SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CENTRUE FINANCIAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: NA
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(2) Aggregate number of securities to which transaction applies: NA
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): NA
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(5) Total fee paid: NA
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: NA
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(4) Date Filed: NA
Notes:
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Centrue
Financial
Corporation
March 23, 2007
Dear Fellow Stockholder:
You are cordially invited to attend Centrue Financial Corporation's
annual meeting of stockholders at the Oak Brook Regency Tower, 1515 West 22nd
Street (West Tower), 1st Floor, Oak Brook, Illinois, on Tuesday, April 24, 2007,
at 10:00 a.m. local time.
Your board of directors has nominated four persons to serve as Class
III directors on the board of directors. Their names appear in the enclosed
proxy materials. All four of the nominees are incumbent directors. The board of
directors recommends that you vote your shares for each of the nominees. The
board of directors has also recommended a proposal to amend and restate the
Company's 2003 Stock Option Plan. The board of directors recommends that you
vote your shares to approve the amendment and restatement of the Company's 2003
Stock Option Plan.
You are welcome to attend the meeting in person. Because it is
important that your shares be represented at the meeting, please sign and return
the enclosed proxy, whether or not you plan to attend the meeting. This will
save us additional expense in soliciting proxies and will ensure that your
shares are represented at the meeting.
A copy of our annual report to stockholders for 2006 is also enclosed.
Thank you for your attention to this important matter.
Very truly yours,
/s/ THOMAS A. DAIBER
---------------------------
Thomas A. Daiber
President and
Chief Executive Officer
122 W. Madison Street o Ottawa Illinois o 815-431-2720
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Centrue
Financial
Corporation
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 2007
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TO HOLDERS OF COMMON STOCK:
The annual meeting of stockholders of Centrue Financial Corporation, a
Delaware corporation, will be held at the Oak Brook Regency Tower, 1515 West
22nd Street (West Tower), 1st Floor, Oak Brook, Illinois, on Tuesday, April 24,
2007, at 10:00 a.m. local time, for the purpose of considering and voting upon
the following matters:
1. To elect four Class III directors.
2. To approve the amended and restated 2003 Stock Option Plan.
3. To take action with respect to any other matters that may be
properly brought before the meeting and that might be
considered by the stockholders of a Delaware corporation at
their annual meeting.
We are not aware of any other business to come before the meeting. Only
those stockholders of record as of the close of business on March 1, 2007, shall
be entitled to notice of the meeting and to vote at the meeting and any
adjournments or postponements of the meeting. In the event there are not
sufficient votes for a quorum or to approve or ratify any of the foregoing
proposals at the time of the meeting, the meeting may be adjourned or postponed
in order to permit our further solicitation of proxies.
By Order of the Board of Directors
/s/ THOMAS A. DAIBER
--------------------------------
Thomas A. Daiber
President and
Chief Executive Officer
Ottawa, Illinois
March 23, 2007
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PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON. YOUR VOTE IS IMPORTANT TO ENSURE THAT A MAJORITY OF THE STOCK IS
REPRESENTED. YOU ARE WELCOME TO ATTEND THE MEETING, AND IF YOU DO YOU MAY VOTE
YOUR STOCK IN PERSON IF YOU WISH. IF YOU LATER FIND THAT YOU MAY BE PRESENT AT
THE MEETING OR FOR ANY OTHER REASON DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO
AT ANY TIME PRIOR TO ITS EXERCISE. STOCKHOLDERS HOLDING SHARES IN BROKERAGE
ACCOUNTS ("STREET NAME" HOLDERS) WHO WISH TO VOTE AT THE MEETING WILL NEED TO
OBTAIN A PROXY FROM THE INSTITUTION THAT HOLDS THEIR SHARES.
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Centrue
Financial
Corporation
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by the
board of directors of Centrue Financial Corporation of proxies to be voted at
the annual meeting of stockholders to be held at the Oak Brook Regency Tower,
1515 West 22nd Street (West Tower), 1st Floor, Oak Brook, Illinois, on Tuesday,
April 24, 2007, at 10:00 a.m., local time, or at any adjournments or
postponements of the meeting.
Centrue Financial Corporation, a Delaware corporation, is a regional financial
services company based in Ottawa, Illinois which has one bank subsidiary. Our
offices serve a market area which extends from the far western and southern
suburbs of the Chicago metropolitan area across Central and Northern Illinois
down to the metropolitan St. Louis area.
This proxy statement and the accompanying notice of meeting and proxy are first
being mailed to holders of shares of our common stock, par value $1.00 per
share, on or about March 23, 2007 to stockholders of record as of March 1, 2007.
We are required to file an annual report, called a Form 10-K, with the SEC. A
copy of Form 10-K for the fiscal year ended December 31, 2006 is enclosed for
your reference.
Voting Rights and Proxy Information
The board of directors has fixed the close of business on March 1, 2007, as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the annual meeting. Our transfer books will not be closed between the
record date and the date of the annual meeting. The board of directors hopes
that all stockholders can be represented at the annual meeting. Whether or not
you expect to be present, please sign and return your proxy in the enclosed
self-addressed, stamped envelope. Stockholders giving proxies retain the right
to revoke them at any time before they are voted by written notice of revocation
to the secretary of Centrue Financial Corporation and stockholders present at
the meeting may revoke their proxy and vote in person.
The shares represented by each valid proxy received in time will be voted at the
annual meeting and, if a choice is specified on the proxy, it will be voted in
accordance with that specification. If no instructions are specified in a signed
proxy returned to the Company, the shares represented thereby will be voted in
FAVOR of the election of the directors listed in the enclosed proxy and in FAVOR
to amend and restate the 2003 Stock Option Plan. If any other matters are
properly presented at the annual meeting, including, among other things,
consideration of a motion to adjourn the meeting to another time or place, the
individuals named as proxies and acting thereunder will have the authority to
vote on those matters according to their best judgment to the same extent as the
person delivering the proxy would be entitled to vote. If the annual meeting is
adjourned or postponed, a proxy will remain valid and may be voted at the
adjourned or postponed meeting. As of the date of printing of this proxy
statement, we do not know of any other matters that are to be presented at the
annual meeting other than the election of four Class III directors and the
amendment and restatement of the 2003 Stock Option Plan.
1.
Stockholders giving proxies retain the right to revoke them at any time before
they are voted by written notice of revocation to the secretary of Centrue
Financial Corporation or by a later executed proxy. Attendance at the annual
meeting will not automatically revoke a proxy, but a stockholder attending the
annual meeting may request a ballot and vote in person, thereby revoking a prior
granted proxy.
On March 1, 2007, we had 6,470,840 issued and outstanding shares of common
stock. For the election of directors, and for all other matters to be voted upon
at the annual meeting, each share of common stock is entitled to one vote. A
majority of the outstanding shares of the common stock must be present in person
or represented by proxy to constitute a quorum for purposes of the annual
meeting. Abstentions and broker non-votes (i.e., shares held by brokers in
street name, voting on certain matters due to discretionary authority or
instructions from the beneficial owners but not voting on other matters due to
lack of authority to vote on such matters without instructions from the
beneficial owner) will be counted for purposes of determining a quorum but will
not count toward the determination of whether such matters are approved or
directors are elected. Directors will be elected by a plurality of the votes
present in person or represented by proxy at the meeting and entitled to vote.
In all other matters, the affirmative vote of the majority of shares of common
stock present in person or represented by proxy at the annual meeting and
entitled to vote on the subject matter shall be required to constitute
stockholder approval. Abstentions will be treated as votes against a proposal
and broker non-votes will have no effect on the vote.
I. ELECTION OF DIRECTORS
We have a staggered board of directors, divided into three classes. One class is
elected annually to serve for three years. At the annual meeting, our
stockholders will be entitled to elect four Class III directors for terms of
three years or until their successors are elected and qualified. Each of the
nominees for election as Class III directors are incumbent directors. Our board
of directors has reviewed the independence of the nominees for election to the
board and the independence of the incumbent directors in accordance with the
standards of the Nasdaq Stock Market. In accordance with such review, the board
of directors has determined that each of Messrs. Breipohl, Ganim, Griffith,
Hejna, McDonnell, Shinkle, Smith and Sullivan are independent under those
standards. These independent directors constitute a majority of the incumbent
members and nominees for election to the board.
The proxy provides instructions for voting for all director nominees or for
withholding authority to vote for one or more director nominees. Unless
instructed to the contrary, the persons acting under the proxy which we are
soliciting will vote for the nominees listed below. In the event, however, that
any nominee shall be unable to serve, which is not now contemplated, the proxy
holders reserve the right to vote at the annual meeting for a substitute
nominee.
Information About Directors and Nominees
Set forth below is information, current as of March 1, 2007, concerning the
nominees for election and for the other directors whose terms of office will
continue after the meeting, including the age, year first elected a director and
business experience of each during the previous five years. Unless otherwise
indicated, each person has held the positions shown for at least five years. The
four nominees, if elected at the annual meeting, will serve as Class III
directors for three-year terms, expiring in 2010. We recommend that you vote
your shares FOR all four nominees.
2.
NOMINEES
Name Position with Centrue Financial Corporation
(Age) Director Since and Principal Occupation
----- -------------- ------------------------
Class III
(term expires 2010)
Thomas A. Daiber 2006 Director, President and Chief Executive Officer of
(Age 49) Centrue Financial Corporation and Centrue Bank
(post-merger since November 2006 and pre-merger since
October 2003); Chairman, President and Chief Executive
Officer of Aviston Financial Corporation and Chairman
and Chief Executive Officer of the State Bank of
Aviston (2002-2003); Chief Financial Officer of
Allegiant Bancorp, Inc. (1999-2003)
Dennis J. McDonnell 2000 Director and Chairman of the Board of Centrue Financial
(Age 64) Corporation; Director and Chairman of the Board of
Centrue Bank since November 2006; Chairman, McDonnell
Investment Management, LLC (2001-present)
Mark L. Smith 2006 Director of Centrue Financial Corporation and Centrue
(Age 57) Bank (post-merger since November 2006 and pre-merger
since 2001); President of Smith, Koelling, Dykstra and
Ohm, P.C., managing member of Solutions for Wealth
Management, LLC and North Convent, LLC.
Scott C. Sullivan 1996 Director of Centrue Financial Corporation; Director of
(Age 52) Centrue Bank since November 2006; Attorney, Williams
McCarthy LLP
CONTINUING DIRECTORS
Name Position with Centrue Financial Corporation
(Age) Director Since and Principal Occupation
----- -------------- ------------------------
Class I
(term expires 2008)
Richard J. Berry 1985 Director of Centrue Financial Corporation and Centrue
(Age 54) Bank; Attorney, Myers, Berry, O'Conor & Kuzma, Ltd.
Walter E. Breipohl 1993 Director of Centrue Financial Corporation and Centrue
(Age 53) Bank; Broker/Owner, Kaszynski-Breipohl Realtors
Randall E. Ganim 2006 Director of Centrue Financial Corporation and Centrue
(Age 53) Bank (post-merger since November 2006 and pre-merger
since April 2006); founder and President of Ganim,
Meder, Childers & Hoering, P.C.
3.
CONTINUING DIRECTORS
Name Position with Centrue Financial Corporation
(Age) Director Since and Principal Occupation
----- -------------- ------------------------
Class II
(term expires 2009)
Michael A. Griffith 2006 Director of Centrue Financial Corporation and Centrue
(Age 48) Bank (post-merger since November 2006 and pre-merger
since 2002); founder and Chief Executive Officer of
Aptuit, Inc. (2004-present); Chairman and Chief
Executive Officer of ChiRex Inc. (1998-2000)
Michael J. Hejna 2006 Director of Centrue Financial Corporation and Centrue
(Age 53) Bank (post-merger since November 2006 and pre-merger
since 2003); President and Chief Executive Officer of
Gundaker Commercial Group, Inc.
John A. Shinkle 1997 Director of Centrue Financial Corporation; Senior Vice
(Age 55) President, Stifel Nicolaus & Company, Inc. (2006-present);
Executive Vice President and Director, Synovus
Securities, Inc. (1986-2006)
All of our directors will hold office for the terms indicated, or until their
respective successors are duly elected and qualified. There are no arrangements
or understandings between Centrue Financial Corporation and any person pursuant
to which any director has been selected. No member of the board of directors is
related to any other member of the board of directors.
Board Committees and Meetings
Our board of directors generally meets on a quarterly basis. Largely due to
merger-related activities, the board of directors met sixteen times during 2006,
which included thirteen meetings prior to the merger when the board consisted of
Messrs. Berry, Breipohl, Doty, McDonnell, Reinhardt, Shinkle, Sullivan, Trainor
and Yeoman. During 2006, all directors attended at least 75 percent of the
meetings of the board and the committees on which they served. Our board of
directors has standing executive & compensation, corporate governance &
nominating and audit committees.
Executive & Compensation Committee
The members of the executive & compensation committee are Messrs. Griffith,
Hejna, McDonnell and Shinkle. The committee met five times during 2006, which
included four meetings prior to the merger when the committee consisted of
Messrs. McDonnell, Shinkle and Sullivan. The executive & compensation committee
adopted a charter on June 16, 2005, which was revised on January 23, 2007. The
executive & compensation committee charter combines the duties of both the
executive committee and the compensation committee and is available on the
company's website at www.centrue.com. The performance of the CEO and all
executive & compensation committee items were reviewed by the committee and
recommended to the full board of directors for approval.
The executive & compensation committee is organized, and its members appointed,
by the board of directors to carry out the responsibilities of the board of
directors relating to the effective administration of the company's executive
compensation and benefits programs as well as the general oversight of the
company's compensation program for all company employees. The committee is
comprised of four independent directors and is responsible for providing
oversight to ensure that the company's compensation incentives and benefits are
competitive and are aligned with company goals so that such goals can be
successfully achieved.
4.
The executive & compensation committee does not generally delegate any matters
relating to the compensation and benefits of named executive officers to any
other party other than to the full board of directors. Items of daily management
and decisions relating to company-wide compensation and benefits, not
specifically targeting named executive officers, is delegated to company
management to the extent that it does not result in decisions that may
materially benefit named executive officers in comparison with the overall
employee population. The Company's chief executive officer may recommend or
provide information for consideration regarding the compensation and benefits of
named executive officers to members of the board of directors.
In the course of determining base salaries and total compensation for our
executive officers, the committee reviews data for institutions which are deemed
to be the company's peer group. In determining base salaries throughout 2006,
the committee considered peer data as compiled and reported internally and by
consultants including Sandler O'Neill & Partners, L.P. and Clark Consulting.
The executive & compensation committee also periodically reviews director
compensation. This oversight may be done in conjunction with or as delegated to
the corporate governance committee or the full board of directors.
Audit Committee
The audit committee is responsible for assisting the board of directors with
oversight of (1) the integrity of our financial statements, (2) our compliance
with legal and regulatory requirements, (3) the independent auditor's
qualifications and independence and (4) the performance of our internal
accounting function and independent auditors. The audit committee has the direct
authority and responsibility to select, evaluate and, where appropriate, replace
the independent auditors, and is an "audit committee" for purposes of Section
3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the audit
committee are Messrs. Smith (Chair), Breipohl, Ganim and Sullivan. The committee
met eight times during 2006, which included seven meetings prior to the merger
when the committee consisted of Messrs. Breipohl, Doty and Reinhardt.
Corporate Governance & Nominating Committee
Our board of directors has a corporate governance & nominating committee which
consists of four directors. Messrs. McDonnell (Chair), Hejna, Smith and Sullivan
are the current members of this committee. The corporate governance & nominating
committee identifies individuals to become board members and selects, or
recommends for the board's selection, director nominees to be presented for
stockholder approval at the annual meeting of stockholders or to fill any
vacancies. The corporate governance & nominating committee met two times in 2006
prior to merger when the committee consisted of Messrs. McDonnell, Shinkle and
Sullivan. Since three members of this committee are standing for election at
this annual meeting, the board of directors performed the nominating committee
functions for this meeting.
Our board of directors has adopted a written charter for the corporate
governance & nominating committee. The charter and principles are available on
the company's website at www.centrue.com. Based upon the review described above
under the section "Election of Directors", the board of directors has determined
that each of the members of our corporate governance & nominating committee is
independent under the applicable standards of the Nasdaq Stock Market.
