<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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 Rule 14a-11(c) or Rule 14a-12
CALUMET BANCORP, 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> 2
[CALUMET BANCORP, INC. LOGO]
Suite 1300 - 1105 North Market Street, P.O. Box 8985
Wilmington, Delaware 19899-8985 302-427-9541
1350 East Sibley Boulevard, Dolton, Illinois 60419 708-841-9010
March 27, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
(the "Meeting") of Calumet Bancorp, Inc. (the "Company"), to be held at the
administrative office of the Company, 1350 East Sibley Boulevard, Dolton,
Illinois, on Wednesday, April 30, 1997, at 1:00 p.m.
The attached Notice of the Annual Meeting and Proxy Statement describes
the formal business to be transacted at the meeting. During the meeting, we
will also report on the operations of the Company. Directors and officers of
the Company, as well as a representative of Crowe, Chizek and Company LLP, our
independent auditors, will be present to respond to any appropriate questions
stockholders may have.
The Board of Directors of the Company has determined that the matters to
be considered at the Meeting are in the best interests of the Company and its
shareholders. For the reasons set forth in the Proxy Statement, the Board
unanimously recommends a vote "FOR" each matter to be considered.
To ensure proper representation of your shares at the Annual Meeting,
please sign, date and return the enclosed proxy card in the enclosed
postage-prepaid envelope as soon as possible even if you currently plan to
attend the meeting. This will not prevent you from voting in person, but will
assure that your vote is counted if you are unable to attend the meeting.
On behalf of the Board of Directors and all the employees of the Company
and Calumet Federal Savings and Loan Association of Chicago, I wish to thank
you for your support and interest. I look forward to seeing you at the
Meeting.
Sincerely,
/s/ Thaddeus Walczak
Thaddeus Walczak
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
CALUMET BANCORP, INC.
1350 EAST SIBLEY BOULEVARD
DOLTON, ILLINOIS 60419
(708) 841-9010
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY APRIL 30, 1997
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Shareholders
("Meeting") of Calumet Bancorp, Inc. ("Company") will be held at the
administrative office of the Company, 1350 East Sibley Boulevard, Dolton,
Illinois, on Wednesday, April 30, 1997, at 1:00 p.m.
A Proxy Card and a Proxy Statement for the Meeting are enclosed. The
Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the
Company for terms of three years each;
2. The approval of the Calumet Bancorp,
Inc. 1997 Stock Option Plan;
3. The ratification of the appointment
of Crowe, Chizek and Company LLP as the
independent auditors of the Company for the
fiscal year ending December 31, 1997; and
4. Such other matters as may properly
come before the Meeting or any adjournments
thereof.
Pursuant to the Company's Bylaws, the Board of Directors has fixed the
close of business on March 14, 1997 as the record date for the determination of
the Shareholders entitled to vote at the Meeting. Only holders of common stock
of record at the close of business on the date will be entitled to notice of
and to vote at the Meeting or any adjournments thereof.
In the event there are not sufficient votes to approve any one or more of
the foregoing proposals at the time of the Meeting, the Meeting may be
adjourned in order to permit further solicitation of proxies by the Company. A
list of stockholders entitled to vote at the Meeting will be available at the
office of the Company at 1350 East Sibley Boulevard, Dolton, Illinois for a
period of ten days prior to the Meeting.
EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE SHAREHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH THE CORPORATE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY
EXECUTED PROXY BEARING A LATER DATE. ANY SHAREHOLDER PRESENT AT THE MEETING
MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE
THE MEETING, HOWEVER, IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED
IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD
HOLDER TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ SUSAN M. LINKUS
SUSAN M. LINKUS
SECRETARY
Dolton, Illinois
March 27, 1997
<PAGE> 4
CALUMET BANCORP, INC.
1350 EAST SIBLEY BOULEVARD
DOLTON, ILLINOIS 60419
(708) 841-9010
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 1997
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Calumet Bancorp, Inc. (hereinafter called
"Calumet Bancorp" or the "Company") to be used at the Annual Meeting of
Shareholders of the Company (hereinafter called the "Meeting"). The Company
owns one hundred (100%) percent of the issued and outstanding common stock of
Calumet Federal Savings and Loan Association of Chicago ("Calumet Federal" or
"Association"). The Meeting will be held at the administrative office of the
Company, 1350 East Sibley Boulevard, Dolton, Illinois, on Wednesday, April 30,
1997, at 1:00 p.m. The accompanying Notice of Meeting and this Proxy Statement
are being first mailed to Shareholders on or about March 27, 1997.
Regardless of the number of shares of common stock owned, it is important
that shareholders be represented by proxy or present in person at the Meeting.
Shareholders are requested to vote by completing the enclosed proxy card and
returning it signed and dated in the enclosed postage-paid envelope.
Shareholders are urged to indicate their vote in the spaces provided on the
proxy card. Proxies solicited by the Board of Directors of the Company will be
voted in accordance with the directions given therein. Where no instructions
are indicated, proxies will be voted FOR the election of the Board of
Directors' nominees for directors and FOR the ratification of Crowe, Chizek and
Company LLP as independent auditors for the fiscal year ending December 31,
1997.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Meeting. Execution of a proxy, however,
confers on the designated proxy holders discretionary authority to vote the
shares in accordance with their best judgment on such other business, if any,
that may properly come before the Meeting or any adjournments thereof.
A proxy may be revoked at any time prior to its exercise by the filing of
a written notice of revocation with the Secretary of the Company, by delivering
to the Company a duly executed proxy bearing a later date, or by attending the
Meeting, and voting in person. However, if you are a shareholder whose shares
are not registered in your own name, you will need additional documentation
from your record holder to vote personally at the Meeting.
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, a
proxy solicitation firm, Morrow & Company, Inc., will assist the Company in
soliciting proxies for the Meeting and will be paid a fee of $3,500.00, plus
out-of-pocket expenses. Proxies may also be solicited personally or by
telephone or telegraph by directors, officers and regular employees of the
Company and Calumet Federal, without additional compensation therefor. Calumet
Bancorp will also request persons, firms and corporations holding shares in
their names, or in the name of their nominees, which are beneficially owned by
others, to send proxy material to and obtain proxies from such beneficial
owners, and will reimburse such holders for their reasonable expenses in doing
so.
<PAGE> 5
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The securities which may be voted at the Meeting consist of shares of
Common Stock of Calumet Bancorp, with each share entitling its owner to one
vote on all matters to be voted on at the Meeting except as described below.
There is no cumulative voting for the election of directors. The close of
business on March 14, 1997, has been fixed by the Board of Directors as the
record date ("Record Date") for the determination of shareholders entitled to
notice of and to vote at the Meeting and any adjournments thereof. The total
number of shares of Common Stock outstanding on the Record Date was 2,238,147
shares.
The presence, in person or by proxy, of at least a majority of the total
number of shares of Common Stock entitled to vote (after subtracting any shares
in excess of the Limit pursuant to the provisions of Article XIII of the
Company's Certificate of Incorporation) is necessary to constitute a quorum at
the Meeting. In the event there are not sufficient votes for a quorum or to
approve any proposal at the time of the Meeting, the Meeting may be adjourned
in order to permit the further solicitation of proxies.
The following table sets forth certain information as to those persons
believed by management to be beneficial owners of more than 5% of the
outstanding shares of Common Stock on March 14, 1997. Persons and groups
owning in excess of 5% of the Common Stock are required to file certain reports
regarding such ownership with the Company and with the Securities and Exchange
Commission, in accordance with the Securities Exchange Act of 1934 (the
"Exchange Act"). Additionally, certain other publicly available Exchange Act
reports may provide information regarding the identities of persons or groups
who hold in excess of 5% of the common stock. Other than those persons listed
below, the Company is not aware of any person or group, as such term is defined
in the Exchange Act, that owns more than 5% of the Common Stock as of March 14,
1997.
2
<PAGE> 6
<TABLE>
<CAPTION>
Name and Amount and Nature Percent of
Address of of Beneficial Common Stock
Beneficial Owner Ownership Outstanding (a)
- ---------------- ----------------- ---------------
<S> <C> <C>
Calumet Federal Savings & Loan
Association of Chicago
Employee Stock Ownership Plan
and Trust
1350 East Sibley Boulevard
Dolton, Illinois 60419 267,707(b) 12.0%
Thaddeus Walczak
38 East Road
Chesterton, Indiana 46304 253,681(c) 11.3%
Carole J. Lewis
38 East Road
Chesterton, Indiana 46304 196,831(d) 8.8%
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199 171,000(e) 7.6%
</TABLE>
(a) The total number of shares of Common Stock outstanding on March 14, 1997
was 2,238,147.
(b) The trustee of the Calumet Federal Savings and Loan Association of
Chicago Employee Stock Ownership Plan and Trust, Cole Taylor Bank,
Chicago, Illinois, has sole voting and dispositive power over 84,870
unallocated shares of Common Stock of the Company held in the Trust
and shared voting and dispositive power over 182,837 allocated
shares of common stock held in the Trust. Allocated shares will be
voted by the ESOP trustee in accordance with the instructions of
participating employees. Unallocated shares will be voted by the
ESOP trustee as directed by the ESOP Committee. The ESOP Committee
is composed of Company Directors Henry J. Urban, Louise Czarobski
and William A. McCann.
(c) The number of shares owned by Mr. Walczak, an Officer and Director
of the Company, include 104,982 shares of the Common Stock of the
Company which may be acquired pursuant to presently exercisable
options.
(d) The number of shares owned by Ms. Lewis, an Officer and Director of
the Company, includes 64,681 shares of Common Stock of the Company
which may be acquired pursuant to presently exercisable options.
(e) Based on information filed in a Schedule 13G by John Hancock
Advisers, Inc. on January 31, 1996
3
<PAGE> 7
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of seven members.
