<PAGE>
CHICAGO, ILLINOIS
MARCH 19, 1999
UPBANCORP, INC.
4753 NORTH BROADWAY
CHICAGO, ILLINOIS 60640
(773) 878-2000
PROXY STATEMENT AND NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 13, 1999
To the Stockholders of Upbancorp, Inc.:
The Annual Meeting of Stockholders of Upbancorp, Inc. (the
"Corporation"), will be held at Uptown National Bank of Chicago, 4753 North
Broadway, Chicago, Illinois, on Tuesday, April 13, 1999, at 9:45 A.M., for the
purpose of considering and voting upon the following matters:
1. To elect two (2) Directors to serve as Class I Directors until
the regular Annual Meeting of Stockholders in 2002 and until
their successors are elected and have qualified; and
2. To transact such other business as may properly be brought
before the Annual Meeting or any adjournment thereof.
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED POSTAGE
PAID ENVELOPE AS PROMPTLY AS POSSIBLE WHETHER YOU PLAN TO ATTEND THE ANNUAL
MEETING IN PERSON. IT IS HOPED THAT YOU WILL BE ABLE TO ATTEND THE MEETING, AND
IF YOU DO YOU MAY VOTE YOUR STOCK IN PERSON IF YOU WISH. THE PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO ITS EXERCISE.
<PAGE>
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of the Corporation of proxies for use at the Annual
Meeting of Stockholders of the Corporation to be held April 13, 1999. The record
date for determining stock ownership is March 8, 1999. Only Stockholders of
record as of March 8, 1999, will be entitled to notice of, and to vote at, the
Annual Meeting. As of March 8, 1999, the Corporation had issued and outstanding
868,636 shares of Common Stock with a par value of $1.00 per share. Each share
is entitled to one vote on all matters to be considered at the Annual Meeting.
The Corporation's 1998 Annual Report on Form 10-K, including financial
statements consolidated with those of Uptown National Bank of Chicago ("Uptown")
and Heritage Bank, Phoenix, Arizona ("Heritage"), is being transmitted to each
Stockholder with this Proxy Statement. This Proxy Statement (and the
accompanying proxy) is being mailed to all Stockholders on or about March 19,
1999.
The Corporation was established as a one-bank holding company with
respect to Uptown on June 1, 1983, and became a multi-bank holding company when
Heritage became a wholly-owned subsidiary on July 12, 1988.
Your proxy is being solicited by the Board of Directors of the
Corporation. The cost of soliciting proxies will be borne by the Corporation. In
addition to use of the mails, proxies may be solicited personally or by
telephone or telegraph by officers, Directors and certain employees of the
Corporation or Uptown who will not be specially compensated for such soliciting.
The Corporation will, at its 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.
Stockholders are urged to specify the way they wish to vote their
shares by marking the appropriate boxes on the enclosed proxy. Shares
represented by proxies which are properly executed and returned will be voted at
the Annual Meeting as specified on the proxy. If no choice is specified, the
shares will be voted FOR the nominees listed under Proposal 1 in this Proxy
Statement. It is not anticipated that any action will be asked of the
Stockholders other than that set forth herein; proxies in the enclosed form,
however, will confer discretionary voting authority regarding any other matters
which may properly come before the Annual Meeting on the individuals specified
in the enclosed proxy.
Any Stockholder giving a proxy will have the right to revoke it at any
time prior to the voting thereof by filing a revoking instrument or a duly
executed proxy bearing a later date with the Secretary of the Corporation or by
attending the Annual Meeting and voting in person.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the Judges of Election appointed by the Board of Directors for the
Annual Meeting who will determine whether a quorum is present. The Judges of
Election will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence of a quorum but as unvoted for purposes
of determining the approval of any matter submitted to the Stockholders for a
vote. If a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
not be considered as present and entitled to vote with respect to that matter.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Corporation has a staggered Board of Directors divided into three
classes. One class is elected annually to serve for three years. At the Annual
Meeting of Stockholders on April 13, 1999, two Class I Directors will be elected
for terms of three years or until their successors are elected and qualified.