The corporate governance & nominating committee will consider director nominees
recommended by stockholders. A stockholder who wishes to recommend a person or
persons for consideration as a nominee for election to the board of directors
must send a written notice by mail, c/o corporate governance & nominating
committee, Centrue Financial Corporation, 122 W. Madison, Ottawa, Illinois
61350, that sets forth: (1) the name, address (business and residence), date of
birth and principal occupation or employment (present and for the past five
years) of each person whom the stockholder proposes to be considered as a
nominee; (2) the number of shares of the common stock beneficially owned (as
defined by section 13(d) of the Securities Exchange Act of 1934) by each such
proposed nominee; (3) any other information regarding such proposed nominee that
would be required to be disclosed in a definitive proxy statement to
stockholders prepared in connection with an election of directors pursuant to
section 14(a) of the Securities Exchange Act of 1934; and (4) the name and
address (business and residential) of the stockholder making the recommendation
and the number of shares of the common stock beneficially owned (as defined by
section 13(d) of the Securities Exchange Act of 1934) by the stockholder making
the recommendation.
5.
We may require any proposed nominee to furnish additional information as may be
reasonably required to determine the qualifications of such proposed nominee to
serve as a director of Centrue Financial Corporation. Stockholder
recommendations will be considered only if received no less than 120 days or no
more than 150 days before the date of the proxy statement sent to stockholders
in connection with the previous year's annual meeting of stockholders. The
corporate governance & nominating committee will consider any nominee
recommended by a stockholder in accordance with the preceding paragraph under
the same criteria as any other potential nominee.
The corporate governance & nominating committee seeks board members from diverse
professional backgrounds who combine a broad spectrum of experience and
expertise with a reputation for integrity. Directors should have experience in
positions with a high degree of responsibility, be leaders in the companies or
institutions with which they are affiliated and be selected based upon
contributions they can make to the board in performing its oversight
responsibilities. The corporate governance & nominating committee uses a
subjective process for identifying and evaluating nominees for director, based
on the information available to, and the subjective judgments of, the members of
the corporate governance & nominating committee and our then current needs. We
do not believe there would be any difference in the manner in which the
committee evaluates nominees based on whether the nominee is recommended by a
stockholder or not.
Code of Ethics
The Company has adopted a code of ethics that applies to all of our employees,
officers and directors, including our principal executive officer, principal
financial officer, principal accounting officer or controller, or persons
performing similar functions. Our code of ethics contains written standards that
we believe are reasonably designed to deter wrongdoing and to promote:
o Honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between personal and
professional relationships;
o Full, fair, accurate, timely, and understandable disclosure in
reports and documents that we file with, or submit to, the
Securities and Exchange Commission and in other public
communications we make;
o Compliance with applicable governmental laws, rules and
regulations;
o The prompt internal reporting of violations of the code to an
appropriate person or persons named in the code; and
o Accountability for adherence to the code.
The code of ethics is available on the Company's website at www.centrue.com.
Stockholder Communications with the Board and Policy for Director Attendance at
Annual Meetings
Our board of directors has a process for stockholders to send communications to
the board of directors, its corporate governance & nominating committee or its
audit committee, including complaints regarding accounting, internal accounting
controls, or auditing matters. Communications can be sent to the board of
directors, its corporate governance & nominating committee or its audit
committee or specific directors either by regular mail to the attention of the
board of directors, its corporate governance & nominating committee, its audit
committee or specific directors, at our principal executive offices at 122 W.
Madison Street, Ottawa, Illinois 61350. All of these communications will be
reviewed by our secretary (1) to filter out communications that our secretary
deems, in his or her reasonable judgment, are not appropriate for our directors,
such as spam and communications offering to buy or sell products or services,
and (2) to sort and relay the remainder to the appropriate committee or
directors.
We expect and encourage all of our directors and nominees for election as
directors to attend the annual meeting of stockholders, absent a compelling
reason. All of our directors at the time of the 2006 annual meeting of
stockholders, with the exception of Mr. Shinkle, attended that meeting.
6.
Compensation of Directors
Pre-merger, each non-employee director earned a fee of $1,000 for each board
meeting attended and $250 for each committee meeting attended. Additionally,
each non-employee director received an annual retainer of $2,500, and the audit
committee chairman received an additional annual retainer of $2,000. Each of our
non-employee directors may also receive an annual grant of options to purchase
shares of common stock under the Company's 2003 Stock Option Plan. The 2003
Stock Option Plan provides for annual formula grants to each of our directors of
options to purchase shares of common stock with an exercise price of not less
than 100% of the then current market price of the common stock on the date of
the grant. Such previously issued options were exercisable over five years.
During 2006, no stock options were granted. Effective November 13, 2006, each
director of Centrue Financial Corporation became a director of Centrue Bank,
with the exception of Mr. Shinkle. Post-merger, each non-employee director
earned a fee of $1,750 for each Centrue Financial Corporation board meeting
attended and $750 for each committee meeting attended. Each non-employee
director also earned $1,500 for each Centrue Bank board meeting attended and
$750 for each committee meeting attended. Beginning in 2007, each non-employee
director of Centrue Financial Corporation will receive an annual retainer of
$10,000, and each non-employee director of Centrue Bank will receive an annual
retainer of $5,000. Additionally, the audit committee chairman will receive an
annual retainer of $40,000.
Existing Equity Compensation Plans
The following table summarizes information about our equity compensation plans
by type as of December 31, 2006.
Equity Compensation Plan Information
--------------------------------------------------------------------------------------------------------------------------
Number of securities to Number of securities remaining
be issued upon exercise Weighted-average exercise available for future issuance under
of outstanding options, price of outstanding equity compensation plans (excluding
Plan category warrants and rights options, warrants and rights securities in column (a))
(a) (b) (c)
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Equity compensation 485,974 $18.5108 85,000
plans approved by
stockholders (1)
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Equity compensation 8,450 $16.0625 --
plan not approved by
stockholders (2)
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Total 494,424 $18.4710 85,000
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(1) Includes shares issuable under the 1993 Stock Option Plan and shares
issuable under the 2003 Stock Option Plan. The 1993 Stock Option Plan
terminated April 12, 2003, therefore, no further stock options will be
issued under this Plan. Also includes shares issuable under the
pre-merger Centrue Equity Compensation plans. These plans were
terminated as a result of the merger, therefore, no further stock
options will be issued under these plans.
(2) Includes shares issued under the 1999 Non-qualified Stock Option Plan,
The Company authorized 50,000 shares for issuance under the 1999 Option
Plan. During 1999, 40,750 of these shares were granted and vested in
three years. The options have an exercise period of ten years from the
date of grant.
II. APPROVAL OF STOCK OPTION PLAN
At the annual meeting, stockholders will be asked to approve the amendment and
restatement of the Centrue Financial Corporation 2003 Stock Option Plan (the
"Plan"). The board of directors unanimously adopted the Plan on December 19,
2002 and stockholders approved the Plan at their 2003 annual meeting. The
executive and compensation committee unanimously approved the amendment and
restatement of the Plan on February 23, 2007 and has recommended same for
approval at the next board of directors meeting scheduled in April 2007. Awards
of stock options and restricted stock under the amended and restated Plan may
not be granted after December 19, 2112.
7.
The following summary is subject to and limited in its entirety by the terms of
the Plan, as amended and restated, the complete text of which is included as
Exhibit A to this proxy statement.
The aggregate number of shares of the Company's common stock that may be issued
and outstanding pursuant to the exercise of options or the grant of restricted
stock under the Plan (the "Stock Pool") will not exceed 570,000 shares, which
includes the 200,000 shares approved for issuance under the Plan as previously
approved by stockholders and an additional 370,000 shares being made available
for issuance under the amended and restated Plan. If the Company's stockholders
do not approve the amendment and restatement of the Plan, the shares of the
Company's common stock in the Stock Pool will not exceed 200,000 shares and all
Plan awards will be subject to the terms and conditions of the Plan prior to its
amendment and restatement. Shares of the Company's common stock which would have
been issued pursuant to the exercise of a stock option, but are withheld as
payment of the option price may be added back into the Stock Pool and reissued.
Common shares covered by terminated, expired or forfeited options or restricted
stock awards may also be added back to the Stock Pool. In the event of any
change in the outstanding common shares of the Company as a result of a merger,
reorganization, stock split, reverse stock split, stock dividend,
recapitalization, combination, reclassification, appropriate proportionate
adjustments will be made to both the terms of the Plan and any awards granted
under the Plan which are determined on a per share basis, including, but not
limited to, the amount of common shares in the Stock Pool, the exercise price,
and number of common shares associated with an outstanding option or restricted
stock award. No such adjustments will be required by reason of the issuance or
sale by the Company for cash or other consideration of additional shares of the
Company's common stock or securities convertible into or exchangeable for shares
of the Company's common stock.
Purpose and Eligibility
The purpose of the Plan is to advance the interests of the Company and its
stockholders by helping the Company and its subsidiaries attract and retain the
services of highly qualified employees, officers and directors, upon whose
judgment, initiative and efforts the Company is substantially dependent, and to
provide those persons with further incentives to advance the interests of the
Company. The Plan is also established with the objective of encouraging stock
ownership by such employees, officers and directors and aligning their interests
with those of stockholders.
The objectives of the Plan will be accomplished by the granting of stock option
awards, restricted stock awards and stock appreciation rights awards to selected
key employees, officers and directors. Key employees and officers selected to
participate in the Plan may be eligible for the grant of incentive stock options
("ISOs"), non-qualified stock options ("NSOs"), restricted stock awards and
stock appreciation rights ("SARs"). Directors who are not also employees of the
Company or a subsidiary of the Company shall only be eligible for the grant of
NSOs, restricted stock awards and SARs.
Eligible participants are defined in the Plan to mean employees, officers or
directors of the Company or its subsidiaries. Eligible participants may be
granted ISOs (except in the case of directors who are not also employees of the
Company or a subsidiary of the Company), NSOs, restricted stock awards or SARs
under the Plan if so selected by the Committee. Approximately 21 persons qualify
as eligible participants at this time. The Committee currently anticipates that
up to approximately 12 employees may be awarded stock option grants, restricted
stock or stock appreciation rights under the Plan in 2007. With respect to ISOs
only, this definition does not include persons who have been on leave of absence
for greater than 90 days, unless re-employment is guaranteed by law or contract.
Existing Equity Compensation Plans
In addition to the Plan, the Company currently maintains the Centrue Financial
Corporation 1993 Stock Option Plan (the "1993 Stock Option Plan"), which the
Company's board of directors adopted on February 18, 1993 and the stockholders
of the Company approved on April 12, 1993 and the Centrue Financial Corporation
1999 Stock Option Plan (the "1999 Stock Option Plan"). The following table
provides information regarding the number of shares of common stock subject to
each of these plans as well as information regarding outstanding options to
purchase the Company's common stock under the plans.
8.
Equity Compensation Plan Information
--------------------------------------------------------------------------------------------------------------------------
Number of securities to Number of securities remaining
be issued upon exercise Weighted-average exercise available for future issuance under
of outstanding options, price of outstanding equity compensation plans (excluding
Plan category warrants and rights options, warrants and rights securities in column (a))
(a) (b) (c)
--------------------------------------------------------------------------------------------------------------------------
Equity compensation 485,974 $18.5108 85,000
plans approved by
stockholders
--------------------------------------------------------------------------------------------------------------------------
Equity compensation 8,450 $16.0625 --
plan not approved by
stockholders
--------------------------------------------------------------------------------------------------------------------------
Total 494,424 $18.4710 85,000
--------------------------------------------------------------------------------------------------------------------------
Administration of Plan
The executive and compensation committee (the "Committee") of the board of
directors of the Company, provided that it is comprised solely of non-employee
directors, shall generally serve as the administrative committee for the Plan
and the board of directors of the Company shall have the authority to
independently review and approve all decisions made by the Committee. The
Committee may delegate such powers or duties to employees of the Company or its
subsidiaries, as it deems appropriate. The Company's board of directors may from
time-to-time remove members from the Committee and appoint their successors.
The Committee or the board of directors of the Company, as the case may be, will
have full and final authority in its discretion, at any time subject only to the
express terms, conditions and other provisions of the Company's articles of
incorporation, bylaws and the Plan, and the specific limitations on such
discretion set forth in the Plan:
1. to select and approve the persons to whom options or will be granted
under the Plan from among the eligible participants, including the
number of options and the amount of common stock available for purchase
under such options so granted to each person;
2. to determine the period or periods of time during which options may be
exercised or become exercisable, the option price and the duration of
such options, the date on which options are granted, and other matters
to be determined by the Committee in connection with specific option
grants and option agreements as specified under the Plan;
3. to select and approve the persons to whom restricted stock awards will
be made under the Plan from among the eligible participants and the
number of shares of restricted stock to be subject to each award;
4. to determine the period or periods of time during which restricted
Stock awards may vest, the date on which restricted stock awards are
granted, and other matters to be determined by the Committee in
connection with specific restricted stock awards and restricted stock
agreements as specified under the Plan;
5. to select and approve the persons to whom SARs will be granted under
the Plan from among the eligible participants and the terms of the
SARs; and
6. to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, and to make all other determinations
necessary or advisable for the operation and administration of the
Plan.
Except as otherwise provided in the Plan, the Committee will designate any
option granted as either an ISO or as an NSO (as such terms are defined in the
Plan). To the extent that the fair market value of common stock (as defined in
the Plan), determined at the time the option is granted, with respect to which
all ISOs are exercisable for the first time by any individual during any
calendar year (pursuant to the Plan and all other plans of the Company and/or
its subsidiaries) exceeds $100,000, such option will be treated as an NSO.
9.
Except as otherwise determined by the Committee, options, restricted stock
awards and SARs will be deemed granted under the Plan only upon the execution
and delivery of an option agreement by the option holder and a duly authorized
officer of the Company. Unless the Committee determines that an agreement is
unnecessary, options, restricted stock awards and SARs will not be deemed
granted under the Plan merely upon the authorization of such grant by the
Committee.
Amendment and Termination
The Committee may amend, and the board of directors of the Company may suspend
or discontinue the Plan at any time, provided that: (i) no such action may,
without the approval of the stockholders of the Company, materially increase
(other than by reason of an adjustment as discussed above) the maximum aggregate
number of common stock shares issuable under the Plan, or increase the maximum
total number of common stock shares issuable to an eligible participant under
the Plan; (ii) no action of the Committee will cause ISOs granted under this
Plan not to comply with Section 422 of the Code unless the Committee
specifically declares such action to be made for that purpose; and, (iii) no
action of the Committee shall alter or impair any option or restricted stock
shares previously granted or awarded under the Plan without the consent of such
affected option holder.
Incentive Stock Options and Non-Qualified Stock Options
The Plan authorizes the grant of both ISOs and NSOs, both of which are
exercisable for shares of the Company's common stock. The price that an option
holder must pay in order to exercise an option may be stated in terms of a fixed
dollar amount, a percentage of fair market value at the time of the grant, or
such other method as determined by the Committee in its discretion. In no event
shall the option price for an ISO or an NSO be less than the fair market value
per share of the Company's common stock on the date of the option grant. In the
case of ISOs granted to persons possessing more than 10 percent of the total
combined voting power or value of all classes of stock of the Company and/or its
subsidiaries, the option price will be no less than 110 percent of the fair
market value per share of the Company's common stock on the date of the grant.
The fair market value shall mean the closing price of the Company's common stock
for the trading day immediately preceding the date in question as reported in a
publicly available newspaper or publication deemed reliable by the Committee, or
if there is no closing price reported on such day, the reporting price on the
next previous trading day for which a closing price is reported in such
newspaper or publication. An option holder may pay all or a portion of the
option price, and/or the tax withholding liability, if applicable, in cash or by
certified check or, such other legal consideration as may be approved by the
Committee, in its discretion. Subject to the Committee's discretion, an option
holder may pay all or a portion of the option price, and/or the tax withholding
liability, if applicable, by surrendering shares of Company common stock already
owned or by withholding shares of common stock to be issued under the option
being exercised. Subject to the Committee's discretion, the option holder may
also pay all or a portion of the option price and/or the tax withholding
liability by irrevocably authorizing a third party to sell shares of the
Company's common stock (or a sufficient portion of the shares) acquired upon
exercise of the option and remit to the Company a sufficient portion of the sale
proceeds to pay the entire exercise price and any tax withholding resulting from
such exercise. To the extent that shares of common stock are sold by a third
party as payment of all or a portion of the option price of an ISO, the sale
will be treated as disqualifying disposition thus subjecting the exercise to
immediate tax consequences. See "Certain Federal Income Tax Consequences" below.
The period during which an option may be exercised shall be determined by the
Committee at the time of the option grant and, for ISOs, may not extend more
than ten years from the date of the grant, except in the case of ISOs granted to
persons possessing more than 10 percent of the total combined voting power or
value of all classes of stock of the Company and/or its subsidiaries in which
case the option period will not exceed five years from the date of grant.
