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EXHIBIT 10.9
STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT dated August 6, 1996 (this "Agreement"), is
entered into by and between UNIONBANCORP, INC., a Delaware corporation
("Union"), and WAYNE W. WHALEN ("Stockholder").
RECITALS
A. Union and Prairie Bancorp, Inc., an Illinois corporation ("Prairie"),
are parties to that certain Agreement and Plan of Merger dated January 22, 1996
(the "Merger Agreement"), providing for the merger (the "Merger") of Prairie
with and into a wholly-owned subsidiary of Union.
B. As a result of the Merger, Union will issue to Stockholder
approximately 118,430 shares of Union's common stock, $1.00 par value ("Union
Common Stock").
C. Union is unwilling to expend the substantial time, effort and expense
necessary to implement the proposed acquisition of Prairie, including applying
for and obtaining necessary approvals of federal and state banking authorities,
unless Stockholder enters into this Agreement with Union.
D. The obligation of Union under the Merger Agreement to consummate the
transactions contemplated therein is subject to the receipt by Union of a
standstill agreement in the form of this Agreement from Stockholder,
Stockholder is executing this Agreement for the purpose of inducing Union to
consummate the transactions contemplated by the Merger Agreement and
Stockholder believes it is in his best interest as well as the best interest of
Prairie for Union to consummate the Merger.
NOW, THEREFORE, in consideration of the covenants and agreements of the
parties herein contained, the sufficiency of which is hereby acknowledged, and
as an inducement to Union to incur the expenses associated with the Merger, the
parties hereto, intending to be legally bound, hereby agree as follows:
AGREEMENTS
1. TERM. Except as otherwise expressly provided herein, the respective
covenants and agreements of Stockholder and Union contained in this Agreement
will continue in full force and effect until the fourth anniversary of the
consummation of the Merger (the "Termination Date").
2. COVENANTS OF STOCKHOLDER. Stockholder agrees that prior to the
Termination Date and subject to the further provisions hereof:
(a) Except as otherwise expressly provided in this Section 2(a) and
Section 7, neither Stockholder nor any "person" (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), who is an affiliate (as defined below) of Stockholder (collectively,
the "Stockholder Group"), will, directly or indirectly, acquire any shares of
Union Common Stock in addition to those shares of Union Common Stock issued to
Stockholder in connection with the Merger if at the time of such proposed
acquisition the shares of Union Common Stock then owned by Stockholder
represent 12.5% or more of the then issued and outstanding shares of Union
Common Stock, or to the extent such proposed acquisition would increase the
percentage ownership of the Stockholder Group of the then issued and
outstanding shares of Union Common Stock to 12.5% or more. Notwithstanding
anything to the contrary in the preceding sentence, Stockholder shall not be
prohibited from: (i) acquiring any shares of Union Common Stock issuable to
Stockholder in connection with the conversion of the shares of Union's Series A
Preferred Stock issued to Stockholder in connection with the Merger; (ii)
receiving additional shares of Union Common Stock through stock dividends
declared by Union or through any other distributions or offerings made by Union
generally to all holders of Union Common Stock; or (iii) increasing his
percentage ownership of Union Common Stock solely as a result of actions
approved by Union's board of directors and affecting all holders of Union
Common Stock generally.
(b) Stockholder shall take such action as may be required so that all
shares of Union Common Stock owned by any member of the Stockholder Group are
voted for those persons who are serving as of the date of this
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Agreement on Union's board of directors and for any other person
nominated by Union's management to fill any vacancy on Union's board so long as
such person: (i) would not reasonably be expected to be unacceptable to any
regulatory authority with jurisdiction over Union; (ii) is of good character
and reputation; and (iii) possesses business experience. The good faith
determination by a majority of Union's directors that any person meets such
qualifications shall be dispositive of such issue. In addition to the
foregoing, Stockholder shall take such action as may be required so that all
shares of Union Common Stock owned by any member of the Stockholder Group are
voted for an amendment of the certificate of incorporation of Union to adopt
provisions substantially similar to those found in Section 203 of the General
Corporation Law of the State of Delaware. The members of the Stockholder
Group, as holders of Union Common Stock, agree to be present, in person or by
proxy, at all meetings of stockholders of Union so that all shares of Union
Common Stock beneficially owned by them may be counted for the purpose of
determining the presence of a quorum at any such meetings. To further
effectuate the provisions of this Section 2(b), Stockholder hereby grants to
the President of Union an irrevocable proxy coupled with an interest to: (i)
represent all of the shares of Union Common Stock now or hereafter owned by
Stockholder, or over which Stockholder now has or hereafter may have voting
control, at any stockholders' meeting called by Union's Chairman of the Board,
President or a majority of its directors for the purpose of establishing the
necessary quorum for the conduct of business; and (ii) to vote such shares of
Common Stock in favor of any matters presented at such meeting that Stockholder
has agreed by the terms of this Section 2(b) to support. Notwithstanding the
foregoing, nothing contained herein shall prevent Stockholder from
participating in any meeting of Union's stockholders and from voting the shares
of Union Common Stock owned by him on all matters for which he has not granted
the President of Union a proxy pursuant to this Section 2(c). Such proxy shall
expire on the Termination Date. Stockholder agrees to execute such further
proxies, instruments, agreements and other documents as may be reasonably
necessary to further evidence this grant of proxy.