The two nominees are indicated in the table below. 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 solicited hereby will vote for the nominees
named as Class I Directors. The Corporation has no knowledge that any of the
nominees will refuse or be unable to serve, but if any of the nominees becomes
unavailable for election, the holders of the proxies reserve the right to
substitute another person of their choice as a nominee when voting at the Annual
Meeting. To be elected as a Director, each Director nominee must receive the
favorable vote of a plurality of the shares represented and entitled to vote at
the Annual Meeting.
INFORMATION ABOUT DIRECTORS AND NOMINEES
The following table contains certain information with respect to the
nominees and the Continuing Directors, including the number of shares of Common
Stock of the Corporation beneficially owned, directly or indirectly, as of March
8, 1999, and the year each nominee and Continuing Director became a Director of
the Corporation or its predecessor, Uptown.
NOMINEES
The following persons, if elected at the Annual Meeting of
Stockholders, will serve as Class I Directors for three years:
<TABLE>
<CAPTION>
CLASS I (TERM EXPIRES 2002) COMMON STOCK BENE-
FICIALLY OWNED AS OF
NAME, AGE AND YEAR MARCH 8, 1999(1)
BECAME DIRECTOR OF PRINCIPAL OCCUPATION --------------------------
THE CORPORATION AND OTHER INFORMATION NO. OF PERCENT
- --------------- --------------------- SHARES OF CLASS
------- ---------
<S> <C> <C> <C>
Delbert R. Ellis Retired, former Executive Vice President 4,426 .51
Age 66 - 1996 of Bank of America, Arizona; Director of (2)
the Corporation; Vice Chairman of the Board
and Director of Heritage
Marvin L. Kocian President, Komar Screw Corporation; 15,614 1.80
Age 62 - 1982 Vice President, Assistant Secretary and (2)(3)
Director of the Corporation and Uptown
CONTINUING DIRECTORS
</TABLE>
3
<PAGE>
The following persons will continue to serve as Directors for the periods
indicated:
<TABLE>
<CAPTION>
CLASS II (TERM EXPIRES 2000)
<S> <C> <C> <C>
Stephen W. Edwards Consultant, Planned Futures, Inc.; 56,226 6.47
Age 66 - 1985 Director of the Corporation and Uptown (2)(4)
John E. Fahrendorf, Jr. President, Chief Executive Officer and 6,326 .73
Age 52 - 1993 Director of Heritage; Vice President (2)
and Director of the Corporation
Robert P. Griffiths President, Chief Executive Officer and 57,846 6.66
Age 49 - 1997 Director of Uptown; Vice President and (2)(4)
Director of the Corporation
Alfred E. Hackbarth, Jr. Attorney and CPA, Partner, Hackbarth 45,042 5.19
Age 68 - 1988 & Hudson, P.C.; Retired Partner, (2)(3)(5)
Arthur Andersen & Co.,S.C.; Director
of the Corporation, Uptown and Heritage
CLASS III (TERM EXPIRES 2001)(8)
James E. Heraty Consultant, Ready Men, Inc. since June 68,434 7.88
Age 67 - 1984 1996; prior thereto President, Ready Men, (2)(4)(6)
Inc.; Director of the Corporation and Uptown
Richard K. Ostrom Chairman of the Board, President, 133,020 15.31
Age 59 - 1976 Chief Executive Officer and Director (2)(4)-(7)(9)
of the Corporation; Chairman of the
Board and Director of Uptown and
Heritage
</TABLE>
(1) The information contained in this column is based upon information
furnished to the Corporation by the individuals named above or was
ascertained from an examination of the Corporation's stock records. 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. The above amounts do not include shares beneficially owned by
the adult children of the Directors. Beneficial ownership of such
shares is disclaimed by the Directors. The above amounts include shares
held in joint tenancy with certain members of the families of the
Directors. Shares so held are deemed to be shared as to voting and
investment power.
(2) The above amount includes 2,426 shares held by Vanilla III Enterprises.
Voting and investment power with respect to these shares is shared by
Messrs. Edwards, Ellis, Fahrendorf, Griffiths, Hackbarth, Heraty,
Kocian and Ostrom.
(3) The above amounts do not include shares beneficially owned by the
spouses and adult children of certain Directors as follows: Kocian
-640; and Hackbarth - 6,800. Beneficial ownership of these shares is
disclaimed.