To the extent not previously exercised, each ISO will terminate upon the
expiration of the option period specified in the option agreement provided,
however that, subject to the discretion of the Committee, each ISO will
terminate, if earlier: (i) ninety days after the date that the option holder
ceases to be an eligible participant for any reason other than cause, death or
disability; (ii) immediately upon the eligible participant's termination of
employment for cause; or (iii) one year after the date that the option holder
ceases to be an eligible participant by reason of such person's death or
disability.
10.
To the extent not previously exercised, each NSO will terminate upon the
expiration of the option period specified in the option agreement provided,
however that, subject to the discretion of the Committee, each NSO will
terminate, if earlier: (i) ninety days after the date that the option holder
ceases to be an eligible participant for any reason other than cause, death or
disability; (ii) immediately upon the eligible participant's termination of
employment for cause; or (iii) one year after the date that the option holder
ceases to be an eligible participant by reason of such person's death or
disability.
Restricted Stock Awards
The Plan authorizes the grant of restricted stock awards which award shares of
Company common stock to the recipient. The recipient becomes vested and the
shares of restricted stock become nonforfeitable pursuant to the terms and
conditions of the restricted stock agreement. The Committee has the authority to
establish the terms and conditions of restricted stock awards, including the
period over which such awards will vest and become nonforfeitable. To the extent
that an eligible participant has not become vested in shares of Company common
stock subject to a restricted stock award prior to termination of employment,
death or disability, the eligible participant, subject to the Committee's
discretion, shall forfeit such shares.
Stock Appreciation Rights
SARs may be granted in tandem with or with reference to a related stock option,
in which event the grantee may elect to exercise either the option or the SAR
but not both. SARs may also be granted independently of a related option. In the
event of a grant with a related stock option, the SAR shall be subject to the
terms and conditions of the related option. Upon exercise of a SAR, the grantee
shall be paid the excess of the then fair market value of the number of shares
of Company common stock to which the SAR relates over the fair market value of
such number of shares of Company common stock at the date of grant of the SAR or
of the related option, as the case may be. Such excess shall be paid in cash or
in shares of Company common stock having a fair market value equal to such
excess or in such combination thereof as the Committee shall determine.
Transferability; Dividend and Voting Rights; Withholding
The terms of the Plan provide that ISOs are not transferable other than by will
or the laws of descent and distribution. NSOs may not be transferred other than
by will, the laws of descent and distribution, or, at the discretion of the
Committee, by direct gift to a family member, or gift to a family trust or
family partnership. The terms "family member," "family trust" and "family
partnership" shall have meanings consistent with Section 704 of the Internal
Revenue Code of 1986. Options will be exercisable only by the eligible
participant during his or her lifetime, or, with respect to an NSO, by any of
the recipients of the Transfers specifically permitted by the Plan. Holders of
ISOs or NSOs shall have no dividend rights or voting rights until the options
have been exercised.
SARs and shares of restricted stock shall not be transferable, except that SARs
may be exercised by the executor, administrator or personal representative of
the deceased grantee within twelve months of the death of the grantee. SARs may
be exercised during the individual's continued employment with the Company and
for a period not in excess of ninety days following termination of employment
The Plan provides that recipients of options, restricted stock and SARs pay all
required local, state and federal withholding taxes associated with the exercise
of such options in cash or such other consideration as the Committee permits in
its discretion. Subject to the Committee's approval, the eligible participant's
withholding obligation may be satisfied by the withholding of share of stock
subject to options being exercised or restricted stock becoming vested.
Change in Control
Unless otherwise provided in an option agreement or a restricted stock
agreement, in the event of a change in control of the corporation or a
liquidation or dissolution of the corporation, on the effective date of such
change in control, all options shall become fully exercisable and eligible
participants shall become vested in all restricted stock awards.
11.
For purposes of the Plan, a change of control of the Company shall have
occurred:
(i) on the scheduled expiration date of a tender offer by, or
exchange offer by any corporation, person, other entity or
group (other than the Company, any of its wholly-owned
subsidiaries or a qualified retirement plan of the Company or
one of its subsidiaries), to acquire voting stock of the
Company if:
(1) after giving effect to such offer such corporation,
person, or other entity or group would own 50 percent
or more of the voting stock of the Company;
(2) there shall have been filed documents with the
Securities and Exchange Commission in connection
therewith (or, if no such filing is required, public
evidence that the offer has already commenced); and
(3) such corporation, person, or other entity or group
has secured all required regulatory approvals to own
or control 50 percent or more of the voting stock of
the Company;
(ii) if the stockholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into
another corporation in a transaction in which neither the
Company nor any of its wholly-owned subsidiaries will be the
surviving corporation, or to sell or otherwise dispose of all
or substantially all of the Company's assets to any
corporation, person, other entity or group (other than the
Company, any of its wholly-owned subsidiaries or a qualified
retirement plan of the Company or one of its subsidiaries),
and such definitive agreement is consummated;
(iii) if any corporation, person, or other entity or group (other
than the Company or any of its wholly-owned subsidiaries)
becomes the beneficial owner (as defined in the Company's
Articles of Incorporation) of stock representing 50 percent or
more of the voting stock of the Company; or
(iv) if during any period of two consecutive years continuing
directors cease to comprise a majority of the Company's board
of directors.
Certain Federal Income Tax Consequences
The following summary generally describes the principal federal (and not state
and local) income tax consequences of awards granted under the Plan. The summary
is general in nature and is not intended to cover all tax consequences that may
apply to a particular employee or to the Company. The provisions of the Internal
Revenue Code of 1986, as amended (the "Code") and regulations thereunder
relating to these matters are complicated and their impact in any one case may
depend upon the particular circumstances.
The discussion of federal income tax consequences set forth below is included
for informational purposes only. The discussion is based on currently existing
provisions of the code, existing or proposed treasury regulations thereunder and
current administrative rulings and court decisions. All of the foregoing are
subject to change, and any such change could affect the continuing validity of
this discussion. Each participant in the Plan should consult his or her tax
advisor regarding specific tax consequences including the application and effect
of state and local tax laws.
Incentive Stock Options. ISOs granted under the Plan are intended to qualify as
incentive stock options under Section 422 of the Code. Pursuant to Section 422,
the grant and exercise of an ISO generally will not result in taxable income to
the option holder (with the possible exception of alternative minimum tax
liability) if the option holder does not dispose of common stock received upon
exercise of such option within one year after the date of exercise and two years
after the date of grant (either type of disposition hereinafter referred to as a
"Disqualifying Disposition"), and if the option holder has continuously been an
eligible participant from the date of grant to three months before the date of
exercise (or 12 months in the event of death or disability) (hereinafter
referred to as the "Employment Requirement"). The Company will not be entitled
to a deduction for income tax purposes in connection with the grant or exercise
of an ISO. Additionally, the Company will not be entitled to a deduction at the
time common stock acquired pursuant to an ISO are disposed of, provided that the
option holder has satisfied the Employment Requirement and the disposition is
not a Disqualifying Disposition.
12.
Disposition of common stock acquired pursuant to an ISO, except in the case of a
Disqualifying Disposition, will result in long-term capital gain or loss
taxation of the option holder on the difference between the amount realized upon
disposition and the option price. An option holder who, in a Disqualifying
Disposition, disposes of common stock acquired pursuant to an ISO, will be
required to notify the Company and will immediately recognize the gain on the
disposition as ordinary income. In the event of a Disqualifying Disposition, the
Company will be entitled to a deduction in the amount of income recognized by
the option holder.
Pursuant to the Code and the terms of the Plan, the Committee will designate all
options granted under the Plan as either ISOs or NSOs. To the extent that the
fair market value of the Company's common stock (determined at the time an
option is granted) with respect to which all ISOs are exercisable for the first
time by any individual during any calendar year exceeds $100,000, such option
shall be treated for all purposes under the Plan as an NSO.
Non-Qualified Stock Options. For NSOs, or ISOs which have converted to NSOs for
any reason, the difference between the market value of the Company's common
stock on the date of exercise and the option price will constitute taxable
ordinary income to the option holder on the date of exercise. The Company will
be entitled to a deduction in the same year in an amount equal to the income
taxable to the option holder. The option holder's basis in shares of the
Company's common stock acquired upon exercise of an option will equal the option
price plus the amount of income taxable at the time of exercise. Any subsequent
disposition of such the Company's common stock by the option holder will be
taxed as a capital gain or loss to the option holder, and will be long-term
capital gain or loss if the option holder has held such Company common stock for
more than one year at the time of sale.
Restricted Stock. Restricted stock will generally cause the eligible participant
to recognize taxable ordinary income pursuant to the rules of Section 83 of the
Code. Accordingly, unless otherwise elected by the eligible participant, shares
of restricted stock granted under the Plan will generally cause the eligible
participant to recognize taxable ordinary income in the amount equal to the fair
market value Company common stock when such stock vests and is no longer subject
to a substantial risk of forfeiture. The eligible participant may elect to
recognize taxable ordinary income within 30 days following the restricted stock
award. In the case of such an election (an "83(b) Election") the eligible
participant recognizes taxable ordinary income equal to the fair market value of
Company common stock subject to the restricted stock award. Following an 83(b)
election, if the eligible participant sells the restricted stock after the stock
is no longer subject to a substantial risk of forfeiture, the eligible
participant generally recognizes income taxable at capital gains rates. The
amount of such income is generally the amount received by the eligible
participant upon the disposition of restricted stock less the amount of income
realized by the eligible participant upon making the 83(b) Election. In the
event that (i) the value of restricted stock decreases from the time of an 83(b)
election to the date of disposition of the restricted stock; or (ii) the
eligible participant forfeits the shares of restricted stock following an 83(b)
Election, then the eligible participant may generally offset other capital gains
by the amount of loss realized on such disposition or forfeiture.
Stock Appreciation Rights. Upon the exercise of a SAR, the excess of the then
fair market value of the number of shares of Company common stock to which the
SAR relates over the fair market value of such number of shares of Company
common stock at the date of grant of the SAR or of the related option, as the
case may be, will constitute taxable ordinary income to the option holder on the
date of exercise. The Company will be entitled to a deduction in the same year
in an amount equal to the income taxable to the grantee of the SAR. In the event
the SAR grantee receives shares of the Company's common stock upon exercise of a
SAR, the grantee's basis in such stock will equal the amount of income taxable
at the time of exercise. Any subsequent disposition of such the Company's common
stock by the option holder will be taxed as a capital gain or loss to the option
holder, and will be long-term capital gain or loss if the option holder has held
such Company common stock for more than one year at the time of sale.
Pursuant to the terms of the Plan, the Committee will require any recipient of
common stock upon the exercise of an NSO or a SAR to pay the Company in cash or
in such other form as the Committee may determine in its discretion, the amount
of any tax or other amount required by any governmental authority to be withheld
and paid by the Company to such authority for the account of such recipient.
13.
Performance-Based Compensation -- Section 162(m) Requirement
The Plan is intended to preserve the Company's tax deduction for certain awards
made under the Plan by complying with the terms of Section 162(m) of the Code
and regulations relating thereto.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" THE APPROVAL OF THE ADOPTION OF THE AMENDED AND RESTATED 2003 STOCK
OPTION PLAN
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of our common stock at March 1, 2007, by each person known
by us to be the beneficial owner of more than 5% of the outstanding common
stock, by each director or nominee, by each executive officer named in the
summary compensation table which can be found later in this proxy statement, and
by all of our directors and executive officers as a group.
The following table is based on information supplied to us by the directors,
officers and stockholders described above. The Company has determined beneficial
ownership in accordance with the rules of the SEC. Shares of common stock
subject to options that are either currently exercisable or exercisable within
60 days of March 1, 2007 are treated as outstanding and beneficially owned by
the option holder for the purpose of computing the percentage ownership of the
option holder. However, these shares are not treated as outstanding for the
purpose of computing the percentage ownership of any other person. The table
lists applicable percentage ownership based on 6,470,840 shares outstanding as
of March 1, 2007. Unless otherwise indicated, the address for each person listed
below is 122 W. Madison Street, Ottawa, Illinois 61350.
Name of Individual or Amount and Nature of Percent
Number of Individuals in Group Beneficial Ownership(1)(2) of Class
------------------------------ -------------------------- --------
5% Stockholders
Wayne W. Whalen 871,902(3) 13.3%
333 W. Wacker Drive, Suite 2100
Chicago, Illinois 60606
Jeffrey L. Gendell 636,225(4) 9.8%
55 Railroad Avenue, 3rd Floor
Greenwich, Connecticut 06830
Directors and Nominees
Richard J. Berry 46,411(5) *
Walter E. Breipohl 41,829 *
Thomas A. Daiber 105,337(6) 1.6%
Randall E. Ganim 18,077(7) *
Michael A. Griffith 86,977(8) 1.3%
Michael J. Hejna 44,078(9) *
Dennis J. McDonnell 674,009(10) 10.3%
John A. Shinkle 32,499(11) *
Mark L. Smith 42,504(12) *
Scott C. Sullivan 35,468(13) *
14.
Name of Individual or Amount and Nature of Percent
Number of Individuals in Group Beneficial Ownership(1)(2) of Class
------------------------------ -------------------------- --------
Other Named Executive Officers
J. David Conterio 153(14) *
Ricky R. Parks 18,949(15) *
Everett J. Solon 63,635(16) *
Kurt R. Stevenson 21,711(17) *
All directors and all executive officers 1,264,356(18) 18.4%
as a group (23 persons)
-----------------------
* Indicates less than one percent.
(1) The information contained in this column is based upon information
furnished to us by the persons named above and the members of the
designated group. Amounts reported include shares held directly as well
as shares which are held in retirement accounts and shares held by
members of the named individuals' families or held by trusts of which
the named individual is a trustee or substantial beneficiary, with
respect to which shares the respective individual may be deemed to have
sole or shared voting and/or investment power. The nature of beneficial
ownership for shares shown in this column is sole voting and investment
power, except as set forth in the footnotes below. Inclusion of shares
shall not constitute an admission of beneficial ownership or voting and
investment power over included shares.
(2) Amounts shown include shares obtainable as of March 1, 2007 (or
obtainable within 60 days of March 1, 2007) through the exercise of
options to purchase shares of common stock granted under the Company's
stock option plans as follows: Mr. Berry - 21,500 shares; Mr. Breipohl
- 21,500 shares; Mr. Daiber - 56,400 shares; Mr. Ganim - 6,000 shares;
Mr. Griffith - 54,000; Mr. Hejna - 18,000; Mr. McDonnell - 7,500
shares; Mr. Shinkle - 21,500; Mr. Smith - 24,000 shares; Mr. Sullivan -
21,500 shares; Mr. Parks - 9,000 shares; Mr. Solon - 21,807 shares and
Mr. Stevenson - 14,362 shares. Option holders have the sole power to
exercise their respective options and would also be entitled to
exercise sole voting and investment power over the shares issued upon
the exercise of such options.
(3) Includes shares held by Mr. Whalen's wife, Paula Wolff, Mr. Whalen's
children, the WPW Family Foundation and WPW Associates, L.P., a family
limited partnership, with shared voting and investment power over such
shares. The amount above also includes approximately 86,021 shares
which are issuable upon the conversion of 1,381 shares of Centrue
Financial Corporation convertible preferred stock held by Mr. Whalen.
(4) Includes shares held with affiliates, Tontine Financial Partners, L.P.
and Tontine Management, L.L.C.
(5) Includes 11,100 shares held in trusts for which Mr. Berry is a
co-trustee, over which shares Mr. Berry has shared voting and
investment power.
(6) Includes 16,968 shares held jointly by Mr. Daiber and his spouse and
1,440 shares held in an individual retirement account for the benefit
of his spouse, over which shares Mr. Daiber has shared voting and
investment power. Also includes 2,763 shares held by Mr. Daiber in his
401(k) plan.
(7) All shares are held jointly by Mr. Ganim and his spouse.
(8) Includes 25,777 shares held jointly by Mr. Griffith and his spouse.
(9) Includes 5,000 shares held jointly by Mr. Hejna and his spouse.
(10) Includes shares held jointly by Mr. McDonnell and his wife over which
voting and dispositive power is shared. Also includes shares held in
trust for which Mr. McDonnell is trustee. The amount above also
includes approximately 86,021 shares which are issuable upon the
conversion of 1,381 shares of Centrue Financial Corporation convertible
preferred stock held by Mr. McDonnell. Mr. McDonnell's address is 815
Jackson Avenue, River Forest, Illinois 60305.
15.
(11) Includes 100 shares held by Mr. Shinkle's spouse, over which Mr.
Shinkle has no voting or investment power. Also includes 4,220 shares
held in trust for which Mr. Shinkle serves as trustee and 1,500 held in
an investment club, over which Mr. Shinkle has voting and investment
power.
