTION 9. INDEMNIFICATION. The Employer shall provide the Executive
(including his heirs, personal representatives, executors and administrators)
for the term of this Agreement with coverage under a standard directors' and
officers' liability insurance policy at its expense.
SECTION 10. GENERAL PROVISIONS.
(A) SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Executive, his heirs, legatees and personal
representatives, the Employer and its successors and assigns, and any successor
or assign of the Employer shall be deemed the "EMPLOYER" hereunder. The Employer
shall require any successor to all or substantially all of the business and/or
assets of the Employer, whether directly or indirectly, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the Employer
would be required to perform if no such succession had taken place.
(B) ENTIRE AGREEMENT; MODIFICATIONS. This Agreement constitutes the
entire agreement between the parties respecting the subject matter hereof, and
supersedes all prior negotiations, undertakings, agreements and arrangements
with respect thereto, whether written or oral, and without limiting the
foregoing (specifically including, but not limited to, and Prior Agreement), the
Executive hereby agrees and acknowledges that this Agreement supersedes, and he
shall have no rights to payments or otherwise under, any Prior Agreement. Except
as otherwise explicitly provided herein, this Agreement may not be amended or
modified except by written agreement signed by the Executive and the Employer;
provided, however, that the Employer may unilaterally modify the Agreement to
comply with applicable law, including, but not limited to, Code Section 409A,
while maintaining the spirit and intent of the Agreement.
(C) SURVIVAL. The provisions of Section 4 and Section 6 shall survive
the expiration or termination of this Agreement, in each case for the period set
forth in such section.
(D) ENFORCEMENT AND GOVERNING LAW. The provisions of this Agreement
shall be regarded as divisible and separate; if any of said provisions should be
declared invalid or
F-3-12
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remaining provisions shall not be affected thereby. This
Agreement shall be construed and the legal relations of the parties hereto shall
be determined in accordance with the laws of the State of Illinois without
reference to the conflict of law provisions of any jurisdiction.
(E) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement (with the exception of the remedies set forth in
Section 6(c)) shall be settled exclusively by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by the Executive
within twenty-five (25) miles from the location of the main office of the
Employer, in accordance with the employment rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction; provided, however, that the Executive shall be
entitled to seek specific performance of his right to be paid through the date
of termination during the pendency of any dispute or controversy arising under
or in connection with this Agreement.
(F) WAIVER. No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of this Agreement
to be performed by the other party, shall be deemed a waiver of any similar or
dissimilar provisions or conditions at the same time or any prior or subsequent
time.
(G) NOTICES. Notices pursuant to this Agreement shall be in writing
and shall be deemed given when received; and, if mailed, shall be mailed by
United States registered or certified mail, return receipt requested, postage
prepaid; and if to the Employer, addressed to the principal headquarters of the
Employer, attention: Chairman of the Board; or, if to the Executive, to the
address set forth below the Executive's signature on this Agreement, or to such
other address as the party to be notified shall have given to the other.
(H) INTERNAL REVENUE CODE SECTION 409A. Notwithstanding anything
contained herein to the contrary, if at the time of a termination of employment,
(i) Employee is a "specified employee" as defined in Code Section 409A, and the
regulations and guidance thereunder in effect at the time of such termination
("409A"), and, (ii) any of the payments or benefits provided hereunder may
constitute "deferred compensation" under 409A, then, and only to the extent
required by such provisions, the date of payment of such payments or benefits
otherwise provided shall be delayed for a period of up to six (6) months
following the date of termination.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
UNIONBANCORP, INC. XXXX X. XXXXXXXXX
By:
--------------------------------- ----------------------------------------
Its:
--------------------------------
----------------------------------------
----------------------------------------
Address:
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EXHIBIT G
FORM OF EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT"), is made and entered into as
of June 30, 2006 by and between UnionBancorp, Inc., a Delaware corporation (the
"EMPLOYER"), and [_________] (the "EXECUTIVE"), and shall be effective
immediately upon the consummation of the merger contemplated by the Agreement
and Plan of Merger (the "MERGER AGREEMENT") between the Employer and Centrue
Financial Corporation ("CENTRUE") dated June 30, 2006 (the "EFFECTIVE DATE").
RECITALS
A. The Executive serves as [______________] of [CENTRUE, AND ITS
WHOLLY-OWNED SUBSIDIARY, CENTRUE BANK], [PURSUANT TO THE TERMS OF AN EMPLOYMENT
AGREEMENT DATED _____________, 200____ (THE "CENTRUE AGREEMENT")].
