Thacher Proffitt & Wood
Two World Trade Center
New York, NY 10048
March 13, 1997
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Home Bancorp of Elgin, Inc. -- Commission File No. 0-28696
Proxy Statement for 1997 Annual Meeting
----------------------------------------------------------
Ladies and Gentlemen:
In connection with the Home Bancorp of Elgin, Inc. (the
"Company") 1997 Annual Meeting of Stockholders, and pursuant to Regulation 14A
of the Securities Exchange Act of 1934, as amended, and Rule 14a-6(b)
promulgated thereunder, enclosed on behalf of the Company are conformed copies
of the definitive proxy materials identified below.
1. Letter to stockholders;
2. Notice of annual meeting;
3. Proxy statement;
4. Form of proxy; and
5. Voting authorization form and related letter with respect to
the Company's Employee Stock Ownership Plan.
These items were first released to stockholders on March 13, 1997.
Please direct any questions or comments regarding the enclosures
to the undersigned at (212) 912-7825 or to Nazanien E. Monasebian at (212)
912-7466.
Very truly yours,
/s/ Mark I. Sokolow
-------------------------
Mark I. Sokolow
Enclosures
cc: Mr. Lyle N. Dolan
Home Bancorp of Elgin, Inc.
<PAGE>
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 ss.240.14a-11(c) or ss.240.14a-12
HOME BANCORP OF ELGIN, INC.
------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LETTERHEAD OF HOME BANCORP OF ELGIN, INC.]
March 13, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Home Bancorp of Elgin, Inc. (the "Company"), the holding company
for Home Federal Savings and Loan Association of Elgin (the "Association"),
Elgin, Illinois, which will be held on April 17, 1997 at 16 North Spring Street,
Elgin, Illinois 60120 at 2:00 p.m., Central Time (the "Annual Meeting").
The attached Notice of the 1997 Annual Meeting of Stockholders and
Proxy Statement describe the formal business to be transacted at the Annual
Meeting. Directors and officers of the Company, as well as a representative of
KPMG Peat Marwick LLP, the accounting firm appointed by the Board of Directors
to be the Company's independent auditors for the fiscal year ending December 31,
1997, will be present at the Annual Meeting to respond to appropriate questions.
The Board of Directors of the Company has determined that an
affirmative vote on each matter to be considered at the Annual Meeting is in the
best interests of the Company and its stockholders and unanimously recommends a
vote "FOR" each of these matters.
Please complete, sign and return the enclosed proxy card promptly
whether or not you plan to attend the Annual Meeting. YOUR VOTE IS IMPORTANT
REGARDLESS OF THE NUMBER OF SHARES YOU OWN. VOTING BY PROXY WILL NOT PREVENT YOU
FROM VOTING IN PERSON AT THE ANNUAL MEETING BUT WILL ASSURE THAT YOUR VOTE IS
COUNTED IF YOU ARE UNABLE TO ATTEND. IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE
-----------------------------------------
NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
- ----------------------------------------------------------------------------
YOUR RECORD HOLDER TO ATTEND AND TO VOTE PERSONALLY AT THE ANNUAL MEETING.
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EXAMPLES OF SUCH DOCUMENTATION INCLUDE A BROKER'S STATEMENT, LETTER OR OTHER
DOCUMENT CONFIRMING YOUR OWNERSHIP OF SHARES OF THE COMPANY.
On behalf of the Board of Directors and the employees of Home Bancorp
of Elgin, Inc. and Home Federal Savings and Loan Association of Elgin, we thank
you for your continued support.
Sincerely yours,
/s/ George L. Perucco
George L. Perucco
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
HOME BANCORP OF ELGIN, INC.
16 NORTH SPRING STREET
ELGIN, ILLINOIS 60120
(847) 742-3800
NOTICE OF THE 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 17, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
Home Bancorp of Elgin, Inc. (the "Company") will be held on April 17, 1997 at 16
North Spring Street, Elgin, Illinois 60120, at 2:00 p.m., Central Time, to
consider and vote upon the:
1. Election of three directors, each to serve for a term of three
years;
2. Approval of the Home Bancorp of Elgin, Inc. 1997 Stock Option
Plan;
3. Approval of the Home Bancorp of Elgin, Inc. 1997 Recognition
and Retention Plan;
4. Ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors for the fiscal year ending December 31,
1997; and
5. Authorization of the Board of Directors, in its discretion, to
direct the vote of proxies upon such matters incident to the
conduct of the Annual Meeting as may properly come before the
Annual Meeting, and any adjournment or postponement thereof,
including, without limitation, a motion to adjourn the Annual
Meeting. The Company is not aware of any other business that
may properly come before the Annual Meeting.
The Board of Directors has fixed February 21, 1997 as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and any adjournment or postponement thereof. Only stockholders of
record at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting and any adjournment or postponement thereof.
By Order of the Board of Directors,
/s/ Kathleen A. Schroeder
Kathleen A. Schroeder
VICE PRESIDENT AND SECRETARY
Elgin, Illinois
March 13, 1997
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YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER
OF SHARES YOU OWN. THE BOARD OF DIRECTORS URGES YOU TO SIGN, DATE AND
MARK THE ENCLOSED PROXY CARD PROMPTLY AND RETURN IT IN THE ENCLOSED
ENVELOPE. RETURNING THE PROXY CARD WILL NOT PREVENT YOU FROM VOTING
IN PERSON IF YOU ATTEND THE ANNUAL MEETING.
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<PAGE>
HOME BANCORP OF ELGIN, INC.
PROXY STATEMENT FOR THE
1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 17, 1997
GENERAL INFORMATION
GENERAL
This Proxy Statement and accompanying proxy card are being furnished to
the stockholders of Home Bancorp of Elgin, Inc. (the "Company") in connection
with the solicitation of proxies by the Board of Directors of the Company from
holders of the shares of the Company's issued and outstanding common stock, par
value $.01 per share (the "Common Stock"), as of the close of business on
February 21, 1997 (the "Record Date"), for use at the 1997 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held on April 17, 1997
at 16 North Spring Street, Elgin, Illinois 60120, at 2:00 p.m., Central Time,
and at any adjournment or postponement thereof. This Proxy Statement, together
with the enclosed proxy card, is first being mailed to stockholders on or about
March 13, 1997.
On September 26, 1996, the Company became the holding company for Home
Federal Savings and Loan Association of Elgin (the "Association") upon
completion of the conversion of the Association from the mutual form of
organization into the stock form of organization (the "Conversion"). The
Company, a Delaware corporation, operates as a savings association holding
company for its wholly-owned subsidiary, the Association.
RECORD DATE AND VOTING RIGHTS
The Board of Directors of the Company has fixed the close of business
on February 21, 1997 as the Record Date for the determination of the Company's
stockholders entitled to notice of and to vote at the Annual Meeting.
Accordingly, only holders of record of shares of Common Stock at the close of
business on such date will be entitled to vote at the Annual Meeting. On the
Record Date, there were 7,009,250 shares of Common Stock issued and outstanding.
The presence of the holders of at least a majority of the total number of votes
eligible to be cast in the election of directors generally by the holders of the
outstanding shares of Common Stock of the Company entitled to vote thereat,
represented in person or by proxy, shall constitute a quorum for the transaction
of business at a meeting of stockholders, except as otherwise provided by law,
the Certificate of Incorporation or the Bylaws of the Company.
Each holder of shares of Common Stock outstanding on the Record Date
will be entitled to one vote for each share of capital stock registered in his
or her name on the transfer books or records of the Company at the Annual
Meeting and at any adjournment or postponement thereof. As provided in the
Company's Certificate of Incorporation, record holders of Common Stock who
beneficially own in excess of ten percent (10%) of the issued and outstanding
shares of Common Stock ("Excess Shares") shall be entitled to cast one
one-hundredth (1/100) of one vote per share for each Excess Share. A person or
entity is deemed to beneficially own shares owned by an affiliate or associate
as well as by persons acting in concert with such person or entity. The
Company's Certificate of Incorporation authorizes and imposes a duty on the
Board of Directors, by action of a majority, to interpret all of the terms and
provisions of the Certificate of Incorporation governing Excess Shares and to
determine on the basis of information known to them after reasonable inquiry all
facts necessary to ascertain compliance with the Certificate of Incorporation,
including, without limitation, (i) the number of shares of Common Stock
beneficially owned by any person or purported owner; (ii) whether a person or
purported owner is an affiliate or associate of, or is acting in concert with,
any other person or purported owner; (iii) whether a person or purported owner
has an agreement,
<PAGE>
arrangement or understanding with any other person or purported owner as to the
voting or disposition of any shares of Common Stock; (iv) the application of any
other definition or operative provision of the Certificate of Incorporation to
the given facts; or (v) any other matter relating to the applicability or effect
of the Certificate of Incorporation.
All properly executed proxies received by the Company will be voted in
accordance with the instructions indicated thereon. IF NO INSTRUCTIONS ARE
GIVEN, EXECUTED PROXIES WILL BE VOTED FOR ELECTION OF EACH OF THE THREE NOMINEES
FOR DIRECTOR, AND FOR EACH OTHER PROPOSAL IDENTIFIED IN THE NOTICE OF THE 1997
ANNUAL MEETING OF STOCKHOLDERS. Management is not aware of any matters other
than those set forth in the Notice of the 1997 Annual Meeting of Stockholders
that may be brought before the Annual Meeting. If any other matters properly
come before the Annual Meeting, the persons named in the accompanying proxy card
will vote the shares represented by all properly executed proxies on such
matters in such manner as shall be determined by a majority of the Board of
Directors of the Company.
VOTE REQUIRED
The vote required for each proposal is set forth in the discussion of
such proposal under the caption "--Vote Required."
REVOCABILITY OF PROXIES
A proxy may be revoked at any time before it is voted by filing with
the Company a duly executed instrument revoking the proxy or by submitting a
duly executed proxy bearing a later date. A proxy may also be revoked by
attending and voting at the Annual Meeting or any adjournment or postponement
thereof, if a written revocation is filed with the secretary of the Annual
Meeting prior to the voting of such proxy.
IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN
NAME, YOU WILL NEED APPROPRIATE DOCUMENTATION FROM YOUR STOCKHOLDER OF RECORD TO
VOTE PERSONALLY AT THE ANNUAL MEETING. Examples of such documentation would
include a broker's statement, letter or other document that will confirm your
ownership of shares of the Company.
SOLICITATION OF PROXIES
The Company will bear the costs of soliciting proxies from its
stockholders. In addition to the use of mail, proxies may be solicited by
officers, directors or employees of the Company and the Association, by
telephone or through other forms of communication. The Company 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 materials
to and obtain proxies from such beneficial owners, and will reimburse such
holders for reasonable expenses incurred in connection therewith. In addition,
the Company has retained MacKenzie Partners, Inc. to assist in the solicitation
of proxies, which firm will be paid a fee of $3,000, plus out-of-pocket
expenses.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Directors, officers and employees of the Association and the Company
will be granted stock options under the Home Bancorp of Elgin, Inc. 1997 Stock
Option Plan (the "Option Plan") being presented for stockholder approval in
Proposal 2 if stockholders approve Proposal 2. See "Proposal 2 -- 1997 Stock
Option Plan." Directors, officers and employees of the Association and the
Company will be awarded restricted stock of the Company under the Home Bancorp
of Elgin, Inc. 1997 Recognition and Retention Plan (the "RRP") being presented
for stockholder approval in Proposal 3 if stockholders approve Proposal 3. See
"Proposal 3 -- 1997 Recognition and Retention Plan."
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth, as of January 31, 1997 (except where a
later date is specified), certain information as to Common Stock beneficially
owned by persons owning in excess of 5% of the outstanding shares of Common
Stock. Management knows of no person, except as listed below, who beneficially
owned more than 5% of the Company's outstanding shares of Common Stock as of
January 31, 1997. Except as otherwise indicated, the information provided in the
following table was obtained from filings with the Securities and Exchange
Commission (the "SEC") and with the Company pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Addresses provided are those
listed in the filings as the address of the person authorized to receive notices
and communications. For purposes of the table below and the table set forth
under "Security Ownership of Management," in accordance with Rule 13d-3 under
the Exchange Act, a person is deemed to be the beneficial owner of any shares of
Common Stock (1) over which such person has or shares, directly or indirectly,
voting or investment power, or (2) of which such person has the right to acquire
beneficial ownership at any time within 60 days after January 31, 1997. As used
herein, "voting power" is the power to vote or direct the voting of shares, and
"investment power" includes the power to dispose or direct the disposition of
such shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT
-------------- ---------------- -------------------- -------
<S> <C> <C> <C>
Common Stock, par Employee Stock Ownership Plan 560,740(1) 8.0%
value $.01 per share of Home Bancorp of Elgin, Inc.
16 North Spring Street
Elgin, Illinois 60120
Common Stock, par Janus Capital Corporation 486,825(2) 6.9%
value $.01 per share 100 Fillmore Street
Denver, Colorado 80206
Common Stock, par Brandes Investment Partners, L.P. 378,321(3) 5.4%
value $.01 per share San Diego, California
</TABLE>
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(1) The Employee Stock Ownership Plan ("ESOP") is administered by a committee
of the Company's Board of Directors (the "ESOP Committee"). The ESOP's
assets are held in a trust (the "ESOP Trust"), for which Harris Bank
Barrington, N.A., serves as trustee (the "ESOP Trustee"). The ESOP Trust
purchased these shares with funds borrowed from the Company, initially
placed these shares in a suspense account for future allocation and intends
to allocate them to employees over a period of years as its acquisition
debt is retired. The ESOP Trustee is the beneficial owner of the shares
held in the ESOP Trust. The terms of the ESOP Trust Agreement provide that,
subject to the ESOP Trustee's fiduciary responsibilities under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the ESOP
Trustee will vote, tender or exchange shares of Common Stock held in the
ESOP Trust as directed by the ESOP Committee. The ESOP Committee must
generally direct the vote, tender or exchange of shares of Common Stock
allocated to participants' accounts in accordance with instructions
received from the participants. As of January 31, 1997, 14,019 shares of
Common Stock held by the ESOP Trust have been allocated to eligible
participants in the ESOP. The ESOP Committee must generally vote allocated
shares as to which no instructions are received and any shares that have
not been allocated to participants' accounts in the same proportion as
allocated shares with respect to which the ESOP Committee receives
instructions. The ESOP Committee must generally direct the tender or
exchange of any shares in the suspense account or that otherwise have not
been allocated to participants' accounts in the same proportion as
allocated shares with respect to which the ESOP Committee receives
instructions are tendered or exchanged. With respect to allocated shares as
to which no instructions are received, the ESOP Committee will be deemed to
have received instructions not to tender or exchange such shares. Except as
described above, the ESOP Committee of the Company's Board of Directors has
sole investment power, but no voting power over, the Common Stock held in
the ESOP Trust.
(2) Based on information in a Schedule 13G, dated February 10, 1997, the Janus
Capital Corporation ("Janus Capital") is a registered investment adviser
which furnishes investment advice to several investment companies
registered under Section 8 of the Investment Company Act of 1940 and
individual and institutional clients (collectively referred to herein as
"Managed Portfolios"). As a result of its role as investment adviser to the
Managed Portfolios, Janus Capital may be deemed to be the beneficial owner
of the shares of Common Stock held by the Managed Portfolios. Thomas H.
Bailey owns approximately 12.2% of Janus Capital and is the President and
Chairman of the Board of Directors of Janus Capital. Mr. Bailey, as the
controlling person of Janus Capital, may be deemed to have beneficial
ownership of the shares of Common Stock beneficially owned or deemed to be
beneficially owned by Janus Capital.
(3) Based on information in a Schedule 13G, dated February 13, 1997, Brandes
Investment Partners, L.P. is an investment adviser registered under Section
203 of the Investment Advisers Act of 1940 and is deemed to be the
beneficial owner of these shares of Common Stock.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information with respect to the shares
of Common Stock beneficially owned by each director of the Company, by each
named executive officer of the Company identified in the Summary Compensation
Table included elsewhere herein, and all directors and executive officers of the
Company as a group, as of January 31, 1997. Except as otherwise indicated, each
person and each group shown in the table has sole voting and investment power
with respect to the shares of Common Stock indicated.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE PERCENT OF
POSITION WITH OF BENEFICIAL COMMON STOCK
NAME THE COMPANY(1) OWNERSHIP(2) OUTSTANDING
---- -------------- ------------ -----------
<S> <C> <C> <C>
George L. Perucco Director, President and Chief 21,260 *
Executive Officer
Lyle N. Dolan Director, Executive Vice 10,841 *
President and Treasurer
Orval M. Graening Director 10,000 (3)(4) *
Thomas S. Rakow Director 68,300 (4)(5) *
Henry R. Hines Director 10,000 (4) *
Donald E. Laird Director 3,040 (4)(6) *
Leigh C. O'Connor Director 3,500 (4) *
Richard S. Scheflow Director 3,000 (4) *
Kenneth L. Moran Senior Vice President and 8,276 *
Chief Lending Officer ----------- ----
All directors and executive 215,000 (4) 3.0%
officers as a group (13 persons)
</TABLE>
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* Less than one percent
(1) Titles are for both the Company and the Association.
