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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Agreement, made this 3rd day of June, 1996, by and between
UNIONBANCORP, INC., a Delaware corporation (hereinafter referred to as the
"Employer"), and J. MICHAEL DAW (hereinafter referred to as the "Employee").
WHEREAS, the Employee and the Employer desire to enter into an employment
agreement to fully recognize the contributions of the Employee to the Employer
and to assure continuous harmonious management of the affairs of the Employer;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, it is mutually agreed by and among the parties
hereto as follows:
Section 1. Employment; Term.
1.1 Employment. The Employer hereby hires the Employee as Senior
Agriculture Representative of UnionBancorp, Inc. and the Employee does hereby
accept such employment, upon the terms and conditions hereinafter set forth and
agrees to perform the duties required of him to the best of his ability.
1.2 Term of Employment. The term of this Agreement shall commence as of
June 3, 1996 and shall continue through May 31, 1998 unless extended as
provided in paragraph 1.3 or sooner terminated as provided in Section 5.
1.3 Extension of Term of Employment. On June 1, 1997 and on each June 1
thereafter, the term of this Agreement shall be automatically extended for one
additional year, unless prior to June 1, 1997 or June 1 of any subsequent year,
as the case may be, either party shall have notified the other in writing that
the term of this Agreement shall not be so extended. Once such notification is
given by either party, the term of this Agreement shall not thereafter be
extended.
Section 2. Compensation.
2.1 Base Salary. For the calendar year beginning June 3, 1996, the
Employer shall pay to the Employee as compensation for his services a base
salary of $48,000.00, payable in bi-weekly installments, subject to withholding
for state and federal income taxes and FICA.
2.2 Salary Adjustments. On June 1, 1997 and on each June 1 thereafter,
the Employee's base salary for the ensuing year shall be automatically
increased not less than four percent (4.0%) above the prior year's base salary,
as of May 31 of the prior year.
2.3 Bonus. The Employee shall be entitled to participate in such
executive bonus plans and/or incentive compensation plans as may be established
from time to time by the board of directors of UnionBancorp, Inc.
2.4 Other Benefits. The Employee shall also receive the following
benefits:
(a) Employee shall be entitled to participate in the Employer's
Employee Stock Ownership Plan.
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(b) The Employee shall be entitled to participate in the Employer's
Benefit Package according to the terms and conditions thereof as amended from
time to time.
(c) The Employee shall have twelve (12) paid sick days per year.
(d) The Employee shall have three (3) paid personal days per year.
(e) The Employee shall be entitled to a minimum paid vacation of four
(4) weeks during each calendar year.
(f) The Employee and his dependents shall be entitled to participate in
the Employer's group major medical insurance program according to the terms and
conditions thereof as amended from time to time.
2.5 Expenses. The Employee is authorized to incur reasonable expenses on
behalf of the Employer in performing his duties including, but not limited to,
expenses for travel, entertainment, meals, lodging and attendance at seminars.
The Employer shall reimburse the Employee for all such expenses incurred by the
Employee upon presentation of an itemized account thereof.
Section 3. Duties.
3.1 Employee's Duties. The Employee's duties shall include:
(a) Supervise Agriculture Service Division including, but not limited
to, lending, marketing, farm management and agriculture services;
(b) Search market and seek potential trust and bank customers and refer
them to appropriate trust or bank personnel for follow up;
(c) Make calls on grain elevators, agri chemical and fertilizer
dealers, farm implement dealers and large agricultural products;
(d) Keep inventories and required documents on farm acreage managed,
explore new business development opportunities, make farm inspections and site
visits, establish good communication and reporting mechanisms with all parties;
and
(e) All other duties commensurate with employee's position as may be
assigned from time to time by the Chief Executive Officer or Board of Directors
or designated committee or said Board; and
3.2 Extent of Employee's Services. The Employee shall devote his entire
time, attention and energies to the business of UnionBancorp, Inc. and shall
not during the term of this Agreement be engaged in any other business activity
whether or not such business activity is pursued for gain, profit or other
pecuniary advantage without the prior knowledge and consent of the Chief
Executive Officer or the Board of Directors of UnionBancorp, Inc.; provided,
however, that the foregoing restriction shall not be construed as preventing
the Employee from investing, when such investment will not interfere with the
Employee's full time employment by the Employer.
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Section 4. Protection of Confidential Information.