(c) The proxy granted by the Stockholder pursuant to Section 2(b) and the
covenants contained in Section 2(f) and 2(g) of this Agreement shall terminate
on the earlier of the fourth anniversary of the date of this Agreement or at
such time, if ever, as any third party or any affiliated group (other than any
employee benefit plan sponsored by Union or any of its subsidiaries) acquires
25% or more of the issued and outstanding Union Common Stock, provided, that no
member of the Stockholder Group [nor Mr. Wayne W. Whalen] shall be part of a
partnership, limited partnership, syndicate or other group, or shall otherwise
be acting in concert with any other person which is a member of, or an
affiliate of any member of, such affiliated group or which is an affiliate of
such third party, for the purpose of acquiring, holding, voting or disposing of
shares of Union Common Stock.
(d) Stockholder acknowledges that he has been made aware that the board of
directors of Union has had under consideration, for a number of months, the
adoption of a stockholders' rights plan, that Union's board of directors
intends to continue such consideration and may, at some time before or after
the closing of the Merger, adopt and implement such a plan.
(e) No member of the Stockholder Group shall deposit any shares of Union
Common Stock in a voting trust or subject any shares of Union Common Stock to
any arrangement or agreement with respect to the voting of such shares.
(f) No member of the Stockholder Group shall solicit proxies or become a
"participant" in a "solicitation," as such terms are defined in the current
version of Regulation 14A under the Exchange Act in opposition to the
recommendation of the majority of the directors of Union with respect to any
matter.
(g) No member of the Stockholder Group shall join a partnership, limited
partnership, syndicate or other group, or otherwise act in concert with any
other person, for the purpose of acquiring, holding, voting or disposing of
shares of Union Common Stock, or otherwise become a "person" within the meaning
of Section 13(d)(3) of the Exchange Act (in each case other than solely with
members of the Stockholder Group).
(h) Except as otherwise expressly provided in this Agreement and for any
sales or transfers solely between: (i) Messrs. Wayne W. Whalen and Dennis J.
McDonnell; (ii) Mr. Whalen and his spouse or any child; (iii) Mr. McDonnell and
his spouse or any child; and (iv) Messrs. Whalen or McDonnell and any bidder
(as defined in Rule 14d-1 of the Exchange Act) which has commenced a tender
offer for Union Common Stock which Union
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has recommended to its stockholders, no member of the Stockholder Group
shall, directly or indirectly, offer, sell or transfer any shares of Union
Common Stock without offering Union a right of first refusal in the manner
provided in this Agreement.
3. RIGHT OF FIRST REFUSAL. Except for transfers described in Section
2(h), any member of the Stockholder Group, prior to making any offer to sell,
the sale or transfer of any shares of Union Common Stock to the extent such
shares represent 5% or more of the then issued and outstanding shares of Union
Common Stock, or to the extent that the current proposed transfer of shares,
when aggregated with all past transfers of shares of Union Common Stock from
the Stockholder Group to the same transferee or such transferee's affiliates
would equal or exceed such 5% limit, shall give Union the opportunity to
purchase such shares of Union Common Stock in the following manner:
(a) Any member of the Stockholder Group intending to make such an offer,
sale or transfer shall give notice (the "Transfer Notice") to Union in writing
of such intention, specifying the number of shares of Union Common Stock
proposed to be disposed of and the proposed price therefor, and any specific
offer to purchase such shares of Union Common Stock theretofore received and
then remaining open, identifying the offeror and setting forth all the terms of
such offer (including price). For purposes hereof, a bona fide third-party
tender or exchange offer to purchase shares of Union Common Stock shall be
deemed to be an offer at the price specified therein, without regard to any
provisions thereof with respect to proration or conditions to the offeror's
obligation to purchase.
(b) Union shall have the right, exercisable by written notice given by
Union to the party which gave the Transfer Notice within 15 Business Days (as
defined in the Merger Agreement) after receipt of such Notice (or in the case
of a tender or exchange offer, no later than 24 hours prior to the latest time
by which shares of Union Common Stock must be tendered in order to be accepted
pursuant to such offer or to qualify for any proration applicable to such
offer), to purchase (or to cause a corporation, entity, person or group
designated by Union to purchase) all, but not a part of, the shares of Union
Common Stock specified in such Notice for cash at the price set forth therein.
