-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ola11SW0L1/MGqXHYoIYcYuddhw2lGKumq/vSqMS9Gz9Qz/5g7mTXQG7Zu+DX82j Kn4Q5N+vdzWUlQTizPcJow== 0000950137-97-001390.txt : 19970402 0000950137-97-001390.hdr.sgml : 19970402 ACCESSION NUMBER: 0000950137-97-001390 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970401 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALUMET BANCORP INC /DE CENTRAL INDEX KEY: 0000879694 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 363785272 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-19829 FILM NUMBER: 97572385 BUSINESS ADDRESS: STREET 1: 1350 E SIBLEY BLVD CITY: DOLTON STATE: IL ZIP: 60419 BUSINESS PHONE: 7088419010 MAIL ADDRESS: STREET 1: 1350 E SIBLEY BLVD CITY: DOLTON STATE: IL ZIP: 60419 DEF 14A 1 NOTICE & PROXY STATEMENT 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: - -------------------------------------------------------------------------------- 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 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 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. 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 6
Name and Amount and Nature Percent of Address of of Beneficial Common Stock Beneficial Owner Ownership Outstanding (a) - ---------------- ----------------- --------------- 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%
(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 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.
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 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%
4 8
OTHER EXECUTIVE OFFICERS 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%
(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 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 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 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 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:
GOAL ACTUAL WEIGHTING FACTOR ---- ------ ---------------- 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%
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 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 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 $22.38 which was the market value of the shares at the close of business on January 23, 1995. Twenty percent (20%) of the 1995 Options vested on the date of grant and twenty percent (20%) vests on January 24, 1996, 1997, 1998 and 1999. 11 15 SUMMARY COMPENSATION SCHEDULE
Annual Compensation ------------------- Other Name and Annual Principal Position Years Salary($) Bonus($) Compensation($)(1) - ------------------ ----- --------- -------- ------------------ Thaddeus Walczak 1996 $350,200 $249,500 $19,900 Chairman & CEO 1995 340,000 202,300 18,650 1994 328,701 229,417 18,650 Carole J. Lewis 1996 208,060 114,430 19,900 President & COO 1995 202,000 91,910 18,650 Director 1994 195,477 103,938 18,650 John Garlanger 1996 119,600 27,000 0 Sr. Vice President, 1995 115,000 27,000 0 Treasurer & CFO 1994 109,883 30,000 0
Long-Term Compensation ---------------------- Awards Payouts ---------------------- ------- Restricted Securities Name and Stock Underlaying LTIP All Other Principal Position Years Award ($) Options(#) Payouts($) Compensation($)(2) - ------------------ ----- ---------- ----------- ---------- ------------------ 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
(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 16 OPTION VALUE AT DECEMBER 31, 1996
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT DECEMBER 31, 1996 AT DECEMBER 31, 1996 (1) OPTION ---------------------------------- ---------------------------------- NAME PRICE EXERCISABLE (#) UNEXERCISABLE (#) EXERCISABLE (#) UNEXERCISABLE (#) ---------------- ------ --------------- ----------------- --------------- ---------------- 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
(1) BASED ON A MARKET VALUE OF $33.25 AT DECEMBER 31, 1996, LESS THE OPTION PRICE INDICATED. 13 17 CALUMET BANCORP, INC. 1996 Performance Graph [GRAPH]
12/91 12/92 12/93 12/94 12/95 12/96 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
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 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 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 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 21
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 - ----------------- ------------ -------- -------- ----------------- --------------- -------- William A. McCann First Mortgage (1) 1989 $69,200 $65,584 $64,733 8.74% Director
_____________________ (1) Loan secured by principal residence. 18 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 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 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 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 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. 23 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 / ________________________________________________________________________________ 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
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) EX-99.A 2 1997 STOCK OPTION PLAN 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. 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. 2 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 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. 4 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. 5 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. 6 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. 7 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. 8 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. 9 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. 10 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. 11 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 EX-27 3 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
9 1,000 US 12-MOS DEC-31-1996 JAN-01-1996 DEC-31-1996 1 3,021 6,154 0 0 57,362 27,970 27,375 391,870 5,630 510,217 360,978 30,675 7,625 29,175 0 0 36 81,728 510,217 32,810 6,109 0 38,919 18,348 21,054 17,865 800 53 12,231 7,826 7,826 0 0 5,399 2.05 2.05 3.79% 6,334 0 0 0 4,870 114 74 5,630 5,630 0 0
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