B. The Employer desires to employ the Executive as [TITLE], and the
Executive desires to be employed in such positions.
C. The Employer and the Executive have made commitments to each other on a
variety of important issues concerning the Executive's employment, including the
performance that will be expected of the Executive, the compensation the
Executive will be paid, how long and under what circumstances the Executive will
remain employed and the financial details relating to any decision that either
the Employer or the Executive might ever make to terminate this Agreement.
D. The Employer and the Executive desire to enter into this Agreement as of
the Effective Date and as of such date this Agreement shall supersede all terms
of any other employment or severance agreement, with Centrue or Union, providing
for benefits similar in nature to those contained herein (a "PRIOR AGREEMENT").
E. The Employer recognizes that circumstances may arise in which a future
change of control of the Employer through acquisition or otherwise may occur
thereby causing uncertainty of employment without regard to the competence or
past contributions of the Executive, which uncertainty may result in the loss of
valuable services of the Executive and the Employer and the Employer wishes to
provide reasonable security to the Executive against changes in the employment
relationship in the event of any such change of control.
NOW, THEREFORE, in consideration of the premises and of the covenants
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Employer and the Executive
agree as follows:
AGREEMENT
SECTION 1. TERM WITH AUTOMATIC RENEWAL PROVISIONS. The term of this
Agreement and the Executive's employment hereunder shall be for a term of one
year commencing on the Effective Date (the "ORIGINAL TERM"), and shall
automatically be extended for one (1) additional year on the first anniversary
of the Effective Date and each anniversary thereafter, unless either party to
this Agreement provides written notice of non-renewal to the other party not
less than ninety (90) days prior to such anniversary of the Effective Date. Any
automatic extension of the this Agreement beyond the first anniversary shall NOT
constitute the Original Term, as used herein.
SECTION 2. POSITION AND DUTIES. The Employer hereby employs the Executive
as set forth above or in such other senior executive capacity or capacities as
shall be mutually agreed between the Employer and the Executive. During the
period of the Executive's employment hereunder, the Executive shall devote his
best efforts and full business time, energy, skills and attention to the
business and affairs of the Employer, the Bank, and the other direct and
indirect subsidiaries of the Employer (together with the Bank, the
"SUBSIDIARIES" or a "SUBSIDIARY"). The Executive's duties and authority shall
consist of and include all duties and authority customarily performed and held
by persons holding equivalent positions with business organizations similar in
nature and size to the Employer, as such duties and authority are reasonably
defined, modified and delegated from time to time by the Board of Directors of
the Employer to which the Executive shall report during the term of this
Agreement (the "BOARD"). The Executive shall have the powers necessary to
perform the duties assigned to him and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accoutrements as shall be reasonably necessary and appropriate in the light of
such assigned duties.
SECTION 3. COMPENSATION. As compensation for the services to be provided by
the Executive hereunder, the Executive shall receive the following compensation,
expense reimbursement and other benefits:
(A) BASE COMPENSATION. The Executive shall receive an aggregate annual
minimum Base Salary of [________] payable in installments in accordance with the
regular payroll schedule of the Bank ("BASE SALARY"). Such Base Salary shall be
subject to review annually commencing in 2007 and shall be maintained or
increased during the term of this Agreement in accordance with the Employer's
established management compensation policies and plans.
(B) PERFORMANCE BONUS. The Executive shall be eligible to receive an
annual performance bonus, payable within sixty (60) days after the end of the
fiscal year of the Employer, in an amount not to exceed twenty-five percent
(25%) of the Executive's Base Salary for the applicable year. The amount, if
any, shall be determined by the Board, or the appropriate committee thereof, and
shall generally be based on a combination of organization-wide and individual
performance criteria.
(C) REIMBURSEMENT OF EXPENSES. The Executive shall be reimbursed, upon
submission of appropriate vouchers and supporting documentation, for all travel,
entertainment
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and other out-of-pocket expenses reasonably and necessarily incurred by the
Executive in the performance of his duties hereunder and shall be entitled to
attend seminars, conferences and meetings relating to the business of the
Employer consistent with the Employer's or the Bank's established policies in
that regard.
(D) OTHER BENEFITS. The Executive shall be entitled to all benefits
specifically established for him and, when and to the extent he is eligible
therefor, to participate in all plans and benefits generally accorded to senior
executives of the Employer and the Bank, including, but not limited to, pension,
profit-sharing, supplemental retirement, incentive compensation, bonus,
disability income, group life medical and hospitalization insurance, and similar
or comparable plans, and also to perquisites extended to similarly situated
senior executives, provided, however, that such plans, benefits and perquisites
shall be no less than those made available to all other employees of the
Employer and the Bank.