If the purchase price specified in the Transfer Notice includes any property
other than cash, such purchase price shall be deemed to be the amount of any
cash included in the purchase price plus the value (as jointly determined by a
nationally recognized investment banking firm selected by each party or, in the
event such firms are unable to agree, a third nationally recognized investment
banking firm to be selected by them) of such other property included in such
price. For this purpose:
(i) The parties shall use their best efforts to cause any
determination of the value of any securities included in the purchase
price to be made within seven Business Days after the date of delivery of
the Transfer Notice. If the firms selected by Stockholder and Union are
unable to agree upon the value of any such securities within such
seven-day period, the parties shall promptly select a third firm whose
determination shall be conclusive.
(ii) The parties shall use their best efforts to cause any
determination of the value of property other than securities to be made
within ten Business Days after the date of delivery of the Transfer
Notice. If the firms selected by Stockholder and Union are unable to
agree upon a value within such ten-day period, the parties shall promptly
select a third firm whose determination shall be conclusive.
(iii) The date on which Union must exercise its right of first
refusal shall be extended until three Business Days after the
determination of the value of property included in the purchase price if
such property consists solely of securities or five Business Days after
the determination of such value if other property is included.
(c) If Union exercises its right of first refusal hereunder, the closing
of the purchase of the shares of Union Common Stock with respect to which such
right has been exercised shall take place within 30 calendar days (or if
approval of such purchase by any bank regulatory authority is required by law,
within 90 calendar days) after Union gives notice of such exercise. Upon
exercise of its right of first refusal, Union shall be legally obligated to
consummate the purchase contemplated thereby and shall use its best effort to
secure all approvals required in connection therewith.
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(d) If Union does not exercise its right of first refusal hereunder within
the time specified for such exercise, the party giving the Transfer Notice
shall be free during the period of 90 calendar days following the expiration of
such time for exercise to sell the shares of Union Common Stock specified in
such Notice to the offeror identified therein at the price specified therein or
at any price in excess thereof. If sold in this manner, the shares of Union
Common Stock that were the subject of such sale shall thereafter be free of the
restrictions imposed by this Agreement.
4. LEGEND. (a) Stockholder acknowledges that all certificates
representing shares of Union Common Stock now owned or hereafter acquired by
members of the Stockholder Group shall bear the following legend which will
remain thereon as long as such shares of Union Common Stock are subject to the
restrictions contained in this Agreement:
The securities represented by this certificate
are subject to the provisions of a Standstill
Agreement dated August , 1996, between Wayne W.
Whalen and UnionBancorp, Inc., and may not be sold or
transferred except in accordance therewith. A copy of
said Standstill Agreement is on file at the office of
the corporate secretary of UnionBancorp, Inc.
(b) Union may enter a stop transfer order with the transfer agent or
agents of shares of Union Common Stock against the transfer of shares of Union
Common Stock except in compliance with the requirements of this Agreement.
Union agrees to remove promptly any stop transfer order with respect to, and
issue promptly certificates without such legend in substitution for,
certificates for any shares of Union Common Stock that are no longer subject to
the restrictions contained in this Agreement.
5. PLEDGE OF STOCK. Nothing herein shall be deemed to prevent Stockholder
from pledging the shares of Union Common Stock or any shares of Union's
preferred stock owned by him to secure any of Stockholder's obligations,
provided, however, that the terms of such pledge will grant to Union the right
to acquire any such pledged shares at their then current book value in the
event of a default by Stockholder immediately prior to the transfer of such
pledged shares to a third party through a sale made under the provisions of
Article 9 of the Uniform Commercial Code, as adopted in the State of Illinois,
or any other similar creditor's remedy.
6. CONSULTATION WITH STOCKHOLDER. If at any time during the term of this
Agreement the employment of Mr. R. Scott Grigsby as Union's Chief Executive
Officer shall be voluntarily or involuntarily terminated, Union agrees to
consult with Mr. Whalen and Mr. McDonnell within 90 days after such termination
and before Union's board of directors chooses a new Chief Executive Officer.
7. PRE-EMPTIVE RIGHTS OF STOCKHOLDER. If at any time during the term of
this Agreement Union shall issue any shares of Union Common Stock at a per
share price that is less than the then current per share book value of Union
Common Stock (a "Discount Issuance") to any person in exchange for cash or the
securities of any other entity (other than shares of Union Common Stock issued:
(a) upon conversion of shares of Union's Series A Preferred Stock; (b) to
employees, officers, directors, consultants or other persons performing
services for Union pursuant to any stock option plan, stock purchase plan or
other management incentive plan approved by Union's board of directors; or (c)
in connection with any stock dividends, stock splits or other stock
distribution made to all stockholders of Union generally), Union shall offer to
Stockholder on the same terms and conditions such number of shares of Union
Common Stock as would allow Stockholder to maintain the same percentage
ownership of the issued and outstanding Union Common Stock as he owned
immediately prior to such Discount Issuance.