4.1 Nondisclosure. The Employee recognizes and acknowledges that he will
have access to certain confidential information of the Employer and of entities
affiliated with the Employer and that such information constitutes valuable,
special and unique property of the Employer and such other entities. The
Employee shall not, during or after the term of this Agreement, directly or
indirectly, divulge, disclose or communicate in any manner whatsoever any of
such confidential information to any person, firm, corporation or other entity
for any reason or purpose whatsoever, except to authorized representatives of
the Employer and its affiliated entities. For purpose of this Agreement, the
parties expressly acknowledge and agree that all information, whether written
or otherwise, regarding the Employer's business, including, but not limited to,
information regarding customers, employees, employees' salaries, costs, prices,
earnings, any financial or accounting reports or data, regulatory matters,
pending or threatened litigation or claims, products, services, data processing
and other systems, operations, potential acquisitions, new location plans,
prospective and executed contracts and other business arrangements, shall be
conclusively presumed to be confidential, material and important information of
the Employer, except to the extent that such information is otherwise lawfully
and readily available to the general public.
4.2 Use of Confidential Information. During the term of this Agreement,
the Employee may only use confidential information for purposes reasonably
necessary to the carrying out of the Employee's duties as Senior Agriculture
Representative and the Employee may not make use of any confidential
information after the severance of this employment. Upon the severance of his
employment with the Employer, the Employee shall return to the Employer all
books, records, lists and other written, typed or printed materials, whether
furnished by the Employer or prepared by the Employee, which contain any
information relating to the Employer's business. The Employee further agrees
that he will neither make nor retain any copies of such materials after
severance of his employment.
4.3 Remedies. In event of a breach or threatened breach by the Employee
of the provisions contained in paragraphs 4.1 or 4.2, the Employer shall be
entitled to an injunction restraining the Employee from disclosing, in whole or
in part, using or retaining such confidential information. Nothing herein
contained shall be construed as prohibiting the Employer from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of damages from the Employee. The Employee's covenants with
respect to confidential information, as contained in paragraphs 4.1 and 4.2,
shall continue in effect notwithstanding the severance of the Employee's
employment, whether by the Employer or by the Employee, upon the expiration of
the term of this Agreement or otherwise.
Section 5. Termination.
5.1 Termination by Employee. The Employee may terminate this Agreement,
and sever his employment with the Employer, by giving the Employer at least
thirty (30) days' prior written notice thereof specifying the effective date of
termination.
5.2 Termination Upon Death or Disability. This Agreement shall be
terminated, and the Employee's employment severed, upon the death or disability
of the Employee. For purposes of this Agreement, "disability" means the
Employee's inability, for any reason, to perform his duties as Senior
Agriculture Representative of the Employer for any period of ninety (90)
consecutive days or for more than one hundred eighty (180) days in any
twenty-four (24) month period.
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5.3 Termination by Employer for Cause. The Employer may terminate this
Agreement, and sever the Employee's employment, only "for cause". Cause for
termination shall exist if:
(a) The board of directors of UnionBancorp, Inc. or any bank regulatory
agency determines that the Employee has committed an act or acts of dishonesty.
(b) The Employee is convicted in a judicial proceeding of an offense
involving moral turpitude.
(c) The Employee improperly discloses or uses any confidential
information of the Employer.
(d) The Employee repeatedly and willfully fails or refuses to perform
his duties.
(e) The Employee grossly neglects his duties.
(f) The Employee fails or refuses to comply with the policies,
standards and regulations of the Employer which from time to time may be
established.
(g) The Employee engages in any activities detrimental to the
reputation of the Employer, including but not limited to activities involving a
conflict of interest.
(h) The Employee conducts himself in an unethical, immoral or
fraudulent manner or in a manner which causes him to be held in public ridicule
or scorn or causes a public scandal.
5.4 Notice of Termination for Cause; Employee's Opportunity to Correct.
In the event the Employer intends to terminate this Agreement, and sever the
Employee's employment, for cause, the Employer shall first give the Employee
written notice thereof specifying with particularity the acts, omissions or
conduct constituting causes and stating the effective date of termination,
which date shall not be less than thirty (30) days from the date the notice is
given. If the grounds for termination for cause are those specified in
subparagraphs (a), (b) or (c) of paragraph 5.3, this Agreement shall be
terminated and the Employee's employment shall be severed on the date set forth
in the notice of termination. However, if the grounds alleged in the notice of
termination are other than those specified in subparagraphs (a), (b) or (c) of
paragraph 5.3, the Employee, if he so elects by giving written notice to the
Employer's boards of directors prior to the effective date of termination
stated in the notice, shall be afforded an opportunity to discuss the alleged
grounds with the Employer's boards of directors and the Employee shall then be
given a reasonable period of time, not less than ninety (90) days, within which
to correct the acts, omissions or conduct complained of.