(E) VACATIONS. The Executive shall be entitled to annual paid time off
("PTO") which shall accrue each calendar year and which shall be taken at a time
or times mutually agreeable to the Employer and the Executive; provided,
however, that the Executive shall be entitled to at least twenty three (23) PTO
days annually.
(F) WITHHOLDING. The Employer shall be entitled to withhold from
amounts payable to the Executive hereunder, any federal, state or local
withholding or other taxes which it is from time to time required to withhold.
The Employer shall be entitled to rely upon the opinion of its legal counsel
with regard to any question concerning the amount or requirement of any such
withholding.
(G) STOCK AWARDS. Effective July 7, 2006, Employer shall grant to the
Executive an option to purchase [_____________(____)] shares of Employer's
common stock (the "OPTION"). One fifth (1/5) of the Option shall vest upon the
first anniversary of the Effective Date and one fifth (1/5) shall vest on each
anniversary thereafter, until fully vested on the fifth (5th) anniversary.
Notwithstanding any provision of the Employer's stock option plan ("Stock Plan")
to the contrary, the Option award agreement will specifically provide that the
award will not fully vest upon the consummation of the transactions provided for
in the Merger Agreement. The Option award shall provide that it shall fully vest
upon a subsequent Change in Control (as defined in the Stock Plan), death,
disability, termination of the Executive without Cause or by the Executive due
to a Constructive Discharge (with the terms Cause and Constructive Discharge as
defined herein). The Option will expire, to the extent not exercised, as of the
seventh (7th) anniversary of the Effective Date. The exercise price of the
Option shall be based on the fair market value of the Employer's common stock on
the date of grant.
SECTION 4. CONFIDENTIALITY AND LOYALTY. The Executive acknowledges that
during the course of his employment he may produce and have access to material,
records, data, trade secrets and information not generally available to the
public regarding the Employer and its Subsidiaries (collectively, "CONFIDENTIAL
INFORMATION"). Accordingly, during the Term and during the Restricted Period
(defined below), the Executive shall hold in confidence and not directly or
indirectly disclose, use, copy or make lists of any such Confidential
Information, except to the extent that such information is or thereafter becomes
lawfully available from public sources, or such disclosure is authorized in
writing by the Employer, required by a law or any
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competent administrative agency or judicial authority, or otherwise as
reasonably necessary or appropriate in connection with the performance by the
Executive of his duties hereunder. All records, files, documents and other
materials or copies thereof relating to the business of the Employer and its
Subsidiaries which the Executive shall prepare or use, shall be and remain the
sole property of the Employer, shall not be removed from the premises of the
Employer or its Subsidiaries, as the case may be, without the written consent of
the Employer's Chairman of the Board, except as reasonably necessary or
appropriate in connection with the performance by the Executive of his duties
hereunder, and shall be promptly returned to the Employer upon termination of
the Executive's employment hereunder. The Executive agrees to abide by the
reasonable policies of the Employer, as in effect from time to time, respecting
avoidance of interests conflicting with those of the Employer and its
Subsidiaries.
SECTION 5. TERMINATION.
(A) TERMINATION WITHOUT CAUSE. Either the Employer or the Executive
may terminate this Agreement and the Executive's employment hereunder for any
reason by delivering written notice of termination to the other party no less
than thirty (30) days before the effective date of termination, which date will
be specified in the notice of termination.
(B) VOLUNTARY TERMINATION BY THE EXECUTIVE OR TERMINATION FOLLOWING
THE ORIGINAL TERM. If the Executive voluntarily terminates his employment under
this Agreement other than pursuant to Section 5(d) (Constructive Discharge) or
Section 5(h) (Termination Upon Change of Control), or the Employer terminates
the Executive's employment for any reason following the Original Term other than
following a Change in Control, then the Employer shall only be required to pay
the Executive such Base Salary as shall have accrued through the effective date
of such termination plus the amount of any expense reimbursements for expenses
incurred prior to the effective date of such termination, provided that the
Executive shall have submitted all reimbursement requests within ten (10)
business days of the effective date of such termination, and none of the
Employer or any of its Subsidiaries shall have any further obligations to the
Executive.
(C) PREMATURE TERMINATION.