The Company's Bylaws provide that Directors are to be elected for terms of
three years, approximately one-third of whom are elected annually. Two
directors will be elected at the Meeting to serve for a three year period, or
until their respective successors have been elected and qualified. The
Nominating Committee, consisting of all the Directors of the Company, has
nominated for election as Directors William A. McCann and Darryl Erlandson,
each for a three year term. The nominees are currently members of the Board of
Directors of the Company and the Association. Each director of the Company is
also a director of the Association.
If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute as the Board of
Directors may recommend or the Board of Directors may amend the Bylaws and
reduce the size of the Board. At this time, the Board knows of no reason why
any nominee might be unavailable or unwilling to serve. Unless authority to
vote for the directors is withheld, it is intended that the shares represented
by the enclosed Proxy will be voted FOR the election of both nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
NAMED IN THIS PROXY STATEMENT.
The following table sets forth as to each nominee and director continuing
in office, his or her name, age, the year he or she first became a director and
the number of shares of Common Stock and the percent thereof beneficially owned
at March 14, 1997. The table also sets forth the number of shares of Common
Stock and the percent thereof beneficially owned by non-director executive
officers and by all directors and executive officers as a group at March 14,
1997.
<TABLE>
<CAPTION>
Shares of
Common Stock
Year Beneficially
First Elected Year Owned at Percent of
Name Age(1) Director(2) Term Expires March 14, 1997(3) Class
- ---- ------ ------------- ------------ ----------------- -----------
BOARD NOMINEES
<S> <C> <C> <C> <C> <C>
William A. McCann(5) 59 1991 2000(4) 32,605 1.5%
Darryl Erlandson(6) 36 1996 2000(4) 7,050 0.3%
DIRECTORS CONTINUING IN OFFICE
Thaddeus Walczak(7) 68 1950 1998 253,681 11.3%
Dr. Henry J. Urban(5)
(7) 72 1953 1998 29,163 8.8%
Carole J. Lewis(6) 58 1975 1999 196,831 0.6%
Louise Czarobski(5) 72 1982 1999 12,423 0.5%
Tytus R. Bulicz 52 1991 1999 1,027 0.0%
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
OTHER EXECUTIVE OFFICERS
<S> <C> <C> <C> <C> <C>
John Garlanger 50 N/A N/A 65,366 2.9%
All directors and executive officers as a group (15 persons) 696,670 31.1%
</TABLE>
(1) At December 31, 1996.
(2) Includes prior service on the Board of Directors of Calumet Federal.
(3) In accordance with Rule 13d-3 under the Exchange Act, a person is
deemed to be the beneficial owner, for purposes of this table, of any
shares of Common Stock if he or she has shared voting and/or
investment power with respect to such security. The table includes
shares owned by spouses, other immediate family members in trust,
shares held in retirement accounts or funds for the benefit of the
named individuals, and other forms of ownership, over which shares the
persons named in the table possess voting and investment power. This
table also includes 248,874 shares of Common Stock subject to
outstanding options which will be exercisable within sixty days from
March 14, 1997.
(4) Assuming re-election at the Meeting.
(5) Member of the ESOP Committee which directs ESOP Trustee vote for
84,870 shares of unallocated shares held by ESOP Trust.
(6) Darryl Erlandson is the son-in-law of Carole J. Lewis.
(7) Thaddeus Walczak is a first cousin to Dr. Henry J. Urban.
Set forth below is certain information with respect to the nominees for
directors and the continuing directors of the Company. Unless otherwise
indicated, the principal occupation listed for each person below has been his
or her occupation for the past five years.
CAROLE J. LEWIS has been with Calumet Federal since 1965. Ms. Lewis was
appointed President and Chief Operating Officer of the Association in January,
1987 and has been a director since 1975. Prior to being appointed President of
the Association, Ms. Lewis has served as Executive Vice President, Chief Loan
Officer and Marketing Director of the Association.
LOUISE CZAROBSKI, now retired, was previously an executive secretary for
Continental Bank of Illinois, now known as Bank of America Illinois.
THADDEUS WALCZAK joined Calumet Federal in 1955 and has served as Chairman
of the Board and Chief Executive Officer since January, 1987. For the past
forty-one years Mr. Walczak has been a member of the Association's Board of
Directors. He was appointed President of the Association in 1961 and served in
that capacity until January, 1987.
DR. HENRY J. URBAN is a self-employed dentist in Chicago, Illinois.
5
<PAGE> 9
WILLIAM A. MCCANN is the President and sole stockholder of William A.
McCann Associates, Inc., a real estate appraisal and consulting firm in
Chicago, Illinois. William A. McCann Associates, Inc. has been periodically
engaged by the Association to provide real estate appraisal services. Mr.
McCann serves on the Mayor of Chicago's Task Force Committee on institutional
land uses.
TYTUS R. BULICZ is a Senior Development Engineer for the Advanced
Combustion Group of Navistar International Transportation Corporation. Mr.
Bulicz has been a member of the Board of Directors of the Association since
November, 1991 and a director of Calumet Bancorp since August, 1995.
DARRYL ERLANDSON is a Vice President of the Association and president of
its subsidiaries, Calumet Savings Service Corporation and Calumet Financial
Corporation. Mr. Erlandson was elected to the Board of the Company and
Association in June, 1996 to fill the vacancy created by the resignation of
Sylvester Lulinski who resigned for medical reasons.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company and Association conduct their
business through meetings of the Board and through their committees. During
the fiscal year ended December 31, 1996, the Board of Directors of the Company
held 12 meetings and the Board of Directors of Calumet Federal held 12
meetings. No director of the Company or Calumet Federal attended fewer than
75% of the total meetings of the Board and committee meetings on which such
Board member served during this period.
The Board of Directors of the Company has also established a Stock Option
Committee. This committee did not meet during the year ended December 31,
1996.
The Board of Directors of the Association has established Executive, Audit
and Compliance, Compensation and Community Reinvestment Act ("CRA") Committees.
The Executive Committee consists of Mr. Walczak, Ms. Lewis and Dr. Urban.
This Committee has the authority to exercise most powers of the Board of
Directors between meetings of the full Board of Directors. The Executive
Committee also recommends employee salaries and benefits (except with regard to
its members), as well as the election of officers, the establishment of
Association committees and various other organizational activities of the
Association on an annual basis. All activities of this Committee are reported
to the Association's Board of Directors on a periodic basis. This Committee
met once during 1996.
The Audit and Compliance Committee consists of Dr. Urban, Mr. Bulicz and
Ms. Czarobski. This Committee reviews the Company's budget and audit
performance and meets with the Company's auditors. This Committee met 4 times
in 1996. In addition, this Committee oversees and monitors the Company's
system of internal control by, among other things, monitoring and reviewing
regulatory reports and the Internal Audit Department activities.
The members of the Compensation Committee are William McCann, who serves
as Chairman, Tytus R. Bulicz, Louise Czarobski and Dr. Henry J. Urban. This
Committee met three times during 1996.
6
<PAGE> 10
The board members of the CRA Committee are William McCann, Henry J. Urban,
Carole J. Lewis and Tytus Bulicz. This committee implements CRA policies and
programs and monitors the Association's activities in the CRA area. This
Committee met four times during 1996.
Article II, Section 14 of the Company's Bylaws provides that the Board of
Directors of the Company shall act as a nominating committee for selecting the
management nominees for election as directors. Such section of the Bylaws also
provides as follows: "No nominations for directors except those made by the
nominating committee shall be voted upon at the annual meeting unless other
nominations by shareholders are made in writing and delivered to the Secretary
of the Company in accordance with the provisions of the Company's Certificate
of Incorporation." Article II, Section 15 further provides that any new
business to be taken up at the annual meeting shall be stated in writing and
filed with the Secretary of the Company in accordance with the provisions of
the Company's Certificate of Incorporation. Article X of the Certificate of
Incorporation provides that notice of a stockholder's intent to make a
nomination or present new business at the meeting ("stockholder notice") must
be given not less than thirty days nor more than sixty days prior to any such
meeting; provided, however, that if less than thirty-one days' notice of the
meeting is given to Shareholders by the Company, a stockholder's notice shall
be delivered or mailed, as prescribed, to the Secretary of the Company not
later than the close of the tenth day following the day on which notice of the
meeting was mailed to Shareholders. If properly made, such nominations shall
be considered by Shareholders at such meeting. The Board of Directors of the
Company held a meeting in such capacity on February 25, 1997, in order to
nominate the individuals for election at the Meeting.
REPORT OF COMPENSATION COMMITTEE
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain data and information in regard to the
compensation and benefits provided to the Company's Chief Executive Officer and
other executive officers of the Company. The disclosure requirements for the
Chief Executive Officer and such executive officers include the use of tables
and a report explaining the rationale and considerations that led to
fundamental compensation decisions affecting those individuals. In fulfillment
of this requirement, the Compensation Committee of the Company, at the
direction of the Board of Directors has prepared the following report for
inclusion in this proxy statement.
The Compensation Committee is responsible for establishing the
compensation for the senior executive officers of the Company and its
subsidiaries consistent with the Company's and the Association's business
plans, strategies, and goals. The Compensation Committee establishes the
factors and criteria upon which the executive officers' compensation is based
and how such compensation relates to the Company's performance, general
compensation policies, competitive realities, and regulatory requirements.
The Compensation Committee's functions and objectives are to: (A)
determine the competitiveness of current base salary, annual incentives and
long-term incentives relative to specific competitive markets for the Chairman
and President; (B) develop a performance review mechanism that has written
objectives and goals which are used to make salary increase determinations; (C)
develop an annual incentive plan for senior management; and (D) provide
guidance to the Board of Directors in their role in establishing objectives
regarding executive compensation.
7
<PAGE> 11
The overall compensation philosophy of the Company is as follows:
> to attract and retain quality talent, which is critical to both the
short-term and long-term success of this Company;
> to reinforce strategic performance objectives through the use of incentive
compensation programs.
> to create a mutuality of interest between executive officers and
shareholders through compensation structures that share the rewards and
risks of strategic decision-making.