4
<PAGE>
(4) The above amount includes 48,400 shares held by the Corporation's
pension plan for its employees. Voting and investment power with
respect to these shares is shared by Messrs. Edwards, Griffiths, Heraty
and Ostrom. Beneficial ownership of these shares is disclaimed by
Messrs. Edwards and Heraty. Messrs. Ostrom and Griffiths are vested as
participants in the pension plan.
(5) The above amount includes 25,180 shares held by a charitable foundation
of which Messrs. Ostrom and Hackbarth are directors and officers. The
above amount includes 13,436 shares held by two trusts for which Mr.
Hackbarth is co-trustee. Voting and investment power with respect to
these shares is shared. Beneficial ownership of these shares is
disclaimed.
(6) The above amount includes 10,664 shares held by J.R. Enterprises.
Messrs. Heraty and Ostrom are partners in J.R. Enterprises. Voting and
investment power with respect to these shares is shared by Messrs.
Heraty and Ostrom.
(7) The above amount includes 30,608 shares held by WEO Enterprises. Mr.
Ostrom is a partner in WEO Enterprises. Voting and investment power
with respect to these shares is shared.
(8) B. Arthur Russell, a Class III Director of the Corporation since 1971,
passed away in December 1998. No Director nominee has been slated to
fill this vacancy.
(9) The above amount includes 2,400 shares held in joint tenancy with one
of Mr. Ostrom's parents and 1,332 shares in joint tenancy with Mr.
Ostrom's adult children.
EXECUTIVE OFFICERS
Set forth below is a list of all executive officers of the Corporation.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE CORPORATION, UPTOWN AND HERITAGE
- ---- --- --------------------------------------------------
<S> <C> <C>
Richard K. Ostrom 59 Chairman of the Board, President, Chief Executive
Officer and Director of the Corporation; Chairman of the
Board and Director of Uptown; Chairman of the Board
and Director of Heritage
John E. Fahrendorf, Jr. 52 President, Chief Executive Officer and Director of
Heritage; Vice President and Director of the Corporation
Robert P. Griffiths 49 President, Chief Executive Officer and Director of
Uptown; Vice President and Director of the Corporation
Kathleen L. Harris 35 Senior Vice President and Chief Financial Officer of the
Corporation; Senior Vice President and Cashier of
Heritage
</TABLE>
All of the Corporation's Directors hold office for the terms indicated
and all of the Corporation's executive officers hold office for a term of one
year, or until their respective successors are duly elected and qualified. There
are no arrangements or understandings between any of the Directors, executive
officers, or any other person pursuant to which any of the Directors or
executive officers have been selected for their respective positions, except
with respect to the employment agreement with Messrs. Ostrom, Fahrendorf and
Griffiths as described below (see "EMPLOYMENT AGREEMENTS").
5
<PAGE>
BOARD COMMITTEES AND MEETINGS
The Executive Committee functions as an extension of the Board between
regular meetings of the Board. Members of the Executive Committee are Messrs.
Ellis, Hackbarth, Kocian and Ostrom. The Executive Committee counsels the Chief
Executive Officer in evaluating and recommending major changes in corporate
policy. The Executive Committee has the authority to exercise all powers of the
full Board of Directors except that it will not have the power to declare
dividends, issue stock, amend the bylaws, recommend to the stockholders any
action that requires stockholder approval, fill vacancies on the Board, appoint
or remove officers, amend or rescind prior action of the Board.
The Executive Committee serves as the directors' Nominating Committee
and the Executive Compensation Committee. This Committee met six times during
1998. The Nominating Committee will consider nominees recommended by the
stockholders. Recommendations should be forwarded to Evy Johansen, Senior Vice
President and Secretary to the Board of Directors, Upbancorp, Inc.
4753 North Broadway, Chicago, Illinois 60640.
The Corporation has a standing Audit Committee. Members of the Audit
Committee are Messrs. Edwards, Ellis, Hackbarth, Heraty and Kocian. The
functions of the Audit Committee consist of reviewing, with the Corporation's
independent auditors, the scope and results of the Corporation's procedures for
internal auditing, the scope and results of the auditing engagement and the
adequacy of the Corporation's system of internal controls. The Audit Committee
also makes a recommendation on the selection of the Corporation's independent
auditors to the Board of Directors. This Committee met four times during 1998.
The Board of Directors of the Corporation met five times during 1998.