(i) In the event of the termination of this Agreement by the
Employer prior to the last day of the Original Term for any reason other than a
termination in accordance with the provisions of Section 5(e) (Termination for
Cause), then notwithstanding any mitigation of damages by the Executive, the
Employer shall pay the Executive a sum equal to the Executive's Annual
Compensation. In addition, the Employer shall reimburse the Executive for
continued coverage (COBRA continuation coverage) for the Executive and the
Executive's dependents (if applicable) under the health insurance programs
maintained by the Employer during the period of the Executive's COBRA
eligibility; provided, however, that the continued payment of these amounts by
the Employer shall not offset or diminish any compensation or benefits accrued
as of the date of termination. The term "ANNUAL COMPENSATION" shall mean the
Executive's then current Base Salary and the Executive's performance bonus for
the most recently completed annual performance period (including prior payments
made under the incentive plans of Centrue).
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(ii) Payment to the Executive will be made on a monthly basis
over the twelve (12) month period immediately following the Executive's
termination of employment. Payment of the amounts due under Section 5(c)(i)
shall not be reduced in the event the Executive obtains other employment
following the termination of employment by the Employer.
(iii) If the Employer is not in compliance with its minimum
capital requirements or if the payments required under subsection (i) above
would cause the Employer's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Employer is
in capital compliance.
(D) CONSTRUCTIVE DISCHARGE. If at any time during the Original Term of
this Agreement, except in instances where Employer has valid grounds to
terminate the Executive's employment pursuant to Section 5(e) (Termination for
Cause), the Executive is Constructively Discharged (as hereinafter defined),
then the Executive shall have the right, by written notice given to the Employer
not later than ninety (90) days after such Constructive Discharge, to terminate
his services hereunder, effective as of thirty (30) days after the date of such
notice, and the Executive shall have no rights or obligations under this
Agreement other than as provided in this Section 5(d), Section 4
(Confidentiality and Loyalty) and Section 6 (Non-Competition Covenant). In such
event, the Executive shall be entitled to the payments and benefits provided to
the Executive as if such termination of his employment were pursuant to Section
5(c) (Premature Termination).
For purposes of this Agreement, the Executive shall be "CONSTRUCTIVELY
DISCHARGED" upon the occurrence, without the Executive's express written
consent, of any of the following events, provided that the Executive gives at
least thirty (30) days prior written notice of Executive's termination:
(i) a reduction in the Executive's Base Salary;
(ii) any change in the Executive's duties and responsibilities
that is inconsistent in any adverse respect with the Executive's position(s),
duties or responsibilities, or an adverse change in the Executive's place in the
organization chart or in the seniority of the individual (or Board, where
applicable) to whom the Executive shall report;
(iii) a material and adverse change in the Executive's titles or
offices (including, if applicable, membership on a board of directors);
(iv) a material reduction in the Executive's annual target bonus
opportunity (if any) (for this purpose, a reduction for any year of over twenty
percent (20%) of the Executive's annual target bonus opportunity (if any)
measured by the preceding year shall be considered "material");
(v) requiring the Executive to be based more than fifty (50)
miles from the location of the Executive's place of employment as of the
Effective Date, except for normal business travel in connection with the
Executive's duties; or
(vi) a material breach of this Agreement by the Employer.
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An isolated, insubstantial and inadvertent action taken in good faith and
that is remedied within ten (10) days after receipt of notice thereof given by
the Executive shall not constitute a Constructive Discharge. The Executive's
right to terminate employment due to a Constructive Discharge shall not be
affected by incapacities due to mental or physical illness and the Executive's
continued employment or lack of notice hereunder shall not constitute consent
to, or a waiver of rights with respect to, any event or condition constituting a
Constructive Discharge.
(E) TERMINATION FOR CAUSE. This Agreement may be terminated for Cause
as hereinafter defined. "CAUSE" shall mean:
(i) the Executive's death;
(ii) the Executive's Permanent Disability, which shall mean the
Executive's inability, as a result of physical or mental incapacity,
substantially to perform his duties hereunder for a period of six (6)
consecutive months, with the determination of the Executive's Permanent
Disability to be determined by a physician chosen by two other physicians, each
of which is selected by the Employer and the Executive, respectively;
(iii) the willful and continued failure by the Executive to
perform substantially the Executive's duties (other than any such failure
resulting from the Executive's incapacity due to physical or mental illness or
any such failure subsequent to the delivery to the Executive of a notice of
intent to terminate the Executive's employment without Cause or subsequent to
the Executive's delivery of a notice of the Executive's intent to terminate
employment for Constructive Discharge), and such willful and continued failure
continues after a demand for substantial performance is delivered to the
Executive that specifically identifies the manner in which the Executive has not
substantially performed the Executive's duties;
(iv) the Executive is removed or suspended from banking pursuant
to Section 8(e) of the Federal Deposit Insurance Act, as amended ("FDIA"), or
any other applicable state or federal law; or
(v) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the business
or reputation of the Employer.