> to encourage executives to achieve substantial levels of ownership of
stock in the Company.
The compensation package offered to executive officers consists of a mix
of salary, incentive bonus awards, and stock option awards as well as benefits
under several employee benefit plans offered by the Association.
For the fiscal year ended December 31, 1996, the Company experienced
strong core earnings. In setting executive compensation, for the Chairman and
Chief Executive Officer, and the President and Chief Operating Officer, the
Compensation Committee considered the return on assets, return on equity, asset
quality and the maintenance of an appropriate interest rate spread as it
relates to overall industry performance.
In fiscal 1996 those measures were: Return on Assets 1.08%, Return on
Equity 6.56%, Non-performing Loans to Total Loans 1.65%, and Interest Rate
Spread 3.05%. These are the primary factors, although not the exclusive ones
considered, on which the Compensation Committee bases executive compensation.
This Committee expects to review these standards, adjusting them for unique
factors, such as the increase in equity of the Association as a result of its
conversion to a stock company and the lower interest rate environment of the
last year which helped maintain favorable interest rate spreads, in the
consideration of executive compensation and incentive compensation.
The Compensation Committee investigates the competitiveness of the
compensation of the Chairman and the President by having the following survey
data updated at least annually. Among the sources consulted are the America's
Community Bankers Peer Group Report, and SNL Securities L.P. Peer Group
Analysis.
These surveys encompass Financial Service Companies, Banks, Savings Banks,
and Thrifts throughout the United States with assets ranging from $200 million
to $1 billion. The information is used as a frame of reference for annual
salary adjustments. The base compensation of the Chairman, as given on the
summary compensation table as compared with the base compensation for similar
executives, is in the 75th percentile and that of the President is in the 50th
percentile. The Committee viewed work performance as the most important
measurement factor in setting base compensation.
8
<PAGE> 12
The Committee established certain goals and objectives in 1996 with which
to measure the performance of the Chairman and the President for the purpose of
awarding incentive bonuses based on the attainment of certain goals which were
measured as of June 30, 1996. The goals were: Return on Assets 1%; Return on
Equity 11%; Asset Quality (ratio of non-performing loans to total loans) 2.75%;
Interest rate spread 2.5%. Notwithstanding the attainment of the goals no
incentive bonus would be paid unless an incentive plan "trigger" was achieved.
The Committee determined that the "trigger" would be equal to 75% of the
performance level of the Association's peer group. The peer group selected for
this comparison consists of those savings institutions included in the
America's Community Bankers Peer Group Report. This report is prepared on a
quarterly basis and submitted to the Company and special attention is given to
the peer group referred to as the East North Central Financial Institutions
Having an Asset Size of $300 to $500 Million Residential Lenders, Utilizing
Savings and Time Funding and those that are Well Capitalized. The Peer Group
Report covers 14 profit, efficiency and exposure measures.
The Committee adopted the weighting factors establishing the importance of
the corporate goals as follows:
<TABLE>
<CAPTION>
GOAL ACTUAL WEIGHTING FACTOR
---- ------ ----------------
<S> <C> <C>
1.0% 1.08% - Return on Average Assets 60%
11% 6.56% - Return on Equity 20%
2.75% 1.65% - Asset Quality (non-performing
loans to total loans) 15%
2.50% 3.05% - Interest Rate Spread 5%
</TABLE>
Based on this weighting, average bonuses would be awarded in a range of
25% of base salary to 85% of base salary in the case of the Chairman and in a
range of 25% to 65% of base salary for President, absent special circumstances
or non-recurring items that would mandate the payment of a bonus in excess of
these limitations or the elimination of a bonus entirely. The Committee stated
such items that could be excluded in their consideration of incentive bonuses
would be profits resulting from an extraordinary or non-recurring item, profits
or losses resulting from imposition of Generally Accepted Accounting Principle
changes, regulatory changes, acquisition as a result of a merger or bulk
purchase of assets by the Company or similar circumstances. The Compensation
Committee members in the exercise of their fiduciary duty and with their
dedication to operating a safe and sound Company reserved unto themselves the
right to amend or alter, based on general economic conditions and other factors
governing the performance of the Company, the guidelines and goals established
at any time.
The members of the Compensation Committee are William McCann, who serves
as Chairman, Tytus R. Bulicz, Louise Czarobski and Dr. Henry J. Urban. No
member of the Compensation Committee is or was an officer of the Company or the
Association. McCann and Associates, a company controlled by Mr. McCann was
paid $12,500 during 1996 for appraisal work performed by that company for the
Association.
9
<PAGE> 13
The complete Board of Directors serves as the Compensation Committee for
the remainder of the executive employees of the Company. Both the Compensation
Committee and the Board will continue to review the standards of performance of
the Association and the appropriate peer group to which comparisons may be
made. They reserve the right to change the standard and peer group comparables
as they see fit in order to assure that the standards reflect the reality of
the market place and the actual performance of the Company.
DIRECTORS COMPENSATION
Directors received from the Association $1,250 for each Board meeting.
Members of the Audit Committee of the Association receive $150 for each meeting
attended; members of the Special Compensation Committee receive $300 for each
meeting attended with the chairman of the committee receiving $500; members of
the Executive Committee receive $1,250 for each meeting attended. Directors
Urban, Czarobski, Bulicz, McCann and Erlandson received $19,300, $16,800,
$16,800, $16,000, and $8,750 respectively from the Association in 1996.
Non-employee directors of the Company received $200 for each meeting attended.
Directors Urban, Czarobski, McCann and Bulicz each received $2,400 from the
Company in 1996; Director Erlandson received $1,400 as director's fees from the
Company in 1996. Certain non-employee directors received the non-incentive
stock options in 1992 which vest over a five year period ending February 1996
at an exercise price of $10.00 per share. Directors Urban, Czarobski and
McCann received 17,681; 7,073; and 7,073 options for the purchase of shares
respectively. On January 24, 1995 all non-employee directors received
additional non-incentive stock options which vest over a five year period
ending January, 1999 at an exercise price of $22.38 per share. Directors
Urban, Czarobski, McCann and Bulicz received 1,776; 711; 888; and 711 options
for the purchase of shares respectively. Mr. Erlandson was not a director at
the time of the 1992 and 1995 non-incentive stock option grants and
consequently holds no options. Mr. William McCann also performs appraisal work
for the Association.
EXECUTIVE COMPENSATION
The following tables set forth for the fiscal years ended December 31,
1996, 1995 and 1994 certain information as to the total compensation received
by each of the three most highly compensated executive officers of the Company
receiving total cash compensation in excess of $100,000 during this period for
services in all capacities to the Company and the Association. These amounts
reflect total cash compensation paid by the Association to these individuals
during the period. For the fiscal year ended December 31, 1996 forty percent
(40%) of the compensation paid to Mr. Walczak, thirty percent (30%) of the
compensation paid to Mr. Garlanger, and twenty-five percent (25%) of the
compensation paid to Ms. Lewis was reimbursed by the Company to the
Association, to compensate the Association for the time devoted by those
individuals to Company business.
On January 24, 1995 stock awards under the Calumet Federal Savings and
Loan Association of Chicago Management Development and Recognition Plan ("MRP")
in the amount of 14,034 shares, 14,034 shares and 3,573 shares were awarded to
Mr. Walczak, Ms. Lewis and Mr. Garlanger, respectively (the "1995 MRP Awards").
The value of those awards were set at $22.38 per share, which was the market
value of the shares at the close of business on January 23, 1995. One-third of
the 1995 MRP Awards vested on the date of grant, one-third vested on January 1,
1996 and the final one-third vested on January 1, 1997.
The incentive and non-incentive stock options granted on February 18,
1992, vested 20% on the date of grant, with another 20% vested on February 18,
1993, 1994, 1995 and 1996.
10
<PAGE> 14
On January 24, 1995, incentive and non-incentive options under the 1991
Stock Option Plan of Calumet Bancorp for 12,790 shares, 7,816 shares and 1,705
shares were granted to Mr. Walczak, Ms. Lewis and Mr. Garlanger respectively
(the "1995 Options"). The exercise price for the 1995 Options is $22.38 which
was the market value of the shares at the close of business on January 23,
1995. Twenty percent (20%) of the 1995 Options vested on the date of grant and
twenty percent (20%) vests on January 24, 1996, 1997, 1998 and 1999.
11
<PAGE> 15
SUMMARY COMPENSATION SCHEDULE
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Other
Name and Annual
Principal Position Years Salary($) Bonus($) Compensation($)(1)
- ------------------ ----- --------- -------- ------------------
<S> <C> <C> <C> <C>
Thaddeus Walczak 1996 $350,200 $249,500 $19,900
Chairman & CEO 1995 340,000 202,300 18,650
1994 328,701 229,417 18,650
Carole J. Lewis 1996 208,060 114,430 19,900
President & COO 1995 202,000 91,910 18,650
Director 1994 195,477 103,938 18,650
John Garlanger 1996 119,600 27,000 0
Sr. Vice President, 1995 115,000 27,000 0
Treasurer & CFO 1994 109,883 30,000 0
</TABLE>
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Awards Payouts
---------------------- -------
Restricted Securities
Name and Stock Underlaying LTIP All Other
Principal Position Years Award ($) Options(#) Payouts($) Compensation($)(2)
- ------------------ ----- ---------- ----------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Thaddeus Walczak 1996 $ 0 0 $ 0 $ 99,750
Chairman & CEO 1995 314,011 12,790 0 83,250
1994 0 0 0 27,257
Carole J. Lewis 1996 0 0 0 99,750
President & COO 1995 314,011 7,816 0 83,250
Director 1994 0 0 0 127,240
John Garlanger 1996 0 0 0 99,750
Sr. Vice President, 1995 79,946 1,705 0 83,250
Treasurer & CFO 1994 0 0 0 21,040
</TABLE>
(1) DIRECTORS' AND COMMITTEE FEES
(2) VALUE OF ESOP SHARES ALLOCATED PLUS AMORTIZATION OF SUPPLEMENTAL RETIREMENT
PLAN COSTS:
$99,983 WAS AMORTIZED IN 1994 FOR CAROLE J. LEWIS
12
<PAGE> 16
OPTION VALUE AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1996 AT DECEMBER 31, 1996 (1)
OPTION ---------------------------------- ----------------------------------
NAME PRICE EXERCISABLE (#) UNEXERCISABLE (#) EXERCISABLE (#) UNEXERCISABLE (#)
---------------- ------ --------------- ----------------- --------------- ----------------
<S> <C> <C> <C>
Thaddeus Walczak $10.000 97,308 -- $2,262,411 $ --
22.375 5,116 7,674 165,013 247,509
Carole J. Lewis $10.000 59,993 -- 1,394,837 --
22.375 3,126 4,690 100,836 151,275
John Garlanger $10.000 16,974 -- 394,646 --
22.375 682 1,023 22,017 33,014
</TABLE>
(1) BASED ON A MARKET VALUE OF $33.25 AT DECEMBER 31, 1996, LESS THE
OPTION PRICE INDICATED.