8. REMEDIES. Stockholder, on the one hand, and Union, on the other,
acknowledge and agree that irreparable damage would occur in the event any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which they may be entitled at
law or equity.
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9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, superseding all
prior oral or written agreements or understandings. Except as otherwise
expressly contemplated by this Agreement, and except for the Merger Agreement
and the other agreements between the parties hereto which are contemplated
therein, there have been and are no promises, restrictions, agreements or
understandings between the parties with respect to the subject matter hereof
except as set forth in this Agreement.
10. HEADINGS; COUNTERPARTS. The headings in this Agreement are for
convenience only and shall not be considered a part of or affect the meaning,
construction or interpretation of any provision of this Agreement. This
Agreement may be executed in several counterparts each of which shall be deemed
an original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument.
11. GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed therein without regard to the conflicts of laws rules.
12. NOTICES. All notices, requests and other communications hereunder
shall be in writing (which shall include telecopier communication) and shall be
deemed to have been duly given if delivered by hand or by overnight express
delivery service, mailed with first class postage prepaid or telecopied if
confirmed immediately thereafter by also mailing a copy of any notice, request
or other communication by mail with first class postage prepaid:
(a) If to Union, to:
UnionBancorp, Inc. Barack, Ferrazzano, Kirschbaum & Perlman
122 West Madison Street 333 West Wacker Drive, Suite 2700
Ottawa, Illinois 61350 and Chicago, Illinois 60606
Attention: R. Scott Grigsby Attention: John E. Freechack, Esq.
Chairman and President Telephone: (312) 984-3223
Telephone: (815) 673-3333 Telecopier: (312) 984-3150
Telecopier: (815) 434-3160
(b) If to Stockholder, to:
Wayne W. Whalen
Skadden, Arps, Slate, Meagher & Flom
333 West Wacker Drive, Suite 2100
Chicago, Illinois 60606
Telephone: (312) 407-0700
Telecopier: (312) 407-0411
or to such other person or place as any of the parties shall furnish to the
other parties in writing; except that notices of a change of address shall be
effective: (i) if delivered by hand, when delivered; (ii) if mailed in the
manner provided in this Section, five Business Days after deposit
with the United States Postal Service; (iii) if delivered by overnight express
delivery service, on the next Business Day after deposit with such service; or
(iv) if by telecopier, on the next Business Day if also confirmed by mail in
the manner provided in this Section.
13. SEVERABILITY. If any provision of this Agreement shall be deemed
invalid or inoperative, or in the event a court of competent jurisdiction
determines that any of the provisions of this Agreement contravene public
policy in any way, this Agreement shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and effect,
and any such provisions which are invalid or inoperative or which contravene
public policy shall be deemed, without further action or deed on the part of
any person, to be modified, amended and/or limited, but only to the limited
extent necessary to render the same valid and enforceable.
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14. AMENDMENT AND MODIFICATION. This Agreement may only be amended,
modified or supplemented by a written agreement executed by each of the parties
hereto.
15. AFFILIATE; PERSON. As used herein, the term "affiliate" shall have the
meaning set forth in Rule 12b-2 promulgated under the Exchange Act and, except
for those cases in this Agreement where it is expressly defined otherwise, the
term "person" shall mean any individual, partnership, corporation, trust or
other entity.
16. ASSIGNMENT; PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their respective
heirs, beneficiaries, legatees, personal representatives, successors and
assigns and any subsequent holders of shares of Union Common Stock that were
previously owned by Stockholder and subject to the terms of this Agreement, but
shall not be assigned by the parties hereto, by operation of law or otherwise,
without the prior written consent of the other party. Nothing in this
Agreement, expressed or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
17. WAIVER OF COMPLIANCE; CONSENTS. Any failure of Union on the one hand,
or Stockholder on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived in writing by the party entitled to
the performance of such obligation, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth above.
18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument. Each
party shall receive a duplicate original of the counterpart copy or copies
executed by it and Union.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ATTEST: UNIONBANCORP, INC.
By: \s\ Charles J. Grako By: \s\ R. Scott Grigsby
-------------------- -----------------------------------
Charles J. Grako R. Scott Grigsby
Secretary/Treasurer Chairman of the Board and President
s\ Wayne W. Whalen
--------------------------
(Signature of Stockholder)
Wayne W. Whalen
-------------------------
(Printed Name of Stockholder)
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STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT dated August 6, 1996 (this "Agreement"), is
entered into by and between UNIONBANCORP, INC., a Delaware corporation
("Union"), and DENNIS J. MCDONNELL ("Stockholder").