All of the present Directors attended more than 75% of the meetings of the Board
and of the committees of the Board on which they served during 1998.
EXECUTIVE COMPENSATION
The following table sets forth compensation information about the
Corporation's Chairman of the Board, President and Chief Executive Officer,
Senior Vice President and Chief Financial Officer, the Vice Presidents and
Directors of the Corporation. No other officers of the Corporation or its
subsidiaries received more than $100,000 in salary and bonus during 1998.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER
ANNUAL ALL OTHER
NAME AND COMPEN- COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION (1) SATION (2)
------------------ ---- ------ ----- ------ ----------
<S> <C> <C> <C> <C> <C>
Richard K. Ostrom, 1998 $237,500 $33,750 $11,500 $11,532
Chairman of the Board, 1997 225,000 -0- 21,450 10,539
President and Chief 1996 200,000 -0- 14,500 12,433
Executive Officer of the
Corporation; Chairman of
the Board and Director of
Uptown and Heritage
- -------------------------------------- ---------- ---------------- -------------- ----------------- -------------------
John E. Fahrendorf, Jr., 1998 $159,625 $14,792 $5,600 $7,964
President, Chief Executive 1997 148,000 -0- 10,050 5,769
Officer and Director of 1996 130,000 5,000 3,400 1,945
Heritage; Vice President
and Director of the
Corporation
- -------------------------------------- ---------- ---------------- -------------- ----------------- -------------------
Robert P. Griffiths 1998 $158,525 $15,150 $8,000 $7,600
President, Chief Executive 1997 151,500 -0- 14,300 6,796
Officer and Director of 1996 130,000 -0- 11,100 5,708
Uptown; Vice President
and Director of the
Corporation
- -------------------------------------- ---------- ---------------- -------------- ----------------- -------------------
Kathleen L. Harris 1998 $99,527 $4,612 -0- $3,221
Senior Vice President and
Chief Financial Officer;
Senior Vice President and
Cashier of Heritage
- -------------------------------------- ---------- ---------------- -------------- ----------------- -------------------
- -------------------------------------- ---------- ---------------- -------------- ----------------- -------------------
</TABLE>
(1) The amount indicated for Messrs. Ostrom, Fahrendorf and Griffiths
represents Board of Directors and Committee fees.
(2) The amount indicates the Corporation's 401(k) Flexible Compensation
Plan match of the executive's contribution, limited to 3% of the
individual's annual salary; the Corporation's 401(k) optional
contribution, and in the case of Messrs. Ostrom, Fahrendorf and
Griffiths the reportable amount of the annual premium associated with a
Split Dollar Life Insurance Policy, which in 1998, 1997 and 1996 was
$6,732, $6,039 and $5,433, respectively, for Mr. Ostrom; $2,591, $2,467
and $1,945, respectively, for Mr. Fahrendorf; and $2,322, $2,186 and
$1,703, respectively, for Mr. Griffiths.
7
<PAGE>
DIRECTORS' FEES
In 1998 Directors' fees were restructured, effective July 1, 1998. As a
result of these changes, all nonemployee Directors receive an annual retainer of
$3,000 for the Corporation, $5,000 for Uptown and $3,000 for Heritage. In
addition, they received the following amounts for each Board of Directors and
Committee meeting they attend: Corporation Board of Directors meeting -- $700;
Board of Directors meeting of Uptown -- $300; Board of Directors meeting of
Heritage -- $300; Loan and Investment Committee -- $200; Audit Committee --
$500; Executive Committee -- $500; Retirement Committee -- $200; and Land Trust
Committee -- $250. As restructured, employee Directors do not receive an annual
retainer or attendance fees for Directors' or Committee meetings, respectively.
Prior to July 1, 1998, all Directors were paid for each meeting
attended as follows: $650 for each meeting of the Board of Directors of the
Corporation; $500 for each meeting of the Board of Directors of Uptown and
Heritage; $300 for each meeting of the Audit Committee; $200 for each meeting of
the Loan and Investment Committee; and $150 for each meeting of the Compensation
and Organization Committee. Outside directors received $100 for each Executive
Committee and Retirement Committee meeting they attended.