(2) See "Principal Stockholders of the Company" for the definition of
"beneficial ownership."
(3) All of these shares are held by a trust for Mr. Graening.
(4) Does not include 546,721 shares held by the ESOP Trust that have not
been allocated to participants' accounts with respect to which members
of the Board of Directors who serve on the ESOP Committee may be deemed
to have sole "investment power" but no "voting" power. Each such person
disclaims beneficial ownership of these shares.
(5) Mr. Rakow owns 12,500 shares in his own name, and his spouse owns
20,000 shares in her own name. Rakow Enterprises, Inc., a corporation
controlled by Mr. Rakow, owns 12,500 shares, and 18,300 shares are held
for the benefit of Mr. Rakow by the 401(k) Plan established by this
corporation. This total also includes 5,000 shares owned by the IHC
Group Foundation. Mr. Rakow is a Trustee of this Foundation and may be
deemed to have beneficial ownership of these shares since he may
exercise "voting" and "investment power" over these shares in his
capacity as a Trustee. Mr. Rakow disclaims beneficial ownership of
these 5,000 shares.
(6) Ownership of 1,500 shares is held by a Trust established by Mr. Laird
under which his spouse is the designated beneficiary, and ownership of
1,500 shares is held by a Trust established by Mr. Laird's spouse under
which Mr. Laird is the designated beneficiary. Mr. Laird's spouse owns
40 shares in her own name.
4
<PAGE>
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PROPOSAL 1
ELECTION OF DIRECTORS
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GENERAL
The Certificate of Incorporation and Bylaws of the Company provide for
the election of directors by the stockholders. For this purpose, the Board of
Directors of the Company is divided into three classes with respect to term of
office, each class to contain, as near as may be possible, one-third of the
entire number of the Board, with the terms of office of one class expiring at
each Annual Meeting. At each annual meeting of stockholders, the successors to
the class of directors (other than directors elected by holders of shares of one
or more series of Preferred Stock, of which there currently are none) whose term
expires at that time shall be elected by the stockholders to serve for a term of
three years. There are currently eight directors of the Company.
The terms of three directors expire at the Annual Meeting. Each of the
three incumbent directors, Henry R. Hines, Thomas S. Rakow and Richard S.
Scheflow, has been nominated by the Board of Directors to be re-elected at the
Annual Meeting for a three-year term expiring at the annual meeting of
stockholders to be held in 2000, or when their successors are otherwise duly
elected and qualified. Each nominee has consented to being named in this Proxy
Statement and to serve if elected. The terms of the remaining two classes of
directors expire at the annual meetings of stockholders to be held in 1998 and
1999, or when their successors are otherwise duly elected and qualified.
In the event that any nominee for election as a director at the Annual
Meeting is unable or declines to serve, which the Board of Directors has no
reason to expect, the persons named in the Proxy Card will vote with respect to
a substitute nominee. Such substitute shall be designated by the incumbent Board
of Directors by delivery to the Secretary, not fewer than five (5) days prior to
the date of the Annual Meeting, of a written notice of substitution.
VOTE REQUIRED
Directors are elected by a plurality of the votes cast by each class of
shares entitled to vote at a meeting of stockholders, present and entitled to
vote in the election at the Annual Meeting. The holders of Common Stock may not
vote their shares cumulatively for the election of directors. Shares underlying
broker non-votes will not be counted as having been voted in person or by proxy
and will have no effect on the election of directors.
5
<PAGE>
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
The following table sets forth certain information with respect to each
nominee for election as a director and each director whose term does not expire
at the Annual Meeting ("Continuing Director"). There are no arrangements or
understandings between the Company and any director or nominee pursuant to which
such person was elected or nominated to be a director of the Company. For
information with respect to security ownership of directors, see "Security
Ownership of Certain Beneficial Owners and Management -Security Ownership of
Management."
<TABLE>
<CAPTION>
DIRECTOR TERM POSITION(S) HELD WITH THE
NOMINEES AGE(1) SINCE(2) EXPIRES COMPANY AND THE ASSOCIATION
- -------- ------ --------------- ---------------- ------------------------------------------
<S> <C> <C> <C> <C>
Henry R. Hines 77 1975 1997 Director
Thomas S. Rakow 54 1980 1997 Director
Richard S. Scheflow 72 1974 1997 Director
CONTINUING DIRECTORS
- --------------------
George L. Perucco 70 1965 1998 Director, President and Chief Executive Officer
Lyle N. Dolan 55 1984 1998 Director, Executive Vice President and Treasurer
Orval M. Graening 86 1967 1999 Director
Donald E. Laird 65 1985 1998 Director
Leigh C. O'Connor 84 1967 1999 Director
</TABLE>
- --------------------------------------------
(1) As of December 31, 1996.
(2) Includes service as a Director with the Association prior to the
Company's incorporation in 1996.
The principal occupation and business experience of each nominee for
election as director and each Continuing Director are set forth below. Unless
otherwise indicated, each of the following persons has held his present position
for the last five years.
NOMINEES FOR ELECTION AS DIRECTOR
HENRY R. HINES has served as a director of the Association since 1975.
He retired from his position as Vice President of Williams Manufacturing Co., a
medical equipment manufacturer, in 1980.
THOMAS S. RAKOW has served as a director of the Association since 1980.
He is the President of IHC Group, Inc., a general contractor, the President of
Rakow Enterprises, Inc., an equipment leasing company, and a partner in Harkow
Partnership, a real estate company.
RICHARD S. SCHEFLOW has served as a director of the Association since
1974. He is a partner with the law firm of Scheflow, Rydell, Travis & Scheflow,
located in Elgin, Illinois.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE ELECTION OF EACH NOMINEE AS DIRECTOR.
CONTINUING DIRECTORS
GEORGE L. PERUCCO has served as the President and Chief Executive
Officer of the Association since 1965. Mr. Perucco joined the Association in
1961 and has also served as Assistant Secretary, Secretary and Executive Vice
President of the Association. Prior to joining the Association, Mr. Perucco was
an executive in the Accounting Division of the United States League of Savings
Associations.
6
<PAGE>
LYLE N. DOLAN has served as the Association's Executive Vice President
and Treasurer since 1986 and as a director of the Association since 1984. Prior
to that, Mr. Dolan served as Vice President and Treasurer of the Association
since 1974 and Treasurer of the Association since 1970.
ORVAL M. GRAENING has served as a director of the Association since
1967. He is the former President of Woodruff & Edwards, Inc., a foundry company,
and retired in 1990.
DONALD E. LAIRD has served as a director of the Association since 1985.
He is the President of Laird Funeral Home, PC.
LEIGH C. O'CONNOR has served as a director of the Association since
1967. He retired from his position as Office Manager of Illinois Hydraulic Inc.,
a construction company, in 1980.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS OF THE COMPANY AND THE
ASSOCIATION
The Board of Directors of each of the Company and Association meet on a
monthly basis and may have additional special meetings from time to time. During
the fiscal year ended December 31, 1996, the Board of Directors of the
Association met 13 times and the Company's Board of Directors met six times. No
current director attended fewer than 75% of the total number of board meetings
and committee meetings of which such director was a member.
The Company has established the following committees of its Board of
Directors:
The EXECUTIVE COMMITTEE of the Company consists of Messrs. O'Connor
(Chairman), Dolan, Graening, Rakow, Perucco, Hines, Scheflow and Laird. This
Committee is authorized to exercise certain powers of the Board of Directors in
the interim period between meetings of the Board. The Executive Committee will
meet periodically to review and monitor operating expenses with a particular
emphasis on expense savings. The Executive Committee will consider longer-term
strategic and industry issues. The Company's Executive Committee did not meet in
1996, the first year of the Company's existence.
The AUDIT COMMITTEE of each of the Company and the Association consists
of Messrs. Graening (Chairman), Rakow, Hines, Scheflow, Laird and O'Connor. The
Audit Committee of the Association meets periodically to arrange the
Association's annual financial statement audit through its independent Certified
Public Accountants, KPMG Peat Marwick LLP, and to review and evaluate
recommendations made during the annual audit. The Audit Committee of the Company
will perform a similar function for the Company. The Audit Committee of the
Company did not meet in 1996, the first year of the Company's existence.
The COMPENSATION COMMITTEE of the Company consists of Messrs. Hines,
Graening, Laird, O'Connor, Rakow and Scheflow. This Committee establishes the
compensation of the Chief Executive Officer, approves the compensation of other
officers and determines the compensation and benefits to be paid to the
Association's employees. The Compensation Committee met one time in 1996, the
first year of the Company's existence.
7
<PAGE>
EXECUTIVE OFFICERS
The following individuals are executive officers of the Company and
hold the offices set forth below opposite their names.
NAME POSITION HELD WITH THE COMPANY
---- ------------------------------
George L. Perucco President and Chief Executive Officer
Lyle N. Dolan Executive Vice President and Treasurer
Kenneth L. Moran Senior Vice President and Chief Lending Officer
David G. Towe Vice President Loan Operations and Marketing
Raymond G. Bandemer Vice President
Kathleen A. Schroeder Vice President and Secretary
Pat A. Lenart Vice President
The executive officers of the Company are elected annually and hold
office until their respective successors have been elected and qualified, or
until death, resignation or removal by the Board of Directors. The Company has
entered into Employment Agreements with certain of its executive officers which
set forth the terms of their employment. See "--Employment Agreements."
Biographical information of executive officers of the Company or the
Association who are not directors is set forth below.
KENNETH L. MORAN, age 51, has served as the Association's Senior Vice
President and Chief Lending Officer since 1989. He has worked at the Association
in various capacities since 1970.
DAVID G. TOWE, age 44, has served as the Association's Vice President,
Loan Operations & Marketing since 1989. He has served the Association in various
capacities since 1973.
RAYMOND G. BANDEMER, age 54, has served as Vice President of the
Association since 1989 and has served the Association since 1981. Prior to that,
he was employed at Tel-A-Data Corporation and was Assistant Vice President at
Unity Savings Association of Chicago.
KATHLEEN A. SCHROEDER, age 49, has served as Vice President and
Secretary of the Association since 1989. She has been employed by the
Association since 1964.
PAT A. LENART, age 56, has served as the Association's Vice President,
Personnel Director since 1989. She has worked at the Association in various
capacities since 1976.
8
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
REPORT OF COMPENSATION COMMITTEE
THE FOLLOWING REPORT OF THE COMPANY'S COMPENSATION COMMITTEE IS
PROVIDED IN ACCORDANCE WITH THE RULES AND REGULATIONS OF THE SEC. PURSUANT TO
SUCH RULES AND REGULATIONS, THIS REPORT SHALL NOT BE DEEMED "SOLICITING
MATERIAL," FILED WITH THE SEC SUBJECT TO REGULATION 14A OR 14C OF THE SEC OR
SUBJECT TO THE LIABILITIES OF SECTION 18 OF THE EXCHANGE ACT.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Home Bancorp of Elgin, Inc. (the "Company") was formed in 1996 for the
purpose of becoming the holding company for Home Federal Savings and Loan
Association of Elgin (the "Association") in a stock conversion that took effect
in September, 1996. For the fiscal year ended December 31, 1996, substantially
all of the business of the Company was conducted through the Association. During
such fiscal year, the Company's Chief Executive Officer and other executive
officers served as the Chief Executive Officer and executive officers,
respectively, of the Association and performed substantially all of their
services in connection with the management and operation of the Association. As
a result, all compensation of the Chief Executive Officer and all other
executive officers for such period was paid by the Association and determined by
the Board of Directors of the Association on the recommendation of its Budget
and Salary Committee (the "Association Compensation Committee"). The Board of
Directors of the Association accepted without modification all of the
Association Compensation Committee's recommendations on executive compensation
for the fiscal year ended December 31, 1996. The composition of the Association
Compensation Committee is the same as that of the Company's Compensation
Committee.
It is the Company's policy to cause its executive officers to be
compensated, either directly or through its affiliates, using a combination of
cash compensation, consisting of a base salary and discretionary bonus payments,
and participation in the Association's fringe benefit plans. These elements are
intended to provide an overall compensation package that is commensurate with
the Company's financial resources, that is appropriate to assure the retention
of experienced management personnel and align their financial interests with
those of the Company's stockholders, and that is responsive to the immediate and
long-term needs of executive officers and their families. The compensation
practices of other savings and loan associations in the Chicago metropolitan
area are considered in establishing the overall level of compensation and the
components of the compensation package; however, it has not been a goal or
policy to set compensation at levels designed to achieve a predetermined
percentile ranking among an identified group of peer institutions.
For the fiscal year ended December 31, 1996, base salaries of all
executive officers were set at levels determined, in the subjective judgment of
the Association Compensation Committee, to be commensurate with the executive
officers' customary respective duties and responsibilities and to enable them to
maintain appropriate standards of living within their communities. Annual salary
rates were increased over the prior year's rates, primarily to reflect the value
of the executive officer's services to the Association and for cost of living
increases. Fringe benefit programs, consisting of life, disability and group
health insurance coverages, are designed to provide for the health and welfare
of the executives and their families as well as for their long-term financial
needs. In addition, all executive officers participated in the Company's
Employee Stock Ownership Plan (the "ESOP") for the fiscal year ended December
31, 1996. Each executive officer has an individual account within the ESOP Trust
which is invested primarily in employer securities, with the result that a
portion of each executive officer's long-term retirement savings is tied to the
performance of the Association and the Company.
The determination of the Chief Executive Officer's compensation for the
fiscal year ended December 31, 1996 was based on the same general principles
applied to other executive officers.
The Compensation Committee recognizes the significant additional
efforts required of the Chief Executive Officer and other executive officers of
the Association and the Company in bringing about the
9
<PAGE>
Association's successful stock conversion and the Company's initial public
offering. It also recognizes that successfully managing and operating a public
company will entail additional ongoing duties and responsibilities for each
executive officer. No additional cash compensation has been awarded on this
basis. It is the Compensation Committee's intention that any such additional
cash compensation be considered in light of the stock benefit plans being
proposed to the stockholders for their approval at this Annual Meeting.
COMPENSATION COMMITTEE OF
HOME BANCORP OF ELGIN, INC.
HENRY R. HINES
ORVAL M. GRAENING
DONALD E. LAIRD
LEIGH C. O'CONNOR
THOMAS S. RAKOW
RICHARD S. SCHEFLOW
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Hines, Graening, Laird,
O'Connor, Rakow and Scheflow. Mr. Rakow, a director of the Company, is also the
President of IHC Group, Inc., a general construction firm which performed site
utility work on the construction of the Association's South Elgin branch during
the 1996 fiscal year. Upon completion of this work, the Association paid a total
of $74,430 in fees to IHC Group, Inc. Mr. Scheflow, a director of the Company,
is also a partner in the law firm of Scheflow, Rydell, Travis & Scheflow. During
the 1996 fiscal year, this law firm provided legal representation to the
Association on corporate matters and in foreclosure proceedings. The Association
paid Scheflow, Rydell, Travis & Scheflow a total of $35,190 for legal work
performed during the 1996 fiscal year. There are no other interlocks, as defined
under the rules and regulations of the SEC, between members of the Compensation
Committee or executive officers of the Company and corporations with respect to
which such persons are affiliated, or otherwise.
10
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's total cumulative stockholder
return from September 26, 1996, the date of the Company's initial public
offering, to December 31, 1996, to the total return for the Nasdaq National
Market and the total return for the S&L Index, which is an index for publicly
traded thrift institutions that trade on a major exchange.
[Performance Graph]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
9/26/96 10/31/96 11/29/96 12/31/96
------- -------- -------- --------
<S> <C> <C> <C> <C>
Home Bancorp of Elgin, Inc. 100.00 125.00 127.50 135.00
NASDAQ Market Index 100.00 99.47 105.26 105.13
S & L Index 100.00 111.95 119.67 113.54
Assumes $100 Invested on September 26, 1996.
Assumes dividends reinvested.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THERE CAN BE NO ASSURANCE THAT STOCK PERFORMANCE WILL CONTINUE INTO THE FUTURE
WITH THE SAME OR SIMILAR TRENDS DEPICTED IN THE GRAPH ABOVE.
11
<PAGE>
DIRECTORS' COMPENSATION
FEE ARRANGEMENTS. Currently, each director of the Association, other
than Messrs. Perucco and Dolan, receives an annual retainer of $26,460 for
attendance at board meetings. The aggregate amount of fees paid to such
directors by the Association for the year ended December 31, 1996 was $158,760.
No additional fees are paid for attendance at board committee meetings.
Directors of the Company will not be separately compensated for their services
as such. It is anticipated that directors will also be eligible to receive
options and awards pursuant to the Stock Option Plans and Stock Programs
expected to be implemented by the Company. See "Proposal 2 -- 1997 Stock Option
Plan," and "--Proposal 3 -- Recognition and Retention Plan."