RECITALS
A) Union and Prairie Bancorp, Inc., an Illinois corporation ("Prairie"),
are parties to that certain Agreement and Plan of Merger dated January 22, 1996
(the "Merger Agreement"), providing for the merger (the "Merger") of Prairie
with and into a wholly-owned subsidiary of Union.
B) As a result of the Merger, Union will issue to Stockholder
approximately 118,430 shares of Union's common stock, $1.00 par value ("Union
Common Stock").
C) Union is unwilling to expend the substantial time, effort and expense
necessary to implement the proposed acquisition of Prairie, including applying
for and obtaining necessary approvals of federal and state banking authorities,
unless Stockholder enters into this Agreement with Union.
D) The obligation of Union under the Merger Agreement to consummate the
transactions contemplated therein is subject to the receipt by Union of a
standstill agreement in the form of this Agreement from Stockholder,
Stockholder is executing this Agreement for the purpose of inducing Union to
consummate the transactions contemplated by the Merger Agreement and
Stockholder believes it is in his best interest as well as the best interest of
Prairie for Union to consummate the Merger.
NOW, THEREFORE, in consideration of the covenants and agreements of the
parties herein contained, the sufficiency of which is hereby acknowledged, and
as an inducement to Union to incur the expenses associated with the Merger, the
parties hereto, intending to be legally bound, hereby agree as follows:
AGREEMENTS
1. TERM. Except as otherwise expressly provided herein, the respective
covenants and agreements of Stockholder and Union contained in this Agreement
will continue in full force and effect until the fourth anniversary of the
consummation of the Merger (the "Termination Date").
2. COVENANTS OF STOCKHOLDER. Stockholder agrees that prior to the
Termination Date and subject to the further provisions hereof:
(a) Except as otherwise expressly provided in this Section 2(a) and
Section 7, neither Stockholder nor any "person" (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), who is an affiliate (as defined below) of Stockholder (collectively,
the "Stockholder Group"), will, directly or indirectly, acquire any shares of
Union Common Stock in addition to those shares of Union Common Stock issued to
Stockholder in connection with the Merger if at the time of such proposed
acquisition the shares of Union Common Stock then owned by Stockholder
represent 12.5% or more of the then issued and outstanding shares of Union
Common Stock, or to the extent such proposed acquisition would increase the
percentage ownership of the Stockholder Group of the then issued and
outstanding shares of Union Common Stock to 12.5% or more. Notwithstanding
anything to the contrary in the preceding sentence, Stockholder shall not be
prohibited from: (i) acquiring any shares of Union Common Stock issuable to
Stockholder in connection with the conversion of the shares of Union's Series A
Preferred Stock issued to Stockholder in connection with the Merger; (ii)
receiving additional shares of Union Common Stock through stock dividends
declared by Union or through any other distributions or offerings made by Union
generally to all holders of Union Common Stock; or (iii) increasing his
percentage ownership of Union Common Stock solely as a result of actions
approved by Union's board of directors and affecting all holders of Union
Common Stock generally.
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(b) Stockholder shall take such action as may be required so that all
shares of Union Common Stock owned by any member of the Stockholder Group are
voted for those persons who are serving as of the date of this Agreement on
Union's board of directors and for any other person nominated by Union's
management to fill any vacancy on Union's board so long as such person: (i)
would not reasonably be expected to be unacceptable to any regulatory authority
with jurisdiction over Union; (ii) is of good character and reputation; and
(iii) possesses business experience. The good faith determination by a
majority of Union's directors that any person meets such qualifications shall
be dispositive of such issue. In addition to the foregoing, Stockholder shall
take such action as may be required so that all shares of Union Common Stock
owned by any member of the Stockholder Group are voted for an amendment of the
certificate of incorporation of Union to adopt provisions substantially similar
to those found in Section 203 of the General Corporation Law of the State of
Delaware. The members of the Stockholder Group, as holders of Union Common
Stock, agree to be present, in person or by proxy, at all meetings of
stockholders of Union so that all shares of Union Common Stock beneficially
owned by them may be counted for the purpose of determining the presence of a
quorum at any such meetings. To further effectuate the provisions of this
Section 2(b), Stockholder hereby grants to the President of Union an
irrevocable proxy coupled with an interest to: (i) represent all of the shares
of Union Common Stock now or hereafter owned by Stockholder, or over which
Stockholder now has or hereafter may have voting control, at any stockholders'
meeting called by Union's Chairman of the Board, President or a majority of its
directors for the purpose of establishing the necessary quorum for the conduct
of business; and (ii) to vote such shares of Common Stock in favor of any
matters presented at such meeting that Stockholder has agreed by the terms of
this Section 2(b) to support. Notwithstanding the foregoing, nothing contained
herein shall prevent Stockholder from participating in any meeting of Union's
stockholders and from voting the shares of Union Common Stock owned by him on
all matters for which he has not granted the President of Union a proxy
pursuant to this Section 2(c). Such proxy shall expire on the Termination
Date. Stockholder agrees to execute such further proxies, instruments,
agreements and other documents as may be reasonably necessary to further
evidence this grant of proxy.