The Board of Directors of the Corporation and Uptown have adopted and
administer a directors' deferred compensation plan (the "Deferred Plan") in
which participation is voluntary. The Deferred Plan is not a "qualified plan"
within the meaning of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Deferred Plan allows participants to defer Director
retainer and monthly fees for the benefit of the participants. Deferred fees
paid to participants are placed in a cash reserve account. Payments are to be
made under the Deferred Plan when a participant ceases to be a Director for any
reason. Currently, Messrs. Edwards and Ellis participate in the Deferred Plan.
RETIREMENT BENEFITS
Substantially all employees of the Corporation who have met a service
requirement are participating in the Corporation's noncontributory pension plan.
The following table illustrates the estimated annual benefits payable upon
retirement pursuant to the pension plan for specified average base salary rates
and years of credited service classifications.
8
<PAGE>
PENSION TABLE
ANNUAL RETIREMENT BENEFITS BASED UPON
YEARS OF SERVICE
<TABLE>
<CAPTION>
REMUNERATION 10 15 20 25 30
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$125,000 $18,750 $28,125 $37,500 $46,875 $56,250
$150,000 22,500 33,750 45,000 56,250 67,500
$175,000 26,250 39,375 52,500 65,625 78,750
$200,000 30,000 45,000 60,000 75,000 90,000
$225,000 33,750 50,625 67,500 84,375 101,250
$250,000 37,500 56,250 75,000 93,750 112,500
$300,000 45,000 67,500 90,000 112,500 246,000
</TABLE>
"Remuneration" is determined by averaging the employee's annual salary
for the five consecutive plan years of the participant's benefit service that
produces the highest average earnings preceding retirement. The statutory
maximum recognizable compensation for 1998 was limited to $150,000. The actual
salary paid to an employee considered in determining the employee's average
annual remuneration includes base pay, overtime pay, commissions and bonuses.
Fees paid for serving as a Director are excluded from this computation. Benefits
are computed on straight life annuity amounts; such benefits are not subject to
any deduction for Social Security or other offsets. Richard K. Ostrom has
thirty-six years of credited service, John E. Fahrendorf, Jr., has seven years
of credited service, Robert P. Griffiths has five years of credited service and
Kathleen L. Harris has ten years of credited service.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Board of Directors of the Corporation adopted a Supplemental
Executive Retirement Plan (the "SERP") for certain executive officers, effective
February 1998. The SERP is not a "qualified plan" within the meaning of Section
401(a) of the Code. The principal objective of the SERP is to ensure the payment
of a competitive level of retirement income to attract, retain and motivate
selected executives.
Eligibility for participation in the SERP is limited to those employees
whose earnings during any period exceed the maximum amount of earnings taken
into account for pension plan purposes under Section 401(a) of the Code, or
whose accrued benefit under the Corporation's pension plan is limited by Section
415 of the Code. The payments are to be made under the SERP at a participant's
retirement or death, but not for any other event of termination of employment.
EMPLOYMENT AGREEMENTS
In January of 1997, the Corporation entered into a five-year employment
agreement with Mr. Ostrom, which expires on December 31, 2002. The agreement
also provides for renegotiation should the reported earnings of the Corporation
exceed $3,000,000 for two consecutive years. This
9
<PAGE>
agreement was amended in July 1998, to adjust Mr. Ostrom's compensation as a
result of the restructured Directors' fees (see "DIRECTORS' FEES").
Effective July 1, 1998, Mr. Ostrom will receive a salary of $250,000
per year. As a result of this amendment, Mr. Ostrom's salary for 1998 consisted
of the original base amount of $225,000 plus $12,500 for a portion of the
Directors' fees which were eliminated as a result of the restructuring of the
Directors' fees in July 1998.
Under the terms of the agreement, if the employment of the executive
with the Corporation is terminated within three years of a "change in control"
of the Corporation, the Corporation must continue to pay the terminated
executive the salary due under the agreement and continue certain insurance
coverages for the 48-month period immediately following his separation from
service. These payments, however, shall be reduced by any amount which, under
the Internal Revenue Code, is deemed an "excess parachute payment."
A "change in control" of the Corporation is defined as a "change in
control" which must be reported to the Securities and Exchange Commission or the
Board of Governors of the Federal Reserve System, or if (1) any person or entity
acquires or controls 30% or more of the Corporation's outstanding voting
securities; (2) during any period of two consecutive years, the persons who were
directors of the Corporation immediately prior to such period cease to
constitute a majority of the Board of Directors of the Corporation; or (3) the
Corporation or Uptown is sold, merged or consolidated with another bank holding
company or bank.