(12) Includes 480 shares held by Mr. Smith's spouse, over which Mr. Smith
has no voting or investment power. Also includes 1,692 shares held
jointly by Mr. Smith and his spouse, over which he has shared voting
and investment power and 3,840 shares held in a trust in which Mr.
Smith serves as trustee with respect to which he has sole voting and
investment power. However, he does not have any financial interest over
those shares and disclaims any beneficial interest.
(13) Includes 1,000 shares held by Mr. Sullivan jointly with his spouse,
1,687 shares held by Mr. Sullivan's wife and 1,000 shares held by
members of Mr. Sullivan's family, over which shares Mr. Sullivan has
shared voting and investment power.
(14) All shares were allocated to Mr. Conterio under the employee stock
ownership plan.
(15) Includes 9,949 shares held by Mr. Parks in his 401(k) plan.
(16) Includes 9,695 shares held jointly by Mr. Solon with his spouse and 259
shares held by Mr. Solon in his 401(k) plan and 25,834 shares allocated
to Mr. Solon under the employee stock ownership plan.
(17) Includes 425 shares held by Mr. Stevenson jointly with his spouse, over
which shares Mr. Stevenson has shared voting and investment power. Also
includes 668 shares held by Mr. Stevenson in his 401(k) plan and 5,956
shares allocated to Mr. Stevenson under the employee stock ownership
plan.
(18) Footnotes (2) and (5) through (17) are incorporated herein.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that our executive
officers, directors and persons who own more than 10% of our common stock file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. They are also required to furnish us with copies of all Section
16(a) forms they file. Based solely on our review of the copies of such forms,
and, if appropriate, representations made to us by any reporting person
concerning whether a Form 5 was required to be filed for 2006, we are not aware
that any of our directors, executive officers or 10% stockholders failed to
comply with the filing requirements of Section 16(a) during 2006, with the
exception of Mr. Shinkle who failed to file one Form 4 reporting one transaction
in connection with the purchase of Company common stock through a
broker-maintained dividend reinvestment plan and Messrs. Stevenson and Yeoman
who each failed to timely file one Form 4 reporting stock options granted to
them.
Report of Executive & Compensation Committee
The executive & compensation committee has reviewed and discussed the
Compensation Discussion and Analysis (the "CD&A") for the year ended December
31, 2006 with management. Based on the review and discussions, the executive &
compensation committee recommended to the board of directors that the CD&A be
included in the Company's annual report on Form 10-K for the year ended December
31, 2006 and the Company's 2007 proxy statement for filing with the SEC.
Respectively Submitted,
Year 2006 Executive & Compensation Committee
Michael A. Griffith, Chair
Michael J. Hejna
Dennis J. McDonnell
John A. Shinkle
Executive & Compensation Committee Interlocks
The members of the executive & compensation committee are set forth in the
preceding section. There are no members of the executive & compensation
committee who were officers or employees of the Company, former officers of the
Company or its subsidiaries or had any relationship otherwise requiring
disclosure here.
16.
COMPENSATION DISCUSSION AND ANALYSIS
Philosophy
The executive & compensation committee's principal responsibilities include
acting upon matters delegated to the committee by the full board and ensuring
the alignment of compensation with the strategic objectives of the organization.
The executive & compensation committee recognizes that the Company's success
that has been attained over time has been earned largely through the selection,
training and development of top caliber executive, managerial, and professional
talent. Ongoing investment in human capital is expected to produce favorable
long-term returns to our customers and shareholders by offering extensive and
progressive services that provide a unique and pleasant banking experience to an
ever-growing customer base.
The Company has positioned itself for future growth that is dependent upon its
ability to continue to improve operational efficiencies, offer comprehensive
financial products and services, and enhance technological capabilities.
Critical to this ongoing success is that executives continue to be among the
most highly qualified and talented professionals available in their respective
areas of expertise, when compared to a peer group that represents competition
for business and talent.
The Company believes successful compensation programs link business and
compensation strategies with thought processes that address a broad array of
program influences. This approach to strategy is a core value as it relates to
how the Company competes with other organizations while meeting the needs of its
customers.
Elements of Compensation and Determination of Payments
The executive & compensation committee annually reviews and approves goals and
objectives relevant to the compensation and benefits package of the chief
executive officer and other executive officers of the organization. Executive
officers shall, for the purposes of the committee's oversight, include those
individuals who are the annually named executive officers of the Company.
In determining the compensation and benefits of our executive officers, the
following factors are generally taken into consideration: the performance of the
executive officers in achieving short and long-term goals; payment of
compensation commensurate with the ability and expertise of the executive
officers; and payment of compensation that is competitive with similar
companies. The committee considers the foregoing factors, as well as others, in
determining the compensation and benefits plans of our executive officers.
In the course of determining base salaries and total compensation for our
executive officers, the committee reviews data for institutions which are deemed
to be the Company's peer group. In determining base salaries throughout 2006,
the committee considered peer data as compiled and reported internally and by
consultants including Sandler O'Neill & Partners, L.P. and Clark Consulting.
The following elements include factors that will be considered when reviewing
executive officer compensation and benefits: base salary, bonus, long-term
incentives, officer benefits, retirement plan funding, perquisites and group
insurance benefits.
The following is a general description of how each of these elements applies to
our executive officers.
Base Salary - In determining the base salary of executive officers, the
executive & compensation committee defines base salary as the annualized regular
cash compensation of an employee, excluding bonus awards, Company contributions
to employee benefits plans, or other compensation not designated as salary. The
executive & compensation committee considers the individual job performance of
the executive officers, as well as overall corporate performance, and the
average salaries as published by our peers and other third party consultants.
Base salaries are generally reviewed and considered for adjustment on an annual
basis, unless circumstances exist in which the executive is assuming a scope and
degree of responsibilities materially greater or lesser than the executive's
present duties, or it is deemed that an adjustment is needed to meet marketplace
demands.
17.
Short-Term Incentive Compensation (Cash Bonus) -The short-term incentive
compensation program is intended to sustain management's focus on the
corporation's requirement for strategic long-range planning by encouraging
attainment of the annual profitability goals. The plan is designed to attract,
develop, retain and reward well-qualified management and executive staff.
Each year, the executive & compensation committee approves participants for the
program and corresponding rewards tiers ranging up to 50% of base salary,
commensurate with the responsibility level of each position. Eligible rewards,
including those of the chief executive officer, are based on both personal goals
and corporate performance. A minimum threshold must be met before any rewards
are paid, and all rewards are subject to final approval by the board of
directors. Personal goals are set jointly by the participant and Company
management and are comprised of tactical initiatives to be completed within the
period that can ultimately advocate the successful completion of long-range
strategic initiatives.
Long-Term Incentive Compensation - The Company's primary long-term incentive
vehicle is stock options. Inclusion in the Company's long-term incentive program
is based on the recommendation of the chief executive officer and the executive
& compensation committee, and is approved by the board of directors. No specific
formula is used in determining the amount and frequency of long-term incentives.
However, the committee considers factors such as earnings per share, return on
equity and total return to shareholders and generally reserves long-term
incentive grants to motivate and reward extraordinary performance that may
positively impact the Company's long-term objectives. The Company has approved
amendments to its stock option plan to, among other things, permit the awards of
restricted stock in addition to the grant of stock options (see [Disclosure of
Stock Option Plan] section).
Officer Benefits - Officer benefits programs focus on two general types of
officer benefits: nonqualified retirement benefits and officer life insurance.
The Company does not currently have any non-qualified retirement benefits for
its officers. Several officers, not including our chief executive officer, are
currently covered by a bank owned life insurance (BOLI) policy. A small group of
officers with BOLI are also covered by a split dollar plan which, subject to the
achievement of certain conditions, pays out a portion of death benefits to the
executives' named beneficiaries.
Retirement Benefits- The executive & compensation committee considers various
benefits, including retirement benefits, in determining compensation. In October
of 2006, the Company made a final pro-rated annual contribution to and then
terminated its employee stock ownership plan. The primary remaining retirement
vehicle is the Company's 401(k) plan. The 401(k) plan holds a safe harbor status
and allows eligible participants to defer compensation up to annual IRS limits.
In 2006, all eligible participants received a safe harbor contribution equal to
4% of their total eligible compensation regardless of whether and to what extent
salary deferrals were elected.
Company executives participate in retirement plan programs in a manner
consistent with plan provisions covering other employees. Currently, the Company
does not provide executives with any supplemental executive retirement plan
benefits.
Perquisites - Executive officers may have a limited number of perquisites made
available to them. The main perquisites that may be offered are country club
memberships, reimbursement of business expense and employment or
change-in-control agreements. A detailed explanation of employment agreements is
provided in the section designated as Employment Agreements and Other
Arrangements.
Group Insurance Benefits- The Company offers a comprehensive employee benefits
package for all eligible employees which includes group health, dental, vision,
life, dependent life, short and long-term disability insurance and a flexible
spending account plan. Executive officers are afforded the same participation
and rewards terms as all other eligible staff.
Total Rewards - The Company considers compensation a single package consisting
of the parts described in this statement. When viewed in this manner, the
organization is positioned to: 1) establish specific goals for each form of
compensation, 2) project funding requirements consistent with the Company's
business strategies, and 3) administer the program with predetermined goals as a
guide. Assuming strategic goals are met, the combined total rewards would be
expected to be comparable to similarly sized banks within the Company's market
area.
18.
Executive Compensation
The following table shows the compensation earned by the chief executive
officer, chief financial officer and the three other most highly compensated
executive officers in 2006.
Summary Compensation Table
------------------------------------------------------------------------------------------------------------------------------------
Change in
Pension
Value and
Non-
qualified
Deferred
Name and Non-Equity Compen-
Principal Stock Option Incentive Plan sation All Other
Position Year Salary Bonus Awards Awards Compensation Earnings Compensation Total
($) ($) ($) ($) ($) ($) ($) ($)
------------------------------------------------------------------------------------------------------------------------------------
Thomas A 2006 $ 289,712 $ 60,000 -- $ 63,793 -- -- $ 7,938 $ 421,443
Daiber
President &
Chief Executive
Officer (1)
------------------------------------------------------------------------------------------------------------------------------------
Scott A 2006 $ 185,872 $ 8,800 -- -- -- -- $ 15,463 $ 210,135
Yeoman
Former
President &
Chief Executive
Officer (2)
------------------------------------------------------------------------------------------------------------------------------------
Kurt R 2006 $ 147,687 $ 59,405 -- $ 33,900 -- -- $ 11,044 $ 204,991
Stevenson
Senior
Executive Vice
President &
Chief Financial
Officer, Interim
Chief Operating
Officer (3)
------------------------------------------------------------------------------------------------------------------------------------
Everett J 2006 $ 144,500 $ 34,680 -- $ 11,606 -- -- $ 13,381 $ 204,167
Solon (4)
Market
President
------------------------------------------------------------------------------------------------------------------------------------
J. David 2006 $ 142,188 $ 27,075 -- -- -- -- $ 9,399 $ 178,662
Conterio (5)
EVP/Head of
Wealth
Management
------------------------------------------------------------------------------------------------------------------------------------
Ricky R 2006 $ 135,000 $ 17,152 -- $ 8,750 -- -- $ 5,340 $ 166,242
Parks (6)
Market
President
------------------------------------------------------------------------------------------------------------------------------------
(1) Information disclosed in this table for Mr. Daiber includes
compensation earned under the former Centrue in the first 10.5 months
of 2006. Mr. Daiber was granted 12,500 stock options in association
with his employment agreement in July of 2006. Options are subject to a
5-year graded vesting schedule. Stock option values are based on the
Black-Scholes model assuming a five-year option life. Mr. Daiber's All
19.
Other Compensation figure of $7,938 represents the dollar value of
employer contributions to his 401(k) account for 2006 for both the
pre-merger and post-merger entities.
(2) Mr. Yeoman's All Other Compensation figure represents $10,579 of
employer contributions to his 401(k) account and $4,884 of employer
contributions to his ESOP account.
(3) Mr. Stevenson was granted 7,500 stock options in association with his
employment agreement in July of 2006. Stock option values are based on
the Black-Scholes model assuming a five-year option life. Mr.
Stevenson's All Other Compensation figure represents $7,556 of employer
contributions to his 401(k) account; $3,310 of employer contributions
to his ESOP account and $178 of imputed income related to Mr.
Stevenson's split dollar bank-owned life insurance (BOLI) policy.
(4) Stock option values are based on the Black-Scholes model assuming a
five-year option life. Mr. Solon's All Other Compensation figure
represents $7,245 of employer contributions to his 401(k) account;
$3,229 of employer contributions to his ESOP account for 2006 and
$1,582 of imputed income related to Mr. Solon's split dollar bank-owned
life insurance (BOLI) policy.
(5) Mr. Conterio's All Other Compensation figure represents $6,468 of
employer contributions to his 401(k) account and $2,931 of employer
contributions to his ESOP account for 2006.
(6) Mr. Parks was granted 5,000 stock options in association with his
employment agreement in July of 2006. Stock option values are based on
the Black-Scholes model assuming a five-year option life. Mr. Parks'
All Other Compensation figure represents $5,340 of employer
contributions to his 401(k) account.
Employment Agreements and Other Arrangements
We are not a party to any employment agreements with our executive officers
named in the compensation table, except for the following:
The post-merger Centrue entered into employment agreements with Thomas A. Daiber
and Kurt R. Stevenson on June 30, 2006. Except as described below, each
agreement is substantially identical. Initially the agreements are effective for
a three-year term. On the second anniversary of the agreements' effective date,
the term will be extended an additional day so that the term is always one year,
unless either party gives written notice of non-renewal to the other party.
The agreement for Mr. Daiber provides for an annual base salary of not less than
$290,000. Additionally, Mr. Daiber will have the opportunity to receive an
annual performance bonus of up to 50% of his base salary. The agreement also
provided for the award of incentive stock options to Mr. Daiber, and on July 7,
2006 Mr. Daiber was awarded options to purchase equal to 12,500 shares of
Centrue stock after the merger. Mr. Daiber is entitled to not less than
twenty-three days of paid time off as well as benefits at least as favorable to
the benefits provided to all other employees.
The agreement for Mr. Stevenson provides for an annual base salary of $170,000.
Additionally, Mr. Stevenson will have the opportunity to receive an annual
performance bonus of up to 30% of his base salary. The agreement also provided
for the award of incentive stock options to Mr. Stevenson, and on July 7, 2006
Mr. Stevenson was awarded options to purchase equal to 7,500 shares of Centrue
stock after the merger. Mr. Stevenson is entitled to not less than twenty-three
days of paid time off as well as benefits at least as favorable to the benefits
provided to all other employees.
The employment agreements include customary provisions prohibiting the executive
from competing and other activities that would be harmful to the Company.
Payments under the employment agreements will be reduced to the extent necessary
to prevent any portion of the payments from being treated as a nondeductible
excess parachute payment under the federal tax laws.
20.
On January 31, 2007, the Company entered into employment agreements with Everett
J. Solon and Ricky R. Parks. Except as described below, each agreement is
substantially identical. Initially the agreements are effective for a two-year
term for Mr. Solon and a one-year term for Mr. Parks. On the first anniversary
of the date the agreements become effective, the term may be extended for one or
more additional years by resolution of the board of directors.
Mr. Solon's agreement specifies a minimum base salary of $152,000. He will have
the opportunity to receive annual performance bonuses of up to 25% of his base
salary and is entitled to not less than twenty-five days of paid time off as
well as benefits at least as favorable to the benefits provided to all other
employees.
Mr. Solon received a grant of 5,000 stock options to be vested over a five-year
period in association with his employment contract.
The employment agreement includes customary provisions prohibiting Mr. Solon
from competing and other activities that would be harmful to the Company.
Payments under the employment agreement will be reduced to the extent necessary
to prevent any portion of the payments from being treated as a nondeductible
excess parachute payment under the federal tax laws.
Mr. Parks' agreement specifies a minimum base salary of $142,000. He will have
the opportunity to receive annual performance bonuses of up to 25% of his base
salary and is entitled to not less than twenty-five days of paid time off as
well as benefits at least as favorable to the benefits provided to all other
employees.
Mr. Parks was granted 5,000 stock options in association with a previous
employment agreement in July of 2006, subsequently replaced by the January 2007
agreement. No additional options were issued with the January 2007 agreement for
Mr. Parks.
The employment agreement includes customary provisions prohibiting Mr. Parks
from competing and other activities that would be harmful to the Company.
Payments under the employment agreement will be reduced to the extent necessary
to prevent any portion of the payments from being treated as a nondeductible
excess parachute payment under the federal tax laws.