EXECUTIVE COMPENSATION
CASH COMPENSATION. The following table sets forth the cash compensation
paid by the Association for services rendered in all capacities during the
fiscal years ended December 31, 1996 and December 31, 1995, to the Chief
Executive Officer and all executive officers of the Association who received
aggregate salary and bonus in excess of $100,000 (the "Named Executive
Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE(1)
LONG TERM COMPENSATION
---------------------------------------------
ANNUAL COMPENSATION(2) AWARDS PAYOUTS
---------------------- ---------------------- --------------------
OTHER RESTRICTED
ANNUAL STOCK LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
POSITIONS YEAR SALARY($) BONUS($) ($)(3) ($)(4) (#)(4) ($)(4) ($)(5)
- --------------------------------- ---- --------- -------- -------------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George L. Perucco, President and
Chief Executive Officer........ 1996 $214,655 -- $4,104 -- -- -- $17,613
1995 $204,433 -- $2,884 -- -- -- $ 734
Lyle N. Dolan, Executive Vice
President and Treasurer....... 1996 $134,753 -- $4,682 -- -- -- $12,872
1995 $128,336 -- $4,635 -- -- -- $ 1,430
Kenneth L. Moran, Senior Vice
President and Chief Lending
Officer....................... 1996 $109,242 -- $3,547 -- -- -- $10,340
1995 $104,040 -- $3,625 -- -- -- $ 1,145
</TABLE>
- --------------------------------------------
(1) No information is provided for 1994, because neither the Company nor
the Association was subject to the reporting requirements of the
Exchange Act for such year, and such information has not otherwise been
included in filings made under the federal securities laws.
(2) Under Annual Compensation, the column titled "Salary" includes base
salary, director's fees and payroll deductions for health insurance
under the Association's health insurance plan.
(3) Represents amounts reimbursed for the payment of taxes. For 1995 and
1996, there were no: (a) perquisites with an aggregate value for any
named individual in excess of the lesser of $50,000 or 10% of the total
of the individual's salary and bonus for the year; (b) payments of
above-market preferential earnings on deferred compensation; (c)
payments of earnings with respect to long-term incentive plans prior to
settlement or maturation; or (d) preferential discounts on stock.
(4) During the fiscal years ended December 31, 1995 and 1996, neither the
Association nor the Company maintained any restricted stock, stock
options or other long-term incentive plans.
(5) Includes the dollar value of premiums, if any, paid by the Association
with respect to term life insurance (other than group term insurance
coverage under a plan available to substantially all salaried
employees) for the benefit of the Named Executive Officer and the value
of shares of Common Stock allocated to these Executives as of December
31, 1996 under the ESOP on a value per share of $13.50, which was the
closing sales price for Common Stock on The Nasdaq Stock Market
National Market System on December 31, 1996.
12
<PAGE>
EMPLOYMENT AGREEMENTS
Effective upon the Conversion, the Company and the Association (subject
to non-objection by the Office of Thrift Supervision (the "OTS")) have
authorized the execution of Employment Agreements with each of Messrs. Perucco,
Dolan and Moran (the "Senior Executives"). These Employment Agreements establish
the respective duties and compensation of the Senior Executives and are intended
to ensure that the Association and the Company will be able to maintain a stable
and competent management base after the Conversion. The continued success of the
Association and the Company depends to a significant degree on the skills and
competence of the Senior Executives.
The Employment Agreements provide for a three-year term for Mr. Perucco
and two-year terms for Messrs. Dolan and Moran. The Association's Employment
Agreements provide that, commencing on the first anniversary date and continuing
each anniversary date thereafter, the Board of Directors may, with the Senior
Executive's concurrence, extend its Employment Agreements for an additional
year, so that the remaining terms shall be three years, after conducting a
performance evaluation of the Senior Executive. The Company's Employment
Agreements provide for automatic daily extensions such that the remaining terms
of the Employment Agreements shall be three years unless written notice of
non-renewal is given by the Board of Directors or the Senior Executive. The
Employment Agreements provide that the Senior Executive's base salary will be
reviewed annually. It is anticipated that this review will be performed by
non-employee members of the Board, and the Senior Executive's base salary may be
increased on the basis of his job performance and the overall performance of the
Association. The base salaries for Messrs. Perucco, Dolan and Moran as of
January 1, 1996 were $214,655, $134,753 and $109,242, respectively. In addition
to the base salary, the Employment Agreements provide for, among other things,
entitlement to participation in stock, retirement and welfare benefit plans and
eligibility for fringe benefits applicable to executive personnel such as a
company car and fees for club and organization memberships deemed appropriate by
the Association or Company and the Senior Executive. The Employment Agreements
provide for termination by the Association or the Company at any time for cause
as defined in the Employment Agreements.
In the event of the termination of the Senior Executives' due to death
or disability, or in the event the Association or the Company chooses to
terminate the Senior Executive's employment for reasons other than for cause, or
in the event of the Senior Executive's resignation from the Association and the
Company for certain reasons specified in the Employment Agreements, the Senior
Executive or, in the event of death, his beneficiary would be entitled to a lump
sum cash payment in an amount equal to the present value of the remaining base
salary and bonus payments due to the Senior Executive and the additional
contributions or benefits that would have been earned under any employee benefit
plans of the Association or the Company during the remaining terms of the
Employment Agreements and payments that would have been made under any incentive
compensation plan during the remaining terms of the Employment Agreements. The
Association and the Company would also continue the Senior Executive's life,
health and disability insurance coverage for the remaining terms of the
Employment Agreements. Reasons specified as grounds for resignation for purposes
of the Employment Agreements are: failure to elect or re-elect the Senior
Executive to his offices; failure to vest in him the functions, duties or
authority associated with such offices; any material breach of contract by the
Association or the Company which is not cured within 30 days after written
notice thereof; and, following a Change of Control (as defined in the Employment
Agreements), include demotion, loss of title, office or significant authority or
responsibility, any reduction in any element of compensation or benefits, any
adverse change on location of the principal place of employment or working
conditions or resignation for any other reason. In general, for purposes of the
Employment Agreements and the plans maintained by the Company or the
Association, a "change of control" will generally be deemed to occur when a
person or group of persons acting in concert acquires beneficial ownership of
25% or more of any class of equity security of the Company or the Association,
upon stockholder approval of a merger or consolidation or a change of the
majority of the Board of Directors of the Company or the Association, or
liquidation or sale of substantially all the assets of the Company or the
Association.
Payments to the Senior Executives under the Association's Employment
Agreements will be guaranteed by the Company in the event that payments or
benefits are not paid by the Association. Payment
13
<PAGE>
under the Company's Employment Agreements would be made by the Company. To the
extent that payments under the Company's Employment Agreements and the
Association's Employment Agreements are duplicative, payments due under the
Company's Employment Agreements would be offset by amounts actually paid by the
Association. Senior Executives would be entitled to reimbursement of certain
costs incurred in interpreting or enforcing the Employment Agreements.
Cash and benefits paid to a Senior Executive under the Employment
Agreements together with payments under other benefit plans following a "change
of control" of the Association or the Company may constitute an "excess
parachute" payment under Section 280G of the Code, resulting in the imposition
of a 20% excise tax on the recipient and the denial of the deduction for such
excess amounts to the Company and the Association. The Company's Employment
Agreements include a provision indemnifying each Senior Executive on an
after-tax basis for any "golden parachute" excise taxes.
EMPLOYEE RETENTION AGREEMENTS
The Association and the Company (subject to the non-objection of the
OTS) have authorized the execution of Employee Retention Agreements with the
following four executive officers: Mr. Towe, Mr. Bandemer, Ms. Schroeder and Ms.
Lenart ("Contract Employee" or "Contract Employees"). The purpose of the
Retention Agreements is to secure the Contract Employees' continued availability
and attention to the Association's affairs, relieved of distractions arising
from the possibility of a corporate change of control. The Retention Agreements
do not impose an immediate obligation on the Association to continue the
Contract Employees' employment but provide for a period of assured employment
("Assurance Period") following a change of control of the Association or
Company. The Retention Agreements provide for an initial Assurance Period of one
year commencing on the date of a change of control, subject to extension.
If, upon a change of control, or within 12 months of, and in connection
with, a change of control, a Contract Employee is discharged without "cause" (as
defined in the Retention Agreements) or he voluntarily resigns within one year
following a material adverse change in his position, duties, salary or due to a
material breach of the Agreement by the Association or Company, the Contract
Employee (or, in the event of his death, his estate) would be entitled to a lump
sum cash payment equal to the present value of the remaining base salary and
bonus payments due during the Assurance Period plus any additional contributions
and benefits that the Contract Employee would have earned under the Association
or Company's employee benefit plans during the Assurance Period. Each Contract
Employee's life, health, and disability coverage would also be continued during
the Assurance Period. The total amount of termination benefits payable to each
Contract Employee under the Retention Agreements is limited to three times the
Contract Employee's average total compensation for the prior five calendar
years, and is subject to further reduction if necessary to avoid the
characterization of such payments as excess parachute payments for purposes 280G
of the Code. Payments to the Contract Employees under their respective Retention
Agreements will be guaranteed by the Company to the extent that the required
payments are not made by the Association.
BENEFITS
PENSION PLAN. During 1996, the Association maintained a
non-contributory, tax-qualified defined benefit pension plan (the "Pension
Plan") for eligible employees. All employees, except leased employees, who had
attained age 21 and completed one year of service were eligible to participate
in the Pension Plan. The Pension Plan provided for a benefit for each
participant, including executive officers named in the Summary Compensation
Table above. The benefit is equal to the sum of (a) a participant's accrued
benefit as of March 31, 1989 adjusted for final average compensation determined
after March 31, 1989, plus (2) 1.9% times final average compensation multiplied
by benefit service earned after March 31, 1989, plus (3) 0.5936% times final
average compensation in excess of covered compensation multiplied by benefit
service after March 31, 1989. Benefit service after March 31, 1989 was limited
to a maximum of 25 years and all benefit service is limited to a maximum of 35
years. Final average compensation was one-twelfth of the highest average of a
participant's compensation during five (5) consecutive calendar years of
employment out the last ten (10)
14
<PAGE>
calendar years of employment. The Pension Plan is funded by the Association on
an actuarial basis and all assets are held in trust by the Pension Plan trustee.
The Association terminated this Pension Plan during 1996, with the
effect that all accrued benefits of all affected employees became 100% vested
and no additional benefit may be accrued. Provision has been made for the
settlement of all of the Pension Plan's benefit liabilities through the purchase
of insurance company annuities or the payment of lump sum settlements.
The following table illustrates the annual benefit payable upon normal
retirement at age 65 in the normal form of benefit under the Pension Plan (a
10-year certain and life annuity) at various levels of compensation and years of
service under the Pension Plan:
<TABLE>
<CAPTION>
YEARS OF SERVICE AT RETIREMENT
----------------------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ---------------- ---------------- ----------------- ------------------ ---------
<C> <C> <C> <C> <C> <C>
$ 125,000 $ 54,940 $ 62,155 $ 66,514 $ 69,329 $ 71,285
150,000(1) 66,788 75,726 81,119 84,623 87,072
175,000(1) 66,788 75,726 81,119 84,623 87,072
200,000(1) 66,788 75,726 81,119 84,623 87,072
225,000(1) 66,788 75,726 81,119 84,623 87,072
250,000(1) 66,788 75,726 81,119 84,623 87,072
</TABLE>
- --------------------------------------------
(1) For the Pension Plan year ending March 31, 1996, the compensation for
calculating benefits could not exceed $150,000 (as adjusted for
subsequent years pursuant to Code provisions). No supplemental plan was
in effect.
The following table sets forth the years of credited service and the
Average Annual Earnings (as defined above) determined as of the Pension Plan
year ended as of March 31, 1996, for each of the individuals named in the
Summary Compensation Table. The Average Annual Earnings includes the salary and
bonus columns of the Summary Compensation Table.
YEARS OF CREDITED SERVICE
-------------------------
YEARS MONTHS AVERAGE ANNUAL EARNINGS
----- ------ -----------------------
Mr. Perucco 33 6 $150,000
Mr. Dolan 25 0 128,000
Mr. Moran 25 0 105,000
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. The Company has established,
and the Association and the Company have adopted for the benefit of eligible
employees, an ESOP and related trust. Substantially all employees of the
Association or the Company who have attained age 21 and have completed one year
of service may be eligible to become participants in the ESOP. The ESOP
purchased eight percent (8%) of the Common Stock issued in the Conversion with
funds borrowed from the Company. Although contributions to the ESOP will be
discretionary, the Company or the Association intends to make annual
contributions to the ESOP in an aggregate amount at least equal to the principal
and interest requirement on the debt. This loan is for a term of 10 years, bears
interest at the rate of 8% per annum and calls for level annual payments of
principal and interest designed to amortize the loan over its term. The loan
also permits optional pre-payment. The Company and the Association may make
additional annual contributions to the ESOP to the maximum extent deductible for
federal income purposes.
Shares purchased by the ESOP have been pledged as collateral for the
loan, and will be held in a suspense account until released for allocation among
participants in the ESOP as the loan is repaid. The pledged shares will be
released annually from the suspense account in an amount proportional to the
repayment of the ESOP loan for each plan year. The released shares will be
allocated among the accounts of participants
15
<PAGE>
on the basis of the participant's compensation for the year of allocation.
Benefits generally become vested at the rate of 10% per year for the first two
years of service and 20% per year for the next three years, with 100% vesting
after five years of service. Participants also become immediately vested upon
termination of employment due to death, retirement at age 65 or older, permanent
disability or upon the occurrence of a change of control. Forfeitures will be
reallocated among remaining participating employees, in the same proportion as
contributions. Vested benefits may be paid in a single sum or installment
payments and are payable upon death, retirement at age 65 or older, disability
or separation from service.
In connection with the establishment of the ESOP, a Committee of the
Company's Board of Directors was appointed to administer the ESOP (the "ESOP
Committee"). Harris Bank Barrington, N.A. has been appointed as the ESOP's
trustee. The ESOP Committee may instruct the trustee regarding investment of
funds contributed to the ESOP and the voting of shares held in the ESOP Trust.
The ESOP trustee, subject to its fiduciary duty, must vote all allocated shares
held in the ESOP in accordance with the instructions of the participating
employees. Under the ESOP, unallocated shares will be voted in a manner
calculated to most accurately reflect the instructions it has received from
participants regarding the allocated stock as long as such vote is in accordance
with the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
The ESOP may purchase additional shares of Common Stock in the future,
in the open market or otherwise, and may do so either on a leveraged basis with
borrowed funds or with cash dividends, periodic employer contributions or other
cash flow. Whether such purchases will be made and the terms and conditions of
any such purchases will be determined by the ESOP's fiduciaries taking into
account such factors as they consider relevant at the time, including their
judgment as to the attractiveness of the Common Stock as an investment, the
price at which Common Stock may be purchased and, in the case of leveraged
purchases, the terms and conditions on which borrowed funds are available and
the willingness of the Company or the Association to offer purchase money
financing or guarantee purchase money financing offered by third parties.
STOCK OPTION PLANS. Directors, officers and employees of the
Association and the Company will be granted stock options under the Home Bancorp
of Elgin, Inc. 1997 Stock Option Plan (the "Option Plan") being presented for
stockholder approval in Proposal 2 if stockholders approve Proposal 2. See
"Proposal 2 -- 1997 Stock Option Plan."
STOCK PROGRAMS. Directors, officers and employees of the Association
and the Company will be awarded restricted stock of the Company under the Home
Bancorp of Elgin, Inc. 1997 Recognition and Retention Plan (the "RRP") being
presented for stockholder approval in Proposal 3 if stockholders approve
Proposal 3. See "Proposal 3 -- Recognition and Retention Plan."
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA") requires that all loans or extensions of credit to executive officers
and directors must be made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more than the normal
risk of repayment or present other unfavorable features. The Association has
made loans or extended credit to executive officers and directors and also to
certain persons related to executive officers and directors. All such loans were
made by the Association in the ordinary course of business and were not made
with more favorable terms nor did they involve more than the normal risk of
collectibility or present unfavorable features. The outstanding principal
balance of such loans to directors, executive officers and their associates
totaled $1,492,280 or 2.27% of the Association's total equity at December 31,
1996.
The Company intends that all transactions in the future between the
Company and its executive officers, directors, holders of 10% or more of the
shares of any class of its common stock and affiliates
16
<PAGE>
thereof, will contain terms no less favorable to the Company than could have
been obtained by it in arm's-length negotiations with unaffiliated persons and
will be approved by a majority of independent outside directors of the Company
not having any interest in the transaction.
Richard S. Scheflow, a director of the Association and the Company, is
a partner in the law firm of Scheflow, Rydell, Travis & Scheflow, which firm
represents the Association on corporate matters and foreclosure proceedings. In
connection with such representation of the Association, Scheflow, Rydell, Travis
& Scheflow received fees of $35,190 for the year ended December 31, 1996.
Thomas S. Rakow, a director of the Association and the Company, is the
President of IHC Group, Inc., which is involved in general construction work.
IHC Group, Inc. is the subcontractor performing site utility work on the
construction of the Association's South Elgin branch. The amount payable to IHC
Group, Inc. under such subcontract was $75,430, all of which has been paid to
date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of Common Stock to
file with the SEC reports of ownership and changes of ownership. Officers,
directors and greater than 10% stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by it, or written
representations from certain reporting persons, the Company believes that all
filing requirements applicable to its executive officers, directors and greater
than 10% beneficial owners for the fiscal year ended December 31, 1996 were
complied with.