If the executive is terminated "for cause" or due to death, disability
or retirement following a "change in control", the Corporation has no obligation
to provide continued benefits to the terminated executive. "Cause" is defined as
the commission of a criminal act against the Corporation, personally profiting
from a transaction to the detriment of the Corporation, gross neglect of the
executive's duties or unwillingness to obey the Corporation's policies.
The agreement allows the executive to terminate his employment for a
"Good Reason" and receive compensation from the Corporation after a "change in
control" of the Corporation. "Good Reason" occurs under the agreements in the
following circumstances: (1) the Corporation reduces the executive's salary; (2)
the Corporation discontinues his participation in any benefit and/or incentive
program; (3) the Corporation asks him to relocate; or (4) the Corporation
reduces his current duties, authority or status.
The agreement provides that during the one year period immediately
following termination of the executive's employment, the executive will not
render services similar to those being performed for the Corporation to any
financial business in competition with the Corporation and located within a ten
mile radius of the Corporation. This limitation does not apply to financial
businesses located in the central business district of Chicago which is located
six miles from the Corporation.
10
<PAGE>
In January of 1997, the Corporation and Heritage entered into a
two-year employment agreement with Mr. Fahrendorf and the Corporation and Uptown
entered into a two-year employment agreement with Mr. Griffiths. These
agreements expired on December 31, 1998. In December of 1998, the Corporation
and Heritage entered into a two-year employment agreement with Mr. Fahrendorf
and the Corporation and Uptown entered into a two-year employment agreement with
Mr. Griffiths. These agreements expire on December 31, 2000.
For 1998, Mr. Fahrendorf received from Heritage a base salary of
$155,000 plus $4,625 for Directors' fees which were eliminated as a result of
the restructuring of the Directors' fees in July 1998 (see "DIRECTORS' FEES").
Under the terms of Mr. Fahrendorf's present agreement, he will receive from
Heritage a base salary of $170,000 for 1999.
For 1998, Mr. Griffiths received from Uptown a base salary of $151,500
plus $7,025 for Directors' fees which were eliminated as a result of the
restructuring of the Directors' fees in July 1998 (see "DIRECTORS' FEES"). Under
the terms of Mr. Griffiths' present agreement, he will receive from Uptown a
base salary of $172,500 for 1999.
Mr. Fahrendorf's agreement provides for incentives based on the
financial performance of Heritage and the Corporation. Mr. Griffiths' agreement
provides for incentives based on the financial performance of Uptown and the
Corporation.
Under the terms of both agreements, if the executive's employment is
terminated within three years of a "change in control" of the bank or the
Corporation, the bank is required to continue to pay the salary due under the
agreement and continue certain insurance coverages for the twenty-four months
immediately following the separation from service. These payments, however, are
required to be reduced by any amount which, under the Internal Revenue Code, is
deemed an "excess parachute payment."
A "change in control" in both agreements is defined as a "change in
control" which must be reported to the Securities and Exchange Commission, the
applicable bank regulatory agency or the Board of Governors of the Federal
Reserve System, or if (1) any person or entity acquires or controls 30% or more
of the Corporation's outstanding voting securities; (2) during any period of two
consecutive years, the persons who were directors of the Corporation immediately
prior to such period cease to constitute a majority of the Board of Directors of
the Corporation; or (3) the bank or the Corporation is sold, merged or
consolidated with another bank holding company or bank.
If the bank executive is terminated "for cause" or due to death,
disability or retirement following a "change in control", neither the bank nor
the Corporation has any obligation to provide continued benefits. "Cause" is
defined as the commission of a criminal act against the bank or the Corporation,
personally profiting from a transaction to the detriment of the bank or the
Corporation or gross neglect of their respective duties.
Each agreement allows the bank executive to terminate his employment
for a "Good Reason" and receive compensation from the bank after a "change in
control" of the bank or the Corporation. "Good Reason" occurs under both
agreements in the following circumstances: (1) the bank reduces the executive's
salary; (2) the bank discontinues the executive's participation in any benefit
and/or
11
<PAGE>
incentive program; (3) the bank asks the executive to relocate; or (4) the bank
reduces the executive's current duties, authority or status.