Descriptions of any potential post-termination payments are disclosed in the
section titled Other Potential Post-Employment Payments.
Compensation of the Chief Executive Officer
During the first 10 months of 2006, Scott A. Yeoman served as the chief
executive officer of UnionBancorp, Inc. Mr. Yeoman joined the organization on
June 13, 2005, and the terms of his employment, including an initial base salary
of $220,000, were established through negotiations with the board of directors.
This base salary remained in effect for Mr. Yeoman through his departure date in
October of 2006.
In July of 2006, a special bonus in the amount of $8,800 or 4% of his annual
salary was paid to Mr. Yeoman. He, along with other select officers, did not
receive an annual salary increase at the start of 2006. Instead, it was agreed
upon by management and the board of directors that these individuals would
receive a lump-sum equivalent to 4% of annual salary if the Company met its
financial targets for the first six months of 2006.
Since Mr. Yeoman terminated his employment prior to the end of the plan year,
Mr. Yeoman forfeited his 2006 annual bonus.
The long-term incentive vehicle historically used by the Company is stock
options. Eligible participants include all holding company directors and certain
officers of the Company, including the chief executive officer. The original
stock option plan was approved by shareholders in 1993, and the 2003 Stock
Option Plan was presented and approved by stockholders in 2003. Mr. Yeoman
received a stock option grant of 10,000 shares in July of 2006 as part of his
employment agreement in contemplation of the merger. Those options were
forfeited upon Mr. Yeoman's resignation, as explained in detail in the Summary
Compensation Table of Executive Compensation.
21.
Mr. Yeoman was eligible for participation in all Company-sponsored benefits
programs in 2006, including the Company's group health coverage, group-term life
insurance coverage, and Company-sponsored retirement programs including the
UnionBancorp, Inc. 410(k) and Profit Sharing Plan and the UnionBancorp, Inc.
Employee Stock Ownership Plan.
Mr. Yeoman did not receive any compensation associated with a car allowance, but
did receive country club dues in the amount of $1,450 during the time in which
he was actively employed with UnionBancorp in 2006.
Since Mr. Yeoman's resignation came less than one month before the merger
consummated, UnionBancorp did not name a chief executive officer during the
interim period.
Effective as of the merger date of November 13, 2006, Thomas A. Daiber was
appointed the president and chief executive officer for the new Centrue
Financial Corporation.
During the first 10 months of 2006, Mr. Daiber served as the chief executive
officer of the pre-merger Centrue. The terms of his employment, including a base
salary of $290,000, were established by the board of directors. This base salary
remained in effect with the post-merger Centrue and throughout the remainder of
2006.
Mr. Daiber was granted 12,500 stock options in association with his employment
agreement in July of 2006 in anticipation of the merger. Mr. Daiber received no
additional long-term incentives under the post-merger Centrue, as explained in
detail in the Summary Compensation Table of Executive Compensation.
Under both the pre-merger Centrue and the post-merger Centrue, Mr. Daiber was
eligible for participation in all Company-sponsored benefits programs in 2006,
including the Company's group health coverage, group-term life insurance
coverage, and Company-sponsored retirement programs including the Centrue
Financial Corporation 410(k) and Profit Sharing Plan.
Mr. Daiber did not receive any compensation associated with a car allowance or
country club dues.
In February of 2007, Mr. Daiber received a bonus for year 2006 performance in
the amount of $60,000.
The compensation and benefits package for 2006 for Mr. Yeoman and Mr. Daiber in
association with their time served in the capacity of chief executive officer of
the Company was approved by the Company's board of directors and was
commensurate with their knowledge, skills and abilities, as supported by their
professional experience and accomplishments, as well as the Board's belief in
each to successfully lead the organization. The executive & compensation
committee has reviewed all components of the total compensation package of the
chief executive officer and the other named executive officers in this proxy
statement and believes them to be reasonable and not excessive.
In addition to determining the initial compensation and benefits package for the
chief executive officer, annually, the executive & compensation committee
evaluates four primary areas of performance in determining the chief executive
officer's level of compensation. Changes to the base salary, cash bonus,
long-term rewards and other benefits of the chief executive officer are based
on:
o long-range strategic planning and implementation;
o the Company's financial performance
o compliance with regulatory requirements and relations with regulatory
agencies; and
o the individual's effectiveness of managing relationships with
stockholders and the board of directors.
22.
When evaluating the Company's financial performance, the executive &
compensation committee considers profitability, asset growth, asset quality and
risk management. The primary evaluation criteria are considered to be essential
to our long-term viability and are given equal weight in the evaluation.
Finally, the executive & compensation committee reviews compensation packages of
peer institution, as well as compensation surveys provided by independent third
parties, to ensure that the chief executive officer's compensation is
competitive and commensurate with his level of performance.
Grants of Plan-Based Awards
---------------------------------------------------------------------------------------------------------
All Other Option
Awards: Number
of Securities Exercise or Base Grant Date Fair
Underlying Price of Option Value of Stock and
Name Grant Date (4) Options Awards Option Awards
(#) ($/Sh) ($)
---------------------------------------------------------------------------------------------------------
Thomas A. Daiber(1) 07/07/2006 12,500 $ 19.58 $ 244,750
---------------------------------------------------------------------------------------------------------
Kurt R. Stevenson(2) 07/07/2006 7,500 $ 19.60 $ 147,000
---------------------------------------------------------------------------------------------------------
Ricky R. Parks(3) 07/07/2006 5,000 $ 19.58 $ 97,900
---------------------------------------------------------------------------------------------------------
(1) Mr. Daiber was granted 12,500 options in association with his
employment contract. The exercise price for Mr. Daiber's options
reflects the end of day close price of the pre-merger Centrue as of the
grant date, adjusted to reflect the 1.2 exchange ratio.
(2) Mr. Stevenson was granted 7,500 options in association with his
employment contract. The exercise price for Mr. Stevenson's options
reflects the end of day close price of the former UnionBancorp as of
the grant date.
(3) Mr. Parks was granted 5,000 options in association with his employment
contract. The exercise price for Mr. Parks' options reflects the end of
day close price of the former Centrue as of the grant date, adjusted to
reflect the 1.2 exchange ratio.
(4) All options granted on July 7, 2006 were qualified options subject to a
five-year graded vesting schedule in which options vest 20% per year.
23.
Outstanding Equity Awards at Fiscal Year-End
-------------------------------------------------------------------------------------------------------------------------------
Option Awards Stock Awards
-------------------------------------------------------------------------------------------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Equity Plan Market or
Incentive Awards: Payout
Number of Plan Number of Value of
Securities Number of Awards: Number Market Unearned Unearned
Underlying Securities Number of of Shares Value of Shares, Shares,
Unexercised Underlying Securities or Units Shares or Units or Units or
Options Unexercised Underlying of Stock Units of Other Other
Options Unexercised Option That Have Stock That Rights That Rights That
Exercisable Un- Unearned Exercise Option Not Have Not Have Not Have Not
(1) exercisable Options Price Expiration Vested Vested Vested Vested
Name (#) (#) (#) ($)(2) Date (#) ($) (#) ($)
-------------------------------------------------------------------------------------------------------------------------------
Thomas A. 24,000 --- --- $21.8800 10/09/2013 --- --- --- ---
Daiber 18,000 --- --- 22.9200 10/19/2014
14,400 --- --- 22.5000 12/29/2012
--- 12,500 --- 19.5800 07/07/2013
-------------------------------------------------------------------------------------------------------------------------------
Kurt R. 300 --- --- 13.0000 02/14/2007 --- --- --- ---
Stevenson 500 --- --- 18.5000 02/16/2008
500 --- --- 15.0000 02/11/2009
100 --- --- 16.0625 11/18/2009
2,935 --- --- 11.7500 02/15/2011
2,935 --- --- 14.2500 02/20/2012
2,392 --- --- 15.0900 12/19/2012
5,000 --- --- 20.3000 06/16/2015
--- 7,500 --- 19.6000 07/07/2013
-------------------------------------------------------------------------------------------------------------------------------
Everett J. 1,000 --- --- 13.0000 02/14/2007 --- --- --- ---
Solon 3,000 --- --- 18.5000 02/16/2008
3,500 --- --- 15.0000 02/11/2009
100 --- --- 16.0625 11/18/2009
3,196 --- --- 11.7500 02/15/2011
4,076 --- --- 14.2500 02/20/2012
2,935 --- --- 15.0900 12/19/2012
5,000 --- --- 20.3000 06/16/2015
-------------------------------------------------------------------------------------------------------------------------------
Ricky R. 2,400 --- --- 23.3100 01/20/2011 --- --- --- ---
Parks 1,200 --- --- 22.9200 10/19/2011
5,400 --- --- 21.7400 09/01/2015
--- 5,000 --- 19.5800 07/07/2013
-------------------------------------------------------------------------------------------------------------------------------
(1) All outstanding stock options for the pre-merger Centrue and the
pre-merger UnionBancorp were vested up to 100% at the time of the
merger with the exception of those options issued in July of 2006
associated with employment contracts. Options issue in July of 2006 for
Messrs. Daiber, Stevenson and Parks are subject to a five-year graded
vesting schedule in which options vest at 20% per year beginning on
November 13, 2007 the first anniversary of the merger.
(2) Exercise prices for stock options issued by the pre-merger Centrue have
been adjusted to reflect the 1.2 exchange ratio.
24.
Option Exercises and Stock Vested
-----------------------------------------------------------------------------------------------------
Option Awards Stock Awards
-----------------------------------------------------------------------------------------------------
Name Number of Number of
Shares Shares
Acquired Value Realized Acquired Value Realized
on Exercise on Exercise on Vesting on Vesting
(#) ($) (#) ($)
-----------------------------------------------------------------------------------------------------
Thomas A. Daiber (1) --- --- 300 $ 6,375
2,400 45,080
4,800 87,400
-----------------------------------------------------------------------------------------------------
Everett J. Solon 1,350 $ 19,521 --- ---
-----------------------------------------------------------------------------------------------------
(1) Mr. Daiber's vested shares are reflective of the number of shares held
with the post-merger Centrue, as adjusted to reflect the 1.2 exchange
ratio. Mr. Daiber's restricted shares were vested to 100% on the
merger date.
Director Compensation
------------------------------------------------------------------------------------------------------------------
Change in
Pension
Fees Non-Equity Value and
Earned or Incentive Nonqualified
Paid in Stock Option Plan Deferred All Other
Cash Awards Awards Compensation Compensation Compensation Total
Name ($) (1) ($) ($) (2) ($) Earnings ($) ($)
------------------------------------------------------------------------------------------------------------------
Richard J. Berry $ 28,500 --- $ 36,033 --- --- --- $ 64,533
------------------------------------------------------------------------------------------------------------------
Walter E. Breipohl $ 33,500 --- $ 36,033 --- --- --- $ 69,533
------------------------------------------------------------------------------------------------------------------
Robert J. Doty (3) $ 13,500 --- $ 48,258 --- --- --- $ 61,758
------------------------------------------------------------------------------------------------------------------
Randall E. Ganim $ 23,000 --- $ 29,340 --- --- --- $ 52,340
------------------------------------------------------------------------------------------------------------------
Michael A. Griffith $ 133,523 --- $ 29,340 --- --- --- $162,863
------------------------------------------------------------------------------------------------------------------
Michael J. Hejna $ 102,000 --- $ 29,340 --- --- --- $131,340
------------------------------------------------------------------------------------------------------------------
Dennis J. McDonnell $ 21,000 --- $ 36,033 --- --- --- $ 57,033
------------------------------------------------------------------------------------------------------------------
I.J. Reinhardt (3) $ 22,750 --- $ 48,258 --- --- --- $ 71,008
------------------------------------------------------------------------------------------------------------------
John A. Shinkle $ 18,750 --- $ 36,033 --- --- --- $ 54,783
------------------------------------------------------------------------------------------------------------------
Mark L. Smith $ 101,046 --- $ 29,340 --- --- --- $130,386
------------------------------------------------------------------------------------------------------------------
Scott C. Sullivan $ 20,250 --- $ 36,033 --- --- --- $ 56,283
------------------------------------------------------------------------------------------------------------------
John A. Trainor (3) $ 11,500 --- $ 48,258 --- --- --- $ 59,758
------------------------------------------------------------------------------------------------------------------
25.
------------------------------------------------------------------------------------------------------------------
Change in
Pension
Fees Non-Equity Value and
Earned or Incentive Nonqualified
Paid in Stock Option Plan Deferred All Other
Cash Awards Awards Compensation Compensation Compensation Total
Name ($) (1) ($) ($) (2) ($) Earnings ($) ($)
------------------------------------------------------------------------------------------------------------------
Wesley E. Walker (4) $ 16,000 --- --- --- --- --- $ 16,000
------------------------------------------------------------------------------------------------------------------
(1) Represents compensation for all bank and holding company board and
committee meetings and annual retainers. Compensation for Messrs.
Ganim, Griffith, Hejna, and Smith includes all compensation earned
under the former Centrue in the first 10.5 months of 2006. Includes
deferrals of director fees earned in 2006 pursuant to the pre-merger
Centrue directors deferred compensation plan paid out in Centrue stock
upon the change of control. Pursuant to the terms of that plan, each
director's full balance was paid in stock in conjunction with the
merger. These amounts, which include amounts earned in both 2006 and
prior plan years, equal 877 post-merger shares for Mr. Ganim, 6,577
post-merger shares for Mr. Griffith, 8,128 post-merger shares for Mr.
Hejna and 6,624 post-merger shares for Mr. Smith. All compensation for
Mr. Walker was paid by the former Centrue.
(2) Stock option values are based on the Black-Scholes model assuming a
five-year option life. Stock option awards for Messrs. Ganim, Griffith,
Hejna, and Smith were issued by the former Centrue pre-merger and
reflect a 1.2 multiple in converting former Centrue stock to
UnionBancorp stock at the merger date. Messrs. Doty, Reinhart and
Trainor each received 2,500 stock options upon retirement immediately
vested for recognition of their Board service to UnionBancorp. All
unvested options for the directors of the former UnionBancorp,
including those for Messrs. Berry, Breipohl, McDonnell, Shinkle,
Sullivan, Doty, Reinhart and Trainor, became immediately and fully
exercisable in conjunction with the merger.
(3) Messrs. Doty, Reinhart and Trainor retired from the UnionBancorp board
immediately prior to the merger date.
(4) Mr. Walker retired from the former Centrue board on April 20, 2006.
Other Potential Post-Employment Payments
The agreements for Mr. Daiber and Mr. Stevenson provide that in the event of a
termination of the executive's employment without cause or by the executive due
to constructive discharge prior to the end of the term of the agreement, the
executive will be entitled to certain severance benefits including payments of
the executive's annual compensation for the greater of twenty-four months or the
remaining period left in the employment agreement's term. Annual compensation is
the executive's base salary plus the performance bonus for the most recent
performance period. The executive would also be entitled to receive
reimbursement for premiums the executive pays for the continuation of medical
benefits for the executive and the executive's dependents.
During the twelve months following a change of control, if the executive
voluntarily terminates his employment due to constructive discharge or if the
Company terminates the executive's employment for any reason other than cause,
the executive will be entitled to receive a lump sum payment equal to three
times the executive's annual compensation, which is the sum of the executive's
base salary and the performance bonus for the most recent performance period,
plus reimbursement for premiums the executive pays for the continuation of
medical benefits for the executive and the executive's dependents.
26.
At December 31, 2006, if the Company would have paid out Mr. Daiber under his
change of control provision, he would have been entitled to $870,000 (reflects
three years) in base salary, $180,000 (reflects three years; estimates based off
of earned bonus in 2006) in bonus and approximately $39,144 in COBRA
continuation premiums (reflects three years; estimates based off of current
premium levels) for Mr. Daiber's family for health, dental and vision benefits
for a period of 36 months plus normal accruals paid upon termination of
employment. In addition, all outstanding stock options and awards would have
become fully and immediately exercisable.
At December 31, 2006, if the Company would have paid out Mr. Daiber under his
constructive discharge or termination without cause provision, compensation and
benefits would have been substantially similar other than that they would have
been reduced by the six week period in which the contract was in force for Mr.
Daiber from the merger date through year-end.
At December 31, 2006, if the Company would have paid out Mr. Stevenson under his
change of control provision, he would have been entitled to $510,000 (reflects
three years) in base salary, $178,215 (reflects three years; estimates based off
of earned bonus in 2006) in bonus and approximately $39,144 in COBRA
continuation premiums (reflects three years; estimates based off of current
premium levels) for Mr. Stevenson's family for health, dental and vision
benefits for a period of 36 months plus normal accruals paid upon termination of
employment. In addition, all outstanding stock options and awards would have
become fully and immediately exercisable.