-----------------------------------------------------------------
PROPOSAL 2
1997 STOCK OPTION PLAN
-----------------------------------------------------------------
GENERAL PLAN INFORMATION
The Company has adopted, subject to approval by stockholders of the
Company, the Home Bancorp of Elgin, Inc. 1997 Stock Option Plan (the "Option
Plan"). The Option Plan provides for the grant of options to purchase Common
Stock of the Company ("Options") to certain officers, employees and outside
directors of the Company, the Association or any affiliate approved by the Board
of Directors. The Option Plan is not subject to ERISA and is not a tax-qualified
plan under the Code. The principal provisions of the Option Plan are summarized
below. The full text of the Option Plan is set forth as Appendix A to this Proxy
Statement, to which reference is made, and the summary provided below is
qualified in its entirety by such reference.
VOTE REQUIRED
Pursuant to the regulations of the OTS applicable to management stock
benefit plans to be established by a federal association or its holding company
sooner than one year after the association's stock conversion, the affirmative
vote of a majority of the votes eligible to be cast is required for approval of
the Option Plan. If approved by stockholders pursuant to such rule, the Option
Plan will take effect and Options may be granted thereunder on and after the
date of the Annual Meeting. Under the Company's Bylaws, the affirmative vote of
a majority of the shares present and entitled to vote at a meeting at which a
quorum is present would ordinarily be required for approval by stockholders. In
the event that less than a majority of the votes eligible
17
<PAGE>
to be cast at the Annual Meeting but at least a majority of the votes present
and entitled to vote at the Annual Meeting vote in favor of approval, the Option
Plan may be considered approved, but it will not be established or implemented
and no Options will be granted prior to September 26, 1997, which is the first
anniversary of the Conversion. The effective date of the Option Plan shall be
referred to as the "Option Plan Effective Date."
Shares as to which the "ABSTAIN" box has been selected on the Proxy
Card will be counted as present and entitled to vote and, accordingly, will have
the effect of a vote against Proposal 2. Shares underlying broker non-votes will
not be counted as having been voted in person or by proxy and will have the same
effect as a vote against Proposal 2 for purposes of the OTS approval
requirement, but such shares will not be counted as present and entitled to
vote, and will therefore have no effect on the vote for any other purposes with
respect to Proposal 2.
PURPOSE OF THE OPTION PLAN
The purpose of the Option Plan is to promote the growth and
profitability of the Company, to provide certain key officers, employees and
directors of the Company and its affiliates with an incentive to achieve
corporate objectives, to attract and retain individuals of outstanding
competence and to provide such individuals with an equity interest in the
Company.
DESCRIPTION OF THE OPTION PLAN
ADMINISTRATION. The members of the Compensation Committee who are
Disinterested Directors (the "Option Committee") will administer the Option Plan
and will determine, within the limitations of the Option Plan, the officers and
employees to whom Options will be granted, the number of shares subject to each
Option, the terms of such Options (including provisions regarding exercisability
and acceleration of exercisability) and the procedures by which the Options may
be exercised. Options granted to outside directors under the Option Plan are by
automatic formula grant, and the Option Committee has no discretion over the
material terms of such grants. Subject to certain specific limitations and
restrictions set forth in the Option Plan, the Option Committee has full and
final authority to interpret the Option Plan, to prescribe, amend and rescind
rules and regulations, if any, relating to the Option Plan and to make all
determinations necessary or advisable for the administration of the Option Plan.
The costs and expenses of administering the Option Plan will be borne by the
Company.
STOCK SUBJECT TO THE OPTION PLAN. The Company has reserved 700,925
shares of Common Stock ("Option Shares") for issuance upon exercise of Options.
Such Option Shares may be authorized and unissued shares or shares previously
issued and reacquired by the Company. Any Option Shares subject to grants under
the Option Plan which expire or are terminated, forfeited or cancelled without
having been exercised or vested in full, shall again be available for purposes
of the Option Plan. As of February 21, 1997, the aggregate fair market value of
the Option Shares reserved for issuance was $10,513,875, based on the closing
sales price per share of Common Stock of $15.00 on The Nasdaq Stock Market on
such Record Date.
ELIGIBILITY. Any employee of the Company, the Association or any
affiliate approved by the Board who is selected by the Option Committee is
eligible to participate in the Option Plan as an "Eligible Individual." As of
the Record Date, there were 7 Eligible Individuals. Members of the Board or of
the Board of Directors of the Association or any affiliate approved by the Board
who are not employees or officers of the Company or the Association or any
affiliate are eligible to participate as an "Eligible Director." As of the
Record Date, there were 6 Eligible Directors.
TERMS AND CONDITIONS OF OPTIONS GRANTED TO OFFICERS AND EMPLOYEES. The
Option Plan provides for the grant of options which qualify for favorable
federal income tax treatment as "incentive stock options" ("ISOs") and
non-qualified stock options which do not so qualify ("NQSOs"). ISOs are subject
to certain restrictions under the Code. A maximum of 490,647 shares may be
issued to all officers and employees in
18
<PAGE>
the aggregate, and a maximum of 175,236 shares may be issued to any officer or
employee individually, upon exercise of Options. Unless otherwise designated by
the Option Committee, Options granted under the Option Plan will be NQSOs, will
be exercisable at a price per share equal to the fair market value of a share of
Common Stock on the date of the Option grant and will be exercisable for a
period of ten years after the date of grant (or for a shorter period ending
three months after the option holder's termination of employment for reasons
other than death, disability or retirement or discharge for cause, one year
after termination of employment due to death disability or retirement, or
immediately upon termination for cause). In no event may an Option be granted
with an exercise price per share that is less than fair market value of a share
of Common Stock when the Option is granted. An option holder's right to exercise
Options is suspended during any period when the option holder is the subject of
a pending proceeding to terminate his or her employment for cause. If the Option
expires during such suspension, the Company will, upon the employee's
reinstatement, pay damages equal to the value of the expired Options less the
exercise price.
Upon the exercise of an Option, the Exercise Price must be paid in
full. Payment may be made in cash or in such other consideration as the Option
Committee deems appropriate, including, but not limited to, Common Stock already
owned by the option holder or Option Shares to be acquired by the option holder
upon exercise of the Option. Options may be transferred prior to exercise only
to certain family members, certain non-profit organizations, and on death of the
option holder.
TERMS AND CONDITIONS OF OPTIONS GRANTED TO OUTSIDE DIRECTORS. Effective
on the Option Plan Effective Date, each person who is an Eligible Director on
such date will be granted a NQSO to purchase 35,046 Option Shares. Such Options
will have an Exercise Price equal to the fair market value of a share of Common
Stock on the date of grant and an Exercise Period commencing on the date of
grant and expiring on the earliest of (i) the date he or she ceases to be an
Eligible Director due to a removal for cause (in accordance with the bylaws of
the Association or the Company or other affiliate, as applicable) and (ii) the
last day of the ten-year period commencing on the date the Option was granted.
On April 17, 1998 and on each anniversary thereof until all 35,046 Option Shares
subject to the grant are exercisable, an Option granted to an Eligible Director
will become exercisable as to 20% of the Option Shares as to which his
outstanding Option has been granted. All Option Shares not previously purchased
or available for purchase will become available for purchase on the date of the
option holder's death or disability as defined in the Option Plan. A maximum of
210,276 shares may be issued to Eligible Directors upon exercise of Options.
Options granted to directors under the Option Plan will be NQSOs. Upon
the exercise of an Option, the Exercise Price must be paid in full. Payment may
be made in cash or in such other consideration as the Option Committee deems
appropriate, including, but not limited to, Common Stock already owned by the
option holder or Option Shares to be acquired by the option holder upon exercise
of the Option.
MERGERS AND REORGANIZATIONS; ADJUSTMENTS FOR EXTRAORDINARY DIVIDENDS.
The number of shares available under the Option Plan and the outstanding options
will be adjusted to reflect any merger, consolidation or business reorganization
in which the Company is the surviving entity, and to reflect any stock split,
stock dividend or other event generally affecting the number of shares. If a
merger, consolidation or other business reorganization occurs and the Company is
not the surviving entity, outstanding Options may be cancelled upon 30 days'
written notice to the option holder so long as the option holder receives
payment determined by the Board to be the equivalent value of the cancelled
Options. The Option Plan provides that the Company will make a cash payment to
option holders to equitably reflect any extraordinary non-stock dividend that
may be paid which results in a non-taxable return of capital. No representation
is made that any such dividend will be declared or paid.
REGULATORY RESTRICTIONS
The Option Plan is subject to certain restrictions imposed by the OTS
with respect to stock option plans or other management or employee stock benefit
plans that are established or implemented by a federal savings association or
its holding company within one year after the association's conversion from a
mutual
19
<PAGE>
association to a stock association. The restrictions apply to the Option Plan
because the Conversion occurred within one year prior to the date of this Annual
Meeting.
To satisfy the OTS requirements, the Option Plan provides that (i) no
Options may be granted prior to the date on which the holders of a majority of
the Company's outstanding shares approve the Option Plan or before March 26,
1997, whichever is later; (ii) no individual officer or employee may be granted
Options to purchase more than 175,236 Shares; and (iii) any Options granted will
become exercisable at a rate no more rapid than 20% per year beginning on April
17, 1997, with accelerated vesting only in cases of death or disability.
Management of the Company has been advised by its legal counsel that
the Option Plan complies with all applicable OTS regulations, as modified by the
Regulatory Exception. The OTS has not endorsed or approved the Option Plan. No
written or oral representation to the contrary shall be made. The Option Plan
provides that it will be interpreted to comply with OTS regulations and is
subject to amendment, without the solicitation of further stockholder approval,
to effect such compliance.
TERMINATION OR AMENDMENT OF THE OPTION PLAN
Unless sooner terminated, the Option Plan will terminate automatically
on the day preceding the tenth anniversary of the Option Plan Effective Date.
The Board may suspend or terminate the Option Plan in whole or in part at any
time prior to the tenth anniversary of the Option Plan Effective Date by giving
written notice of such suspension or termination to the Option Committee. In the
event of any suspension or termination of the Option Plan, all Options
theretofore granted under the Option Plan that are outstanding on the date of
such suspension or termination of the Option Plan will remain outstanding under
the terms of the agreements granting such Options.
The Board may amend or revise the Option Plan in whole or in part at
any time, but if the amendment or revision amends a material term of the Option
Plan, such amendment or revision will be subject to approval by the stockholders
of the Company to the extent required to comply with Section 162(m) of the Code.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended only as a summary and does not
purport to be a comprehensive description of the federal tax laws, regulations
and policies affecting the Company and recipients of ISOs and NQSOs that may be
granted under the Option Plan. Any change in applicable law or regulation or in
the policies of various taxing authorities may have a material effect on the
discussion contained herein.
There are no federal income tax consequences for the Company or the
option holder at the time an ISO is granted or upon the exercise of an ISO. If
there is no sale or other disposition of the shares acquired upon the exercise
of an ISO within two years after the date the ISO was granted, or within one
year after the exercise of the ISO, then at no time will any amount be
deductible by the Company with respect to the ISO. If the option holder
exercises an ISO and sells or otherwise disposes of the shares so acquired after
satisfying the foregoing holding period requirements, then he will realize a
capital gain or loss on the sale or disposition. If the option holder exercises
his ISO and sells or disposes of his shares prior to satisfying the foregoing
holding period requirements, then an amount equal to the difference between the
amount realized upon the sale or other disposition of such shares and the price
paid for such shares upon the exercise of the ISO will be includible in the
ordinary income of such person, and such amount will ordinarily be deductible by
the Company at the time it is includible in such person's income.
With respect to the grant of NQSOs, there are no federal income tax
consequences for the Company or the option holder at the date of the grant. Upon
the exercise of a NQSO, an amount equal to the difference between the fair
market value of the shares to be purchased on the date of exercise and the
aggregate purchase price of such shares is generally includible in the ordinary
income of the person exercising such NQSO, although such inclusion may be at a
later date in the case of an option holder whose disposition of such shares
20
<PAGE>
could result in liability under Section 16(b) of the Exchange Act. The Company
will ordinarily be entitled to a deduction for federal income tax purposes at
the time the option holder is taxed on the exercise of the NQSO equal to the
amount which the option holder is required to include as ordinary income.
Section 162(m) of the Code limits the Company's deductions of compensation in
excess of $1,000,000 per year for the chief executive officer and the four other
most highly paid executives named in its proxy statement, but provides for
certain exceptions for performance based compensation. The Company intends the
Option Plan to comply with the requirements for an exception to Section 162(m)
applicable to stock option plans so that the Company's deduction for
compensation related to the exercise of stock options would not be subject to
the $1,000,000 limitation. No executive of the Company currently receives
compensation subject to this limitation.
The foregoing statements are intended to summarize the general
principles of current federal income tax law applicable to Options that may be
granted under the Option Plan. State and local tax consequences may also be
significant.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" APPROVAL OF THE HOME BANCORP OF ELGIN, INC. 1997 STOCK OPTION PLAN.
-----------------------------------------------------------------
PROPOSAL 3
1997 RECOGNITION AND RETENTION PLAN
-----------------------------------------------------------------
GENERAL PLAN INFORMATION
The Company has adopted, subject to the approval by stockholders of the
Company, the Home Bancorp of Elgin, Inc. 1997 Recognition and Retention Plan
(the "RRP"). The RRP provides for restricted stock awards ("Awards") to certain
officers, employees and outside directors of the Company, the Association or any
affiliate approved by the Board. The RRP is not subject to ERISA and is not a
tax-qualified plan under the Code. The principal provisions of the RRP are
summarized below. The full text of the RRP is set forth as Appendix B to this
Proxy Statement, to which reference is made, and the summary provided below is
qualified in its entirety by such reference.
VOTE REQUIRED
Pursuant to regulations of the OTS applicable to management stock
benefit plans to be established by a federal association or its holding company
sooner than one year after the association's stock conversion, the affirmative
vote of a majority of the votes eligible to be cast is required for approval of
the RRP. If approved by stockholders, the RRP will take effect, and Awards
granted thereunder may be effective, on April 17, 1997. Under the Company's
Bylaws, the affirmative vote of a majority of the shares present and entitled to
vote at a meeting at which a quorum is present would ordinarily be required for
approval by stockholders. In the event that less than a majority of the votes
eligible to be cast at the Annual Meeting, but at least a majority of the votes
present and entitled to vote at the Annual Meeting vote in favor of approval,
the RRP may be considered approved, but it will not be established or
implemented and no Awards will be granted, prior to September 26, 1997, which is
the first anniversary of the Conversion. The effective date of the RRP shall be
referred to as the "RRP Effective Date."
21
<PAGE>
Shares as to which the "ABSTAIN" box has been selected on the Proxy
Card will be counted as present and entitled to vote and, accordingly, will have
the effect of a vote against Proposal 3. Shares underlying broker non-votes will
not be counted as having been voted in person or by proxy and will have the same
effect as a vote against Proposal 3 for purposes of the OTS approval
requirement, but such shares will not be counted as present and entitled to
vote, and will therefore have no effect on the vote for any other purposes with
respect to Proposal 3.
PURPOSE OF THE RRP
The purpose of the RRP is to promote the growth and profitability of
the Company, to provide certain key officers, employees and directors of the
Company and its affiliates with an incentive to achieve corporate objectives, to
attract and retain individuals of outstanding competence and to provide such
individuals with an equity interest in the Company.
DESCRIPTION OF THE RRP
ADMINISTRATION. The members of the Compensation Committee who are
Disinterested Directors (the "RRP Committee") will administer the RRP and will
determine, within the limitations of the RRP, the officers and employees to whom
Awards will be granted, the number of shares subject to each Award, the terms of
such Awards (including provisions regarding exercisability and acceleration of
exercisability) and the procedures by which the Awards shall be exercised.
Awards to outside directors will be determined by automatic formula grant and
the RRP Committee has no discretion over the material terms of such grants.
Subject to certain specific limitations and restrictions set forth in the RRP,
the RRP Committee has full and final authority to interpret the RRP, to
prescribe, amend and rescind rules and regulations, if any, relating to the RRP
and to make all determinations necessary or advisable for the administration of
the RRP. The costs and expenses of administering the RRP will be borne by the
Company and not charged to any grant of an Award nor to any participating
director, officer or employee.
STOCK SUBJECT TO THE RRP. The Company will establish a trust ("Trust")
and will contribute, or cause to be contributed, to the Trust, from time to
time, such amounts of money or property as shall be determined by the Board, in
its discretion. No contributions by participants will be permitted. A trustee
will invest the assets of the Trust in Common Stock and in such investments
including savings accounts, time or other interest bearing deposits in or other
interest bearing obligations of the Company, in such proportions as shall be
determined by the RRP Committee. In no event shall the assets of the Trust be
used to purchase more than 280,370 shares of Common Stock. As of February 21,
1997, the aggregate fair market value of the Common Stock to be purchased for
the RRP was $4,205,550, based on the closing sales price per share of $15.00 on
The Nasdaq Stock Market on such Record Date. It is currently anticipated that
the Trust will purchase Common Stock on the open market, but may also purchase
from the Company or in private transactions.