13
<PAGE> 17
CALUMET BANCORP, INC.
1996 Performance Graph
[GRAPH]
<TABLE>
<CAPTION>
12/91 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
NASDAQ INDEX 92.5 107.7 123.6 120.9 170.9 210.2
PEER INDEX 88.9 136.3 179.6 182.0 278.6 361.1
CBCI INDEX -- 137.9 185.0 173.6 237.9 285.0
</TABLE>
The above performance graph was prepared from data obtained from the
Center for Research in Security Prices at the University of Chicago. The index
level for all three series was set to 100.0 on February 20, 1992, the date the
Company completed its conversion and first traded on the Nasdaq stock market.
The market index being used is the CRSP Total Return Index for the Nasdaq Stock
Market (US Companies). The peer group index was based on data from all
companies listed on NASDAQ as depository institutions and includes both banks
and thrifts.
14
<PAGE> 18
EMPLOYMENT AGREEMENTS. The Association at the time of its conversion to
stock form (the "Conversion") entered into three-year employment agreements
with Mr. Walczak, Ms. Lewis and Mr. Garlanger. The annual compensation of each
of the above officers may be increased by action of the Board of Directors upon
an annual performance review. In accordance with the terms of the employment
agreements, the Board of Directors on January 31, 1997 extended each agreement
until December 31, 1999. The Association on January 31, 1997 entered into a
three year employment agreement with Mr. Erlandson. The agreements are
terminable by the Association for just cause at any time or in certain events
specified by Office of Thrift Supervision regulations.
The employment agreements provide for severance payments and other
benefits in the event of involuntary termination of employment in connection
with any change in control of the Company. Severance payments also will be
provided on a similar basis in connection with a voluntary termination of
employment where, subsequent to a change in control, officers are assigned
duties inconsistent with their positions, duties, responsibilities and status
immediately prior to such change in control. The term "change in control" is
defined in the agreements as, among other things, any time during the period of
employment when a change of control is deemed to have occurred under
regulations of the OTS or a change in the composition of more than a majority
of the Board of Directors of the Company occurs.
For each of the above officers, the severance payments from the Employers
will equal 1.00 times the officer's average annual compensation during the
prior year plus the balance of the officer's contract, but in no event will the
severance payment exceed 2.99 times the officers annual compensation during the
prior year. Such amount will be paid within five business days following the
termination of employment, unless the officer elects to receive equal monthly
installments over a three-year period. Section 280G of the Internal Revenue
Code of 1986, as amended ("Code"), states that severance payments which equal
or exceed three times the base compensation of the individual are deemed to be
"excess parachute payments" if they are contingent upon a change in control.
Individuals receiving excess parachute payments are subject to a 20% excise tax
on the amount of such excess payments, and the Association is not entitled to
deduct the amount of such excess payments. The employment agreements provide
that if the severance payments to the above officers constitute parachute
payments in the opinion of counsel to the Association, then (1) the officer may
elect to receive the maximum amount of severance payments that can be paid
without constituting excess parachute payments, or (2) if the officer does not
make such election, the Employer shall pay him a lump sum cash payment equal to
2.99 times his/her base compensation.
The agreements restrict the employee's right to compete against the
Employers for a period of one year from the date of termination of the
agreement if the employee voluntarily terminates his employment, except in the
event of a change in control, or if the Employers terminate for cause. The
Board of Directors of the Company or the Association may, from time to time,
also extend employment agreements to other senior executive officers.
SEVERANCE AGREEMENTS. The Association has entered into severance
agreements with Lorraine Straka, Susan Linkus, Deborah Cattoni and Jean A.
Adams. The severance agreements have a term of one year. The agreements
provide for severance payments if employment is terminated following a change
in control. The payments under the agreements for Ms. Straka, Ms. Linkus and
Ms. Cattoni are equal to the total amount of one times the annual compensation
paid to each executive officer during the year immediately preceding the change
in control. Ms. Adams' agreement provides that she would be paid fifty percent
(50%) of the annual compensation paid to her during the year immediately
preceding the change in control. The sum would be paid promptly after any
change in control. The term "change in control" is
15
<PAGE> 19
defined in the agreements as, among other things, any time during the
period of employment when a change in control is deemed to have occurred under
regulations of the OTS or a change in the composition of more than a majority
of the Board of Directors of the Company occurs.
PROFIT SHARING PLAN. Calumet Federal maintains a deferred compensation
profit sharing plan, the Calumet Federal Savings and Loan Association of
Chicago Profit Sharing Plan ("Profit Sharing Plan") for the benefit of its
employees. Employees become eligible to participate under the Profit Sharing
Plan after completing one year of service at the Association and attaining age
21. Each year the Association, at the discretion of the Board of Directors,
may make contributions for each eligible individual. The Association has not
made any Profit Sharing contributions in 1994, 1995 or 1996. Employees are
entitled to withdraw funds from the Profit Sharing Plan upon retirement, death,
disability or termination of employment. Normal retirement age under the Plan
is age 65. The Plan conforms to the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
EMPLOYEE STOCK OWNERSHIP PLAN. The Association maintains an ESOP for the
exclusive benefit of participating employees. In order to participate under
the ESOP, employees are required to be 21 years old and have completed one year
of service with the Association.
The ESOP is funded by contributions made by the Association in cash or
Common Stock. Benefits may be paid either in shares of Common Stock or in
cash. The ESOP originally borrowed funds from an unrelated third party lender
to purchase 282,900 shares of Common Stock issued in the Conversion on February
20, 1992. The Company repaid the original ESOP loan and extended a loan to the
ESOP for $2,263,200. This loan is secured by the shares purchased with the
proceeds and will be repaid by the ESOP with funds from the Association's
contributions and earnings on ESOP assets. Shares purchased with the loan
proceeds are held in a suspense account for allocation among participants as
the loan is repaid. The Association recorded $282,900, $565,850 and $565,850
of compensation expense during the years ended December 31, 1994, 1995 and
1996. The principal balance of the loan is $848,700 at December 31, 1996.
The Board of Directors of the Association has appointed a committee (the
"ESOP COMMITTEE"), composed of Dr. Urban, Louise Czarobski and William McCann
to administer the ESOP. Cole Taylor Bank is the independent trustee for the
ESOP. The ESOP Trustee is required to vote all allocated shares held in the
ESOP in accordance with the instructions of the participating employees.
Shares for which employees do not give instructions and unallocated shares are
voted by the ESOP Trustee in the same proportion as determined by the vote of
participants with respect to allocated shares.
STOCK OPTION PLAN. In connection with the Conversion, the Board of
Directors of the Corporation adopted the Calumet Bancorp, Inc. 1991 Stock
Option Plan (the "1991 PLAN"). The 1991 Plan authorizes granting of stock
options and limited rights for 353,625 shares of Common Stock to such officers,
key employees and directors of the Corporation or its affiliates as the Stock
Option Committee of the Board of Directors (the "COMMITTEE") may determine.
The members of the Committee are Dr. Henry J. Urban, Louise Czarobski and
William A. McCann.
16
<PAGE> 20
Options granted to date under the 1991 Plan become exercisable on a
cumulative basis in equal installments over a five year period from the date of
grant. The first installment of options became exercisable in February of
1992. The options will expire 10 years from the date of grant.
Options to purchase 14,969 shares of Common Stock were exercised in 1996.
At December 31, 1996, options to purchase 352,918 shares of Common Stock
have been granted to officers and directors. All options granted have included
limited rights which enable a holder, upon a change in control of the
Corporation, to elect to receive cash equal to the difference between the
exercise price of the option and the fair market value of the Common Stock on
the date of exercise (multiplied by the number of shares with respect to which
the rights are exercised).
MANAGEMENT RECOGNITION AND RETENTION PLAN AND TRUST. In connection with
the Conversion, the Association established the Calumet Federal Savings and
Loan Association of Chicago Management Recognition and Retention Plan and Trust
(the "MRP"). The Association contributed funds allowing the MRP to acquire
124,950 shares of Common Stock in the Conversion.
A Committee of the Board of Directors of the Association administers the
MRP. Under the MRP, awards ("AWARDS") have been granted to key employees in
the form of shares of Common Stock held by the MRP. Awards are
non-transferable and non-assessable. Prior to vesting, recipients of Awards
may not direct the voting of shares of Common Stock allocated to them. Shares
of Common Stock held by the MRP trust which have not been awarded or are not
vested, are voted by trustees as directed by the vote of the non-employee
members of the Board of Directors. At December 31, 1996, all 124,950 shares
have been awarded.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Under the Exchange Act, the Company's directors, executive officers and
any person holding more than 10% of the Company's Common Stock are required to
report their initial ownership of the Company's Common Stock and any subsequent
changes in that ownership to the Securities and Exchange Commission. Specific
due dates for these reports have been established and the Corporation is
required to disclose in this Proxy Statement any failure to file such reports
by these dates during 1996. Based solely on a review of copies of such reports
furnished to the Company, or written representations that no reports were
required, the Company believes that during 1996 all filing requirements
applicable to its directors and executive officers were satisfied.