(c) The proxy granted by the Stockholder pursuant to Section 2(b) and the
covenants contained in Section 2(f) and 2(g) of this Agreement shall terminate
on the earlier of the fourth anniversary of the date of this Agreement or at
such time, if ever, as any third party or any affiliated group (other than any
employee benefit plan sponsored by Union or any of its subsidiaries) acquires
25% or more of the issued and outstanding Union Common Stock, provided, that no
member of the Stockholder Group [nor Mr. Dennis J. McDonnell] shall be part of
a partnership, limited partnership, syndicate or other group, or shall
otherwise be acting in concert with any other person which is a member of, or
an affiliate of any member of, such affiliated group or which is an affiliate
of such third party, for the purpose of acquiring, holding, voting or disposing
of shares of Union Common Stock.
(d) Stockholder acknowledges that he has been made aware that the board of
directors of Union has had under consideration, for a number of months, the
adoption of a stockholders' rights plan, that Union's board of directors
intends to continue such consideration and may, at some time before or after
the closing of the Merger, adopt and implement such a plan.
(e) No member of the Stockholder Group shall deposit any shares of Union
Common Stock in a voting trust or subject any shares of Union Common Stock to
any arrangement or agreement with respect to the voting of such shares.
(f) No member of the Stockholder Group shall solicit proxies or become a
"participant" in a "solicitation," as such terms are defined in the current
version of Regulation 14A under the Exchange Act in opposition to the
recommendation of the majority of the directors of Union with respect to any
matter.
(g) No member of the Stockholder Group shall join a partnership, limited
partnership, syndicate or other group, or otherwise act in concert with any
other person, for the purpose of acquiring, holding, voting or disposing of
shares of Union Common Stock, or otherwise become a "person" within the meaning
of Section 13(d)(3) of the Exchange Act (in each case other than solely with
members of the Stockholder Group).
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(h) Except as otherwise expressly provided in this Agreement and for any
sales or transfers solely between: (i) Messrs. Wayne W. Whalen and Dennis J.
McDonnell; (ii) Mr. Whalen and his spouse or any child; (iii) Mr. McDonnell and
his spouse or any child; and (iv) Messrs. Whalen or McDonnell and any bidder
(as defined in Rule 14d-1 of the Exchange Act) which has commenced a tender
offer for Union Common Stock which Union has recommended to its stockholders,
no member of the Stockholder Group shall, directly or indirectly, offer, sell
or transfer any shares of Union Common Stock without offering Union a right of
first refusal in the manner provided in this Agreement.
3. RIGHT OF FIRST REFUSAL. Except for transfers described in Section
2(h), any member of the Stockholder Group, prior to making any offer to sell,
the sale or transfer of any shares of Union Common Stock to the extent such
shares represent 5% or more of the then issued and outstanding shares of Union
Common Stock, or to the extent that the current proposed transfer of shares,
when aggregated with all past transfers of shares of Union Common Stock from
the Stockholder Group to the same transferee or such transferee's affiliates
would equal or exceed such 5% limit, shall give Union the opportunity to
purchase such shares of Union Common Stock in the following manner:
(a) Any member of the Stockholder Group intending to make such an offer,
sale or transfer shall give notice (the "Transfer Notice") to Union in writing
of such intention, specifying the number of shares of Union Common Stock
proposed to be disposed of and the proposed price therefor, and any specific
offer to purchase such shares of Union Common Stock theretofore received and
then remaining open, identifying the offeror and setting forth all the terms of
such offer (including price). For purposes hereof, a bona fide third-party
tender or exchange offer to purchase shares of Union Common Stock shall be
deemed to be an offer at the price specified therein, without regard to any
provisions thereof with respect to proration or conditions to the offeror's
obligation to purchase.
(b) Union shall have the right, exercisable by written notice given by
Union to the party which gave the Transfer Notice within 15 Business Days (as
defined in the Merger Agreement) after receipt of such Notice (or in the case
of a tender or exchange offer, no later than 24 hours prior to the latest time
by which shares of Union Common Stock must be tendered in order to be accepted
pursuant to such offer or to qualify for any proration applicable to such
offer), to purchase (or to cause a corporation, entity, person or group
designated by Union to purchase) all, but not a part of, the shares of Union
Common Stock specified in such Notice for cash at the price set forth therein.