Mr. Fahrendorf's agreement provides that during the ninety-day period
immediately following termination of his employment other than for Good Reason,
he would not render services similar to those being performed for Heritage to
any financial business in competition with Heritage and located within the
metropolitan Phoenix area. This non-competition restriction is not applicable
following termination of his employment for cause, for Good Reason or upon
expiration of the employment agreement pursuant to its terms.
Mr. Griffiths' agreement provides that during the ninety-day period
immediately following termination of his employment other than for Good Reason,
he would not render services similar to those being performed for Uptown or the
Corporation to any financial business in competition with Uptown or the
Corporation and located within a ten mile radius from the principal office of
Uptown or the Corporation, except for the central loop area of Chicago. This
non-competition restriction is not applicable following termination of his
employment for cause, for Good Reason or upon expiration of the employment
agreement pursuant to its terms.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors and executive officers of the Corporation, Uptown and
Heritage and their associates were customers of, and have had transactions with,
Uptown and Heritage in the ordinary course of business during 1998. Comparable
transactions may be expected to take place in the future.
All outstanding loans, commitments to loan, transactions in repurchase
agreements and certificates of deposit and depository relationships in such
ordinary course of business, were on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for transactions
with other persons and, in the opinion of management of the Corporation, did not
involve more than the normal risk of collectibility or present other unfavorable
features. See the Corporation's Annual Report on Form 10-K, Item 13.
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 8, 1999, the total number
of shares of Common Stock of the Corporation beneficially owned, and the percent
of such shares so owned, by each person known to the Corporation to be the
beneficial owner of more than 5% of the Common Stock of the Corporation, and all
officers and Directors of the Corporation as a group.
<TABLE>
<CAPTION>
NAME OR NUMBER OF AMOUNT AND NATURE OF PERCENT OF
PERSONS IN GROUP BENEFICIAL OWNERSHIP (1) CLASS
- ----------------- ------------------------ -----------
<S> <C> <C> <C>
Cede & Co. 293,151 (2) 33.75%
c/o Depository Trust Company
New York, NY
Richard K. Ostrom 133,020 (3)-(7) 15.31%
Chicago, IL
James E. Heraty 68,434 (3)(5)(6) 7.88%
Chicago, IL
Robert P. Griffiths 57,846 (3)(5) 6.66%
Chicago, IL
Stephen W. Edwards 56,226 (3)(5) 6.47%
Chicago, IL
Raymond K. Jorgensen 50,200 5.78%
Chicago, IL
Alfred E. Hackbarth, Jr. 45,042 (3)(4) 5.19%
Chicago, IL
All officers and Directors
(11 persons) as a group 191,754 22.08%
</TABLE>
(1) The information contained in this column is based upon information
furnished to the Corporation by the individuals named above or was
ascertained from an examination of the Corporation's stock records. 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. The above amounts do not include shares beneficially owned by
the adult children of certain of the persons named above. Beneficial
ownership of such shares is disclaimed. The above amounts include
shares held in joint tenancy with certain members of the families of
the persons named above. Shares so held are deemed to be shared as to
voting and investment power.
(2) Cede & Co. is a trust company which is a depository for trustees for
several trusts holding Common Stock of the Corporation, including the
shares held by the Corporation's pension plan for its employees.
(3) The above amount includes 2,426 shares held by Vanilla III Enterprises.
Voting and investment power with respect to these shares is shared by
Messrs. Edwards, Ellis, Fahrendorf, Griffiths, Hackbarth, Heraty,
Kocian and Ostrom.
13
<PAGE>
(4) The above amount includes 25,180 shares held by a charitable foundation
of which Messrs. Hackbarth and Ostrom are directors and officers. The
above amount includes 13,436 shares held by two trusts for which Mr.
Hackbarth is co-trustee. Voting and investment power with respect to
these shares is shared. Beneficial ownership of these shares is
disclaimed.
(5) The above amount includes 48,400 shares held by the Corporation's
pension plan for its employees. Voting and investment power with
respect to these shares is shared by Messrs. Edwards, Griffiths, Heraty
and Ostrom. Messrs. Griffiths and Ostrom are vested participants in the
pension plan. Beneficial ownership of these shares is disclaimed by
Messrs. Edwards and Heraty. The above amount includes 30,608 shares
held by WEO Enterprises. Mr. Ostrom is a partner in WEO Enterprises.