TRANSACTIONS WITH MANAGEMENT Prior to the enactment of the Financial
Institution Reform, Recovery and Enforcement Act of 1989, Calumet Federal
offered residential mortgage loans to officers, directors and employees at
current market rates but reduced points and waived application fees on a
case-by-case basis. Since FIRREA, all loans are made to officers, directors
and employees on the same terms as loans granted to members of the general
public, except the Association may waive application fees for non-management
employees.
The following table sets forth information as to all directors and
executive officers, including members of their immediate families and
affiliated entities, who had loans with Calumet Federal aggregating $60,000 or
more during the year ended December 31, 1996.
17
<PAGE> 21
<TABLE>
<CAPTION>
Highest
Original Original Contract Balance Loan Balance at
Date of Contract Year Ended December 31, Interest
Name and Position Type of Loan Loan Balance December 31, 1996 1996 Rate
- ----------------- ------------ -------- -------- ----------------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
William A. McCann First Mortgage (1) 1989 $69,200 $65,584 $64,733 8.74%
Director
</TABLE>
_____________________
(1) Loan secured by principal residence.
18
<PAGE> 22
PROPOSAL 2. APPROVAL OF 1997 STOCK OPTION PLAN
On February 25, 1997 the Board of Directors of the Company adopted the
Calumet Bancorp, Inc. 1997 Stock Option Plan the ("1997 Plan"), subject to
approval of the 1997 Plan by the stockholders of the Company. The principal
features of the 1997 Plan are summarized below. The summary, however, is
qualified in its entirety by reference to the 1997 Plan, a copy of which is
included as Exhibit A to this Proxy Statement.
Pursuant to the 1997 Plan 100,000 shares of Common Stock of the Company
will be reserved for future issuance by the Company upon exercise of stock
options to be granted to full time employees and non-employee directors of the
Company and its subsidiaries from time to time under the 1997 Plan. The
purpose of the 1997 Plan is to increase the incentive and encourage the
continued employment of key employees, as well as the continued service of
directors, by facilitating their purchase of a stock interest in the Company.
The 1997 Plan, which is subject to stockholder approval, provides for a term of
ten years after which no awards may be made.
The 1997 Plan will be administered by a committee of at least two
disinterested directors of the Company designated by the Board of Directors
(the "Committee"). The Committee will select the employees to whom options are
to be granted and the number of shares to be granted. Certain employees and
non-employee directors of the Company and its subsidiaries will be eligible to
receive, at no cost to them, options under the 1997 Plan. Management intends
that options granted under the 1997 Plan will constitute both incentive stock
options (options that afford favorable tax treatment to recipients upon
compliance with certain restrictions and do not normally result in tax
deductions to the Company) and options that do not so qualify. The option
price may not be less than 100% of the fair market value of the shares on the
date of grant. Such options shall not be exercisable after the expiration of
ten years from the date of grant provided, however, that in the case of an
employee who owns more than 10% of the outstanding Common Stock at the time the
option is granted, the option price may not be less than 110% of the fair
market value of the shares on the date of grant, and the option shall not be
exercisable after the expiration of five years from the date of grant. Options
may be exercised by payment in cash, shares of Common Stock or a combination of
both.
All outstanding options become immediately exercisable in the event of a
change of control or imminent change in control of the Company, as defined in
the 1997 Plan. In such event, each optionee shall be entitled to receive an
amount equal to the fair market value of the Common Stock subject to such
option over the exercise price of such shares, in exchange for surrender of the
options by the optionee.
The 1997 Plan provides that the total number of option shares covered by
such plan, the number of shares covered by each option and the exercise price
per share shall be proportionately adjusted in the event of a subdivision or
consolidation of shares or the payment of a stock dividend or similar capital
adjustment effect without receipt of consideration by the Company.
No federal income tax consequences are incurred by the Company or the
optionee at the time of grant of an option. The exercise of an option which is
an incentive stock option will generally not by itself result in the
recognition of taxable income to the optionee nor entitle the Company to a
deduction at the time of such exercise. However, the difference between the
exercise price and the fair market value of the option shares on the date of
exercise is an item of tax preference which may, in certain situations, trigger
the
19
<PAGE> 23
alternative minimum tax under the Internal Revenue Code. The optionee will
recognize capital gain or loss upon resale of the shares received upon such
exercise, provided that he held such shares for at least one year after
transfer of the shares to him or two years after the grant of the option,
whichever is later. If the shares are not held for that period the optionee
will recognize ordinary income upon disposition in an amount equal to the
lesser of (i) the difference between the exercise price and the fair market
value on the date of exercise of the shares or (ii) the gain realized upon the
sale. The exercise of a non-incentive stock option will generally result in
the recognition of ordinary income by the optionee on the date of exercise in
an amount equal to the difference between the exercise price and the fair
market value of the shares acquired pursuant to the option. The Company will
be entitled to a deduction for federal income tax purposes at the same time and
in the same amount.
The Company will receive no monetary consideration for the granting of
stock options under the 1997 Plan. It will receive no monetary consideration
other than the option price per share of Common Stock issued to optionees upon
exercise of those options.
Stockholder approval will enable the Option Plan to qualify for the
granting of incentive stock options and will enable the recipients of options
to qualify for certain exemptive treatment from the short-swing profit
recapture provision of Section 16(b) of the Exchange Act.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE CALUMET
BANCORP, INC. 1997 STOCK OPTION PLAN
20
<PAGE> 24
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On September 24, 1996, the Company dismissed the firm of Ernst & Young LLP
(E&Y) as independent certified public accountants of the Company. The change
in independent certified accountants was approved by the Board of Directors.
E&Y performed audits of the financial statements for the two years ended
December 31, 1995 and 1994. Their reports did not contain an adverse opinion
or a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope, or accounting principles.
During the two years ended December 31, 1995, and from December 31, 1995
through the effective date of the E&Y termination, there were no disagreements
between the Company and E&Y on any matter of accounting principles or practice,
financial statement disclosure, or auditing scope or procedure, which
disagreements would have caused E&Y to make reference to the subject matter of
such disagreements in connection with its report.
During the two years ended December 31, 1995, and from December 31, 1995
until the effective date of the dismissal of E&Y, E&Y did not advise the
Company of any of the following matters:
1. That the internal controls necessary for the Company to develop
reliable financial statements did not exist;
2. That information had come to E&Y's attention that had led it to no
longer be able to rely on management's representations, or that had made
it unwilling to be associated with the financial statements prepared by
management;
3. That there was a need to expand significantly the scope of the audit
of the Company, or that information had come to E&Y's attention that if
further investigated: (i) may materially impact the fairness or
reliability of either a previously-issued audit report or underlying
financial statements, or the financial statements issued or to be issued
covering the fiscal periods subsequent to the date of the most recent
financial statements covered by an audit report (including information
that may prevent it from rendering an unqualified audit report on those
financial statements), or (ii) may cause it to be unwilling to rely on
management's representation or be associated with the Company's
financial statements and that, due to its dismissal, E&Y did not so
expand the scope of its audit or conduct such further investigation;
4. That information had come to E&Y's attention that it had concluded
materially impacted the fairness or reliability of either: (i) a
previously-issued audit report or the underlying financial statements,
or (ii) the financial statements issued or to be issued covering the
fiscal period subsequent to the date of the most recent financial
statements covered by an audit report (including information that,
unless resolved to the accountant's satisfaction, would prevent it from
rendering an unqualified audit report on those financial statements), or
that, due to its dismissal, there were no such unresolved issues as of
the date of its dismissal.
On September 25, 1996, the Company engaged the firm of Crowe, Chizek and
Company LLP as independent auditors for the Company for the fiscal year ended
December 31, 1996. During the two years ended December 31, 1995, and from
December 31, 1995 through the engagement of Crowe, Chizek and Company LLP as
the Company's independent accountant, neither the Company nor anyone on its
behalf had consulted Crowe, Chizek and Company LLP with respect to any
accounting or auditing issues involving the Company. In particular, there were
no discussions with the Company regarding the application of accounting
principles to a specified transaction, the type of audit opinion that might be
rendered on the financial statements or any related item.
21
<PAGE> 25
The Board of Directors has reappointed Crowe, Chizek and Company LLP to
continue as independent auditors for the Company and its affiliates, including
the Association, for the fiscal year ending December 31, 1997 subject to
ratification of such appointment by the shareholders. Representatives of
Crowe, Chizek and Company LLP are expected to attend the Meeting. They will be
given an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from shareholders present at the
Meeting.
Unless marked to the contrary, the shares represented by the enclosed
Proxy will be voted FOR ratification of the appointment of Crowe, Chizek and
Company LLP as the independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF CROWE, CHIZEK AND COMPANY LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY.
SHAREHOLDER PROPOSALS
To be considered for inclusion in the proxy statement and proxy relating
to the annual meeting of shareholders to be held in 1998, a shareholder
proposal must be received by the Secretary of the Company at the address set
forth on the first page of this Proxy Statement, not later than November 26,
1997. Any such proposal shall be subject to 17 C.F.R. Section 240.14a-8 of the
Rules and Regulations of the Securities and Exchange Commission.
NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING AND SHAREHOLDER
NOMINATIONS.