ELIGIBILITY. Any employee of the Company, the Association or any
affiliate approved by the Board who is selected by the RRP Committee is eligible
to participate in the RRP as an "Eligible Individual." As of the Record Date,
there were 7 Eligible Individuals. Members of the Board or of the Board of
Directors of the Association or any affiliate approved by the Board who are not
employees or officers of the Company, the Association or such affiliate are
eligible to participate as an "Eligible Director." As of the Record Date, there
were 6 Eligible Directors.
AWARDS TO OUTSIDE DIRECTORS. On the RRP Effective Date, each Eligible
Director will receive an Award of 14,018 shares.
AWARDS TO OFFICERS AND EMPLOYEES. After the RRP Effective Date, the RRP
Committee may, in its discretion, grant Awards of restricted stock to Eligible
Individuals, up to a maximum of 70,092 shares for any one individual. The RRP
Committee will determine at the time of the grant the number of shares of Common
22
<PAGE>
Stock subject to an Award and the vesting schedule applicable to the Award and
may, in its discretion, establish other terms and conditions applicable to the
Award.
TERMS AND CONDITIONS OF AWARDS. Stock subject to Awards is held in
trust pursuant to the RRP until vested. An individual to whom an Award is
granted is entitled to exercise voting rights and receive cash dividends with
respect to stock subject to Awards granted to him whether or not vested. The RRP
Committee will exercise voting rights with respect to shares in the Trust that
have not been allocated to reflect the voting directions of shares granted under
the RRP. Each individual to whom an Award is granted is entitled to direct the
manner of response to any tender offer, exchange offer or other offer made to
stockholders with respect to stock subject to Awards granted to such person
whether or not vested. If no direction is given, the shares will not be tendered
or exchanged. For shares that are not allocated in connection with an Award, the
RRP Committee will direct the Trustee to respond to reflect the responses given
with respect to shares allocated in connection with Awards.
The shares covered by an Award will become vested in accordance with
the terms of the Award and as soon as practicable following such vesting, the
Trustee will transfer the shares to the recipient. The shares covered by an
Award will vest according to a vesting schedule established by the RRP
Committee, but in no event at a rate more rapid than 20% on May 1st following
each of the first five anniversary dates of stockholder approval unless
consistent with prevailing OTS regulations; however, any shares covered by the
Award will become 100% vested as of the date of the recipient's death or
disability. The RRP Committee may prescribe a different vesting schedule for
Eligible Individuals, subject to regulatory restrictions described below. If an
individual covered by an Award terminates employment or ceases to be a director
for reasons other than death or disability, the individual forfeits all rights
to his unvested shares remaining in the RRP trust. Individuals may designate a
beneficiary to receive distributions on account of death.
MERGERS AND REORGANIZATIONS. The number of shares available under the
RRP and the Awards will be adjusted to reflect any merger, consolidation or
business reorganization in which the Company is the surviving entity and to
reflect any stock split, stock dividend or other event generally affecting the
number of shares. If a merger, consolidation or other business reorganization
occurs and the Company is not the surviving entity, the Trustee will hold any
money, stock, securities or other property received in the trust fund, and
adjusting any award by allocating such money, stock, securities or other
property to the Eligible Director or Eligible Individual.
REGULATORY RESTRICTIONS
The RRP is subject to certain restrictions imposed by the OTS with
respect to management or employee stock benefit plans that are established or
implemented by a federal savings association or its holding company within one
year after the association's conversion from a mutual association to a stock
association. The restrictions apply to the RRP because the Conversion occurred
within one year prior to the date of the Annual Meeting.
To satisfy the OTS requirements, the RRP provides that (i) no Awards
may be granted prior to the date on which a majority of the Company's
outstanding shares approve the RRP, (ii) no Eligible Individual shall receive
Awards for more than 70,092 Shares and (iii) any Awards will become vested at a
rate no more rapid than 20% per year beginning on May 1, 1998, with accelerated
vesting in cases of death or disability.
Management of the Company has been advised by its legal counsel that
the RRP complies with all applicable OTS regulations, as modified by the
Regulatory Exception. The OTS has not endorsed or approved the RRP. No written
or oral representation to the contrary shall be made. The Plan provides that it
will be interpreted to comply with applicable OTS regulations and is subject to
amendment, without the solicitation of further stockholder approval, to effect
such compliance.
23
<PAGE>
TERMINATION OR AMENDMENT OF THE RRP
The Board may suspend or terminate the RRP in whole or in part at any
time by giving written notice of such suspension or termination to the RRP
Committee, but the RRP may not be terminated while there are outstanding Awards
that may thereafter become vested. Upon the termination of the RRP, the Trustee
shall make distributions from the Trust in such amounts and to such persons as
the RRP Committee may direct and shall return the remaining assets of the Trust,
if any, to the Company.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended only as a summary and does not
purport to be a comprehensive description of the federal tax laws, regulations
and policies affecting the Company and recipients of Awards that may be granted
under the RRP. Any descriptions of the provisions of any law, regulation or
policy contained herein are qualified in their entirety by reference to the
particular law, regulation or policy. Any change in applicable law or regulation
or in the policies of various taxing authorities may have a material effect on
the discussion contained herein. The RRP does not constitute a qualified plan
under Section 401(a) of the Code.
The award of Common Stock under the RRP does not result in federal
income tax consequences to either the Company or the award recipient. Upon the
vesting of an award and the distribution of the vested shares, the award
recipient will generally be required to include in ordinary income, for the
taxable year in which the vesting date occur, an amount equal to the fair market
value of the shares on the vesting date, and the Company will generally be
allowed to claim a deduction, for compensation expense, in a like amount. To the
extent that dividends are paid with respect to unvested shares held under the
RRP and distributed to the award recipient, such dividend amounts will likewise
be includible in the ordinary income of the recipient and allowable as a
deduction, for compensation expense, to the Company. Section 162(m) of the Code
limits the Company's deductions of compensation in excess of $1,000,000 per year
for the chief executive officer and the four other most highly paid executives
named in its proxy statement. No executive of the Company currently receives
compensation subject to this limitation. Compensation amounts resulting from the
award and vesting of shares will be subject to this deduction limitation, if
such amount when added to other includible compensation exceeds $1,000,000.
Dividends declared and paid with respect to vested shares, as well as any gain
or loss realized upon an award recipient's disposition of the shares, will be
treated as dividend income and capital gain or loss, respectively, in the same
manner as for other stockholders.
The foregoing statements are intended to summarize the general
principles of current federal income tax law applicable to Awards that may be
granted under the RRP. State and local tax consequences may also be significant.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" APPROVAL OF THE HOME BANCORP OF ELGIN, INC. 1997 RECOGNITION AND
RETENTION PLAN.
24
<PAGE>
NEW PLAN BENEFITS
HOME BANCORP OF ELGIN, INC. STOCK PLANS
---------------------------------------
The following table discloses the benefits that will be received by
directors (and may be received by others) under the Stock Option Plan and RRP if
the stockholders approve Proposals 2 and 3.
<TABLE>
<CAPTION>
=========================================================================================================================
Stock Option Plan(1)(2) RRP(3)(4)
------------------------------------------------------------------
Name/Position # $ Value # $ Value
=========================================================================================================================
<S> <C> <C> <C> <C>
George L. Perucco, President & 175,231 -- 70,092 $1,051,380
Chief Executive Officer
- -------------------------------------------------------------------------------------------------------------------------
Lyle N. Dolan, Executive Vice President & 105,138 -- 42,055 $ 630,825
Treasurer
- -------------------------------------------------------------------------------------------------------------------------
Kenneth L. Moran, Senior Vice President 70,092 -- 28,037 $ 420,555
- -------------------------------------------------------------------------------------------------------------------------
Executive Group 140,184 -- 56,072 $ 841,080
- -------------------------------------------------------------------------------------------------------------------------
Non-Executive Director Group 210,276 -- 84,108 $1,261,620
- -------------------------------------------------------------------------------------------------------------------------
Non-Executive Employee Group(5) N/A N/A N/A N/A
=========================================================================================================================
</TABLE>
- --------------------------------------------
(1) As of the Record Date, no grants have been made under the Option Plan.
It is not determinable at this time what benefits, if any, each of the
persons or groups listed above will receive under such Plan. The
numbers in the table reflect the Option Committee's intentions of
grants to be made upon the Option Plan Effective Date. On April 17,
1998, and on each of the four consecutive anniversary dates following
thereafter, 20% of the Shares subject to each Option will become
exercisable.
(2) On the Option Plan Effective Date, each outside director, including
outside directors who are nominees, will receive a non-qualified stock
option to purchase 35,046 Shares with an Exercise Price equal to the
Fair Market Value of a Share on the Option Plan Effective Date. Such
Options will expire on the earliest of the director's removal for cause
or on the tenth anniversary of the date of the grant.
(3) As of the Record Date, no grants have been made under the RRP. It is
not determinable at this time what benefits, if any, each of the
persons or groups listed above will receive under such plan. The
numbers in the table reflect the RRP Committee's intentions of grants
to be made upon the RRP Effective Date. On each May 1st following the
first anniversary of the date of stockholder approval of the RRP until
all Shares are vested, 20% of each Award will become vested and
distributed to the grantee.
(4) On the RRP Effective Date, each Eligible Outside Director, including
outside directors who are nominees, will receive an Award of 14,018
Shares. The dollar value is based on a price per Share of $15.00 (the
closing sale price for Common Stock) as reported on The Nasdaq Stock
Market on the Record Date). The actual value of the benefits under this
Plan will depend on the fair market value of a Share on the RRP
Effective Date, which is indeterminable at this time.
(5) As of the date of this Proxy Statement, no determination has been made
as to whether other employees will receive grants or, if so, the amount
of such grants.
25
<PAGE>
-----------------------------------------------------------------
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
-----------------------------------------------------------------
GENERAL
The Board of Directors has appointed the firm of KPMG Peat Marwick LLP
to act as independent auditors for the Company for the fiscal year ending
December 31, 1997, subject to ratification of such appointment by the Company's
stockholders. A representative of KPMG Peat Marwick LLP is expected to be
present at the Annual Meeting and will be given an opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions. No determination has been made as to what action the
Board of Directors would take if the stockholders do not ratify KPMG Peat
Marwick LLP's appointment.
VOTE REQUIRED
The ratification of the appointment by the Board of Directors of KPMG
Peat Marwick LLP as the Company's independent auditors requires the affirmative
vote of the holders of a majority of the number of votes eligible to be cast by
the holders of the outstanding shares of Common Stock of the Company present and
entitled to vote at the Annual Meeting. Accordingly, shares as to which the
"ABSTAIN" box has been selected on the Proxy Card will be counted as present and
entitled to vote and will have the effect of a vote against Proposal 4. Shares
underlying broker non-votes will not be counted as having been voted in person
or by proxy and will have no effect on the vote for Proposal 4.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.
-----------------------------------------------------------------
PROPOSAL 5
AUTHORIZATION OF THE BOARD OF DIRECTORS, IN ITS DISCRETION, TO DIRECT THE
VOTE OF THE PROXIES UPON SUCH OTHER MATTERS INCIDENT TO THE CONDUCT OF
THE ANNUAL MEETING AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING,
AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF, INCLUDING, WITHOUT
LIMITATION, A MOTION TO ADJOURN THE ANNUAL MEETING
-----------------------------------------------------------------
GENERAL
The Board of Directors is not aware of any other business that may
properly come before the Annual Meeting. The Board seeks the authorization of
the stockholders of the Company, in the event matters incident to the conduct of
the Annual Meeting properly come before the meeting, including, but not limited
to, the consideration of whether to adjourn the Annual Meeting once called to
order, to direct the manner in which those shares represented at the Annual
Meeting by proxies solicited pursuant to this Proxy Statement shall be voted. As
to all such matters, the Board intends that it would direct the voting of such
shares in the manner
26
<PAGE>
determined by the Board, in its discretion, and in the exercise of its duties
and responsibilities, to be in the best interests of the Company and its
stockholders, taken as a whole.
VOTE REQUIRED
The authorization of the Board of Directors, in its discretion, to vote
upon such other business as may properly come before the Annual Meeting requires
the affirmative vote of the holders of a majority of the number of votes
eligible to be cast by the holders of the outstanding shares of Common Stock of
the Company present and entitled to vote at the Annual Meeting. Accordingly,
shares as to which the "ABSTAIN" box has been selected on the Proxy Card will be
counted as present and entitled to vote and will have the effect of a vote
against Proposal 5. Shares underlying broker non-votes will not be counted as
having been voted in person or by proxy and will have no effect on the vote for
Proposal 5.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
AUTHORIZATION OF THE BOARD OF DIRECTORS, IN ITS DISCRETION, TO DIRECT THE VOTE
OF THE PROXIES UPON SUCH OTHER MATTERS INCIDENT TO THE CONDUCT OF THE ANNUAL
MEETING AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING, AND ANY ADJOURNMENT OR
POSTPONEMENT THEREOF, INCLUDING, WITHOUT LIMITATION, A MOTION TO ADJOURN THE
ANNUAL MEETING.
ADDITIONAL INFORMATION
NOTICE OF BUSINESS TO BE CONDUCTED AT ANNUAL MEETING
The Bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an annual meeting or to nominate
any person for election to the Board of Directors. The stockholder must be a
stockholder of record and have given timely notice thereof in writing to the
Secretary of the Company. To be timely, a stockholder's notice must be delivered
to or received by the Secretary not later than the following dates: (i) with
respect to an annual meeting of stockholders, sixty (60) days in advance of such
meeting if such meeting is to be held on a day which is within thirty (30) days
preceding the anniversary of the previous year's annual meeting, or ninety (90)
days in advance of such meeting if such meeting is to be held on or after the
anniversary of the previous year's annual meeting; and (ii) with respect to an
annual meeting of stockholders held at a time other than within the time periods
set forth in the immediately preceding clause (i), the close of business on the
tenth (10th) day following the date on which notice of such meeting is first
given to stockholders. Notice shall be deemed to first be given to stockholders
when disclosure of such date of the meeting of stockholders is first made in a
press release reported to Dow Jones News Services, Associated Press or
comparable national news service, or in a document publicly filed by the Company
with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act. A
stockholder's notice to the Secretary shall set forth such information as
required by the Bylaws of the Company. Nothing in this paragraph shall be deemed
to require the Company to include in its proxy statement and proxy card relating
to an annual meeting any stockholder proposal or nomination which does not meet
all of the requirements for inclusion established by the SEC in effect at the
time such proposal or nomination is received. See "--Date For Submission of
Stockholder Proposals."
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder proposal intended for inclusion in the Company's proxy
statement and proxy card relating to the Company's 1998 Annual Meeting of
Stockholders must be received by the Company by November 13, 1998, pursuant to
the proxy soliciting regulations of the SEC. Nothing in this paragraph shall be
deemed to require the Company to include in its proxy statement and proxy card
for such meeting any stockholder proposal which does not meet the requirements
of the SEC in effect at the time. Any such proposal will be subject to 17 C.F.R.
ss.240.14a-8 of the Rules and Regulations promulgated by the SEC under the
Exchange Act.
27
<PAGE>
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any other matters to be brought before the stockholders
at the 1997 Annual Meeting. See "Proposal 5 -Authorization of the Board of
Directors, in its discretion, to Direct the Vote of the Proxies upon such Other
Matters Incident to the Conduct of the Annual Meeting as may Properly Come
Before the Annual Meeting, and any Adjournment or Postponement Thereof,
including, without limitation, a Motion to Adjourn the Annual Meeting."
By Order of the Board of Directors,
/s/ Kathleen A. Schroeder
Kathleen A. Schroeder
VICE PRESIDENT AND SECRETARY
Elgin, Illinois
March 13, 1997
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN
THE POSTAGE-PAID ENVELOPE PROVIDED.
28
<PAGE>
APPENDIX A
----------
HOME BANCORP OF ELGIN, INC.