5.5 Compensation Upon Termination.
(i) If this Agreement is terminated in accordance with the provisions
of paragraph 5.1, 5.2 and 5.3.
(a) The Employer shall continue to pay the Employee his base salary
through the effective date of termination.
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(b) The Employer shall pay to the Employee compensation based on the
Employee's accrued sick days, personal days and vacation days.
(c) The Employer shall pay to the Employee any accrued bonus or
incentive compensation.
(d) The Employer shall as soon as practicable' distribute to the
Employee in cash the value of his Employee Stock Ownership Plan (ESOP) account.
Section 6. Miscellaneous Provisions.
(ii) If this Agreement is terminated by the Employer other than in
accordance with the provisions of paragraph 5.2 or 5.3 prior to the last day of
the then current term, and for any reason other than a termination in
accordance with the provisions of subparagraph (iii) of this paragraph 5.5,
then notwithstanding any mitigation of damages by the Employee, the Employee
shall receive all amounts under subparagraph (i) of this paragraph 5.5 and the
Employer shall pay the Employee the base salary then payable to the Employee,
the value of any bonus or incentive payments the Employee would have received
had he remained employed, the value of the contributions that would have been
made or credited by the Employer under all employee retirement plans for the
benefit of the Employee and shall continue to provide coverage for the Employee
under the health, life and disability insurance programs maintained by the
Employer for the remainder of the term of this Agreement.
(a) Payment to the Employee will be made on a monthly basis during
the remaining term of this Agreement. At the election of the Employer,
payments may be made in a lump sum. Such payments shall not be reduced
in the event the Employee obtains other employment following the
termination of employment by the Employer.
(b) If the Employer is not in compliance with its minimum capital
requirements or if the payments required under this subparagraph 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.
(c) It is the intention of the Employer and the Employee that no
portion of any payment under this Agreement, or payments to or for the
benefit of the Employee 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 Employee in the nature of compensation, receipt of
which is contingent on the Change of Control (as defined below) 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 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 sixty (60) days following the earlier of
(A) the giving of the notice of termination or (B) the giving of notice
by the Employer to the Employee of its belief that there is a payment or
benefit due the Employee which will result in an excess parachute payment
as defined in Section 280G of the Code, the Employee and the Employer, at
the Employer's expense, shall obtain the opinion of such legal counsel
and certified public accountants as the Employee may choose
(notwithstanding the
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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 (A) the amount of the Base
Period Income of the Employee, (B) the present value of Total Payments
and (C) 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 Employee in writing delivered
to the Employer within thirty (30) days of his receipt of such opinions
or, if the Employee 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 (A) the compensation and benefits provided for in
Section 2 hereof and (B) any other compensation earned by the Employee
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 Employee 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
Employee. 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.
(d) If at any time during the term of this Agreement, the Employee
is Constructively Discharged (as hereinafter defined) then the Employee
shall have the right, by written notice to the Employer within sixty (60)
days of such Constructive Discharge, to terminate his services hereunder,
effective as of thirty (30) days after such notice, and the Employee
shall have no further obligations under this Agreement. The Employee
shall in such event be entitled to a lump sum payment of compensation and
benefits and continuation of the health, life and disability insurance as
if such termination of his employment was pursuant to subparagraph (ii)
of this paragraph 5.5.
For purposes of this Agreement, the Employee shall be "Constructively
Discharged" upon the occurrence of any one of the following events:
(i) The Employee is not re-elected or is removed from the
positions with the Employer set forth in Section 1 hereof, other
than as a result of the Employee's election or appointment to
positions of equal or superior scope and responsibility; or
(ii) The Employee shall fail to be vested by the Employer with
the powers, authority and support services of any of said offices;
or
(iii) The Employer shall notify the Employee that the
employment term of the Employee will not be extended or further
extended, as set forth in paragraph 1.3; or
(iv) The Employer changes the primary employment location of
the
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Employee to a place that is more than fifty (50) miles from the
primary employment location as of the date of this Agreement; or
(v) The Employer otherwise commits a material breach of its
obligations under this Agreement.
(iii) In the event of a Change in Control (as defined below) of the
Employer and the termination of the Employee's employment under (a) or (b)
below, the Employee shall be entitled to (i) a lump sum payment equal to three
(3) times his most recent base salary and the value of the other amounts and
benefits payable or accrued under Section 2, and (ii) continued coverage under
the health, life and disability insurance programs for three years following
such termination. The following shall constitute termination for purposes of
this subparagraph:
(a) The Employee terminates his employment under this Agreement by a
written notice to that effect delivered to the Employer's boards of
directors within one (1) year after the Change in Control.