If the purchase price specified in the Transfer Notice includes any property
other than cash, such purchase price shall be deemed to be the amount of any
cash included in the purchase price plus the value (as jointly determined by a
nationally recognized investment banking firm selected by each party or, in the
event such firms are unable to agree, a third nationally recognized investment
banking firm to be selected by them) of such other property included in such
price. For this purpose:
(i) The parties shall use their best efforts to cause any
determination of the value of any securities included in the purchase price
to be made within seven Business Days after the date of delivery of the
Transfer Notice. If the firms selected by Stockholder and Union are unable
to agree upon the value of any such securities within such seven-day
period, the parties shall promptly select a third firm whose determination
shall be conclusive.
(ii) The parties shall use their best efforts to cause any
determination of the value of property other than securities to be made
within ten Business Days after the date of delivery of the Transfer Notice.
If the firms selected by Stockholder and Union are unable to agree upon a
value within such ten-day period, the parties shall promptly select a third
firm whose determination shall be conclusive.
(iii) The date on which Union must exercise its right of first refusal
shall be extended until three Business Days after the determination of the
value of property included in the purchase price if such property consists
solely of securities or five Business Days after the determination of such
value if other property is included.
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(c) If Union exercises its right of first refusal hereunder, the closing
of the purchase of the shares of Union Common Stock with respect to which such
right has been exercised shall take place within 30 calendar days (or if
approval of such purchase by any bank regulatory authority is required by law,
within 90 calendar days) after Union gives notice of such exercise. Upon
exercise of its right of first refusal, Union shall be legally obligated to
consummate the purchase contemplated thereby and shall use its best effort to
secure all approvals required in connection therewith.
(d) If Union does not exercise its right of first refusal hereunder within
the time specified for such exercise, the party giving the Transfer Notice
shall be free during the period of 90 calendar days following the expiration of
such time for exercise to sell the shares of Union Common Stock specified in
such Notice to the offeror identified therein at the price specified therein or
at any price in excess thereof. If sold in this manner, the shares of Union
Common Stock that were the subject of such sale shall thereafter be free of the
restrictions imposed by this Agreement.
4. LEGEND. (a) Stockholder acknowledges that all certificates
representing shares of Union Common Stock now owned or hereafter acquired by
members of the Stockholder Group shall bear the following legend which will
remain thereon as long as such shares of Union Common Stock are subject to the
restrictions contained in this Agreement:
The securities represented by this certificate
are subject to the provisions of a Standstill
Agreement dated August , 1996, between Dennis J.
McDonnell and UnionBancorp, Inc., and may not be sold
or transferred except in accordance therewith. A copy
of said Standstill Agreement is on file at the office
of the corporate secretary of UnionBancorp, Inc.
(b) Union may enter a stop transfer order with the transfer agent or
agents of shares of Union Common Stock against the transfer of shares of Union
Common Stock except in compliance with the requirements of this Agreement.
Union agrees to remove promptly any stop transfer order with respect to, and
issue promptly certificates without such legend in substitution for,
certificates for any shares of Union Common Stock that are no longer subject to
the restrictions contained in this Agreement.
5. PLEDGE OF STOCK. Nothing herein shall be deemed to prevent Stockholder
from pledging the shares of Union Common Stock or any shares of Union's
preferred stock owned by him to secure any of Stockholder's obligations,
provided, however, that the terms of such pledge will grant to Union the right
to acquire any such pledged shares at their then current book value in the
event of a default by Stockholder immediately prior to the transfer of such
pledged shares to a third party through a sale made under the provisions of
Article 9 of the Uniform Commercial Code, as adopted in the State of Illinois,
or any other similar creditor's remedy.
6. CONSULTATION WITH STOCKHOLDER. If at any time during the term of this
Agreement the employment of Mr. R. Scott Grigsby as Union's Chief Executive
Officer shall be voluntarily or involuntarily terminated, Union agrees to
consult with Mr. Whalen and Mr. McDonnell within 90 days after such termination
and before Union's board of directors chooses a new Chief Executive Officer.
7. PRE-EMPTIVE RIGHTS OF STOCKHOLDER. If at any time during the term of
this Agreement Union shall issue any shares of Union Common Stock at a per
share price that is less than the then current per share book value of Union
Common Stock (a "Discount Issuance") to any person in exchange for cash or the
securities of any other entity (other than shares of Union Common Stock issued:
(a) upon conversion of shares of Union's Series A Preferred Stock; (b) to
employees, officers, directors, consultants or other persons performing
services for Union pursuant to any stock option plan, stock purchase plan or
other management incentive plan approved by Union's board of directors; or (c)
in connection with any stock dividends, stock splits or other stock
distribution made to all stockholders of Union generally), Union shall offer to
Stockholder on the same terms and conditions such number of shares of Union
Common Stock as would allow Stockholder
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to maintain the same percentage ownership of the issued and outstanding Union
Common Stock as he owned immediately prior to such Discount Issuance.