1997 STOCK OPTION PLAN
------------------------------
ADOPTED JANUARY 16, 1997
EFFECTIVE AS OF APRIL 17, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
---------
PURPOSE
-------
SECTION 1.1 GENERAL PURPOSE OF THE PLAN...............................A-1
ARTICLE II
----------
DEFINITIONS
-----------
SECTION 2.1 ASSOCIATION...............................................A-1
SECTION 2.2 BOARD.....................................................A-1
SECTION 2.3 CHANGE IN CONTROL.........................................A-1
SECTION 2.4 CODE......................................................A-2
SECTION 2.5 COMMITTEE.................................................A-2
SECTION 2.6 COMPANY...................................................A-2
SECTION 2.7 DISABILITY................................................A-2
SECTION 2.8 DISINTERESTED BOARD MEMBER................................A-2
SECTION 2.9 EFFECTIVE DATE............................................A-2
SECTION 2.10 ELIGIBLE DIRECTOR.........................................A-2
SECTION 2.11 ELIGIBLE EMPLOYEE.........................................A-3
SECTION 2.12 EMPLOYER..................................................A-3
SECTION 2.13 EXCHANGE ACT..............................................A-3
SECTION 2.14 EXERCISE PRICE............................................A-3
SECTION 2.15 FAIR MARKET VALUE.........................................A-3
SECTION 2.16 FAMILY MEMBER.............................................A-3
SECTION 2.17 INCENTIVE STOCK OPTION....................................A-3
SECTION 2.18 LIMITED STOCK APPRECIATION RIGHT..........................A-3
SECTION 2.19 NON-PROFIT ORGANIZATION...................................A-3
SECTION 2.20 NON-QUALIFIED STOCK OPTION................................A-3
SECTION 2.21 OPTION....................................................A-3
SECTION 2.22 OPTION PERIOD.............................................A-3
SECTION 2.23 OTS REGULATIONS...........................................A-4
SECTION 2.24 PERSON....................................................A-4
SECTION 2.25 PLAN......................................................A-4
SECTION 2.26 RETIREMENT................................................A-4
SECTION 2.27 SHARE.....................................................A-4
SECTION 2.28 TERMINATION FOR CAUSE.....................................A-4
ARTICLE III
-----------
AVAILABLE SHARES
----------------
SECTION 3.1 AVAILABLE SHARES..........................................A-5
ARTICLE IV
----------
ADMINISTRATION
--------------
SECTION 4.1 COMMITTEE.................................................A-5
SECTION 4.2 COMMITTEE ACTION..........................................A-5
SECTION 4.3 COMMITTEE RESPONSIBILITIES................................A-6
A-(i)
<PAGE>
Page
----
ARTICLE V
---------
STOCK OPTIONS FOR ELIGIBLE DIRECTORS
------------------------------------
SECTION 5.1 IN GENERAL.................................................A-6
SECTION 5.2 EXERCISE PRICE.............................................A-6
SECTION 5.3 OPTION PERIOD..............................................A-6
ARTICLE VI
----------
STOCK OPTIONS FOR ELIGIBLE EMPLOYEES
------------------------------------
SECTION 6.1 SIZE OF OPTION..............................................A-7
SECTION 6.2 GRANT OF OPTIONS............................................A-8
SECTION 6.3 EXERCISE PRICE..............................................A-8
SECTION 6.4 OPTION PERIOD...............................................A-8
SECTION 6.5 REQUIRED REGULATORY PROVISIONS..............................A-9
SECTION 6.6 ADDITIONAL RESTRICTIONS ON INCENTIVE STOCK OPTIONS.........A-10
ARTICLE VII
-----------
OPTIONS -- IN GENERAL
---------------------
SECTION 7.1 METHOD OF EXERCISE.........................................A-11
SECTION 7.2 LIMITATIONS ON OPTIONS.....................................A-12
ARTICLE VIII
------------
AMENDMENT AND TERMINATION
-------------------------
SECTION 8.1 TERMINATION................................................A-12
SECTION 8.2 AMENDMENT..................................................A-12
SECTION 8.3 ADJUSTMENTS IN THE EVENT OF A BUSINESS REORGANIZATION......A-13
ARTICLE IX
----------
MISCELLANEOUS
-------------
SECTION 9.1 STATUS AS AN EMPLOYEE BENEFIT PLAN.........................A-13
SECTION 9.2 NO RIGHT TO CONTINUED EMPLOYMENT...........................A-14
SECTION 9.3 CONSTRUCTION OF LANGUAGE...................................A-14
SECTION 9.4 GOVERNING LAW..............................................A-14
SECTION 9.5 HEADINGS...................................................A-14
SECTION 9.6 NON-ALIENATION OF BENEFITS.................................A-14
SECTION 9.7 TAXES......................................................A-14
SECTION 9.8 APPROVAL OF SHAREHOLDERS...................................A-14
SECTION 9.9 NOTICES....................................................A-15
A-(ii)
<PAGE>
HOME BANCORP OF ELGIN, INC.
---------------------------
1997 STOCK OPTION PLAN
----------------------
ARTICLE I
---------
PURPOSE
-------
SECTION 1.1 GENERAL PURPOSE OF THE PLAN.
The purpose of the Plan is to promote the growth and
profitability of Home Bancorp of Elgin, Inc., to provide eligible directors,
certain key officers and employees of Home Bancorp of Elgin, Inc. and its
affiliates with an incentive to achieve corporate objectives, to attract and
retain individuals of outstanding competence and to provide such individuals
with an equity interest in Home Bancorp of Elgin, Inc.
ARTICLE II
----------
DEFINITIONS
-----------
The following definitions shall apply for the purposes of this
Plan, unless a different meaning is plainly indicated by the context:
SECTION 2.1 ASSOCIATION means Home Federal Savings and Loan
Association of Elgin, a federally chartered savings institution, and any
successor thereto.
SECTION 2.2 BOARD means the board of directors of the Company.
SECTION 2.3 CHANGE IN CONTROL means any of the following
events:
(a) the occurrence of any event upon which any "person" (as
such term is used in sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended ("Exchange Act")), other than (A) a
trustee or other fiduciary holding securities under an employee benefit
plan maintained for the benefit of employees of the Company; (B) a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company; or (C) any group constituting a person in which
employees of the Company are substantial members, becomes the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities issued by the
Company representing 25% or more of the combined voting power of all of
the Company's then outstanding securities; or
(b) the occurrence of any event upon which the individuals who
on the date the Plan is adopted are members of the Board, together with
individuals whose election by the Board or nomination for election by
the Company's stockholders was approved by the affirmative vote of at
least two-thirds of the members of the Board then in office who were
either members of the Board on the date this Plan is adopted or whose
nomination or election was previously so approved, cease for any reason
to constitute a majority of the members of the Board, but excluding,
for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of directors of the Company (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or
A-1
<PAGE>
(c) the shareholders of the Company approve either:
(i) a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation
following which both of the following conditions are
satisfied:
(A) either (I) the members of the Board of
the Company immediately prior to such merger or
consolidation constitute at least a majority of the
members of the governing body of the institution
resulting from such merger or consolidation; or (II)
the shareholders of the Company own securities of the
institution resulting from such merger or
consolidation representing 80% or more of the
combined voting power of all such securities of the
resulting institution then outstanding in
substantially the same proportions as their ownership
of voting securities of the Company immediately
before such merger or consolidation; and
(B) the entity which results from such
merger or consolidation expressly agrees in writing
to assume and perform the Company's obligations under
the Plan; or
(ii) a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the
Company of all or substantially all of its assets; and
(d) any event that would be described in section 2.3(a), (b)
or (c) if "the Association" were substituted for "the Company" therein.
SECTION 2.4 CODE means the Internal Revenue Code of 1986
(including the corresponding provisions of any succeeding law).
SECTION 2.5 COMMITTEE means the Committee described in section
4.1.
SECTION 2.6 COMPANY means Home Bancorp of Elgin, Inc., a
corporation organized and existing under the laws of the State of Delaware, and
any successor thereto.
SECTION 2.7 DISABILITY means a condition of total incapacity,
mental or physical, for further performance of duty with the Company which the
Committee shall have determined, on the basis of competent medical evidence, is
likely to be permanent.
SECTION 2.8 DISINTERESTED BOARD MEMBER means a member of the
Board who (a) is not a current employee of the Company or a subsidiary, (b) is
not a former employee of the Company who receives compensation for prior
services (other than benefits under a tax-qualified retirement plan) during the
taxable year, (c) has not been an officer of the Company, (d) does not receive
remuneration from the Company or a subsidiary, either directly or indirectly, in
any capacity other than as a director and (e) does not possess an interest in
any other transaction, and is not engaged in a business relationship, for which
disclosure would be required pursuant to Item 404(a) or (b) of the proxy
solicitation rules of the Securities and Exchange Commission. The term
Disinterested Board Member shall be interpreted in such manner as shall be
necessary to conform to the requirements of section 162(m) of the Code or Rule
16b-3 promulgated under the Exchange Act.
SECTION 2.9 EFFECTIVE DATE means April 17, 1997.
SECTION 2.10 ELIGIBLE DIRECTOR means a member of the board of
directors of an Employer who is not also an employee or an officer of an
Employer.
A-2
<PAGE>
SECTION 2.11 ELIGIBLE EMPLOYEE means any employee whom the
Committee may determine to be a key officer or employee of an Employer and
select to receive a grant of an Option pursuant to the Plan.
SECTION 2.12 EMPLOYER means the Company, the Association and
any successor thereto and, with the prior approval of the Board, and subject to
such terms and conditions as may be imposed by the Board, any other savings
bank, savings and loan association, bank, corporation, financial institution or
other business organization or institution. With respect to any Eligible
Employer or Eligible Director, the Employer shall mean the entity which employs
such person or upon whose board of directors such person serves.
SECTION 2.13 EXCHANGE ACT means the Securities Exchange Act of
1934, as amended.
SECTION 2.14 EXERCISE PRICE means the price per Share at which
Shares subject to an Option may be purchased upon exercise of the Option,
determined in accordance with section 5.4.
SECTION 2.15 FAIR MARKET VALUE means, with respect to a Share
on a specified date:
(a) the final reported sales price on the date in question (or
if there is no reported sale on such date, on the last preceding date
on which any reported sale occurred) as reported in the principal
consolidated reporting system with respect to securities listed or
admitted to trading on the principal United States securities exchange
on which the Shares are listed or admitted to trading; or
(b) if the Shares are not listed or admitted to trading on any
such exchange, the closing bid quotation with respect to a Share on
such date on the National Association of Securities Dealers Automated
Quotations System, or, if no such quotation is provided, on another
similar system, selected by the Committee, then in use; or
(c) if sections 2.15(a) and (b) are not applicable, the
fair market value of a Share as the Committee may determine.
SECTION 2.16 FAMILY MEMBER means the spouse, parent, child or
sibling of an Eligible Director or Eligible Employee.
SECTION 2.17 INCENTIVE STOCK OPTION means a right to purchase
Shares that is granted to Eligible Employees pursuant to section 6.1, that is
designated by the Committee to be an Incentive Stock Option and that is intended
to satisfy the requirements of section 422 of the Code.
SECTION 2.18 LIMITED STOCK APPRECIATION RIGHT means a right
granted pursuant to section 7.3.
SECTION 2.19 NON-PROFIT ORGANIZATION means any organization
which is exempt from federal income tax under section 501(c)(3), (4), (5), (6),
(7), (8) or (10) of the Internal Revenue Code.
SECTION 2.20 NON-QUALIFIED STOCK OPTION means a right to
purchase Shares that is granted pursuant to section 5.1 or 6.1. For Eligible
Employees, an Option will be a Non-Qualified Stock Option if (a) it is not
designated by the Committee to be an Incentive Stock Option, or (b) it does not
satisfy the requirements of section 422 of the Code.
SECTION 2.21 OPTION means either an Incentive Stock Option or
a Non-Qualified Stock Option.
SECTION 2.22 OPTION PERIOD means the period during which an
Option may be exercised, determined in accordance with section 5.3 and 6.4.
A-3
<PAGE>
SECTION 2.23 OTS REGULATIONS means the regulations issued by
the Office of Thrift Supervision and applicable to the Plan, the Association or
the Company.
SECTION 2.24 PERSON means an individual, a corporation, a
bank, a savings bank, a savings and loan association, a financial institution, a
partnership, an association, a joint-stock company, a trust, an estate, an
unincorporated organization and any other business organization or institution.
SECTION 2.25 PLAN means the Home Bancorp of Elgin, Inc. 1996
Stock Option Plan, as amended from time to time.
SECTION 2.26 RETIREMENT means retirement at or after the
normal or early retirement date set forth in any tax-qualified retirement plan
of the Association.
SECTION 2.27 SHARE means a share of Common Stock, par value
$.01 per share, of Home Bancorp of Elgin, Inc.
SECTION 2.28 TERMINATION FOR CAUSE means one of the following:
(a) for an Eligible Employee who is not an officer or employee
of any bank or savings institution regulated by the Office of Thrift
Supervision, "Termination for Cause" means termination of employment with the
Employer upon the occurrence of any of the following: (i) the employee
intentionally engages in dishonest conduct in connection with his performance of
services for the Employer resulting in his conviction of a felony; (ii) the
employee is convicted of, or pleads guilty or NOLO CONTENDERE to, a felony or
any crime involving moral turpitude; (iii) the employee willfully fails or
refuses to perform his duties under any employment or retention agreement and
fails to cure such breach within sixty (60) days following written notice
thereof from the Employer; (iv) the employee breaches his fiduciary duties to
the Employer for personal profit; or (v) the employee's willful breach or
violation of any law, rule or regulation (other than traffic violations or
similar offenses), or final cease and desist order in connection with his
performance of services for the Employer;
(b) for an Eligible Employee who is an officer or employee of
a bank or savings institution regulated by the Office of Thrift Supervision,
"Termination for Cause" means termination of employment for personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or
final cease and desist order, or any material breach of this Agreement, in each
case as measured against standards generally prevailing at the relevant time in
the savings and community banking industry; PROVIDED, HOWEVER, that such
individual shall not be deemed to have been discharged for cause unless and
until he shall have received a written notice of termination from the Board,
which notice shall be given to such individual not later than five (5) business
days after the board of directors of the Employer adopts, and shall be
accompanied by, a resolution duly approved by affirmative vote of a majority of
the entire board of directors of the Employer at a meeting called and held for
such purpose (which meeting shall be held not less than fifteen (15) days nor
more than thirty (30) days after notice to the individual), at which meeting
there shall be a reasonable opportunity for the individual to make oral and
written presentations to the members of the board of directors of the Employer,
on his own behalf, or through a representative, who may be his legal counsel, to
refute the grounds for the proposed determination) finding that in the good
faith opinion of the board of directors of the Employer grounds exist for
discharging the individual for cause.
A-4
<PAGE>
ARTICLE III
-----------
AVAILABLE SHARES
----------------
SECTION 3.1 AVAILABLE SHARES.
Subject to section 8.3, the maximum aggregate number of Shares
with respect to which Options may be granted at any time shall be equal to the
excess of:
(a) 700,925 Shares; over
(b) the sum of:
(i) the number of Shares with respect to which
previously granted Options may then or may in the future be
exercised; plus
(ii) the number of Shares with respect to which
previously granted Options have been exercised.
A maximum aggregate of 490,647 Shares may be granted to Eligible Employees and a
maximum aggregate of 210,276 Shares may be granted to Eligible Directors. For
purposes of this section 3.1, an Option shall not be considered as having been
exercised to the extent that such Option terminates by reason other than the
purchase of related Shares; PROVIDED, HOWEVER, that for purposes of meeting the
requirements of section 162(m) of the Code, no Eligible Employee who is a
covered employee under section 162(m) of the Code shall receive a grant of
Options in excess of the amount specified under this section 3.1, computed as if
any Option which is cancelled reduced the maximum number of Shares.
ARTICLE IV
----------
ADMINISTRATION
--------------
SECTION 4.1 COMMITTEE.
The Plan shall be administered by the members of the
Compensation Committee of Home Bancorp of Elgin, Inc. who are Disinterested
Board Members. If the Committee consists of fewer than two Disinterested Board
Members, then the Board shall appoint to the Committee such additional
Disinterested Board Members as shall be necessary to provide for a Committee
consisting of at least two Disinterested Board Members.
SECTION 4.2 COMMITTEE ACTION.
The Committee shall hold such meetings, and may make such
administrative rules and regulations, as it may deem proper. A majority of the
members of the Committee shall constitute a quorum, and the action of a majority
of the members of the Committee present at a meeting at which a quorum is
present, as well as actions taken pursuant to the unanimous written consent of
all of the members of the Committee without holding a meeting, shall be deemed
to be actions of the Committee. All actions of the Committee shall be final and
conclusive and shall be binding upon the Company and all other interested
parties. Any Person dealing with the Committee shall be fully protected in
relying upon any written notice, instruction, direction or other communication
signed by the secretary of the Committee and one member of
A-5
<PAGE>
the Committee, by two members of the Committee or by a representative of the
Committee authorized to sign the same in its behalf.
SECTION 4.3 COMMITTEE RESPONSIBILITIES.
Subject to the terms and conditions of the Plan and such
limitations as may be imposed from time to time by the Board, the Committee
shall be responsible for the overall management and administration of the Plan
and shall have such authority as shall be necessary or appropriate in order to
carry out its responsibilities, including, without limitation, the authority:
(a) to interpret and construe the Plan, and to determine all
questions that may arise under the Plan as to eligibility for
participation in the Plan, the number of Shares subject to the Options,
if any, to be granted, and the terms and conditions thereof;
(b) to adopt rules and regulations and to prescribe forms for
the operation and administration of the Plan; and
(c) to take any other action not inconsistent with the
provisions of the Plan that it may deem necessary or appropriate.
ARTICLE V
---------
STOCK OPTIONS FOR ELIGIBLE DIRECTORS
------------------------------------
SECTION 5.1 IN GENERAL.
(a) On the Effective Date, each Eligible Director shall be
granted an Option to purchase 35,046 Shares.