At December 31, 2006, if the Company would have paid out Mr. Stevenson under his
constructive discharge or termination without cause provisions, compensation and
benefits would have been substantially similar other than that they would have
been reduced by the six week period in which the contract was in force for Mr.
Stevenson from the merger date through year-end.
During the twelve months following a change of control, if Mr. Solon voluntarily
terminates his employment due to constructive discharge or if the Company
terminates his employment for any reason other than cause, Mr. Solon will be
entitled to receive a lump sum payment equal to two times his annual
compensation, which is the sum of his base salary and the performance bonus for
the most recent performance period, plus reimbursement for premiums he pays for
the continuation of medical benefits for him and his dependents.
At December 31, 2006, if the Company would have paid out Mr. Solon under his
constructive discharge, termination without cause or change of control
provision, he would have been entitled to $289,000 in base salary (reflects two
years), $69,360 (reflects two years; estimates based off of earned bonus in
2006) in bonus and approximately $26,096 in COBRA continuation premiums
(reflects two years; estimates based off of current premium levels) for Mr.
Solon's family for health, dental and life benefits for a period of 24 months
plus normal accruals paid upon termination of employment. In addition, all
outstanding stock options and awards would have become fully and immediately
exercisable.
During the twelve months following a change of control, if Mr. Parks voluntarily
terminates his employment due to constructive discharge or if the Company
terminates his employment for any reason other than cause, Mr. Parks will be
entitled to receive a lump sum payment equal to one times his annual
compensation, which is the sum of his base salary and the performance bonus for
the most recent performance period, plus reimbursement for premiums he pays for
the continuation of medical benefits for him and his dependents.
At December 31, 2006, if the Company would have paid out Mr. Parks under his
constructive discharge, termination without cause or change of control
provision, he would have been entitled to $135,000 in base salary, $17,152 in
bonus (estimated based off of earned bonus in 2006) in bonus and approximately
$13,048 in COBRA continuation premiums (estimated based off of current premium
levels) for Mr. Parks' family for health, dental and life benefits for a period
of 12 months plus normal accruals paid upon termination of employment. In
addition, all outstanding stock options and awards would have become fully and
immediately exercisable.
27.
On May 23, 2005, the Company entered into a Change of Control Agreement with J.
David Conterio. The agreement provides that if, within two years after a change
in control occurs, Mr. Conterio's employment is terminated without "good cause,"
then he shall receive a cash payment equal to one times his salary. For a period
of one year, Mr. Conterio would be allowed to participate in any benefit plans
of the Company or bank which provide health (including medical and dental), life
or disability insurance, or similar coverage to the extent permitted by law and
the applicable benefit plan. Payments under the employment agreement will be
reduced to the extent necessary to prevent any portion of the payments from
being treated as a nondeductible excess parachute payment under the federal tax
laws.
At December 31, 2006, if the Company would have paid out Mr. Conterio under his
change of control provision, he would have been entitled to $142,500 in base
salary plus normal accruals paid upon termination of employment.
TRANSACTIONS WITH MANAGEMENT
The Company's audit committee charter requires the review of all related party
transactions, other than Regulation O transactions, to the extent required by
the rules of the Securities and Exchange Commission and NASDAQ (or by the rules
and regulations of any other exchange or national market on which the Company's
common stock is quoted or listed for trading).
Several of our directors and executive officers (including their affiliates,
families and companies in which they are principal owners, officers or
directors) were loan customers of, and had other transactions with, us and our
subsidiaries in the ordinary course of business. These loans and lines of credit
were made in the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
transactions with other persons and did not involve more than the normal risk of
collectibility or present other unfavorable features. During 2006, the law firm
of Myers, Berry, O'Conor & Kuzma, Ltd. received $115,272 in fees attributable to
Company related matters in which the law firm provided legal services. Richard
J. Berry, a director of Centrue Financial Corporation and Centrue Bank, is a
principal of that firm. During 2006, the Gundaker Commercial Group received
$157,000 in broker fees associated with the sale of an OREO property. Michael J.
Hejna, a director of Centrue Financial Corporation and Centrue Bank, is a
principal of that firm.
ACCOUNTANT FEES
Audit Fees
Audit fees and expenses billed to the Company by Crowe Chizek and Company LLC
for the audit of the Company's financial statements for the fiscal years ended
December 31, 2006, including fees related to the merger, and December 31, 2005,
and for the review of the Company's financial statements included in the
Company's quarterly reports on Form 10-Q, are as follows:
2006 2005
---- ----
$185,500 $118,500
Audit Related Fees
Audit related fees and expenses billed to the Company by Crowe Chizek and
Company LLC for fiscal years 2006 and 2005 for services related to the
performance of the audit or review of the Company's financial statements and
fees related to the merger that were not included under the heading "Audit
Fees", are as follows:
2006 2005
---- ----
$134,630 $ 14,000
Tax Fees
Tax fees and expenses billed to the Company for fiscal years 2006 and 2005 for
services related to tax compliance, tax advice and tax planning, consisting
primarily of preparing the Company's federal and state income tax returns for
the previous fiscal periods and inclusive of expenses are as follows:
2006 2005
---- ----
$ 19,000 $ 27,600
28.
All Other Fees
Fees and expenses billed to the Company for fiscal years 2006 and 2005 for all
other services, which primarily consisted of the audit of the benefit plans are
as follows:
2006 2005
---- ----
$ 65,900 $ 45,165
The audit committee, after consideration of the matter, does not believe that
the rendering of these services by Crowe Chizek to be incompatible with
maintaining its independence as our principal accountant. In accordance with
Section 10A(i) of the Exchange Act, before Crowe Chizek and Company LLC is
engaged by us to render audit or non-audit services, the engagement is approved
by our audit committee. None of the audit-related, tax and other services
described in the table above were required to be approved by the audit committee
pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.
The audit committee is responsible for reviewing and pre-approving any non-audit
services to be performed by the Company's independent auditors. The audit
committee has delegated its pre-approval authority to the chairman of the audit
committee to act between meetings of the audit committee. Any pre-approval given
by the chairman of the audit committee pursuant to this delegation is presented
to the full audit committee at its next regularly scheduled meeting. The audit
committee or chairman of the audit committee reviews and, if appropriate,
approves non-audit service engagements, taking into account the proposed scope
of the non-audit services, the proposed fees for the non-audit services, whether
the non-audit services are permissible under applicable law or regulation and
the likely impact of the non-audit services on the independence of the
independent auditors. Since the effective date of the SEC rules requiring
pre-approval of non-audit services on May 6, 2003, each new engagement of the
Company's independent auditors to perform non-audit services has been approved
in advance by the audit committee or the chairman of the audit committee
pursuant to the foregoing procedures.
29.
AUDIT COMMITTEE REPORT
The incorporation by reference of this proxy statement into any document filed
with the Securities and Exchange Commission by us shall not be deemed to include
the following report unless the report is specifically stated to be incorporated
by reference into such document.
The audit committee assists the board in carrying out its oversight
responsibilities for our financial reporting process, audit process and internal
controls. The committee also reviews the audited financial statements and
recommends to the board that they be included in our annual report on Form 10-K.
The committee is comprised solely of independent directors. The current charter
is available on the company's website at www.centrue.com.
Management is responsible for the preparation, presentation and integrity of our
financial statements, accounting and financial reporting principles, internal
controls, and procedures designed to ensure compliance with accounting
standards, applicable laws and regulations. Crowe Chizek and Company LLC, our
independent registered public accounting firm, is responsible for performing an
independent audit of the financial statements in accordance with standards of
the Public Company Accounting Oversight Board. Centrue Financial Corporation
outsources the internal audit function to a third party that reports directly to
the audit committee and management. This third party is responsible for
objectively reviewing and evaluating the adequacy, effectiveness and quality of
our system of internal controls relating to the reliability and integrity of our
financial information. The audit committee has ultimate authority and
responsibility to select, evaluate and, when appropriate, replace our
independent auditors.
The audit committee has reviewed and discussed our audited financial statements
for the fiscal year ended December 31, 2006 with our management and Crowe Chizek
and Company LLC, our independent registered public accounting firm. The
committee has also discussed with Crowe Chizek and Company LLC the matters
required to be discussed by SAS 61 (Codification for Statements on Auditing
Standards) as well as having received and discussed the written disclosures and
the letter from Crowe Chizek and Company LLC required by Independence Standards
Board Statement No. 1 (Independence Discussions with Audit Committees). Based on
the review and discussions with management and Crowe Chizek and Company LLC, the
committee has recommended to the board that the audited financial statements be
included in our annual report on Form 10-K for the fiscal year ending December
31, 2006 for filing with the Securities and Exchange Commission.
Audit Committee
Mark L. Smith, Chair
Walter E. Breipohl
Randall E. Ganim
Scott C. Sullivan
30.
Audit Committee Financial Expert
Prior to the merger, the membership of the audit committee did not include a
director who qualifies for designation as an "audit committee financial expert".
Subsequent to the merger, the board of directors has determined that two of the
four audit committee members, Messrs. Ganim and Smith, are qualified for
designation as "audit committee financial experts". Both directors are
independent under the listing standards of the Nasdaq Stock Market.
STOCKHOLDER PROPOSALS FOR 2008 ANNUAL MEETING
For inclusion in our proxy statement and form of proxy relating to the 2008
annual meeting of stockholders, stockholder proposals must be received by us on
or before November 24, 2007. In order to be presented at such meeting, notice of
the proposal must be received by Centrue Financial Corporation on or before
March 24, 2008, and must otherwise comply with our bylaws.
"HOUSEHOLDING" OF PROXY MATERIALS
In 2000, the Securities and Exchange Commission adopted rules that permit
companies and intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements, prospectuses and annual reports with respect
to two or more security holders sharing the same address by delivering a single
copy of proxy statements, prospectuses and annual reports, as the case may be,
addressed to those security holders. This process, which is commonly referred to
as "householding," potentially means extra convenience for security holders and
cost savings for companies.
This year, a number of brokers with accountholders who are Centrue Financial
Corporation stockholders will be "householding" our proxy materials. As
indicated in the notice previously provided by these brokers to Centrue
Financial Corporation stockholders, a single proxy statement and Form 10-K
annual report will be delivered to multiple stockholders sharing an address
unless contrary instructions have been received from an affected stockholder.
Once you have received notice from your broker or the Company that they will be
"householding" communications to your address, "householding" will continue
until you are notified otherwise or until you revoke your consent. If, at any
time, you no longer wish to participate in "householding" and would prefer to
receive a separate proxy statement and Form 10-K annual report, please notify
your broker, direct your written request to Centrue Financial Corporation,
Investor Relations, 122 W. Madison Street, Ottawa, IL 61350 or contact Investor
Relations at (815) 431-2720.
Stockholders who currently receive multiple copies of the proxy statement and
Form 10-K annual report at their address and would like to request
"householding" of their communications should contact their broker or, if a
stockholder is a direct holder of Centrue Financial Corpration shares, they
should submit a written request to Computershare Investor Services, the
Company's transfer agent, at 2 North LaSalle Street, Chicago, IL 60602.
OTHER MATTERS
We do not intend to present any other business at the meeting and know of no
other matters which will be presented. However, if any other matters come before
the meeting, it is the intention of the persons named in the accompanying proxy
to vote in accordance with their best judgment on those matters. A
representative of our independent auditors, Crowe Chizek and Company LLC, is
expected to attend the annual meeting and will be available to respond to
appropriate questions and to make a statement if he or she so desires.
Your proxy is solicited by the board of directors, and we will pay the cost of
solicitation. In addition to soliciting proxies by use of the mail, officers,
directors and regular employees of Centrue Financial Corporation or our
subsidiaries, acting on our behalf, may solicit proxies by telephone, telegraph
or personal interview. We will, at our expense, upon the receipt of a request
from brokers and other custodians, nominees and fiduciaries, forward proxy
soliciting material to the beneficial owners of shares held of record by such
persons.
31.
FAILURE TO INDICATE CHOICE
If any stockholder fails to indicate a choice with respect to any of the
proposals on the proxy for the annual meeting, the shares of such stockholder
shall be voted FOR the nominees listed under proposal 1 and FOR the amended and
restated 2003 Stock Option Plan under proposal 2.
By Order of the Board of Directors
/s/ THOMAS A. DAIBER
-----------------------------
Thomas A. Daiber
President and
Chief Executive Officer
Ottawa, Illinois
March 23, 2007
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
32.
EXHIBIT A
---------
CENTRUE FINANCIAL CORPORATION
AMENDED AND RESTATED
2003 STOCK OPTION PLAN
----------------------
1. Purpose of the Plan
-------------------
The Plan is intended to provide a means whereby key
policy-making directors and employees of the Company and its Subsidiaries may
sustain a sense of proprietorship and personal involvement in the continued
development and financial success of the Company, and to encourage them to
remain with and devote their best efforts to the business of the Company,
thereby advancing the interests of the Company and its stockholders.
Accordingly, the Company may permit certain directors and employees to acquire
common stock of the Company or otherwise participate in the financial success of
the Company or to be awarded shares of common stock of the Company, on the terms
and conditions established herein. This Plan, as amended and restated, will
become effective on the date of its adoption by the Board, provided the amended
and restated Plan is approved by the shareholders of the Company (excluding
holders of shares of Option Stock and Restricted Stock issued by the Company
under this Plan) within twelve months after that date. If the Plan is not
approved by the shareholders of the Company, any Restricted Stock awards granted
under this Plan will be rescinded and void and any Options granted shall be
valid only if such Options are granted pursuant to the terms and conditions of
the Plan prior to its restatement, as approved by the shareholders of the
Company on April 22, 2003. This Plan will remain in effect until it is
terminated by the Board under Section 12 hereof, except that no Options or
Restricted Stock will be granted after December 19, 2012, which is the tenth
anniversary of the date of this Plan's original adoption by the Board.
2. Definitions Unless the context otherwise requires,
the following defined terms (together with other capitalized terms defined
elsewhere in this Plan) will govern the construction of this Plan, and of any
Stock Option Agreements and Restricted Stock Agreements entered into pursuant to
this Plan. Notwithstanding the foregoing, the terms and conditions of all Stock
Option Agreements entered into prior to the Effective Date of this Plan, as
amended and restated, shall be governed by the terms and conditions of the Plan
as in effect on the date such Stock Option Agreements were effective.
a. "10% Shareholder" means a person who owns, either
directly or indirectly by virtue of the ownership attribution provisions set
forth in Section 424(d) of the Code at the time he or she is granted an Option,
Stock possessing more than 10% of the total combined voting power or value of
all classes of Stock of the Company and/or of its Subsidiaries.
b. "1933 Act" means the federal Securities Act of 1933,
as amended.
c. "1934 Act" means the federal Securities Exchange Act
of 1934, as amended.
d. "Board" means the Board of Directors of the Company.
e. "Cause" means (i) the Participant's material breach
of an employment agreement, if any, between the Participant and the Company or
one of its Subsidiaries, (ii) the Participant's breach of a Confidential
Information Agreement between the Participant and the Company or one of its
Subsidiaries, (iii) the breach of any non-disclosure or non-compete agreement
between the Participant and the Company or one of its Subsidiaries, or (iv) the
Participant engages in illegal conduct or misconduct which materially and
demonstrably injures the Company. For purposes of determining whether "Cause"
exists, no act or failure to act, on the Participant's part shall be considered
"willful," unless it is done, or omitted to be done, by the Participant in bad
faith or without reasonable belief by the Participant that his action or
omission was in the best interests of the Company.
f. A "Change in Control" of the Company shall have
occurred:
(i) on the scheduled expiration date of a tender
offer by, or exchange offer by any
corporation, person, other entity or group
(other than the Company, any of its wholly
owned Subsidiaries or a qualified retirement
plan of the Company or one of its
Subsidiaries, or one or more persons who are
beneficial owners, as determined under Rule
13d-4 under the 1934 Act , of 10% or more of
33.
the Voting Stock of the Company on the date
on which the Plan is approved by the Board),
to acquire Voting Stock of the Company if:
(1) after giving effect to such offer
such corporation, person, other
entity or group would own 50% or
more of the Voting Stock of the
Company;
(2) there shall have been filed
documents with the Securities and
Exchange Commission in connection
therewith (or, if no such filing is
required, public evidence that the
offer has already commenced); and
(3) such corporation, person, other
entity or group has secured all
required regulatory approvals to own
or control 50% or more of the Voting
Stock of the Company;
(ii) if the shareholders of the Company approve a
definitive agreement to merge or consolidate
the Company with or into another corporation
in a transaction in which neither the
Company nor any of its wholly owned
Subsidiaries will be the surviving
corporation, or to sell or otherwise dispose
of all or substantially all of the Company's
assets to any corporation, person, other
entity or group (other than the Company or
any of its wholly owned Subsidiaries), and
such definitive agreement is consummated; or
(iii) if any corporation, person, other entity or
group (other than the Company, any of its
wholly owned Subsidiaries or a qualified
retirement plan of the Company or one of its
Subsidiaries, or one or more persons who are
beneficial owners, as determined under Rule
13d-4 under the 1934 Act , of 10% or more of
the Voting Stock of the Company on the date
on which the Plan is approved by the Board )
becomes the beneficial owner, as determined
under Rule 13d-4 under the 1934 Act, of
Stock representing 50% or more of the Voting
Stock of the Company.
g. "Code" means the Internal Revenue Code of 1986, as
amended (references herein to Sections of the Code are intended to refer to
Sections of the Code as enacted at the time of this Plan's adoption by the Board
and as subsequently amended, or to any substantially similar successor
provisions of the Code resulting from recodification, renumbering or otherwise).
h. "Committee" means the Centrue Financial Corporation
Executive and Compensation Committee of the Company's Board of Directors. The
Committee shall be comprised solely of not less than 3 Non-Employee Directors.
