<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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
UPBANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(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):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / 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:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
CHICAGO, ILLINOIS
MARCH 17, 2000
UPBANCORP, INC.
4753 NORTH BROADWAY
CHICAGO, ILLINOIS 60640
(773) 878-2000
PROXY STATEMENT AND NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 18, 2000
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 18, 2000, at 9:45 A.M., for the
purpose of considering and voting upon the following matters:
1. To elect three (3) Directors to serve as Class II Directors
until the regular Annual Meeting of Stockholders in 2003 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 18, 2000. The record
date for determining stock ownership is March 13, 2000. Only Stockholders of
record as of March 13, 2000, will be entitled to notice of, and to vote at, the
Annual Meeting. As of March 13, 2000, the Corporation had issued and outstanding
837,308 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 1999 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 17,
2000.
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 18, 2000, three Class II Directors will be
elected for terms of three years or until their successors are elected and
qualified. The three 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 II 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
13, 2000, 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 II Directors for three years:
CLASS II (TERM EXPIRES 2003)(1)
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY
OWNED AS OF
MARCH 13, 2000(2)
---------------------------
NAME, AGE AND YEAR NO. OF PERCENT
BECAME DIRECTOR OF PRINCIPAL OCCUPATION SHARES OF CLASS
THE CORPORATION AND OTHER INFORMATION -------- ---------
- --------------- ---------------------
<S> <C> <C> <C>
Stephen W. Edwards Consultant, Planned Futures, Inc.; 54,222 6.48
Age 67 - 1985 Director of the Corporation and Uptown (3)
Robert P. Griffiths President, Chief Executive Officer and 56,841 6.79
Age 50 - 1997 Director of Uptown; Vice President and (3)
Director of the Corporation; Executive
Vice President of Heritage since
January 2000
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C>
Alfred E. Hackbarth, Jr. Attorney and CPA, Partner, Hackbarth 45,731 5.46
Age 69 - 1988 & Hudson, P.C.; Retired Partner, (4)-(6)
Arthur Andersen & Co.,S.C.; Director
of the Corporation, Uptown and Heritage
</TABLE>
CONTINUING DIRECTORS
The following persons will continue to serve as Directors for the periods
indicated:
CLASS III (TERM EXPIRES 2001)
<TABLE>
<S> <C> <C> <C>
James E. Heraty Consultant, Ready Men, Inc. since June 68,038 8.13
Age 68 - 1984 1996; prior thereto President, Ready Men, (3)(7)
Inc.; Director of the Corporation and Uptown
Richard K. Ostrom Chairman of the Board, President, 130,114 15.54
Age 60 - 1976 Chief Executive Officer and Director (3)(4)(6)-(8)
of the Corporation; Chairman of the
Board and Director of Uptown;
Chairman of the Board, Director, and
since January 2000, President and Chief
Executive Officer of Heritage
</TABLE>
CLASS I (TERM EXPIRES 2002)
<TABLE>
<S> <C> <C> <C>
Delbert R. Ellis Retired, former Executive Vice President 6,295 .75
Age 67 - 1996 of Bank of America, Arizona; Director of (4)
the Corporation; Vice Chairman of the Board
and Director of Heritage
Marvin L. Kocian President, Komar Screw Corporation; 14,255 1.70
Age 63 - 1982 Vice President, Assistant Secretary and (5)
Director of the Corporation and
Director of Uptown
</TABLE>
(1) John E. Fahrendorf, Jr., a Class II Director of the Corporation since 1993
was not slated as a Class II Director nominee. The Board of Directors has
not slated a Class II Director nominee to replace Mr. Fahrendorf.
(2) 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.
4
<PAGE>
(3) 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.
(4) The above includes 4,295 shares held by H.E.O. Enterprises. Messrs. Ellis,
Hackbarth and Ostrom are partners in H.E.O. Enterprises. Voting and
investment power with respect to these shares is shared by Messrs. Ellis,
Hackbarth and Ostrom.