(b) Any Option granted under this section 5.1 shall be
evidenced by a written agreement which shall specify the number of Shares
covered by the Option, the Exercise Price for the Shares subject to the Option
and the Option Period, all as determined pursuant to this Article V. The Option
agreement shall also set forth specifically or incorporate by reference the
applicable provisions of the Plan.
SECTION 5.2 EXERCISE PRICE.
The price per Share at which an Option granted to an Eligible
Director under section 5.1 may be exercised shall be the Fair Market Value of a
Share on the date on which the Option is granted.
SECTION 5.3 OPTION PERIOD.
(a) Subject to section 5.3(b), the Option Period during which
an Option granted to an Eligible Director under section 5.1 may be exercised
shall commence on the date the Option is granted and shall expire on the earlier
of:
(i) removal for cause in accordance with the Employer's
bylaws; or
(ii) the last day of the ten-year period commencing on the
date on which the Option was granted.
A-6
<PAGE>
(b) During the Option Period, the maximum number of
Shares as to which an outstanding Option may be exercised shall be as follows:
(i) prior to the first anniversary of the date on which
the Plan is approved by shareholders pursuant to section 9.8, the
Option shall not be exercisable;
(ii) on and after the first anniversary, but prior to the
second anniversary, of the date on which the Plan is approved by
shareholders pursuant to section 9.8, the Option may be exercised as to
a maximum of twenty percent (20%) of the Shares subject to the Option;
(iii) on and after the second anniversary, but prior to the
third anniversary, of the date on which the Plan is approved by
shareholders pursuant to section 9.8, the Option may be exercised as to
a maximum of forty percent (40%) of the Shares subject to the Option,
when granted, including in such number any optioned Shares purchased
prior to such second anniversary;
(iv) on and after the third anniversary, but prior to the
fourth anniversary, of the date on which the Plan is approved by
shareholders pursuant to section 9.8, the Option may be exercised as to
a maximum of sixty percent (60%) of the Shares subject to the Option,
when granted, including in such number any optioned Shares purchased
prior to such third anniversary;
(v) on and after the fourth anniversary, but prior to the
fifth anniversary, of the date on which the Plan is approved by
shareholders pursuant to section 9.8, the Option may be exercised as to
a maximum of eighty percent (80%) of the Shares subject to the Option,
when granted, including in such number any optioned Shares purchased
prior to such fourth anniversary; and
(vi) on and after the fifth anniversary of the date on which
the Plan is approved by shareholders pursuant to section 9.8 and for
the remainder of the Option Period, the Option may be exercised as to
the entire number of optioned Shares not theretofore purchased;
PROVIDED, HOWEVER, that such an Option shall become fully exercisable, and all
optioned Shares not previously purchased shall become available for purchase, on
the date of the Option holder's death or Disability.
ARTICLE VI
----------
STOCK OPTIONS FOR ELIGIBLE EMPLOYEES
------------------------------------
SECTION 6.1 SIZE OF OPTION.
Subject to sections 6.2 and 6.5 and such limitations as the
Board may from time to time impose, the number of Shares as to which an Eligible
Employee may be granted Options shall be determined by the Committee, in its
discretion. Except as provided in section 6.5, the maximum number of Shares that
may be optioned to any one individual under this Plan during its entire duration
shall be the entire number of Shares available under section 3.1 of the Plan.
A-7
<PAGE>
SECTION 6.2 GRANT OF OPTIONS.
(a) Subject to the limitations of the Plan, the Committee may,
in its discretion, grant to an Eligible Employee an Option to purchase Shares.
The Option for such Eligible Employees must be designated as either an Incentive
Stock Option or a Non-Qualified Stock Option and, if not designated as either,
shall be a Non-Qualified Stock Option.
(b) Any Option granted under this section 6.2 shall be
evidenced by a written agreement which shall:
(i) specify the number of Shares covered by the Option;
(ii) specify the Exercise Price, determined in accordance
with section 6.3, for the Shares subject to the Option;
(iii) specify the Option Period determined in accordance
with section 6.4;
(iv) set forth specifically or incorporate by reference
the applicable provisions of the Plan; and
(v) contain such other terms and conditions not
inconsistent with the Plan as the Committee may, in its discretion,
prescribe with respect to an Option granted to an Eligible Employee.
SECTION 6.3 EXERCISE PRICE.
The price per Share at which an Option granted to an Eligible
Employee shall be determined by the Committee, in its discretion; PROVIDED,
HOWEVER, that the Exercise Price shall not be less than the Fair Market Value of
a Share on the date on which the Option is granted.
SECTION 6.4 OPTION PERIOD.
Subject to section 6.5, the Option Period during which an
Option granted to an Eligible Employee may be exercised shall commence on the
date specified by the Committee in the Option agreement and shall expire on the
date specified in the Option agreement or, if no date is specified, on the
earliest of:
(a) the close of business on the last day of the three-month
period commencing on the date of the Eligible Employee's termination of
employment with the Employer, other than on account of death or
Disability, Retirement or a Termination for Cause;
(b) the close of business on the last day of the one-year
period commencing on the date of the Eligible Employee's termination of
employment due to death, Disability or Retirement;
(c) the date and time when the Eligible Employee ceases to be
an employee of the Employer due to a Termination for Cause; and
(d) the last day of the ten-year period commencing on the date
on which the Option was granted.
A-8
<PAGE>
SECTION 6.5 REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything contained herein to the contrary:
(a) no Option shall be granted to an Eligible Employee
under the Plan prior to shareholder approval under section 9.8;
(b) no Eligible Employee may be granted Options to
purchase more than 175,236 Shares.
(c) each Option granted to an Eligible Employee shall
become exercisable as follows:
(i) prior to the first anniversary of the date
on which the Plan is approved by shareholders pursuant to
section 9.8, the Option shall not be exercisable;
(ii) on and after the first anniversary, but prior to
the second anniversary, of the date on which the Plan is
approved by shareholders pursuant to section 9.8, the Option
may be exercised as to a maximum of twenty percent (20%) of
the Shares subject to the Option when granted;
(iii) on and after the second anniversary, but prior
to the third anniversary, of the date on which the Plan is
approved by shareholders pursuant to section 9.8, the Option
may be exercised as to a maximum of forty percent (40%) of the
Shares subject to the Option when granted, including in such
forty percent (40%) any optioned Shares purchased prior to
such second anniversary;
(iv) on and after the third anniversary, but prior to
the fourth anniversary, of the date on which the Plan is
approved by shareholders pursuant to section 9.8, the Option
may be exercised as to a maximum of sixty percent (60%) of the
Shares subject to the Option when granted, including in such
sixty percent (60%) any optioned Shares purchased prior to
such third anniversary;
(v) on and after the fourth anniversary, but prior to
the fifth anniversary, of the date on which the Plan is
approved by shareholders pursuant to section 9.8, the Option
may be exercised as to a maximum of eighty percent (80%) of
the Shares subject to the Option when granted, including in
such eighty percent (80%) any optioned Shares purchased prior
to such fourth anniversary; and
(vi) on and after the fifth anniversary of the date
on which the Plan is approved by shareholders pursuant to
section 9.8 and for the remainder of the Option Period, the
Option may be exercised as to the entire number of optioned
Shares not theretofore purchased;
PROVIDED, HOWEVER, that such an Option shall become fully exercisable,
and all optioned Shares not previously purchased shall become available
for purchase, on the date of the Option holder's death or Disability;
PROVIDED, FURTHER, that the Committee may establish a different vesting
schedule if not inconsistent with section 563b.3(g) of OTS Regulations.
(d) The Option Period of any Option granted to an Eligible
Employee hereunder, whether or not previously vested, shall be
suspended as of the time and date at which the Option holder has
received notice from the Board that his or her employment is subject to
a possible Termination for Cause. Such suspension shall remain in
effect until the Option holder receives official notice from the Board
that he or she has been cleared of any possible
A-9
<PAGE>
Termination for Cause, at which time, the original Exercise Period
shall be reinstated without any adjustment for the intervening
suspended period. In the event that the Option Period under section 6.4
expires during such suspension, the Company shall pay to the Eligible
Employee, within 30 days after his reinstatement as an employee of the
Company, damages equal to the value of the expired Options less the
Exercise Price of such Options.
(e) No Option granted to an Eligible Employee hereunder,
whether or not previously vested, shall be exercised after the time and
date at which the Option holder's employment with the Employer is
terminated in a Termination for Cause.
SECTION 6.6 ADDITIONAL RESTRICTIONS ON INCENTIVE STOCK
OPTIONS.
In addition to the limitations of section 7.3, an Option
granted to an Eligible Employee designated by the Committee to be an Incentive
Stock Option shall be subject to the following limitations:
(a) If, for any calendar year, the sum of (i) plus (ii)
exceeds $100,000, where (i) equals the Fair Market Value (determined as
of the date of the grant) of Shares subject to an Option intended to be
an Incentive Stock Option which first become available for purchase
during such calendar year, and (ii) equals the Fair Market Value
(determined as of the date of grant) of Shares subject to any other
options intended to be Incentive Stock Options and previously granted
to the same Eligible Employee which first become exercisable in such
calendar year, then that number of Shares optioned which causes the sum
of (i) and (ii) to exceed $100,000 shall be deemed to be Shares
optioned pursuant to a Non-Qualified Stock Option or Non-Qualified
Stock Options, with the same terms as the Option or Options intended to
be an Incentive Stock Option;
(b) The Exercise Price of an Incentive Stock Option granted to
an Eligible Employee who, at the time the Option is granted, owns
Shares comprising more than 10% of the total combined voting power of
all classes of stock of the Company shall not be less than 110% of the
Fair Market Value of a Share, and if an Option designated as an
Incentive Stock Option shall be granted at an Exercise Price that does
not satisfy this requirement, the designated Exercise Price shall be
observed and the Option shall be treated as a NonQualified Stock
Option;
(c) The Option Period of an Incentive Stock Option granted to
an Eligible Employee who, at the time the Option is granted, owns
Shares comprising more than 10% of the total combined voting power of
all classes of stock of the Company, shall expire no later than the
fifth anniversary of the date on which the Option was granted, and if
an Option designated as an Incentive Stock Option shall be granted for
an Option Period that does not satisfy this requirement, the designated
Option Period shall be observed and the Option shall be treated as a
Non-Qualified Stock Option;
(d) An Incentive Stock Option that is exercised during
its designated Option Period but more than:
(i) three (3) months after the termination of
employment with the Company, a parent or a subsidiary (other
than on account of disability within the meaning of section
22(e)(3) of the Code or death) of the Eligible Employee to
whom it was granted; and
(ii) one (1) year after such individual's termination
of employment with the Company, a parent or a subsidiary due
to disability (within the meaning of section 22(e)(3) of the
Code);
A-10
<PAGE>
may be exercised in accordance with the terms but shall at the time of
exercise be treated as a Non-Qualified Stock Option; and
(e) Except with the prior written approval of the Committee,
no individual shall dispose of Shares acquired pursuant to the exercise
of an Incentive Stock Option until after the later of (i) the second
anniversary of the date on which the Incentive Stock Option was
granted, or (ii) the first anniversary of the date on which the Shares
were acquired.
ARTICLE VII
-----------
OPTIONS -- IN GENERAL
---------------------
SECTION 7.1 METHOD OF EXERCISE.
(a) Subject to the limitations of the Plan and the Option
agreement, an Option holder may, at any time during the Option Period, exercise
his or her right to purchase all or any part of the Shares to which the Option
relates; PROVIDED, HOWEVER, that the minimum number of Shares which may be
purchased at any time shall be 100, or, if less, the total number of Shares
relating to the Option which remain unpurchased. An Option holder shall exercise
an Option to purchase Shares by:
(i) giving written notice to the Committee, in such form
and manner as the Committee may prescribe, of his intent to exercise
the Option;
(ii) delivering to the Committee full payment, consistent
with section 7.1(b), for the Shares as to which the Option is to be
exercised; and
(iii) satisfying such other conditions as may be prescribed
in the Option agreement.
(b) The Exercise Price of Shares to be purchased upon exercise
of any Option shall be paid in full in cash (by certified or bank check or such
other instrument as the Company may accept) or, if and to the extent permitted
by the Committee, by one or more of the following: (i) in the form of Shares
already owned by the Option holder having an aggregate Fair Market Value on the
date the Option is exercised equal to the aggregate Exercise Price to be paid;
(ii) by requesting the Company to cancel without payment Options outstanding to
such Person for that number of Shares whose aggregate Fair Market Value on the
date of exercise, when reduced by their aggregate Exercise Price, equals the
aggregate Exercise Price of the Options being exercised; or (iii) by a
combination thereof. Payment for any Shares to be purchased upon exercise of an
Option may also be made by delivering a properly executed exercise notice to the
Company, together with a copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds to pay the purchase
price. To facilitate the foregoing, the Company may enter into agreements for
coordinated procedures with one or more brokerage firms.
(c) When the requirements of section 7.1(a) and (b) have been
satisfied, the Committee shall take such action as is necessary to cause the
issuance of a stock certificate evidencing the Option holder's ownership of such
Shares. The Person exercising the Option shall have no right to vote or to
receive dividends, nor have any other rights with respect to the Shares, prior
to the date as of which such Shares are transferred to such Person on the stock
transfer records of the Company, and no adjustments shall be made for any
dividends or other rights for which the record date is prior to the date as of
which such transfer is effected, except as may be required under section 8.3.
A-11
<PAGE>
SECTION 7.2 LIMITATIONS ON OPTIONS.
(a) An Option by its terms shall not be transferable by the
Option holder other than to Family Members or Non-profit Organizations or by
will or by the laws of descent and distribution and shall be exercisable, during
the lifetime of the Option holder, only by the Option holder, a Family Member or
a Non-profit Organization. Any such transfer shall be effected by written notice
to the Company given in such form and manner as the Committee may prescribe and
shall be recognized only if such notice is received by the Company prior to the
death of the person giving it. Thereafter, the transferee shall have, with
respect to such Option, all of the rights, privileges and obligations which
would attach thereunder to the transferor if the Option were issued to such
transferor. If a privilege of the Option depends on the life, employment or
other status of the transferor, such privilege of the Option for the transferee
shall continue to depend on the life, employment or other status of the
transferor. The Committee shall have full and exclusive authority to interpret
and apply the provisions of this Plan to transferees to the extent not
specifically described herein. Notwithstanding the foregoing, an Incentive Stock
Option is not transferable by an Eligible Employee other than by will or the
laws of descent and distribution, and is exercisable, during his lifetime,
solely by him.
(b) The Company's obligation to deliver Shares with respect to
an Option shall, if the Committee so requests, be conditioned upon the receipt
of a representation as to the investment intention of the Option holder to whom
such Shares are to be delivered, in such form as the Committee shall determine
to be necessary or advisable to comply with the provisions of applicable
federal, state or local law. It may be provided that any such representation
shall become inoperative upon a registration of the Shares or upon the
occurrence of any other event eliminating the necessity of such representation.
The Company shall not be required to deliver any Shares under the Plan prior to
(i) the admission of such Shares to listing on any stock exchange on which
Shares may then be listed, or (ii) the completion of such registration or other
qualification under any state or federal law, rule or regulation as the
Committee shall determine to be necessary or advisable.
ARTICLE VIII
------------
AMENDMENT AND TERMINATION
-------------------------
SECTION 8.1 TERMINATION.
The Board may suspend or terminate the Plan in whole or in
part at any time prior to the tenth anniversary of the Effective Date by giving
written notice of such suspension or termination to the Committee. Unless sooner
terminated, the Plan shall terminate automatically on the day preceding the
tenth anniversary of the Effective Date. In the event of any suspension or
termination of the Plan, all Options theretofore granted under the Plan that are
outstanding on the date of such suspension or termination of the Plan shall
remain outstanding and exercisable for the period and on the terms and
conditions set forth in the Option agreements evidencing such Options.
SECTION 8.2 AMENDMENT.
The Board may amend or revise the Plan in whole or in part at
any time; PROVIDED, HOWEVER, that, to the extent required to comply with section
162(m) of the Code, no such amendment or revision shall be effective if it
amends a material term of the Plan unless approved by the holders of a majority
of the voting Shares of Dime Community Bancorp, Inc.
A-12
<PAGE>
SECTION 8.3 ADJUSTMENTS IN THE EVENT OF A BUSINESS
REORGANIZATION.
(a) In the event of any merger, consolidation, or other
business reorganization in which the Company is the surviving entity, and in the
event of any stock split, stock dividend or other event generally affecting the
number of Shares held by each Person who is then a holder of record of Shares,
the number of Shares covered by each outstanding Option and the number of Shares
available pursuant to section 3.1 shall be adjusted to account for such event.
Such adjustment shall be effected by multiplying such number of Shares by an
amount equal to the number of Shares that would be owned after such event by a
Person who, immediately prior to such event, was the holder of record of one
Share, and the Exercise Price of the Options shall be adjusted by dividing the
Exercise Price by such number of Shares; PROVIDED, HOWEVER, that the Committee
may, in its discretion, establish another appropriate method of adjustment.