The bylaws of the Company provide an advance notice procedure for certain
business to be brought before an annual meeting. In order for a shareholder to
properly bring business before an annual meeting, the shareholder must give
written notice to the Secretary of the Company not less than thirty (30) days
before the time originally fixed for such meeting; provided, however, that in
the event that less than thirty-one (31) days notice or prior public disclosure
of the date of the meeting is given or made to shareholders, notice by the
shareholder to be timely must be received not later than the close of business
on the tenth day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure was made. The notice must
include the shareholder's name and address, as it appears on the Company's
record of shareholders, a brief description of the proposed business, the
reason for conducting such business at the Annual Meeting, the class and number
of shares of the Company's capital stock that are beneficially owned by such
shareholder and any material interest of such shareholder in the proposed
business. In the case of nominations to the Board, certain information
regarding the nominee must be provided. The shareholder's notice of nomination
must contain all information relating to the nominee which is required to be
disclosed by the Company's bylaws and by the Exchange Act. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement and proxy relating to the 1997 Annual Meeting any shareholder
proposal which does not meet all of the requirements for inclusion established
by the Securities and Exchange Commission in effect at the time such proposal
is received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Annual
Meeting of Shareholders. If, however, other matters are properly brought
before the Meeting, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Whether or not you intend to be present at the Meeting, you are urged to
return your proxy promptly. If you are present at the Meeting and wish to vote
your shares in person, your proxy may be revoked by voting at the Meeting.
22
<PAGE> 26
A copy of the Form 10-K for the year ended December 31, 1996 as filed with
the Securities and Exchange Commission will be furnished without charge to
Shareholders of record upon written request to SUSAN M. LINKUS, SECRETARY,
CALUMET BANCORP, INC., 1350 EAST SIBLEY BOULEVARD, DOLTON, ILLINOIS 60419.
By Order of the Board of Directors
/s/ Susan M. Linkus
Susan M. Linkus
Corporate Secretary
Dolton, Illinois
March 27, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND PROMPTLY RETURN
THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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<PAGE> 27
FRONT CALUMET BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 30, 1997
THIS BALLOT IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED STOCKHOLDER OF CALUMET BANCORP, INC. DOES HEREBY ACKNOWLEDGE
RECEIPT OF NOTICE OF SAID ANNUAL MEETING AND ACCOMPANYING PROXY STATEMENT AND
CONSTITUTES AND APPOINTS THADDEUS WALCZAK, CAROLE J. LEWIS AND/OR HENRY J.
URBAN OR ANY OF THEM, WITH FULL POWER OF SUBSTITUTION, TO VOTE ALL SHARES OF
STOCK OF CALUMET BANCORP, INC. WHICH THE UNDERSIGNED IS ENTITLED TO VOTE, AS
FULLY AS THE UNDERSIGNED COULD DO IF PERSONALLY PRESENT AT THE ANNUAL MEETING
OF STOCKHOLDERS OF SAID CORPORATION TO BE HELD ON WEDNESDAY, APRIL 30, 1997 AT
1:00 P.M., AND AT ANY ADJOURNMENTS THEREOF, AT THE OFFICE OF THE CORPORATION AT
1350 EAST SIBLEY BOULEVARD, DOLTON, ILLINOIS AS FOLLOWS:
BACK PLEASE MARK IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /
________________________________________________________________________________
<TABLE>
<S> <C> <C> <C> <C> <C>
1. THE ELECTION OF WILLIAM J. MCCANN AND FOR WITHHELD FOR ALL
DARRYL ERLANDSON AS DIRECTORS FOR TERMS EXCEPT
EXPIRING IN 2000 _____ __________ ________ _________________
NOMINEE EXCEPTION
2. APPROVAL OF THE CALUMET BANCORP 1997 FOR WITHHELD ABSTAIN
STOCK OPTION PLAN _____ __________ ________
3. RATIFICATION OF THE APPOINTMENT OF FOR WITHHELD ABSTAIN
CROWE, CHIZEK AND COMPANY LLP AS _____ __________ ________
INDEPENDENT AUDITORS OF THE CORPORATION
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997
4. AS SUCH PROXIES MAY IN THEIR DISCRETION FOR WITHHELD ABSTAIN
DETERMINE UPON SUCH OTHER MATTERS AS MAY _____ __________ ________
PROPERLY COME BEFORE THE MEETING
</TABLE>
THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN AND IN THE
ABSENCE OF SUCH INSTRUCTIONS SHALL BE VOTED FOR ALL OF THE DIRECTORS, NOMINEES
AND FOR APPROVAL OF THE RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK AND
COMPANY LLP AND THE APPROVAL OF THE 1997 STOCK OPTION PLAN. IF OTHER BUSINESS
IS PRESENTED AT SAID MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE
BEST JUDGMENT OF THE PROXIES ON THOSE MATTERS.
YOU ARE URGED TO MARK, SIGN AND RETURN YOUR PROXY WITHOUT DELAY IN THE RETURN
ENVELOPE PROVIDED FOR THAT PURPOSE, WHICH REQUIRED NO POSTAGE IF MAILED IN THE
UNITED STATES.
WHEN SIGNING THE PROXY, PLEASE DATE IT AND TAKE CARE TO HAVE THE SIGNATURE
CONFORM TO THE STOCKHOLDER'S NAME AS IT APPEARS ON THIS SIDE OF THE PROXY. IF
SHARES ARE REGISTERED IN THE NAMES OF TWO OR MORE PERSONS, EACH PERSON SHOULD
SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES AND GUARDIANS SHOULD SO INDICATE
WHEN SIGNING.
SIGNATURE(S):
__________________________________
__________________________________
DATE: _____________________________
(BE SURE TO DATE YOUR PROXY)
<PAGE> 1
EXHIBIT A
CALUMET BANCORP, INC.
A HOLDING COMPANY FOR
CALUMET FEDERAL SAVINGS AND LOAN ASSOCIATION OF CHICAGO
DOLTON, ILLINOIS
1997 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. The Plan shall be known as the Calumet Bancorp,
Inc. 1997 Stock Option Plan (the "Plan"). The purpose of the Plan is to
attract and retain the best available personnel as officers, directors and
employees and to provide additional incentive to employees of Calumet Bancorp,
Inc. (the "Corporation") or any present or future parent or subsidiary of the
Corporation to promote the success of the business. The Plan is intended to
provide for the grant of "Incentive Stock Options", within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
Non-incentive Stock Options. Each and every one of the provisions of the Plan
relating to Incentive Stock Options shall be interpreted to conform to the
requirements of Section 422 of the Code.
2. DEFINITIONS. As used herein, the following definitions shall apply.
(a) "Association" shall mean Calumet Federal Savings and Loan Association
of Chicago.
(b) "Award" means the grant by the Committee of an Incentive Stock Option,
a Non-incentive Stock Option, or any combination thereof, as provided in the
Plan.
(c) "Board" shall mean the Board of Directors of the Corporation.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean the Stock Option Committee appointed by the
Board in accordance with paragraph 4(a) of the Plan.
(f) "Common Stock" shall mean common stock, $.01 par value per share, of
the Corporation.
(g) "Continuous Employment" or "Continuous Status as an Employee" shall
mean the absence of any interruption or termination of employment by the
Corporation or any present or future Parent or Subsidiary of the Corporation.
Employment shall not be considered interrupted in the case of sick leave,
military leave or any other leave of absence approved by the Corporation or in
the case of transfers between payroll locations of the Corporation or between
the Corporation, its Parent, its Subsidiaries or a successor.
<PAGE> 2
(h) "Corporation" shall mean Calumet Bancorp, Inc., a holding company.
(i) "Effective Date" shall mean the date specified In Section 14 hereof.
(j) "Employee" shall mean person employed by the Corporation or any
present or future Parent or Subsidiary of the Corporation.
(k) "Incentive Stock Option" or "ISO" means an option to purchase Shares
granted by the Committee pursuant to Section 7 hereof which is subject to the
limitations and restrictions of Section 7 hereof and is intended to qualify
under Section 422 of the Code.
(l) "Non-incentive Stock Option" or "Non-ISO" means an option to purchase
Shares granted by the Committee pursuant to Section 8, which option is not
intended to qualify under Section 422 of the Code.
(m) "Option" shall mean an Incentive or Non-incentive Stock Option granted
pursuant to this Plan.
(n) "Optioned Stock" shall mean stock subject to an Option granted
pursuant to the Plan.
(o) "Optionee" shall mean any person who receives an Option.
(p) "Parent" shall mean any present or future corporation which would be a
"parent corporation" as defined in Subsections 425(e) and (g) of the Code.
(q) "Participant" means any director, officer or key employee of the
Corporation or any Parent or Subsidiary of the Corporation or any other person
providing a service to the Corporation who is selected by the Committee to
receive an Award.
(r) "Plan" shall mean the Calumet Bancorp, Inc. 1997 Stock Option Plan.
(s) "Share" shall mean one share of the Common Stock.
(t) "Subsidiary" shall mean any present or future corporation which would
be a "subsidiary corporation" as defined in Subsections 425(f) and (g) of the
Code.
3. SHARES SUBJECT TO THE PLAN. Except as otherwise required by the
provisions of Section 12 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 100,000 shares.
Such Shares may either be authorized but unissued or treasury shares.
An Award shall not be considered to have been made under the Plan with
respect to any Option which terminates and new Awards may be granted under the
Plan with respect to the number of Shares as to which such termination has
occurred.
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<PAGE> 3
4. ADMINISTRATION OF THE PLAN.
(a) Composition of the Committee. The Plan shall be administered by the
Committee consisting of at least two directors of the Corporation appointed by
the Board. Officers, directors, key employees and other persons who are
designated by the Committee shall be eligible to receive Awards under the Plan,
and all directors designated as members of the Committee shall be
"disinterested persons" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended. A "disinterested person" is an administrator
who at the time he exercises discretion in administering the Plan has not at
any time within one year prior thereto, received a discretionary grant or award
pursuant to any stock plan of the Corporation or any of its affiliates.
(b) Powers of the Committee. The Committee is authorized (but only to the
extent not contrary to the expressed provisions of the Plan or to resolutions
adopted by the Board) to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the form and content
of Awards to be issued under the Plan and to make other determinations
necessary or advisable for the administration of the Plan, and shall have and
may exercise such other power and authority as may be delegated to it by the
Board from time to time. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at any meeting at
which a quorum is present shall be deemed the action of the Committee. In no
event may the Committee revoke outstanding Awards without the consent of the
Participant.