(5) The above amounts do not include shares beneficially owned by the spouses
and adult children of certain Directors as follows: Kocian -840; and
Hackbarth - 6,800. Beneficial ownership of these shares is disclaimed.
(6) The above amount includes 24,000 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.
(7) The above amount includes 12,216 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.
(8) 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 60 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,
Director, and since January 2000, President and Chief
Executive Officer of Heritage
Robert P. Griffiths 50 President, Chief Executive Officer and Director of
Uptown; Vice President and Director of the Corporation;
Executive Vice President of Heritage since January 2000
Kathleen L. Harris 36 Senior Vice President and Chief Financial Officer of the
Corporation; Senior Vice President, Cashier, and since
July 1999, Director 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 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 10 times during
1999. The Nominating Committee will consider nominees recommended by the
stockholders. Recommendations should be forwarded to Evy Alsaker, Vice
President, 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 4 times during 1999.
The Board of Directors of the Corporation met 5 times during 1999. 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 1999.
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 executive officers of the Corporation or
its subsidiaries received more than $100,000 in salary and bonus during 1999.
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 1999 250,000 58,043 -0- 12,305
Chairman of the Board, 1998 225,000 33,750 11,500 11,532
President and Chief 1997 237,500 -0- 21,450 10,539
Executive Officer of the
Corporation; Chairman of
the Board and Director of
Uptown; Chairman of the
Board, Director, and since
January 2000, President
and Chief Executive
Officer of Heritage
- -------------------------------------- ---------- ---------------- -------------- ----------------- -------------------
John E. Fahrendorf, Jr.(3), 1999 170,000 24,188 -0- 7,582
President, Chief Executive 1998 159,625 14,792 5,600 7,964
Officer and Director of 1997 148,000 -0- 10,050 5,769
Heritage; Vice President
and Director of the
Corporation
- -------------------------------------- ---------- ---------------- -------------- ----------------- -------------------
Robert P. Griffiths 1999 172,500 24,251 -0- 7,272
President, Chief Executive 1998 158,525 15,150 8,000 7,600
Officer and Director of 1997 151,500 -0- 14,300 6,796
Uptown; Vice President
and Director of the
Corporation; Executive
Vice President of Heritage
since January 2000
- -------------------------------------- ---------- ---------------- -------------- ----------------- -------------------
Kathleen L. Harris 1999 105,000 7,550 -0- 3,376
Senior Vice President and 1998 99,527 4,612 -0- 3,221
Chief Financial Officer of 1997 -0- -0- -0- -0-
the Corporation; Senior
Vice President, Cashier,
and since July 1999,
Director of Heritage
====================================== ========== ================ ============== ================= ===================
</TABLE>
(1) The amount indicated for Messrs. Ostrom, Fahrendorf and Griffiths
represents Board of Directors and Committee fees.
7
<PAGE>
(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 1999, 1998 and 1997 was
$7,505, $6,732 and $6,039, respectively, for Mr. Ostrom; $2,782, $2,591
and $2,467, respectively, for Mr. Fahrendorf; and $2,472, $2,322 and
$2,186, respectively, for Mr. Griffiths.
(3) Mr. Fahrendorf ceased to hold any executive officer position with
Heritage and the Corporation as of January 12, 2000.
DIRECTORS' FEES
All non-employee Directors receive an annual retainer of $3,000 for the
Corporation, $5,000 for Uptown and $3,000 for Heritage. In addition, they
receive the following amounts for each Board of Directors and Committee meeting
they attend: Corporation Board of Directors meeting-- $700; Audit
Committee--$500; Executive Committee-- $500; Retirement Committee--$200; Uptown
Board of Directors meeting--$300; Land Trust Committee--$250; Loan and
Investment Committee--$200; Heritage Board of Directors meeting-- $300; and Loan
and Investment Committee-- $200. Employee Directors do not receive an annual
retainer or attendance fees for Directors' or Committee meetings, respectively.