(vi) For purposes of determining whether "Cause" exists, no act
or failure to act on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the action or omission was in, or not opposed to, the
best interests of the Employer. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board, based upon the advice
of counsel for the Employer or upon the instructions to the Executive by a more
senior officer shall be conclusively presumed to be done, or omitted to be done,
by the Executive in good faith and in the best interests of the Employer. The
Employer must notify the Executive of any event constituting Cause within ninety
(90) days following its knowledge of its existence or such event shall not
constitute Cause under this Agreement.
(vii) Upon a termination of the Executive's employment with the
Employer for Cause, the Executive shall be entitled to receive from the Employer
only such
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payments as are due and owing to the Executive as of the effective date of such
termination. If the Executive's employment is terminated for Cause pursuant to
this Section, then the Employer shall only be required to pay the Executive such
Base Salary as shall have accrued through the effective date of such termination
and neither the Employer nor any of its Subsidiaries shall have any further
obligations to the Executive.
(F) PAYMENTS UPON DEATH. In the event payments are due and owing under
this Agreement at the death of the Executive, payment shall be made to such
beneficiary as the Executive may designate in writing, or failing such
designation, to the executor of his estate, in full settlement and satisfaction
of all claims and demands on behalf of the Executive.
(G) PAYMENTS PRIOR TO PERMANENT DISABILITY. The Executive shall be
entitled to the compensation and benefits provided for under this Agreement for
any period during the term of this Agreement and prior to the establishment of
the Executive's Disability during which the Executive is unable to work due to a
physical or mental infirmity. Notwithstanding anything contained in this
Agreement to the contrary, until the date specified in a notice of termination
relating to the Executive's Disability, the Executive shall be entitled to
return to his positions with the Employer as set forth in this Agreement in
which event no Disability of the Executive will be deemed to have occurred.
(H) TERMINATION UPON CHANGE OF CONTROL.
(i) In the event of a Change of Control (as defined below) of the
Employer and the termination of the Executive's employment under either A or B
below, subject to Section 5(h)(iii) below, the Executive shall be entitled to
receive in lieu of any other payments provided for in this Agreement a lump sum
payment equal to the amount determined pursuant to Section 5(c) (Premature
Termination), and the continuation of benefits as provided in Section 5(c).
Either of the following shall constitute termination of the Executive's
employment within the meaning of this Section 5(h):
(A) The Executive voluntarily terminates his employment
within the twelve (12) month period immediately following the Change of Control
due to Constructive Discharge.
(B) This Agreement and the Executive's employment is
terminated by the Employer or its successor within the twelve (12) month period
immediately following the Change of Control, for reasons other than Cause.
(ii) For purposes of this Section, the term "CHANGE OF CONTROL"
shall mean the following:
(A) The consummation of the acquisition by any person (as
such term is defined in Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 ACT")) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the 0000 Xxx) of fifty percent (50%) or more of
the combined voting power of the then outstanding voting securities of the
Employer; or
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(B) Consummation of: (1) a merger or consolidation to which
the Employer is a party if the stockholders immediately before such merger or
consolidation do not, as a result of such merger or consolidation, own, directly
or indirectly, more than sixty-seven percent (67%) of the combined voting power
of the then outstanding voting securities of the entity resulting from such
merger or consolidation in substantially the same proportion as their ownership
of the combined voting power of the Employer's voting securities outstanding
immediately before such merger or consolidation; or (2) a complete liquidation
or dissolution or an agreement for the sale or other disposition of all or
substantially all of the assets of the Employer or the Bank.
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
solely because fifty percent (50%) or more of the combined voting power of the
Employer's then outstanding securities is acquired by: (1) a trustee or other
fiduciary holding securities under one or more employee benefit plans maintained
for employees of the entity; or (2) any corporation which, immediately prior to
such acquisition, is owned directly or indirectly by the stockholders in the
same proportion as their ownership of stock immediately prior to such
acquisition.
Notwithstanding the foregoing, the consummation of the merger contemplated by
the Merger Agreement shall not constitute a Change of Control for any purpose of
this Agreement.