The Chairman of the Corporation and such other officers as shall be
designated by the Committee are hereby authorized to execute instruments
evidencing Awards on behalf of the Corporation and to cause them to be
delivered to the Participants.
(c) Effect of Committee's Decision. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on all persons
affected thereby.
5. ELIGIBILITY.
(a) Awards may be granted to officers, directors, key employees and other
persons. The Committee shall from time to time determine the officers,
directors, key employees and other persons who shall be granted Options or
Awards under the Plan, the number to be granted to each such officers,
directors, key employees and other persons under the Plan, and whether Options
granted to each such Participant under the Plan shall be Incentive and/or
Non-incentive Stock Options. In selecting Participants and in determining the
number of shares of Common Stock to be granted to each such Participant
pursuant to each Award granted under the Plan, the Committee may consider the
nature of the services rendered by each such Participant, each such
Participant's current and potential contribution to the Corporation, and such
other factors as the Committee may, in its sole discretion, deem relevant.
Officers, directors, key employees or other persons who have been granted an
Award may, if otherwise eligible, be granted additional Options or Awards.
3
<PAGE> 4
(b) The aggregate fair market value (determined as of the date the Option
is granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by each Employee during the calendar year in
which they are first exercisable (under all Incentive Stock Option plans, as
defined in Section 422 of the Code, of the Corporation or any present or future
Parent or Subsidiary of the Corporation) shall not exceed $100,000.
Notwithstanding the prior provisions of this Section 5, the Committee may grant
Options in excess of the foregoing limitations, provided said Options shall be
clearly and specifically designated as not being Incentive Stock Options, as
defined in Section 422 of the Code.
6. TERM OF PLAN. The Plan shall continue in effect for a term of ten (10)
years from the Effective date, unless sooner terminated pursuant to Section 16.
No Option shall be granted under the Plan after ten (10) years from the
Effective Date.
7. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS. Incentive Stock
Options may be granted only to Participants who are Employees. Each Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an instrument
in such form as the Committee shall from time to time approve. Each and every
Incentive Stock Option granted pursuant to the Plan shall comply with, and be
subject to, the following terms and conditions:
(a) OPTION PRICE.
(i) The price per share at which each Incentive Stock option granted under
the Plan may be exercised shall not as to any particular Incentive Stock
Option, be less than the fair market value of the Common Stock at the time such
Incentive Stock Option is granted. For such purposes, if the Common Stock is
traded otherwise on a national securities exchange at the time of the granting
of an Option, then the price per share of the Optioned Stock shall be not less
than the mean between the bid and asked price on the date the Incentive Stock
Option is granted or, if there is no bid and asked price on said date, then on
the next prior business day on which there was a bid and asked price. If no
such bid and asked price is available, then the price per share shall be
determined by the Committee. If the Common Stock is listed on a national
securities exchange at the time of the granting of an Incentive Stock Option,
then the price per share shall be not less than the average of the highest and
lowest selling price on such exchange on the date such Incentive Option is
granted or, if there were no sales on said date, then the price shall be not
less than the mean between the bid and asked price on such date.
(ii) In the case of an Employee who owns Common Stock representing more
than ten percent (10%) of the outstanding Common Stock at the time the
Incentive Stock Option is granted, the Incentive Stock Option price shall not
be less than one hundred and ten percent (110%) of the fair market value of the
Common Stock at the time the Incentive Stock Option is granted.
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<PAGE> 5
(b) PAYMENT
Full payment for each share of Common Stock purchased upon the exercise of
any Incentive Stock Option granted under the Plan shall be made at the time of
exercise of each such Incentive Stock Option and shall be paid in cash (in
United States Dollars), Common Stock or a combination of cash and Common Stock.
Common Stock utilized in full or partial payment of the exercise price shall
be valued at its fair market value at the date of exercise. The Corporation
shall accept full or partial payment in Common Stock only to the extent
permitted by applicable law. No shares of Common Stock shall be issued until
full payment therefor has been received by the Corporation, and no Optionee
shall have any of the rights of a shareholder of the Corporation until shares
of Common Stock are issued to him.
(c) TERM.
The term of each Incentive Stock Option granted pursuant to the Plan shall
be not more than ten (10) years from the date each such Incentive Stock Option
is granted, provided that in the case of an Employee who owns stock
representing more than 10% of the Common Stock outstanding at the time the
Incentive Stock Option is granted, the term of the Incentive Stock Option shall
not exceed five (5) years.
(d) EXERCISE GENERALLY.
Except as otherwise provided in Section 9 hereof, no Incentive Stock
Option may be exercised unless the optionee shall have been in the employ of
the Corporation at all times during the period beginning with the date of grant
of any such Incentive Stock Option and ending on the date three (3) months
prior to the date of exercise of any such Incentive Stock Option. The
Committee may impose additional conditions upon the right of an Optionee to
exercise any Incentive Stock Option granted hereunder which are not
inconsistent with the terms of the Plan or the requirements for qualification
as an Incentive Stock Option under Section 422 of the Code.
(e) TRANSFERABILITY.
Any Incentive Stock Option granted pursuant to the Plan shall be exercised
during any Optionee's lifetime only by the Optionee to whom it was granted and
shall not be assignable or transferable otherwise than by will or by the laws
of descent and distribution.
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<PAGE> 6
8. TERMS AND CONDITIONS OF NON-INCENTIVE STOCK OPTIONS. Each
Non-incentive Stock Option granted pursuant to the Plan shall be evidenced by
an instrument in such form as the Committee shall from time to time approve.
Each and every Non-incentive Stock Option granted pursuant to the Plan shall
comply with and be subject to the following terms and conditions:
(a) OPTION PRICE.
The price per share at which each Non-incentive Stock Option granted under
the Plan may be exercised shall not, as to any particular Non-incentive Stock
Option, be less than the fair market value of the Common Stock at the time such
Non-incentive Stock Option is granted. For such purposes, if the Common Stock
is traded otherwise than on a national securities exchange at the time of the
granting of an Option, then the price per share of the Optioned Stock shall be
not less than the mean between the bid and asked price on the date the
Non-incentive Stock Option is granted or, if there is no bid and asked price on
said date, then on the next prior business day on which there was a bid and
asked price. If no such bid and asked price is available, then the price per
share shall be determined by the Committee. If the Common Stock is listed on a
national securities exchange at the time of the granting of a Non-incentive
Stock Option, then the price per share shall be not less than the average of
the highest and lowest selling price on such exchange on the date such
Non-incentive Stock Option is granted or, if there were no sales on said date,
then the price shall be not less than the mean between the bid and asked price
on such date.
(b) PAYMENT.
Full payment for each share of Common Stock purchased upon the exercise of
any Non-incentive Stock Option granted under the Plan shall be made at the time
of exercise of each such Non-incentive Stock Option and shall be paid in cash
(in United States Dollars), Common Stock or a combination of cash and Common
Stock. Common Stock utilized in full or partial payment of the exercise price
shall be valued at its fair market value at the date of exercise. The
Corporation shall accept full or partial payment in Common Stock only to the
extent permitted by applicable law. No shares of Common Stock shall be issued
until full payment therefor has been received by the Corporation and no
Optionee shall have any of the rights of a shareholder of the Corporation until
the shares of Common Stock are issued to him.
(c) TERM.
The term of each Non-incentive Stock Option granted pursuant to the Plan
shall be not more than ten (10) years from the date each such Non-incentive
Stock Option is granted, provided that, in the case of an Employee who owns
stock representing more than 10% of the Common Stock at the time the Incentive
Stock Option is granted, the term of the Non-incentive Stock Option shall not
exceed five (5) years.
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<PAGE> 7
(d) EXERCISE GENERALLY.
The Committee may impose additional conditions upon the right of any
Participant to exercise any Non-incentive Stock Option granted hereunder which
are not inconsistent with the terms of the Plan.
(e) TRANSFERABILITY.
Any Non-incentive Stock Option granted pursuant to the Plan shall be
exercised during any Optionee's lifetime only by the Optionee to whom it was
granted and shall not be assignable or transferable otherwise than by will or
by the laws of descent and distribution.
9. EFFECT OF TERMINATION OF EMPLOYMENT, DISABILITY OR DEATH ON INCENTIVE
STOCK OPTIONS.
(a) TERMINATION OF EMPLOYMENT.
In the event that any Optionee's employment by the Corporation shall
terminate for any reason, other than Permanent and Total Disability (as such
term is defined in Section 22(e)(3) of the Code) or death, all of any such
Optionee's Incentive Stock Options, and all of any such Optionee's rights to
purchase or receive shares of Common Stock pursuant thereto, shall
automatically terminate on the earlier of (i) the respective expiration dates
of any such Incentive Stock Options or (ii) the expiration of not more than
three (3) months after the date of such termination of employment, but only if,
and to the extent that, the Optionee was entitled to exercise any such
Incentive Stock Options at the date of such termination of employment. In the
event that a subsidiary ceases to be a subsidiary of the Corporation, the
employment of all of its employees who are not immediately thereafter employees
of the Corporation shall be deemed to terminate upon the date such subsidiary
so ceases to be a subsidiary of the Corporation.
(b) DISABILITY.
In the event that any Optionee's employment by the Corporation shall
terminate as the result of the Permanent and Total Disability of such Optionee,
such Optionee may exercise any Incentive Stock Options granted to him pursuant
to the Plan at any time prior to the earlier of (i) the respective expiration
dates of any such Incentive Stock Options or (ii) the date which is one (1)
year after the date of such termination of employment, but only if, and to the
extent that, the Optionee was entitled to exercise any such Incentive Stock
Options at the date of such termination of employment.
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<PAGE> 8
(c) DEATH.