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 meeting 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, Ellis and Heraty 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 1999 was limited to $160,000. 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-seven years of credited service, John E. Fahrendorf, Jr., has eight years
of credited service, Robert P. Griffiths has six years of credited service and
Kathleen L. Harris has eleven 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 executive
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.
9
<PAGE>
EMPLOYMENT AGREEMENTS
In July of 1999, the Corporation entered into a five-year employment
agreement with Mr. Ostrom, effective July 1, 1999, which expires on June 30,
2004, and provides for automatic one-year extensions unless notice is given by
either Mr. Ostrom or the Corporation. This agreement supercedes a previous
employment agreement that was executed in January 1997.
The agreement provides that Mr. Ostrom will receive a base salary of at
least $250,000 per year, which can be increased but not decreased during the
term of the agreement. The agreement also provides that Mr. Ostrom will be
eligible to participate in any incentive compensation programs and other benefit
programs offered by the Corporation and that he will receive an automobile, life
insurance (including split-dollar life insurance), club memberships and
financial planning assistance.
If the executive is terminated without "Cause" or by giving notice of
nonrenewal or if he resigns for "Good Reason", the executive will be entitled to
all accrued benefits plus a lump sum pro rata annual bonus award for the year in
which the termination occurs, payable within thirty (30) days of the date of
termination (the "Accrued Obligations"). The executive will also be entitled to
severance pay equal to his base annual salary for the greater of one year or the
remainder of the term of the agreement and group medical benefits, as well as
life and accident and disability insurance coverage through the severance
period, at the Corporation's cost (the "Accrued Obligations"). In addition, the
executive will be entitled to his split-dollar life insurance policy; to
purchase the bank car he was using at its book value; and to outplacement
counseling for a period of up to two years or until he secures employment, if
less than 2 years, at a cost not to exceed $15,000. Severance pay will be paid
regardless of whether the executive becomes employed following such termination.
Additional severance pay and medical benefits may be provided for up to twelve
additional months if the executive has not obtained employment.
If the executive is terminated "for cause" or voluntarily terminates
his employment, the executive is only entitled to receive payment of the Accrued
Obligations. "Cause" is defined as the willful and continued failure to perform
substantially his duties, willful engaging in illegal conduct or gross
misconduct detrimental to the Corporation or conviction of a felony involving
moral turpitude.
Upon a "Change-In-Control" of the Corporation, the term of the
agreement will automatically be extended to the later of three years from the
date of the Change-In-Control or June 30, 2005. 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 20% 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.
10
<PAGE>
If the executive is terminated or resigns for "Good Reason" after a
Change-In-Control and within the extended term of the agreement, or resigns for
any reason (or becomes disabled or dies) within a one-year period after a
Change-In-Control, the executive will be entitled to receive the Accrued
Obligations plus the following compensation and benefits for four years
following his termination. The executive will be entitled to his annual base
salary and annual bonus award; annual contributions to the Corporation's
retirement plans based on the rate of contributions to such plans for the
calendar year immediately preceding the Change-In-Control or date of
termination, whichever produces the greater amount; compensation for perquisites
to which he was entitled in an amount equal to 7.5% of his annual salary;
amounts paid by the Corporation on the executive's behalf for other benefits
including club memberships and group medical benefits, as well as life and
accident and disability insurance coverage, at the Corporation expense; and
outplacement counseling for a period of up to two years or until he secures
employment, if less than 2 years, at a cost not to exceed $15,000. The executive
has the option to have the total value of the above compensation and benefits
made in a lump sum payment after a Change-In-Control.
The executive will also be entitled to receive supplemental
compensation in the event that, as a result of a Change-In-Control, he is
subject to any excise tax for "excess parachute payments," as defined in the
Internal Revenue Code. The Corporation would be required to reimburse the
executive so that on an after-tax basis, he receives the full value of the
compensation to be paid to him following a Change-In-Control.
"Good Reason" occurs under the agreement 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.