(iii) It is the intention of the Employer and the Executive that
no portion of any payment under this Agreement, or payments to or for the
benefit of the Executive under any other agreement or plan, be deemed to be an
"EXCESS PARACHUTE PAYMENT" as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "CODE"), or its successors. It is agreed that the
present value of and payments to or for the benefit of the Executive in the
nature of compensation, receipt of which is contingent on the Change of Control
of the Employer, and to which Section 280G of the Code applies (in the aggregate
"TOTAL PAYMENTS") shall not exceed an amount equal to one dollar ($1.00) less
than the maximum amount which the Employer may pay without loss of deduction
under Section 280G(a) of the Code. Present value for purposes of this Agreement
shall be calculated in accordance with Section 280G(d)(4) of the Code. Within
ninety (90) days following the earlier of (A) the giving of the notice of
termination or (B) the giving of notice by the Employer to the Executive of its
belief that there is a payment or benefit due the Executive which will result in
an excess parachute payment as defined in Section 280G of the Code, the
Executive and the Employer, at the Employer's expense, shall obtain the opinion
of such legal counsel and certified public accountants as the Executive may
choose (notwithstanding the fact that such persons have acted or may also be
acting as the legal counsel or certified public accountants for the Employer),
which opinions need not be unqualified, which sets forth (I) the amount of the
Base Period Income of the Executive, (II) the present value of Total Payments
and (III) the amount and present value of any excess parachute payments. In the
event that such opinions determine that there would be an excess parachute
payment, the payment hereunder or any other payment determined by such counsel
to be includable in Total Payments shall be modified, reduced or eliminated as
specified by the Executive in writing delivered to the Employer within sixty
(60) days of the Executive's receipt of such opinions or, if the Executive fails
to so notify the Employer, then as the Employer shall reasonably determine, so
that under the bases of calculation set forth in such opinions there will be no
excess parachute payment. The provisions of this subparagraph, including the
calculations, notices and opinions provided for herein shall be
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based upon the conclusive presumption that (y) the compensation and benefits
provided for in Section 3 hereof and (z) any other compensation earned by the
Executive pursuant to the Employer's compensation programs which would have been
paid in any event, are reasonable compensation for services rendered, even
though the timing of such payment is triggered by the Change of Control;
provided, however, that in the event such legal counsel so requests in
connection with the opinion required by this subparagraph, the Executive and the
Employer shall obtain, at the Employer's expense, and the legal counsel may rely
on in providing the opinion, the advice of a firm of recognized executive
compensation consultants as to the reasonableness of any item of compensation to
be received by the Executive. In the event that the provisions of Sections 280G
and 4999 of the Code are repealed without succession, this subparagraph shall be
of no further force or effect.
(I) REGULATORY SUSPENSION AND TERMINATION.
(i) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employer's affairs by a
notice served under Section 8(e)(3) (12 U.S.C. Section 1818(e)(3)) or 8(g) (12
U.S.C. Section 1818(g)) of the FDIA, the Employer's obligations under this
contract shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Employer may in its discretion (A) pay the Executive all or part of the
compensation withheld while their contract obligations were suspended and (B)
reinstate (in whole or in part) any of the obligations which were suspended.
(ii) If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Employer's affairs by an order issued
under Section 8(e) (12 U.S.C. Section 1818(e)) or 8(g) (12 U.S.C. Section
1818(g)) of the FDIA, all obligations of the Employer under this contract shall
terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(iii) If the Employer is in default as defined in Section 3(x)
(12 U.S.C. Section 1813(x)(1)) of the FDIA, all obligations of the Employer
under this contract shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting parties.
(iv) All obligations of the Employer under this contract shall be
terminated, except to the extent determined that continuation of the contract is
necessary for the continued operation of the institution by the Federal Deposit
Insurance Corporation (the "FDIC"), at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Employer under the
authority contained in Section 13(c) (12 U.S.C. Section 1823(c)) of the FDIA, or
when the Employer is determined by the FDIC to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however, shall
not be affected by such action.
SECTION 6. NON-COMPETITION COVENANT.