In the event of the death of any Optionee, any Incentive Stock Options
granted to any such Optionee may be exercised by the person or persons to whom
the Optionee's rights under any such Incentive Stock Options pass by will or by
the laws of descent and distribution (including the Optionee's estate during
the period of administration) at any time prior to the earlier of (i) the
respective expiration dates of any such Incentive Stock Options or (ii) the
date which is one (1) year after the date of death of such Optionee but only
if, and to the extent that, the Optionee was entitled to exercise any such
Incentive Stock Options at the date of death. For purposes of this Section
9(c), any Incentive Stock Option held by an Optionee shall be considered
exercisable at the date of his death if the only unsatisfied condition
precedent to the exercisability of such Incentive Stock Option at the date of
death is the passage of a specified period of time.
(d) INCENTIVE STOCK OPTIONS DEEMED EXERCISABLE.
For purposes of Sections 9(a), 9(b) and 9(c) above, any Incentive Stock
Option held by any Optionee shall be considered exercisable at the date of the
termination of his employment if any such Incentive Stock Option would have
been exercisable at such date of termination of employment.
(e) TERMINATION OF INCENTIVE STOCK OPTIONS.
To the extent that any Incentive Stock Option granted under the Plan to
any Optionee whose employment by the Corporation terminates shall not have been
exercised within the applicable period set forth in this Section 9, any such
Incentive Stock Option, and all rights to purchase or receive shares of Common
Stock pursuant thereto, as the case may be, shall terminate on the last date of
the applicable period.
10. EFFECT OF TERMINATION OF EMPLOYMENT, DISABILITY OR DEATH ON
NON-INCENTIVE STOCK OPTIONS. The terms and conditions of Non-incentive Stock
Options relating to the effect of the termination of an Optionee's employment,
disability of an Optionee or his death shall be such terms and conditions as
the Committee shall, in its sole discretion, determine at the time of
termination.
11. RIGHT OF REPURCHASE AND RESTRICTIONS ON DISPOSITION. The Committee,
in its sole discretion, may include, as a term of any Incentive Stock Option or
Non-incentive Stock Option, the right (the "REPURCHASE RIGHT"), but not the
obligation, to repurchase all or any amount of the Shares acquired by an
Optionee pursuant to the exercise of any such Options. The intent of the
Repurchase Right is to encourage the continued employment of the Optionee. The
Repurchase Right shall provide for, among other things, a specified duration of
the Repurchase Right, a specified price per Share to be paid upon the exercise
of the Repurchase Right and a restriction on the disposition of the Shares by
the Optionee during the period of the Repurchase Right. The Repurchase Right
may permit the Corporation to transfer or assign such right to another party.
The Corporation may exercise the Repurchase Right only to the extent permitted
by applicable law.
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<PAGE> 9
12. RECAPITALIZATION, MERGER, CONSOLIDATION, CHANGE IN CONTROL AND SIMILAR
TRANSACTIONS.
(a) ADJUSTMENT.
Subject to any required action by the shareholders of the Corporation, the
aggregate number of shares of Common Stock for which stock options may be
granted hereunder, the number of shares of Common Stock covered by each
outstanding stock option, and the exercise price per share of Common Stock of
each such stock option, shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding shares of Common Stock
resulting from a subdivision or consolidation of shares or the payment of a
stock dividend (but only on the Common Stock) or any other increase or decrease
in the number of such shares of Common Stock effected without the receipt of
consideration by the Corporation.
(b) CHANGE IN CONTROL.
All outstanding Options shall become immediately exercisable in the event
of a change in control or imminent change in control of the Corporation, as
determined by the Committee. In the event of such a change in control or
imminent change in control, the Optionee shall, at the discretion of the
Committee, be entitled to receive an amount equal to the fair market value of
the Common Stock subject to any Incentive or Non-incentive Stock Option over
the Option Price of such shares, in exchange for the surrender of Options by
the Optionee on that date in the event of a change In control or imminent
change in control of the Corporation. For purposes of this Section, "change in
control" shall mean (i) the execution of an agreement for the sale of all, or a
material portion of the assets of the Corporation; (ii) the execution of an
agreement for a merger or recapitalization of the Corporation or any merger or
recapitalization whereby the Corporation is not the surviving entity; (iii) a
change of control of the Corporation, as otherwise defined or determined by the
Office of Thrift Supervision or regulations promulgated by it or, if
applicable, by any other applicable bank regulatory agency; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of that term as it is used in Section 13(d) of the Securities Exchange
Act of 1934, as amended and the rules promulgated thereunder) of twenty-five
percent (25%) or more of the outstanding voting securities of the Corporation
by any person, trust, entity or group. The term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein. For purposes of this Section,
"imminent change in control" shall refer to any offer or announcement, oral or
written, by any person or persons acting as a group, to acquire control of the
Corporation. The decision of the Committee as to whether a change in control
or imminent change in control has occurred shall be conclusive and binding.
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<PAGE> 10
(c) EXTRAORDINARY CORPORATE ACTION.
Subject to any required action by the shareholders of the Corporation, in
the event of any change in control, recapitalization, merger, consolidation,
exchange of shares, spin-off, reorganization, tender offer, liquidation or
other extraordinary corporate action or event, the Committee, in its sole
discretion, shall have the power, prior or subsequent to such action or event
to:
(i) appropriately adjust the number of shares of Common Stock
subject to each stock option, the exercise price per share of Common
Stock, and the consideration to be given or received by the Corporation
upon the exercise of any outstanding Option;
(ii) cancel any or all previously granted Options, provided that
appropriate consideration is paid to the Optionee in connection
therewith; and/or
(iii) make such other adjustments in connection with the Plan as the
Committee, in its sole discretion, deems necessary, desirable,
appropriate or advisable; provided, however, that no action shall be
taken by the Committee which would cause Incentive Stock Options granted
pursuant to the Plan to fail to meet the requirements of Section 422 of
the Code.
Except as expressly provided in Section 12(a) and 12(b) hereof, no
Optionee shall have any rights by reason of the occurrence of any of the
events described in this Section 12.
(d) ACCELERATION.
The Committee shall at all times have the power to accelerate the exercise
date of Options previously granted under the Plan.
13. TIME OF GRANTING OPTIONS. The date of grant of an Option under the
Plan shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the determination shall be
given to each Employee to whom an Option is so granted within a reasonable time
after the date of such grant.
14. EFFECTIVE DATE. The Plan shall become effective upon adoption of the
Plan by the Board. Options may be granted prior to approval of the Plan by the
stockholders if the exercise of such Options is subject to such stockholder
approval.
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<PAGE> 11
15. APPROVAL OF STOCKHOLDERS. The Plan shall be submitted for approval by
stockholders of the Corporation within twelve (12) months after the Effective
Date. If such approval has not been obtained at or before the end of said
twelve (12) month period, all Awards granted during such time period under the
Plan shall be cancelled and become null and void.
16. MODIFICATION OF OPTIONS. At any time and from time to time, the Board
may authorize the Committee to direct the execution of an instrument providing
for the modification of any outstanding Option, provided no such modification,
extension or renewal shall confer on the holder of said Option any right or
benefit which could not be conferred on him by the grant of a new Option at
such time or shall not materially decrease the Optionee's benefits under the
Option without the consent of the holder of the Option, except as otherwise
permitted under Section 16 hereof.
17. AMENDMENT AND TERMINATION OF THE PLAN.
(a) ACTION OF THE BOARD.
The Board may alter, suspend or discontinue the Plan, except that no
action of the Board may increase (other than as provided in Section 12) the
maximum number of Shares permitted to be optioned under the Plan, materially
increase the benefits accruing to Participants under the Plan or materially
modify the requirements for eligibility for participation in the Plan unless
such action of the Board shall be subject to approval or ratification by the
shareholders of Corporation.
(b) CHANGE IN APPLICABLE LAW.
Notwithstanding any other provision contained in the Plan, in the event of
a change in any Federal or state law, rule or regulation which would make the
exercise of all or part of any previously granted Incentive and/or
Non-incentive Stock Option unlawful or subject the Corporation to any penalty,
the Committee may restrict any such exercise without the consent of the
Optionee or other holder thereof in order to comply with any such law, rule or
regulation or to avoid any such penalty.
18. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to any Option granted under the Plan unless the issuance and delivery
of such Shares shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder, any applicable state securities law and the
requirements of any stock exchange upon which the Shares may then be listed.
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<PAGE> 12
The inability of the Corporation to obtain from any regulatory body or
authority deemed by the Corporation's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder shall relieve the Corporation of any
liability with respect to the non-issuance of such Shares.
As a condition to the exercise of an Option, the Corporation may require
the person exercising the Option to make such representations and warranties as
may be necessary to assure the availability of an exemption from the
registration requirements of federal or state securities law.
19. RESERVATION OF SHARES. During the term of the Plan, the Corporation
will reserve and keep available number of Shares sufficient to satisfy the
requirements of the Plan.
20. UNSECURED OBLIGATION. No Participant under the Plan shall have any
interest in any fund or special asset of the Corporation by reason of the Plan
or the grant of any Incentive or Non-incentive Stock Option to him under the
Plan. No trust fund shall be created in connection with the Plan or any grant
of any Incentive or Non-incentive Stock Option hereunder and there shall be no
required funding of amounts which may become payable to any Participant.
21. WITHHOLDING TAX. Where a Participant or other person is entitled to
receive Shares pursuant to the exercise of an Option pursuant to the Plan, the
Corporation shall have the right to require the Participant or such other
person to pay the Corporation the amount of any taxes which the Corporation is
required to withhold with respect to such Shares, or, in lieu thereof, to
retain, or sell without notice, a number of such Shares sufficient to cover the
amount required to be withheld.
22. GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Illinois, except to the extent that
Federal law shall be deemed to apply.
I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Calumet Bancorp, Inc. on the 25th day of February, 1997.
BY: /s/ Susan M. Linkus
-------------------------------
SECRETARY
(CORPORATE SEAL)
* * * * * * * * * * * *
I hereby certify that the foregoing Plan was duly approved by the
stockholders of Calumet Bancorp, Inc. on the 30th day of April, 1997.
BY: _______________________________
SECRETARY
(CORPORATE SEAL)
12
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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