If the executive dies other than during a one-year period following a
Change-In-Control, he will not receive any special death benefits and his estate
will receive the Accrued Obligations plus any life insurance proceeds. If the
executive becomes disabled other than during a one-year period following a
Change-In-Control, he will be paid through the date of his termination. In
addition, the Corporation will maintain the executive's split-dollar life
insurance and he can purchase the bank car he was using at its book value.
If the executive retires, the Corporation will pay his medical and
dental insurance. The executive will also be entitled to acquire the
split-dollar life insurance policy and purchase the bank car he was using at its
book value.
The agreement provides that during the term of the agreement and 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 business located within a ten- mile radius of the
Corporation. This limitation does not apply to businesses located in the central
loop area of Chicago.
11
<PAGE>
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. Under these agreements, Mr. Fahrendorf
received from Heritage a salary of $170,000 in 1999 and will receive a salary of
$175,000 for 2000, and Mr. Griffiths received from Uptown a salary of $172,500
in 1999 and will receive a salary of $177,500 for 2000. 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 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 ceased to hold any executive officer position with
Heritage and the Corporation as of January 12, 2000. Upon termination without
cause, Heritage is required to pay the executive one-year's base salary and
continue certain benefits. The parties are presently engaged in discussions
concerning the identification and resolution of the rights and obligations under
Mr.Fahrendorf's agreement.
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
12
<PAGE>
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 1999. 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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 13, 2000, 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>
Cede & Co. 338,962(2) 40.48%
c/o Depository Trust Company
New York, NY
Richard K. Ostrom 130,114(3)-(7) 15.54%
Chicago, IL
James E. Heraty 68,038(5)(6) 8.13%
Chicago, IL
</TABLE>
13
<PAGE>
<TABLE>
<S> <C> <C>
Robert P. Griffiths 56,841(5) 6.79%
Chicago, IL
Stephen W. Edwards 54,222(5) 6.48%
Chicago, IL
Wilmington Trust Corporation 51,700(8) 6.20%
Wilmington, DE
Raymond K. Jorgensen 50,200(2) 6.00%
Chicago, IL
Alfred E. Hackbarth, Jr. 45,731(3)(4) 5.46%
Chicago, IL
All officers and Directors
(10 persons) as a group 188,514 22.51%
</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. The
above amount includes 50,200 shares held for the benefit of Raymond K.
Jorgensen.
(3) The above amount includes 4,295 shares held by H.E.O. Enterprises.
Messrs. Ellis, Hackbarth and Ostrom are partners in H.E.O. Enterprises.
Voting and investment power with respect to these shares is shared by
Messrs. Ellis, Hackbarth and Ostrom.
(4) The above amount includes 24,000 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. Voting and investment power with respect to
these shares is shared.
(6) The above amount includes 12,216 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 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.
(8) Wilmington Trust Corporation is a trust company which is a depository
for trustees for trusts holding Common Stock of the Corporation. The
above amounts include 39,873 shares held by Wilmington Trust
Corporation, Wilmington
14
<PAGE>
Trust Company and Wilmington Trust FSB as co-trustees. Voting and
investment power with respect to these shares is shared.
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, 1999, 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, 1999. For the year 2000, 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 1999
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.
15
<PAGE>
STOCKHOLDERS' PROPOSALS FOR 2001 ANNUAL MEETING
Stockholders may submit proposals appropriate for stockholder action at
the 2001 Annual Meeting consistent with the regulations of the Securities and
Exchange Commission. All such proposals should be directed to Evy Alsaker, Vice
President, Upbancorp, Inc., 4753 North Broadway, Chicago, Illinois 60640, by
November 17, 2000.
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
16
<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 18, 2000
The undersigned hereby appoints Delbert R. Ellis and Marvin L. Kocian, 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 18, 2000, 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)
STEPHEN W. EDWARDS, ROBERT P. GRIFFITHS AND ALFRED E. HACKBARTH, JR.
(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: , 2000 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.