(b) This Agreement is terminated by the Employer or its successor
either in contemplation of or after the Change in Control.
(iv) For purposes of this paragraph, the term "Change in 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 1934 Act) of thirty-three
percent (33%) or more of the combined voting power of the then
outstanding voting securities; or
(b) The individuals who, as of the date hereof, are members of the
Employer's boards of directors cease for any reason to constitute a
majority of their respective board, unless the election, or nomination
for election by the stockholders, of any new director was approved by a
vote of a majority of their respective board, and such new director
shall, for purposes of this Agreement, be considered as a member of their
respective board; or
(c) Approval by stockholders of: (1) a merger or consolidation 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 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 entity.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because thirty-three percent (33%) or more of the combined voting
power of the then outstanding securities is acquired by (1) a trustee or other
fiduciary holding securities under one or more employee benefit plans
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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."
6.1 Relocation of Employee. This Agreement contemplates that the Employee
will discharge his duties hereunder primarily at the Employer's principal
offices in Ottawa , Illinois. The Employer may not relocate the Employee to
another office or location without the Employee's consent.
6.2 Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed given when delivered in
person or when mailed, by certified mail, postage prepaid, return receipt
requested, to the Employer at 122 West Madison Street, Ottawa, Illinois, 61350
or to the Employee at Box 91, Grand Ridge, Illinois, 61325.
6.3 Captions. The Section and paragraph captions contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
6.4 Assignment. This Agreement shall be binding upon and inure to the
benefit of the Employer and the Employee and their respective heirs, legal
representatives, executors, administrators, successors and assigns.
6.5 Severability. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be invalid or unenforceable, such invalidity
or unenforceability shall not affect any other provisions of this Agreement
which can be given effect without the invalid or unenforceable provision and,
to this end, the provisions of this Agreement are severable.
6.6 Disputes. In case of any dispute or disagreement arising out of, or
in connection with, this Agreement, until the final determination of such
dispute or disagreement, the Employer shall continue to pay to the Employee all
of the compensation provided in this Agreement, and the Employee shall be
entitled to continue to receive all of the other benefits provided herein. If
any party commences an action to enforce any of the provisions of this
Agreement, the prevailing party shall be entitled to recover in such action its
costs and expenses incurred in prosecuting or defending such action, including
reasonable attorneys' fees, as may be awarded by the court which hears and
determines the controversy.
6.7 Applicable Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Illinois applicable to
agreements made and to be performed entirely in Illinois.
6.8 Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof, supersedes all
prior negotiations, agreements and understandings, both written and oral,
between the parties, and cannot be amended, supplemented or modified, nor can
any of its provisions be waived, except by an instrument in writing signed by
all parties.
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6.9 Indemnification. (a) The Employer shall provide the Employee
(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.
(b) In addition to the insurance coverage provided for in subparagraph
(a) of this paragraph 6.11, the Employer shall hold harmless and indemnify the
Employee (and his heirs, executors and administrators) to the fullest extent
permitted under applicable law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been an officer
of the Employer (whether or not he continues to be an officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements.
(c) In the event the Employee becomes a party, or is threatened to be
made a party, to any action, suit or proceeding for which the Employer has
agreed to provide insurance coverage or indemnification under this paragraph
6.11, the Employer shall, to the full extent permitted under applicable law,
advance all expenses (including reasonable attorneys' fees), judgments, fines
and amounts paid in settlement (collectively "Expenses") incurred by the
Employee in connection with the investigation, defense, settlement, or appeal
of any threatened, pending or completed action, suit or proceeding, subject to
receipt by the Employer of a written undertaking from the Employee (i) to
reimburse the Employer for all Expenses actually paid by the Employer to or on
behalf of the Employee in the event it shall be ultimately determined that the
Employee is not entitled to indemnification by the Employer for such Expenses
and (ii) to assign to the Employer all rights of the Employee to
indemnification, under any policy of directors' and officers' liability
insurance or otherwise, to the extent of the amount of Expenses actually paid
by the Employer to or on behalf of the Employee."
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day and year first above written.
UNIONBANCORP, INC.
By:/s/ R. Scott Grigsby
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Chairman, President & CEO
ATTEST:
/s/ Charles J. Grako
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Secretary
/s/ J. Michael Daw
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J. Michael Daw
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