8. REMEDIES. Stockholder, on the one hand, and Union, on the other,
acknowledge and agree that irreparable damage would occur in the event any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which they may be entitled at
law or equity.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, superseding all
prior oral or written agreements or understandings. Except as otherwise
expressly contemplated by this Agreement, and except for the Merger Agreement
and the other agreements between the parties hereto which are contemplated
therein, there have been and are no promises, restrictions, agreements or
understandings between the parties with respect to the subject matter hereof
except as set forth in this Agreement.
10. HEADINGS; COUNTERPARTS. The headings in this Agreement are for
convenience only and shall not be considered a part of or affect the meaning,
construction or interpretation of any provision of this Agreement. This
Agreement may be executed in several counterparts each of which shall be deemed
an original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument.
11. GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed therein without regard to the conflicts of laws rules.
12. NOTICES. All notices, requests and other communications hereunder
shall be in writing (which shall include telecopier communication) and shall be
deemed to have been duly given if delivered by hand or by overnight express
delivery service, mailed with first class postage prepaid or telecopied if
confirmed immediately thereafter by also mailing a copy of any notice, request
or other communication by mail with first class postage prepaid:
(a) If to Union, to:
UnionBancorp, Inc. Barack, Ferrazzano, Kirschbaum
& Perlman
122 West Madison Street 333 West Wacker Drive, Suite 2700
Ottawa, Illinois 61350 and Chicago, Illinois 60606
Attention: R. Scott Grigsby Attention: John E. Freechack, Esq.
Chairman and President Telephone: (312) 984-3223
Telephone: (815) 673-3333 Telecopier: (312) 984-3150
Telecopier: (815) 434-3160
(b) If to Stockholder, to:
Dennis J. McDonnell
815 Jackson
River Forest, Illinois 60305
Telephone: (708) 771-5869
or to such other person or place as any of the parties shall furnish to the
other parties in writing, except that notices of a change shall be effective
only upon receipt. Except as otherwise provided herein, all such notices,
reqquests or other communications shall be effective: (i) if delivered by hand,
when delivered; (ii) if mailed in the manner provided in this Section, five
Business Days after deposit with the United States Postal
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Service; (iii) if delivered by overnight express delivery service, on
the next Business Day after deposit with such service; or (iv) if by
telecopier, on the next Business Day if also confirmed by mail in the manner
provided in this Section.
13. SEVERABILITY. If any provision of this Agreement shall be deemed
invalid or inoperative, or in the event a court of competent jurisdiction
determines that any of the provisions of this Agreement contravene public
policy in any way, this Agreement shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and effect,
and any such provisions which are invalid or inoperative or which contravene
public policy shall be deemed, without further action or deed on the part of
any person, to be modified, amended and/or limited, but only to the limited
extent necessary to render the same valid and enforceable.
14. AMENDMENT AND MODIFICATION. This Agreement may only be amended,
modified or supplemented by a written agreement executed by each of the parties
hereto.
15. AFFILIATE; PERSON. As used herein, the term "affiliate" shall have the
meaning set forth in Rule 12b-2 promulgated under the Exchange Act and, except
for those cases in this Agreement where it is expressly defined otherwise, the
term "person" shall mean any individual, partnership, corporation, trust or
other entity.
16. ASSIGNMENT; PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their respective
heirs, beneficiaries, legatees, personal representatives, successors and
assigns and any subsequent holders of shares of Union Common Stock that were
previously owned by Stockholder and subject to the terms of this Agreement, but
shall not be assigned by the parties hereto, by operation of law or otherwise,
without the prior written consent of the other party. Nothing in this
Agreement, expressed or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
17 .WAIVER OF COMPLIANCE; CONSENTS. Any failure of Union on the one hand,
or Stockholder on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived in writing by the party entitled to
the performance of such obligation, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth above.
18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument. Each
party shall receive a duplicate original of the counterpart copy or copies
executed by it and Union.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ATTEST: UNIONBANCORP, INC.
By: \s\ Charles J. Grako By: \s\ R. Scott Grigsby
-------------------- -----------------------------------
Charles J. Grako R. Scott Grigsby
Secretary/Treasurer Chairman of the Board and President
\s\ Dennis J. McDonnell
------------------------
(Signature of Stockholder)
Dennis J. McDonnell
--------------------
(Printed Name of Stockholder)
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