Voting and investment power with respect to these shares is shared.
(6) The above amount includes 10,664 shares held by J.R. Enterprises.
Messrs. Heraty and Ostrom are partners in J.R. Enterprises. Voting and
investment power with respect to these shares is shared by Messrs.
Hearty and Ostrom.
(7) The above amount includes 2,400 shares held in joint tenancy with one
of Mr. Ostrom's parents and 1,332 shares in joint tenancy with Mr.
Ostrom's adult children.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The Directors, officers and beneficial owners of 10% or more of the
equity securities of the Corporation are required to file certain reports with
Securities and Exchange Commission (the "SEC") pursuant to Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). A Form 3 must be
filed with the SEC within 10 days after the event by which the person becomes a
"reporting person" (i.e., director, officer, 10% owner); a Form 4 must be filed
with the SEC on or before the tenth day after the end of the month in which a
change in beneficial ownership has occurred for a reporting person; and a Form 5
must be filed with the SEC on or before the forty- fifth day after the end of
the Corporation's fiscal year for transactions or holdings that should have been
reported but were not reported. For the Corporation's fiscal year ended December
31, 1998, to the knowledge of the Corporation, all Forms 3, 4 and 5 were timely
filed with the SEC and the Corporation knows of no failure to file a required
form by any reporting person.
RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
The Board of Directors of the Corporation retained McGladrey and
Pullen, LLP, certified public accountants, as independent public accountants in
the examination of the consolidated financial statements of the Corporation for
the year ended December 31, 1998. For the year 1999, the Board of Directors has
authorized the engagement of McGladrey and Pullen, LLP as its auditors.
Representatives of McGladrey and Pullen, LLP, the Corporation's 1998
auditors, are expected to be present at the meeting and will be given the
opportunity to make a statement and will be available to respond to appropriate
questions.
14
<PAGE>
STOCKHOLDERS' PROPOSALS FOR 2000 ANNUAL MEETING
Stockholders may submit proposals appropriate for stockholder action at
the 2000 Annual Meeting consistent with the regulations of the Securities and
Exchange Commission. All such proposals should be directed to Evy Johansen,
Senior Vice President and Cashier, Uptown National Bank of Chicago, 4753 North
Broadway, Chicago, Illinois 60640, by November 19, 1999.
BY ORDER OF THE
BOARD OF DIRECTORS
/S/ RICHARD K. OSTROM
-----------------------------------------
RICHARD K. OSTROM, CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
15
<PAGE>
PROXY FOR SHARES OF COMMON STOCK SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
THE STOCKHOLDERS OF UPBANCORP, INC., TO BE HELD ON
APRIL 13, 1999
The undersigned hereby appoints Stephen W. Edwards and Alfred E. Hackbarth,
Jr., or either one of them acting in the absence of the other, with power of
substitution, attorneys and proxies, for and in the name and place of the
undersigned, to vote the number of shares of Common Stock that the undersigned
would be entitled to vote if then personally present at the Annual Meeting of
Stockholders of Upbancorp, Inc., to be held at Uptown National Bank of Chicago,
4753 North Broadway, Chicago, Illinois 60640, on Tuesday, April 13, 1999, at
9:45 A.M., local time, or any adjournment thereof, upon the matters set forth in
the Notice of Annual Meeting and Proxy Statement, receipt of which is hereby
acknowledged, as follows:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for all nominees listed below
(EXCEPT AS MARKED TO THE CONTRARY BELOW)
DELBERT R. ELLIS AND MARVIN L. KOCIAN
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
-------------------------------------------------------------------------------------------
2. In accordance with their discretion, upon all other matters that may properly come before said Meeting and
any adjournment thereof.
</TABLE>
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE NOMINEES LISTED UNDER PROPOSAL 1.
<TABLE>
<S> <C> <C> <C> <C>
Dated: , 1999 Please Sign Here
------------------- ---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
</TABLE>
NOTE: Please date proxy
and sign it exactly as
name or names appear
above. All joint owners
of shares should sign.
State full title when
signing as executor,
administrator, trustee,
guardian, etc. Please
return signed proxy in
the enclosed envelope.