(A) RESTRICTIVE COVENANT. The Employer and the Executive have jointly
reviewed the customer lists and operations of the Employer and its Subsidiaries
and have agreed that the primary service area of the Employer's and its
Subsidiaries' lending and deposit taking
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functions in which the Employer and its Subsidiaries have and will actively
participate extends to an area within thirty-five (35) miles of any office or
branch of the Employer and its Subsidiaries for which the Executive had provided
services within the twenty-four (24) month period immediately preceding the date
of termination (the "RESTRICTIVE AREA"). Therefore, as an essential ingredient
of and in consideration of this Agreement and the payment of the amounts
described in Section 3, the Executive hereby agrees that, except with the
express prior written consent of the Employer, for a period of twelve (12)
months after the termination of the Executive's employment with the Employer,
whether such termination of employment occurs during the term of this Agreement
or following the term or termination of this Agreement (the "RESTRICTIVE
PERIOD"):
(i) The Executive will not, directly or indirectly, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation or control of, be employed by, associated with,
or in any manner connected with, lend the Executive's name or any similar name
to, lend the Executive's credit to, or render services or advice to, any person,
firm, partnership, corporation or trust which owns or operates, a bank, savings
and loan association, credit union or similar financial institution (a
"FINANCIAL INSTITUTION") within the Restrictive Area; provided however, that the
ownership by the Executive of shares of the capital stock which are listed on a
securities exchange or quoted on the National Association of Securities Dealers
Automated Quotation System which do not represent more than five percent (5%) of
the outstanding capital stock of any Financial Institution, shall not violate
any terms of this Agreement.
(ii) The Executive will not, directly or indirectly, either for
himself, or any other Financial Institution: (A) induce or attempt to induce any
employee of the Employer or its Subsidiaries to leave the employ of the Employer
or its Subsidiaries; (B) in any way interfere with the relationship between
Employer or its Subsidiaries and any employee of Employer or its Subsidiaries;
(C) employ, or otherwise engage as an employee, independent contractor or
otherwise, any employee of Employer or its Subsidiaries; or (D) induce or
attempt to induce any customer, supplier, licensee, or business relation of
Employer or its Subsidiaries to cease doing business with the Employer or its
Subsidiaries or in any way interfere with the relationship between any customer,
supplier, licensee or business relation of Employer or its Subsidiaries.
(iii) The Executive will not, directly or indirectly, either for
himself, or any other Financial Institution, solicit the business of any person
or entity known to the Executive to be a customer of the Employer or its
Subsidiaries, whether or not such Executive had personal contact with such
person or entity, with respect to products or activities which compete in whole
or in part with the products or activities of the Employer or its Subsidiaries.
(iv) The Executive will not, directly or indirectly, serve as the
agent, broker or representative of, or otherwise assist, any person or entity in
obtaining services or products from any Financial Institution within the
Restrictive Area.
(v) The Executive expressly agrees that the covenants contained
in this Section 6(a) are reasonable with respect to their duration, geographical
area, and scope.
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(B) VIOLATION OF RESTRICTIVE COVENANT. If the Executive violates the
restrictions contained in Section 6(a) and the Employer brings legal action for
injunctive or other relief, the Employer shall not, as a result of the time
involved in obtaining such relief, be deprived of the benefit of the full period
of the Restrictive Period. Accordingly, the Restrictive Period shall be deemed
to have the duration specified in Section 6(a) computed from the date the relief
is granted but reduced by the time between the period when the Restrictive
Period began to run and the date of the first violation of the restrictions
contained in Section 6(a) by the Executive. In the event that a successor
assumes and agrees to perform this Agreement, the restrictions contained in
Section 6(a) shall continue to apply only to the primary service area of the
Employer as it existed immediately before such assumption and shall not apply to
any of the successor's other offices.
(C) REMEDIES FOR BREACH OF RESTRICTIVE COVENANT. The Executive
acknowledges that the restrictions contained in Section 4 and Section 6(a) of
this Agreement are reasonable and necessary for the protection of the legitimate
business interests of the Employer, that any violation of these restrictions
would cause substantial injury to the Employer and such interests, that the
Employer would not have entered into this Agreement with the Executive without
receiving the additional consideration offered by the Executive in binding
himself to these restrictions and that such restrictions were a material
inducement to the Employer to enter into this Agreement. In the event of any
violation or threatened violation of these restrictions, the Employer, in
addition to and not in limitation of, any other rights, remedies or damages
available to the Employer under this Agreement or otherwise at law or in equity,
shall be entitled to preliminary and permanent injunctive relief to prevent or
restrain any such violation by the Executive and any and all persons directly or
indirectly acting for or with him, as the case may be. In the event of a
violation of the restrictions in Section 4 and Section 6(a) of this Agreement,
the Employer shall have the right to cease making any payments, or providing
benefits, otherwise required hereunder.
SECTION 7. INTERCORPORATE TRANSFERS. If the Executive shall be voluntarily
transferred to a Subsidiary of the Employer, such transfer shall not be deemed
to terminate or modify this Agreement and the employing corporation to which the
Executive shall have been transferred shall, for all purposes of this Agreement,
be construed as standing in the same place and stead as the Employer as of the
date of such transfer, provided however, that this Section 7 shall not modify
Employer's obligations under Section 2, Section 3 and Section 5 hereof.