In the alternative, the Board of Directors may, in its discretion, choose to act
as the Committee for the Plan and the Committee, whether or not comprised solely
of Non-Employee Directors shall act as an advisory committee.
i. "Company" means Centrue Financial Corporation, an
Illinois corporation and its successor or successors.
j. "Confidential Information Agreement" means a written
agreement between the Company or one of its Subsidiaries and the Eligible Person
establishing the duty of the Eligible Person not to disclose information that is
proprietary to the Company or one of its Subsidiaries and establishing the
sanctions applicable in the event the Eligible Person breaches the Agreement.
k. "Disability" has the same meaning as "permanent and
total disability," as defined in Section 22(e)(3) of the Code.
l. "Disqualifying Disposition" means a disposition, as
defined in Section 424(c)(1) of the Code, of Option Stock acquired pursuant to
an ISO, which occurs either:
(i) within two years after the underlying Option
is granted; or
34.
(ii) within one year after the underlying Option
is exercised.
Under Section 424(c)(1) of the Code, the term "disposition"
includes a sale, exchange, gift, or a transfer of legal title, but does not
include (A) a transfer from a decedent to an estate or a transfer by bequest or
inheritance, (B) an exchange to which Section 354, 355, 356, or 1036 (or so much
of Section 1031 as relates to Section 1036) applies, or (C) a mere pledge or
hypothecation.
m. "Eligible Person" means any person who, at a
particular time, is an employee, officer or member of the Board of Directors of
the Company or its Subsidiaries. With respect to ISOs only, this definition does
not include any person who has been on leave of absence for greater than 90
days, unless re-employment is guaranteed by law or contract.
n. "Fair Market Value" means, with respect to Option
Stock and Restricted Stock as of the date in question, the market price per
share of such Stock determined by the Committee, consistent with the
requirements of Section 422 of the Code and to the extent consistent therewith:
(i) if the Stock was principally traded on an
exchange or market in which prices are
reported on a bid and asked basis, the
average of the mean between the bid and
asked price for the Stock at the close of
trading for the 5 consecutive trading days
immediately preceding the date in question;
(ii) if the Stock was principally listed on a
national securities exchange, the closing
price of the Stock for the trading day
immediately preceding the date in question
as reported in a publicly available
newspaper or publication deemed reliable by
the Committee, or if there is no closing
price reported on such day, the reporting
price on the next previous trading day for
which a closing price is reported in such
newspaper or publication; or
(iii) if neither of the foregoing provisions is
applicable, then the Committee shall
determine Fair Market Value in good faith on
such basis as it deems appropriate; in the
case of ISOs, "good faith" shall be
determined in accordance with Section 422 of
the Code.
o. "ISO" or "Incentive Stock Option" means an Option,
which is subject to certain holding requirements and tax benefits, and which
qualifies as an "incentive stock option," as defined in Section 422 of the Code.
p. "New Employer" shall mean the Participant's employer,
or the parent or a Subsidiary of such employer, immediately following a Change
in Control.
q. "Non-Employee Director" means a director who:
(i) is not currently an officer of the Company
or its Subsidiaries, or otherwise currently
employed by the Company or its Subsidiaries;
(ii) does not receive compensation, either
directly or indirectly, from the Company or
its Subsidiaries, for services rendered as a
consultant or in any capacity other than as
a director, except for an amount that does
not exceed the dollar amount for which
disclosure would be required in the
Company's proxy statement;
(iii) does not possess an interest in any other
transaction for which disclosure would be
required in the Company's proxy statement;
and
(iv) is not engaged in a business relationship
for which disclosure would be required in
the Company's proxy statement.
35.
r. "NSO" means any Option granted under this Plan
whether designated by the Committee as a "non-qualified stock option," a
"non-statutory stock option" or otherwise, other than an Option designated by
the Committee as an ISO. The term "NSO" also includes any Option designated by
the Committee as an ISO but which, for any reason, fails to qualify as an ISO
pursuant to Section 422 of the Code and the rules and regulations thereunder.
s. "Option" means a right granted pursuant to this Plan
entitling the Participant to acquire shares of Stock issued by the Company.
t. "Option Agreement" means an agreement between the
Company and an Eligible Person to evidence the terms and conditions of the
issuance of Options hereunder.
u. "Option Price" with respect to any particular Option
means the exercise price at which the Participant may acquire each share of the
Option Stock called for under such Option.
v. "Option Stock" means Stock issued or issuable by the
Company pursuant to the valid exercise of an Option.
w. "Participant" means an Eligible Person to whom an
Option or award of Restricted Stock is granted hereunder, and any transferee of
an Option received pursuant to a Transfer authorized under this Plan.
x. "Plan" means this Centrue Financial Corporation 2003
Stock Option Plan.
y. "Retirement" means the Participant's voluntary
cessation of employment or service as a director following the attainment of age
55 and the completion of 7 years of service.
z. "Restricted Stock" means Stock issued or issuable by
the Company which is subject to the restrictions imposed in Section 8 of this
Plan.
aa. "Restricted Stock Agreement" means an agreement
between the Company and an Eligible Participant to evidence the terms and
conditions of the issuance of Restricted Stock hereunder.
bb. "Restricted Stockholder" means an Eligible
Participant to whom any Restricted Stock is issued hereunder, and any transferee
of such Stock received pursuant to a Transfer required by law.
cc. "SARs" shall mean stock appreciation rights entitling
the grantee to receive cash or shares of Stock having a fair market value equal
to the appreciation in market value of a stated number of shares of Stock from
the date of grant, or in the case of rights granted in tandem with or by
reference to an Option granted prior to the grant of such rights, from the date
of grant of the related Option to the date of exercise.
dd. "Stock" means shares of the Company's common stock.
ee. "Subsidiary" has the same meaning as "Subsidiary
Corporation" as defined in Section 424(f) of the Code.
ff. "Tax Withholding Liability" means all federal and
state income taxes, social security tax, medicare tax and any other taxes
applicable to the income arising from a transaction involving Options required
by applicable law to be withheld by the Company. The Committee shall retain the
discretion to determine the amount of Tax Withholding Liability.
gg. "Transfer," with respect to Option Stock and
Restricted Stock, includes, without limitation, a voluntary or involuntary sale,
assignment, transfer, conveyance, pledge, hypothecation, encumbrance, disposal,
loan, gift, attachment or levy of such Stock, including without limitation an
assignment for the benefit of creditors of the Participant, a transfer by
operation of law, such as a transfer by will or under the laws of descent and
distribution, an execution of judgment against the Option Stock or the
acquisition of record or beneficial ownership thereof by a lender or creditor, a
transfer pursuant to any decree of divorce, dissolution or separate maintenance,
any property settlement, any separation agreement or any other agreement with a
spouse (except for estate planning purposes) under which a part or all of the
36.
shares of Option Stock are transferred or awarded to the spouse of the
Participant or are required to be sold, or a transfer resulting from the filing
by the Participant of a petition for relief, or the filing of an involuntary
petition against such Participant, under the bankruptcy laws of the United
States or of any other nation.
hh. "Voting Stock" shall mean those shares of the Company
Stock entitled to vote generally in the election of directors.
3. Administration of the Plan
--------------------------
Subject to review by the Board, the Committee shall select the
directors and employees from among those eligible to whom Options shall be
granted or to whom Restricted Stock shall be awarded under the Plan, to
establish the number of shares of Stock that will be subject to Options granted
to such director or employee and the time when certificates for such Option
Stock shall be issued, to establish the number of shares of Stock that shall be
subject to awards of Restricted Stock to a director or employee and to prescribe
the legend to be affixed to the certificate representing such Stock that is
subject to a Stock Option or Restricted Stock award. Subject to review by the
Board, the Committee shall also select the directors and employees from among
those eligible to whom rights to participate in the appreciation of Option Stock
shall be granted. Subject to review by the Board, the Committee shall have the
authority to select the directors and employees from among those eligible to
whom SARs may be granted and the terms of such SARs. The Committee is
authorized, subject to Board approval, to interpret the Plan and may from time
to time adopt such rules, regulations, forms and agreements, not inconsistent
with the provisions of the Plan, as it may deem advisable to carry out the Plan.
The Board shall independently review and approve all decisions made by the
Committee in administering the Plan.
4. Shares Subject to the Plan
--------------------------
Subject to Sections 10 and 11 of this Plan, the aggregate
number of shares of Option Stock or Restricted Stock that may be issued and
outstanding pursuant to the exercise of Options or the award of Restricted Stock
under this Plan (the "Stock Pool") will not exceed 570,000 shares. The maximum
number of shares of Option Stock which may be subject to one or more awards to a
single Eligible Person shall not exceed 200,000 shares in the aggregate. Shares
of Option Stock and Restricted Stock that would have been issuable pursuant to
Options, but that are no longer issuable because all or part of those Options
have terminated, been withheld as payment in part or in full of the exercise
price for Options, withheld for the payment of taxes or expired may also be
added back into the Stock Pool to be available for issuance.
5. Type of Stock Options.
---------------------
Except as otherwise provided herein, the Committee
will designate any Option granted hereunder either as an ISO or as an NSO. To
the extent that the Fair Market Value of Stock, determined at the time the
Option is granted, with respect to which all ISOs are exercisable for the first
time by any individual during any calendar year (pursuant to this Plan and all
other plans of the Company and/or its Subsidiaries) exceeds $100,000, such
Option will be treated as an NSO.
6. Terms of Stock Option Agreements. Each Option granted
pursuant to this Plan will be evidenced by an Option Agreement between the
Company and the Eligible Person to whom such Option is granted, in form and
substance satisfactory to the Committee in its sole discretion, consistent with
this Plan. Apart from making copies of this Plan and Option Agreements under
this Plan available to the Eligible Person, the Company shall have no obligation
to explain the terms and conditions of the Plan or Option Agreements, including,
not by way of limitation, the terms of vesting, the available methods for
exercising Options and the timing of an Option's expiration. Without limiting
the foregoing, the following terms and conditions will be considered a part of
each Option Agreement (unless otherwise stated therein):
a. Covenants of Participant. Nothing contained in this
Plan, any Option Agreement or in any other agreement executed in connection with
the granting of an Option under this Plan will confer upon any Participant any
right with respect to the continuation of his or her status as an employee,
officer or director of the Company or its Subsidiaries.
37.
b. Option Vesting Periods. Each Option Agreement will
specify the period or periods of time within which each Option or portion
thereof will first become exercisable (the "Option Vesting Period"). Unless
otherwise indicated in an Option Agreement, all Options shall become vested and
exercisable upon the effective date of a Change in Control of the Company.
c. Exercise of the Option.
----------------------
(i) Mechanics and Notice. Options may be
exercised to the extent exercisable by
giving written notice to the Company
specifying the number of Options to be
exercised, the date of the grant of the
Option or Options to be exercised, the
Option Price, the desired effective date of
the exercise, the number of full shares of
Option Stock to be retained by the
Participant after exercise, and the method
of payment. Once written notice complying
with the requirements of this subsection is
received, the Committee or its designee
shall promptly notify the Participant of the
amount of the Option Price and withholding
taxes due, if either or both is applicable.
Payment of any amounts owing shall be due
immediately upon receipt of such notice.
(ii) Withholding Taxes. As a condition to the
issuance of shares of Option Stock upon
exercise of an Option granted under this
Plan, the Participant will pay to the
Company in cash, through cashless exercise
as provided in Section 6(d) or in such other
form as the Committee may determine in its
discretion, the amount of the Company's Tax
Withholding Liability, if any, associated
with such exercise.
d. Payment of Option Price. Each Option Agreement will
specify the Option Price, with respect to the exercise of Option Stock granted
thereunder, which may be stated in terms of a fixed dollar amount, a percentage
of Fair Market Value at the time of the grant, or such other method as
determined by the Committee in its discretion. In no event will the Option Price
for an ISO granted hereunder be less than the Fair Market Value (or, where an
ISO Participant is a 10% Shareholder, one hundred ten percent (110%) of such
Fair Market Value) of the Option Stock at the time such ISO is granted. In no
event will the Option Price for an NSO granted hereunder be less than 100% of
the Fair Market Value of the Options Stock at the time such NSO is granted. The
Option Price will be payable to the Company in United States dollars in cash or
by certified check or, such other legal consideration as may be approved by the
Committee, in its discretion. The Committee, in its sole discretion, may permit
an Optionee to pay all or a portion of the Option Price, and/or the Company's
Tax Withholding Liability set forth in subsection 6(c) above, if applicable,
with respect to the exercise of an Option by (i) surrendering shares of Stock
already owned by such Optionee; (ii) withholding of shares of Option Stock; or
(iii) irrevocably authorizing a third party to sell shares of Stock (or a
sufficient portion of the shares) acquired upon exercise of the Option and remit
to the Company a sufficient portion of the sale proceeds to pay the entire
Exercise Price and the Company's Tax Withholding Liability from such exercise.
To the extent Option Stock is withheld for tax withholding purposes, the
applicable percentage of tax withholding liability shall be the percentage equal
to the employer's minimum statutory withholding rate (based on minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes,
that are applicable to the taxable income realized upon exercise of Options). To
the extent that Option Stock is withheld pursuant to subparagraphs (i) or (ii)
above, the Fair Market Value of surrendered Stock or withheld Option Stock must
be equal to the corresponding portion of such Option Price and/or tax
withholding liability, as the case may be, to be paid for therewith. To the
extent that shares of Option Stock are sold by a third party as payment of all
or a portion of the Option Price of an ISO, the sale of such shares will be
treated as a Disqualifying Disposition and be subject to Section 421(b) of the
Code.
e. Notice of Disqualifying Disposition. In the event of
a Disqualifying Disposition, the Participant will promptly give written notice
to the Company of such disposition including information regarding the number of
shares involved, the exercise price of the underlying Option through which the
shares were acquired and the date of the Disqualifying Disposition.
f. Termination of the Option. Except as otherwise
provided herein, each Option Agreement will specify the period of time, to be
determined by the Committee in its discretion, during which the Option granted
therein will be exercisable, not to exceed ten years from the date of grant (the
"Option Period"); provided that the Option Period will not exceed five years
from the date of grant in the case of an ISO granted to a 10% Shareholder.
38.
(i) Timing of Termination. To the extent not
previously exercised, each Option will
terminate upon the expiration of the Option
Period specified in the Option Agreement;
provided, however, that, subject to the
discretion of the Committee, each Option
will terminate, if earlier: (a) ninety days
after the date that the Participant ceases
to be an Eligible Person for any reason
other than Cause, death or Disability; (b)
immediately upon the Participant's
termination of employment for Cause; or (c)
1 year after the date that the Participant
ceases to be an Eligible Person by reason of
such person's death or Disability.
(ii) Effect of Change in Control. Except as
provided in an Option Agreement, each Option
will become fully exercisable upon the
effective date of a Change in Control of the
Company or a liquidation or dissolution of
the Company.
(iii) Effect of Retirement, Death or Disability.
Except as provided in an Option Agreement,
Options will not become fully exercisable
upon the Optionee's death, Retirement or
Disability.
g. Transferability of Options. ISOs will be subject to
Transfer by the Participant only by will or the laws of descent and
distribution. NSOs will be subject to Transfer by the Participant only by will
or the laws of descent and distribution or, at the discretion of the Committee,
by direct gift to a family member, or gift to a family trust or family
partnership. The terms "family member," "family trust" and "family partnership"
shall have meanings consistent with Section 704 of the Code. Options will be
exercisable only by the Participant during his or her lifetime, or, with respect
to an NSO, by any of the recipients of the Transfers specifically permitted by
this subsection (g).
h. Compliance with Law. Notwithstanding any other
provision of this Plan, Options may be granted pursuant to this Plan, and Option
Stock may be issued pursuant to the exercise thereof by a Participant, only
after there has been compliance with all applicable federal and state tax and
securities laws. The right to exercise an Option will be further subject to the
requirement that if at any time the Committee determines, in its discretion,
that the listing, registration or qualification of the shares of Option Stock
called for by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory authority, is necessary or
desirable as a condition of or in connection with the granting of such Option or
the purchase of shares of Option Stock, the Option may not be exercised, in
whole or in part, unless and until such listing, registration, qualification,
consent or approval is effected or obtained free of any conditions not
acceptable to the Committee, in its discretion.
i. Stock Certificates. Certificates representing the
Option Stock issued pursuant to the exercise of Options will bear all legends
required by law and necessary to effectuate this Plan's provisions. The Company
may place a "stop transfer" order against shares of the Option Stock until all
restrictions and conditions set forth in this Plan and in the legends referred
to in this subsection (i) have been complied with.
j. Non-Compete. The Committee, in its discretion, may,
as a condition to the grant of an Option, require that the Participant enter
into a covenant not to compete, a non-disclosure agreement or a Confidential
Information Agreement with the Company and its Subsidiaries, which shall become
effective on the date of termination of employment of the Participant with the
Company, or any other date the Committee designates, and which shall contain
such terms and conditions as the Committee specifies.
k. Other Provisions. The Option Agreement may contain
such other terms, provisions and conditions, including such special forfeiture
conditions, rights of repurchase, rights of first refusal and other restrictions
on Transfer of Option Stock issued upon exercise of any Options granted
hereunder, not inconsistent with this Plan, as may be determined by the
Committee in its sole discretion.
7. Stock Appreciation Rights
-------------------------
a. Grants. SARs may be granted to such eligible
directors and employees as may be selected by the Committee.
39.
b. Terms of Grant. SARs may be granted in tandem with or
with reference to a related Option, in which event the grantee may elect to
exercise either the Option or the SAR but not both, as to the same Share subject
to the Option and the SAR, or the SAR may be granted independently of a related
Option. In the event of a grant with a related Option, the SAR shall be subject
to the terms and conditions of the related Option. SARs shall not be
transferable, except that SARs may be exercised by the executor, administrator
or personal representative of the deceased grantee within twelve months of the
death of the grantee. SARs may be exercised during the individual's continued
employment with the Company and for a period not in excess of ninety days
following termination of employment.
c. Payment of Exercise. Upon exercise of a SAR, the
grantee shall be paid the excess of the then fair market value of the number of
shares of Stock to which the SAR relates over the fair market value of such
number of shares of Stock at the date of grant of the SAR or of the related
Option, as the case may be. Such excess shall be paid in cash or in Stock having
a fair market value equal to such excess or in such combination thereof as the
Committee shall determine.
d. Withholding of Tax. As a condition to the payment due
upon exercise of a SAR granted under this Plan, the Participant will pay to the
Company in cash or in such other form as the Committee may determine in its
discretion, the amount of the Company's Tax Withholding Liability, if any,
associated with such exercise.
8. Restricted Stock Awards
-----------------------
Each issuance of Restricted Stock pursuant to this
Plan will be evidenced by a Restricted Stock Agreement between the Company and
the Eligible Participant to whom such Restricted Stock is to be issued, in form
and substance satisfactory to the Committee in its sole discretion, consistent
with this Plan. Each Restricted Stock Agreement (unless otherwise stated
therein) will be deemed to include the following terms and conditions:
a. Covenants of Restricted Stock Holders. Nothing
contained in this Plan, any Restricted Stock Agreement or in any other agreement
executed in connection with the issuance of Restricted Stock under this Plan
will confer upon any Restricted Stockholder any right with respect to the
continuation of his or her status as an employee or officer of the Company or
its Subsidiaries.
b. Restricted Stock Vesting Period. Except as otherwise
provided herein, each Restricted Stock Agreement may specify the period or
periods of time within which shares of Restricted Stock will no longer be
subject to the restrictions imposed under this Plan or any Restricted Stock
Agreement (the "Restricted Stock Vesting Period"), as set forth in this
subsection 8(b). A Restricted Stock Agreement may also specify Designated
Performance Criteria which must be satisfied within the Restricted Stock Vesting
Period. Restricted Stock Vesting Periods shall be determined by the Committee in
its discretion and may be accelerated or shortened by the Committee in its
discretion, but shall not exceed ten years for full vesting. Except as provided
in a Restricted Stock Agreement, all shares of Restricted Stock shall become
immediately and fully vested upon a Change in Control of the Company.
c. Restrictions on Transfer of Restricted Stock.
(i) General Rule. Restricted Stock may be
transferred only if required by law. All
Transfers of Restricted Stock not meeting
the conditions set forth in this subsection
8(c)(i) are expressly prohibited.
(ii) Effect of Prohibited Transfer. Any
prohibited Transfer of Restricted Stock is
void and of no effect. Should such a
Transfer purport to occur, the Company may
refuse to carry out the Transfer on its
books, attempt to set aside the Transfer,
enforce any undertaking or right under this
subsection 8(c)(ii), or exercise any other
legal or equitable remedy.
(iii) Escrow. The Committee may, in its
discretion, require that the Restricted
Stockholder deliver the certificate(s) for
the Restricted Stock with a stock power
executed in blank to the Secretary of the
Company or his or her designee to hold said
certificate(s) and stock power(s) in escrow
and to take all such actions and to
40.
effectuate all such Transfers and/or
releases as are in accordance with the terms
of this Plan. The certificate(s) may be held
in escrow so long as the shares of
Restricted Stock are subject to any
restrictions under this Plan or under a
Restricted Stock Agreement. Each Restricted
Stockholder acknowledges that the Secretary
of the Company (or his or her designee) is
so appointed as the escrow holder with the
foregoing authorities as a material
inducement to the issuance of shares of
Restricted Stock under this Plan, that the
appointment is coupled with an interest, and
that it accordingly will be irrevocable. The
escrow holder will not be liable to any
party to a Restricted Stock Agreement (or to
any other party) for any actions or
omissions unless the escrow holder is
grossly negligent relative thereto. The
escrow holder may rely upon any letter,
notice or other document executed by any
signature purported to be genuine.
d. Compliance with Law. Notwithstanding any other
provision of this Plan, Restricted Stock may be issued pursuant to this Plan
only after there has been compliance with all applicable federal and state tax
and securities laws.
e. Stock Certificates. Certificates representing the
Restricted Stock issued pursuant to this Plan will bear all legends required by
law and necessary to effectuate this Plan's provisions. The Company may place a
"stop transfer" order against shares of the Restricted Stock until all
restrictions and conditions set forth in this Plan and in the legends referred
to in this subsection 8(e) have been complied with.
f. Withholding. As a condition to the issuance of shares
of Restricted Stock, the Participant will pay to the Company in cash or in such
other form as the Committee may determine in its discretion, the amount of the
Company's Tax Withholding Liability, if any, associated with the Participant
becoming vested in such shares or in connection with the Participant's election
to recognize income under Section 83(b) of the Code. The Committee, in its sole
discretion, may permit Restricted Stockholder to pay all or a portion of the
Company's Tax Withholding Liability with respect to shares of Restricted Stock
in which the Participant has become vested by (i) surrendering shares of Stock
already owned by such Restricted Stockholder; (ii) withholding of shares of
Restricted Stock; or (iii) irrevocably authorizing a third party to sell shares
of Restricted Stock (or a sufficient portion of the shares) in which the
Restricted Stockholder has become vested and remit to the Company a sufficient
portion of the sale proceeds to pay the Company's Tax Withholding Liability. To
the extent Restricted Stock is withheld for tax withholding purposes, the
applicable percentage of tax withholding liability shall be the percentage equal
to the employer's minimum statutory withholding rate (based on minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes,
that are applicable to the taxable income realized upon vesting in the
Restricted Stock). To the extent that Restricted Stock is withheld pursuant to
subparagraphs (i) or (ii) above, the Fair Market Value of surrendered Stock or
withheld Restricted Stock must be equal to the corresponding portion of such tax
withholding liability, as the case may be, to be paid for therewith.
g. Other Provisions.The Restricted Stock Agreement may
contain such other terms, provisions and conditions, including such special
forfeiture conditions, rights of repurchase, covenants not to compete, rights of
first refusal and other restrictions on Transfer of Restricted Stock issued
hereunder, not inconsistent with this Plan, as may be determined by the
Committee in its sole discretion.
9. Right of First Refusal
----------------------
If any shares of Stock issued under the Plan are not readily
tradable on an established market on the date an owner intends to sell such
shares, such owner shall first offer such shares to the Company for purchase and
the Company shall have 30 days to exercise its right to purchase such shares.
The owner shall give written notice to the Company stating that he has a bona
fide offer for the purchase of such shares, stating the number of shares to be
sold, the name and address of the person(s) offering to purchase the shares and
the purchase price and terms of payment of such sale. The owner shall be
entitled to receive the same purchase price offered by such person(s) offering
to purchase such shares. Payment may be in a lump sum or, if the lump sum
exceeds $100,000, in substantially equal amounts or more frequent installments
over a period not exceeding 5 years in the discretion of the Committee. If a
method of deferred payment is selected, the unpaid balance shall earn interest
at a rate that is substantially equal to the rate at which the Company could
borrow the amount due and shall be secured by a pledge of the shares purchased
or such other adequate security as agreed to by the Company and the owner. For
41.
purposes of this Paragraph, shares shall be considered not readily tradable on
an established market if such shares are not publicly tradable or because such
shares are subject to a trading limitation under any Federal or state securities
law or regulation that would make such shares less freely tradable than stock
not so restricted. For purposes of this Paragraph, an owner shall include any
person who acquires shares from any other person and for any reason; including,
but not limited to, by gift, death or sale.
10. Adjustments Upon Changes in Stock. In the event of
any change in the outstanding Stock of the Company as a result of a merger,
reorganization, stock split, reverse stock split, stock dividend,
recapitalization, combination or reclassification, appropriate proportionate
adjustments will be made:
a. in the aggregate number of shares of Option Stock and
Restricted Stock in the Stock Pool;
b. in the Option Price and the number of shares of
Option Stock that may be purchased pursuant to an outstanding Option granted
hereunder;
c. in the number of shares subject to a Restricted Stock
Award;
d. in the exercise price of any rights of repurchase or
of first refusal under this Plan; and
e. with respect to other rights and matters determined
on a per share basis under this Plan or any associated Option Agreement or
Restricted Stock Agreement.
Any such adjustments will be made only by the Committee, and
when so made will be effective, conclusive and binding for all purposes with
respect to this Plan and all Options and Restricted Stock awards then
outstanding. No such adjustments will be required by reason of the issuance or
sale by the Company for cash or other consideration of additional shares of its
Stock or securities convertible into or exchangeable for shares of its Stock.
11. Modification, Extension and Renewal of Options and
Restricted Stock. Subject to the terms and conditions and within the limitations
of this Plan, the Committee may modify, extend or renew outstanding Options or
Restricted Stock granted under this Plan, but in no event may the Committee
change the Option Price as stated in the Option Agreement, if expressed as a
fixed dollar amount, or the manner in which the Option Price is to be calculated
as stated in the Option Agreement, if expressed as a percentage of Fair Market
Value at the time of the grant or otherwise. Notwithstanding the foregoing, no
modification of any Option or Restricted Stock award will, without the consent
of the holder of the Option or Restricted Stock, alter or impair any rights or
obligations under any Option or Restricted Stock award previously granted under
this Plan.
12. Amendment and Discontinuance. No Option or Restricted
Stock award shall be granted under this Plan after December 19, 2012, which is
the 10th anniversary of the the date on which this Plan, prior to its amendment
and restatement, was approved by the Company's Board of Directors. The Committee
may amend, and the Board may suspend or discontinue, this Plan at any time,
provided that:
a. No such action may, without the approval of the
shareholders of the Company, increase the maximum total number of shares of
Option Stock or Restricted Stock that may be granted to an individual over the
term of this Plan, or materially increase (other than by reason of an adjustment
pursuant to Section 10 hereof) the aggregate number of shares of Option Stock
and Restricted Stock in the Stock Pool that may be granted pursuant to this
Plan;
b. No action of the Committee will cause ISOs granted
under this Plan not to comply with Section 422 of the Code unless the Committee
specifically declares such action to be made for that purpose;
c. No action of the Committee shall alter or impair any
Option or Restricted Stock previously granted under this Plan without the
consent of such affected Participant.
13. Plan Binding upon Successors. This Plan shall be
binding upon and inure to the benefit of the Company, its Subsidiaries, and
their respective successors and assigns, and Eligible Persons and their
respective assigns, personal representatives, heirs, legatees and beneficiaries.
42.
14. Compliance with Rule 16b-3. With respect to persons
subject to Section 16 of the 1934 Act, transactions under this Plan are intended
to be exempt from short-swing profit liability. To the extent that any
transaction made pursuant to the Plan may give rise to short-swing profit
liability, the Committee may deem such transaction to be null and void, to the
extent permitted by law and deemed advisable by the Committee.
15. Notices. Every direction, revocation or notice
authorized or required by the Plan shall be deemed delivered to the Company:
a. On the date it is personally delivered to the
Secretary of the Company at its principal executive offices; or
b. Three business days after it is sent by registered or
certified mail; postage prepaid, addressed to the Secretary at such offices.
and to a Participant:
c. On the date it is personally delivered to him or her;
or
d. Three business days after it is sent by registered or
certified mail, postage prepaid, addressed to him or her at the last address
shown for him or her on the records of the Company.
16. Governing Law. This Plan will be governed by, and
construed in accordance with, the laws of the State of Illinois, without regard
to its conflict of laws provisions.
17. Copies of Plan. A copy of this Plan will be delivered
to each Participant at or before the time he or she executes an Option
Agreement.
* * *
Date Plan Adopted by Board of Directors:
Date Plan Approved by Shareholders:
43.
[GRAPHIC OMITTED]
Centrue
Financial
Corporation
Using a black ink pen, mark your votes with an X as shown
in this example. Please do not write outside the designated areas. [X]
================================================================================
Annual Meeting Proxy Card
================================================================================
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION
IN THE ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
A Proposals -- The Board of Directors recommends a vote FOR all the nominees
listed and FOR Proposal 2.
1. Election of Directors: For Withhold For Withhold
01 - Thomas A. Daiber [ ] [ ] 02 - Dennis J. McDonnell [ ] [ ]
03 - Mark L. Smith [ ] [ ] 04 - Scott C. Sullivan [ ] [ ]
For Against Abstain
2. Approve the Amended and Restated 2003 Stock [ ] [ ] [ ]
Option Plan
B Non-Voting Items
Change of Address -- Please print new address below.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C Authorized Signatures -- This section must be completed for your vote to be
counted. -- Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, corporate officer, trustee,
guardian, or custodian, please give full title.
Date (mm/dd/yyyy) -- Please print date below. Signature 1 -- Please keep signature within the box.
-------------------------------------------- -----------------------------------------------------
| / / | | |
| / / | | |
| / / | | |
-------------------------------------------- -----------------------------------------------------
Signature 2 -- Please keep signature within the box.
----------------------------------------------------
| |
| |
| |
----------------------------------------------------
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE
ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Centrue
Financial
Corporation
--------------------------------------------------------------------------------
Proxy -- Centrue Financial Corporation
--------------------------------------------------------------------------------
Notice of 2007 Annual Meeting of Stockholders
Oak Brook Regency Tower
1515 West 22nd Street (West Tower) 1st Floor, Oak Brook, Illinois
Tuesday, April 24, 2007 at 10:00 a.m. local time
Richard J. Berry and Randall E. Ganim, or any of them, each with the power of
substitution, are hereby authorized to represent and vote the shares of the
undersigned, with all the powers which the undersigned would possess if
personally present, at the Annual Meeting of Stockholders of Centrue Financial
Corporation to be held on Tuesday, April 24, 2007 or at any postponement or
adjournment thereof.
Shares represented by this proxy will be voted by the stockholder. If no such
directions are indicated, the Proxies will have authority to vote FOR Thomas A.
Daiber, FOR Dennis J. McDonnell, FOR Mark L. Smith, FOR Scott C. Sullivan, and
FOR item 2 Approve the Amended and Restated 2003 Stock Option Plan.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting.
(Items to be voted appear on reverse side.)