SECTION 8. INTEREST IN ASSETS. Neither the Executive nor his estate shall
acquire hereunder any rights in funds or assets of the Employer, otherwise than
by and through the actual payment of amounts payable hereunder; nor shall the
Executive or his estate have any power to transfer, assign, anticipate,
hypothecate or otherwise encumber in advance any of said payments; nor shall any
of such payments be subject to seizure for the payment of any debt, judgment,
alimony, separate maintenance or be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise of the Executive.
SECTION 9. INDEMNIFICATION. The Employer shall provide the Executive
(including his heirs, personal representatives, executors and administrators)
for the term of this Agreement with coverage under a standard directors' and
officers' liability insurance policy at its expense.
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SECTION 10. GENERAL PROVISIONS.
(A) SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Executive, his heirs, legatees and personal
representatives, the Employer and its successors and assigns, and any successor
or assign of the Employer shall be deemed the "EMPLOYER" hereunder. The Employer
shall require any successor to all or substantially all of the business and/or
assets of the Employer, whether directly or indirectly, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the Employer
would be required to perform if no such succession had taken place.
(B) ENTIRE AGREEMENT; MODIFICATIONS. This Agreement constitutes the
entire agreement between the parties respecting the subject matter hereof, and
supersedes all prior negotiations, undertakings, agreements and arrangements
with respect thereto, whether written or oral, and without limiting the
foregoing (specifically including, but not limited to, and Prior Agreement), the
Executive hereby agrees and acknowledges that this Agreement supersedes, and he
shall have no rights to payments or otherwise under, any Prior Agreement. Except
as otherwise explicitly provided herein, this Agreement may not be amended or
modified except by written agreement signed by the Executive and the Employer;
provided, however, that the Employer may unilaterally modify the Agreement to
comply with applicable law, including, but not limited to, Code Section 409A,
while maintaining the spirit and intent of the Agreement.
(C) SURVIVAL. The provisions of Section 4 and Section 6 shall survive
the expiration or termination of this Agreement, in each case for the period set
forth in such section.
(D) ENFORCEMENT AND GOVERNING LAW. The provisions of this Agreement
shall be regarded as divisible and separate; if any of said provisions should be
declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remaining provisions shall not be affected
thereby. This Agreement shall be construed and the legal relations of the
parties hereto shall be determined in accordance with the laws of the State of
Illinois without reference to the conflict of law provisions of any
jurisdiction.
(E) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement (with the exception of the remedies set forth in
Section 6(c)) shall be settled exclusively by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by the Executive
within twenty-five (25) miles from the location of the main office of the
Employer, in accordance with the employment rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction; provided, however, that the Executive shall be
entitled to seek specific performance of his right to be paid through the date
of termination during the pendency of any dispute or controversy arising under
or in connection with this Agreement.
(F) LEGAL FEES. All reasonable legal fees paid or incurred by either
party pursuant to any dispute or question of interpretation relating to this
Agreement shall be paid or reimbursed by the opposing party if the party is
successful on the merits pursuant to a legal judgment, arbitration or
settlement.
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(G) WAIVER. No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of this Agreement
to be performed by the other party, shall be deemed a waiver of any similar or
dissimilar provisions or conditions at the same time or any prior or subsequent
time.
(H) NOTICES. Notices pursuant to this Agreement shall be in writing
and shall be deemed given when received; and, if mailed, shall be mailed by
United States registered or certified mail, return receipt requested, postage
prepaid; and if to the Employer, addressed to the principal headquarters of the
Employer, attention: Chairman of the Board; or, if to the Executive, to the
address set forth below the Executive's signature on this Agreement, or to such
other address as the party to be notified shall have given to the other.
(I) INTERNAL REVENUE CODE SECTION 409A. Notwithstanding anything
contained herein to the contrary, if at the time of a termination of employment,
(i) Employee is a "specified employee" as defined in Code Section 409A, and the
regulations and guidance thereunder in effect at the time of such termination
("409A"), and, (ii) any of the payments or benefits provided hereunder may
constitute "deferred compensation" under 409A, then, and only to the extent
required by such provisions, the date of payment of such payments or benefits
otherwise provided shall be delayed for a period of up to six (6) months
following the date of termination.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
UNIONBANCORP, INC. [EXECUTIVE]
By:
--------------------------------- ----------------------------------------
Its:
--------------------------------
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Address:
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