(b) In the event of any merger, consolidation, or other
business reorganization in which the Company is not the surviving entity, any
Options granted under the Plan which remain outstanding may be cancelled as of
the effective date of such merger, consolidation, business reorganization,
liquidation or sale by the Board upon 30 days' written notice to the Option
holder; PROVIDED, HOWEVER, that on or as soon as practicable following the date
of cancellation, each Option holder shall receive a monetary payment in such
amount, or other property of such kind and value, as the Board determines in
good faith to be equivalent in value to the Options that have been cancelled.
(c) In the event that the Company shall declare and pay any
dividend with respect to Shares (other than a dividend payable in Shares) which
results in a nontaxable return of capital to the holders of Shares for federal
income tax purposes or otherwise than by dividend makes distribution of property
to the holders of its Shares, the Company shall make an equivalent payment to
each Person holding an outstanding Option as of the record date for such
dividend. Such payment shall be made at substantially the same time, in
substantially the same form and in substantially the same amount per optioned
Share as the dividend or other distribution paid with respect to outstanding
Shares; PROVIDED, HOWEVER, that if any dividend or distribution on outstanding
Shares is paid in property other than cash, the Company, in its discretion
applied uniformly to all outstanding Options, may make such payment in a cash
amount per optioned Share equal in fair market value to the fair market value of
the non-cash dividend or distribution.
ARTICLE IX
----------
MISCELLANEOUS
-------------
SECTION 9.1 STATUS AS AN EMPLOYEE BENEFIT PLAN.
This Plan is not intended to satisfy the requirements for
qualification under section 401(a) of the Code or to satisfy the definitional
requirements for an "employee benefit plan" under section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended. It is intended to be a
non-qualified incentive compensation program that is exempt from the regulatory
requirements of the Employee Retirement Income Security Act of 1974, as amended.
The Plan shall be construed and administered so as to effectuate this intent.
A-13
<PAGE>
SECTION 9.2 NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the establishment of the Plan nor any provisions of
the Plan nor any action of the Board or the Committee with respect to the Plan
shall be held or construed to confer upon any Eligible Director or Eligible
Employee any right to a continuation of his or her position as a director or
employee of the Company. The Employers reserve the right to remove any Eligible
Director or dismiss any Eligible Employee or otherwise deal with any Eligible
Director or Eligible Employee to the same extent as though the Plan had not been
adopted.
SECTION 9.3 CONSTRUCTION OF LANGUAGE.
Whenever appropriate in the Plan, words used in the singular
may be read in the plural, words used in the plural may be read in the singular,
and words importing the masculine gender may be read as referring equally to the
feminine or the neuter. Any reference to an Article or section number shall
refer to an Article or section of this Plan unless otherwise indicated.
SECTION 9.4 GOVERNING LAW.
The Plan shall be construed, administered and enforced
according to the laws of the State of Illinois without giving effect to the
conflict of laws principles thereof, except to the extent that such laws are
preempted by federal law. The Plan shall be construed to comply with applicable
OTS Regulations.
SECTION 9.5 HEADINGS.
The headings of Articles and sections are included solely for
convenience of reference. If there is any conflict between such headings and the
text of the Plan, the text shall control.
SECTION 9.6 NON-ALIENATION OF BENEFITS.
The right to receive a benefit under the Plan shall not be
subject in any manner to anticipation, alienation or assignment, nor shall such
right be liable for or subject to debts, contracts, liabilities, engagements or
torts, except to the extent provided in a qualified domestic relations order as
defined in section 414(p) of the Code.
SECTION 9.7 TAXES.
The Company shall have the right to deduct from all amounts
paid by the Company in cash with respect to an Option under the Plan any taxes
required by law to be withheld with respect to such Option. Where any Person is
entitled to receive Shares pursuant to the exercise of an Option, the Company
shall have the right to require such Person to pay the Company the amount of any
tax which the Company is required to withhold with respect to such Shares, or,
in lieu thereof, to retain, or to sell without notice, a sufficient number of
Shares to cover the amount required to be withheld.
SECTION 9.8 APPROVAL OF SHAREHOLDERS.
The Plan shall not be effective or implemented unless approved
by shareholders of Home Bancorp of Elgin, Inc. as follows:
A-14
<PAGE>
(1) if, prior to the one year anniversary of the stock
conversion of Home Federal Savings and Loan Association of Elgin to
stock form, the Plan is approved by the holders of a majority of the
total votes eligible to be cast at any duly called annual or special
meeting of the Company, the Plan shall be effective as of the date of
such approval; and
(2) if subsequent to the one year anniversary of such
conversion, the Plan is approved by the affirmative vote of the holders
of a majority of Shares present or represented by proxy at the meeting
and entitled to vote at an annual or special meeting at which a quorum
is present, the Plan shall be effective as of the date of such
approval.
Shareholder approval shall not be obtained at an annual or special meeting
earlier than six months following such conversion unless permitted by the Office
of Thrift Supervision. No Option shall be granted prior to shareholder approval
of the Plan.
SECTION 9.9 NOTICES.
Any communication required or permitted to be given under the
Plan, including any notice, direction, designation, comment, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below, or at such other
address as one such party may by written notice specify to the other party:
(a) If to the Committee:
Home Bancorp of Elgin, Inc.
16 North Spring Street
Elgin, Illinois 60010
Attention: CORPORATE SECRETARY
-------------------
(b) If to an Option holder, to the Option holder's
address as shown in the Employer's records.
A-15
<PAGE>
APPENDIX B
----------
HOME BANCORP OF ELGIN, INC.
1997 RECOGNITION AND RETENTION PLAN
------------------------------
ADOPTED ON JANUARY 16, 1997
EFFECTIVE AS OF APRIL 17, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I
---------
PURPOSE
-------
SECTION 1.1 GENERAL PURPOSE OF THE PLAN.....................................B-1
ARTICLE II
----------
DEFINITIONS
-----------
SECTION 2.1 ASSOCIATION...............................................B-1
SECTION 2.2 AWARD.....................................................B-1
SECTION 2.3 AWARD DATE................................................B-1
SECTION 2.4 BENEFICIARY...............................................B-1
SECTION 2.5 BOARD.....................................................B-1
SECTION 2.6 CHANGE OF CONTROL.........................................B-1
SECTION 2.7 CODE......................................................B-2
SECTION 2.8 COMMITTEE.................................................B-2
SECTION 2.9 COMPANY...................................................B-2
SECTION 2.10 DISABILITY................................................B-2
SECTION 2.11 DISINTERESTED BOARD MEMBER................................B-2
SECTION 2.12 EFFECTIVE DATE............................................B-3
SECTION 2.13 ELIGIBLE DIRECTOR.........................................B-3
SECTION 2.14 ELIGIBLE EMPLOYEE.........................................B-3
SECTION 2.15 EMPLOYER..................................................B-3
SECTION 2.16 EXCHANGE ACT..............................................B-3
SECTION 2.17 OTS REGULATIONS...........................................B-3
SECTION 2.18 PERSON....................................................B-3
SECTION 2.19 PLAN......................................................B-3
SECTION 2.20 SHARE.....................................................B-3
SECTION 2.21 TRUST.....................................................B-3
SECTION 2.22 TRUST AGREEMENT...........................................B-3
SECTION 2.23 TRUST FUND................................................B-3
SECTION 2.24 TRUSTEE...................................................B-3
ARTICLE III
-----------
SHARES AVAILABLE UNDER PLAN
---------------------------
SECTION 3.1 SHARES AVAILABLE UNDER PLAN...............................B-4
ARTICLE IV
----------
ADMINISTRATION
--------------
SECTION 4.1 COMMITTEE.................................................B-4
SECTION 4.2 COMMITTEE ACTION..........................................B-4
SECTION 4.3 COMMITTEE RESPONSIBILITIES................................B-4
B-(i)
<PAGE>
PAGE
----
ARTICLE V
---------
THE TRUST FUND
--------------
SECTION 5.1 CONTRIBUTIONS.............................................B-5
SECTION 5.2 THE TRUST FUND............................................B-5
SECTION 5.3 INVESTMENTS...............................................B-5
ARTICLE VI
----------
AWARDS
------
SECTION 6.1 AWARDS TO ELIGIBLE DIRECTORS..............................B-5
SECTION 6.2 AWARDS TO ELIGIBLE EMPLOYEES..............................B-5
SECTION 6.3 AWARDS IN GENERAL.........................................B-6
SECTION 6.4 SHARE ALLOCATIONS.........................................B-6
SECTION 6.5 DIVIDEND RIGHTS...........................................B-6
SECTION 6.6 VOTING RIGHTS.............................................B-6
SECTION 6.7 TENDER OFFERS.............................................B-7
SECTION 6.8 LIMITATIONS ON AWARDS.....................................B-7
ARTICLE VII
-----------
VESTING AND DISTRIBUTION OF SHARES
----------------------------------
SECTION 7.1 VESTING OF SHARES GRANTED TO ELIGIBLE DIRECTORS...........B-8
SECTION 7.2 VESTING OF SHARES GRANTED TO ELIGIBLE EMPLOYEES...........B-8
SECTION 7.3 DESIGNATION OF BENEFICIARY................................B-9
SECTION 7.4 MANNER OF DISTRIBUTION....................................B-9
SECTION 7.5 TAXES.....................................................B-9
ARTICLE VIII
------------
AMENDMENT AND TERMINATION
-------------------------
SECTION 8.1 TERMINATION..............................................B-10
SECTION 8.2 AMENDMENT................................................B-10
SECTION 8.3 ADJUSTMENTS IN THE EVENT OF A BUSINESS REORGANIZATION....B-10
ARTICLE IX
----------
MISCELLANEOUS
-------------
SECTION 9.1 STATUS AS AN EMPLOYEE BENEFIT PLAN.......................B-10
SECTION 9.2 NO RIGHT TO CONTINUED EMPLOYMENT.........................B-11
SECTION 9.3 CONSTRUCTION OF LANGUAGE.................................B-11
SECTION 9.4 GOVERNING LAW............................................B-11
SECTION 9.5 HEADINGS.................................................B-11
SECTION 9.6 NON-ALIENATION OF BENEFITS...............................B-11
SECTION 9.7 NOTICES..................................................B-11
SECTION 9.8 APPROVAL OF SHAREHOLDERS.................................B-12
B-(ii)
<PAGE>
HOME BANCORP OF ELGIN, INC.
---------------------------
1997 RECOGNITION AND RETENTION PLAN
-----------------------------------
ARTICLE I
---------
PURPOSE
-------
SECTION 1.1 GENERAL PURPOSE OF THE PLAN.
The purpose of the Plan is to promote the growth and
profitability of Home Bancorp of Elgin, Inc. and to provide eligible directors,
certain key officers and employees of Home Bancorp of Elgin, Inc. with an
incentive to achieve corporate objectives, to attract and retain directors, key
officers and employees of outstanding competence and to provide such directors,
officers and employees with an equity interest in Home Bancorp of Elgin, Inc.
ARTICLE II
----------
DEFINITIONS
-----------
The following definitions shall apply for the purposes of this
Plan, unless a different meaning is plainly indicated by the context:
SECTION 2.1 ASSOCIATION means Home Federal Savings and Loan
Association of Elgin, a federally chartered stock savings association, and any
successor thereto.
SECTION 2.2 AWARD means a grant of Shares to an Eligible
Director or Eligible Employee pursuant to section 6.1 or 6.2.
SECTION 2.3 AWARD DATE means, with respect to a particular
Award, the date specified by the Committee in the notice of the Award issued to
the Eligible Director or Eligible Employee by the Committee, pursuant to section
6.1 or 6.2.
SECTION 2.4 BENEFICIARY means the Person designated by an
Eligible Director or Eligible Employee pursuant to section 7.3, to receive
distribution of any Shares available for distribution to such Eligible Director
or Eligible Employee, in the event such Eligible Director or Eligible Employee
dies prior to receiving distribution of such Shares.
SECTION 2.5 BOARD means the Board of Directors of the Company.
SECTION 2.6 CHANGE OF CONTROL means any of the following
events:
(a) the occurrence of any event upon which any "person" (as
such term is used in sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended ("Exchange Act")), other than (A) a
trustee or other fiduciary holding securities under an employee benefit
plan maintained for the benefit of employees of the Company; (B) a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company; or (C) any group constituting a person in which
employees of the Company are substantial members, becomes the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or
B-1
<PAGE>
indirectly, of securities issued by the Company representing 25% or
more of the combined voting power of all of the Company's then
outstanding securities; or
(b) the occurrence of any event upon which the individuals who
on the date the Plan is adopted are members of the Board, together with
individuals whose election by the Board or nomination for election by
the Company's stockholders was approved by the affirmative vote of at
least two-thirds of the members of the Board then in office who were
either members of the Board on the date this Plan is adopted or whose
nomination or election was previously so approved, cease for any reason
to constitute a majority of the members of the Board, but excluding,
for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of directors of the Company (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or
(c) the shareholders of the Company approve either:
(i) a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation
following which both of the following conditions are
satisfied:
(A) either (I) the members of the Board of
the Company immediately prior to such merger or
consolidation constitute at least a majority of the
members of the governing body of the institution
resulting from such merger or consolidation; or (II)
the shareholders of the Company own securities of the
institution resulting from such merger or
consolidation representing 80% or more of the
combined voting power of all such securities of the
resulting institution then outstanding in
substantially the same proportions as their ownership
of voting securities of the Company immediately
before such merger or consolidation; and
(B) the entity which results from such
merger or consolidation expressly agrees in writing
to assume and perform the Company's obligations under
the Plan; or
(ii) a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the
Company of all or substantially all of its assets; and
(d) any event that would be described in section 2.6(a), (b)
or (c) if "the Association" were substituted for "the Company" therein.
SECTION 2.7 CODE means the Internal Revenue Code of 1986
(including the corresponding provisions of any succeeding law).
SECTION 2.8 COMMITTEE means the Committee described in section
4.1.
SECTION 2.9 COMPANY means Home Bancorp of Elgin, Inc., a
corporation organized and existing under the laws of the State of Delaware, and
any successor thereto.
SECTION 2.10 DISABILITY means a condition of total incapacity,
mental or physical, for further performance of duty with the Company which the
Committee shall have determined, on the basis of competent medical evidence, is
likely to be permanent.
SECTION 2.11 DISINTERESTED BOARD MEMBER means a member of the
Board who (a) is not a current employee of the Company or a subsidiary, (b) does
not receive remuneration from the Company or a subsidiary, either directly or
indirectly, in any capacity other than as a director and (c) does not possess an
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interest in any other transaction, and is not engaged in a business
relationship, for which disclosure would be required pursuant to Item 404(a) or
(b) of the proxy solicitation rules of the Securities and Exchange Commission.
The term Disinterested Board Member shall be interpreted in such manner as shall
be necessary to conform to the requirements of Rule 16b-3 promulgated under the
Exchange Act.
SECTION 2.12 EFFECTIVE DATE means December 26, 1996.
SECTION 2.13 ELIGIBLE DIRECTOR means a member of the board of
directors of the Employer who is not also an employee of the Employer.
SECTION 2.14 ELIGIBLE EMPLOYEE means any employee whom the
Committee may determine to be a key officer or employee of the Employer and
select to receive an Award pursuant to the Plan.
SECTION 2.15 EMPLOYER means the Company, the Association and
any successor thereto and, with the prior approval of the Board, and subject to
such terms and conditions as may be imposed by the Board, any other savings
bank, savings and loan association, bank, corporation, financial institution or
other business organization or institution. With respect to any Eligible
Employee or Eligible Director, the Employer shall mean the entity which employs
such person or upon whose board of directors such person serves.
SECTION 2.16 EXCHANGE ACT means the Securities and Exchange
Act of 1934, as amended.
SECTION 2.17 OTS REGULATIONS means the regulations issued by
the Office of Thrift Supervision and applicable to the Plan, the Association or
the Company.
SECTION 2.18 PERSON means an individual, a corporation, a
bank, a savings bank, a savings and loan association, a financial institution, a
partnership, an association, a joint-stock company, a trust, an estate, an
unincorporated organization and any other business organization or institution.
SECTION 2.19 PLAN means the Home Bancorp of Elgin, Inc. 1997
Recognition and Retention Plan as amended from time to time.
SECTION 2.20 SHARE means a share of common stock of Home
Bancorp of Elgin, Inc., par value $.01 per share.
SECTION 2.21 TRUST means the legal relationship created by
the Trust Agreement pursuant to which the Trustee holds the Trust Fund in trust.
The Trust may be referred to as the "Recognition and Retention Plan Trust of
Home Bancorp of Elgin, Inc."
SECTION 2.22 TRUST AGREEMENT means the agreement between Dime
Community Bancorp, Inc. and the Trustee therein named or its successor pursuant
to which the Trust Fund shall be held in trust.
SECTION 2.23 TRUST FUND means the corpus (consisting of
contributions paid over to the Trustee, and investments thereof), and all
earnings, appreciations or additions thereof and thereto, held by the Trustee
under the Trust Agreement in accordance with the Plan, less any depreciation
thereof and any payments made therefrom pursuant to the Plan.
SECTION 2.24 TRUSTEE means the Trustee of the Trust Fund from
time to time in office. The Trustee shall serve as Trustee until it is removed
or resigns from office and is replaced by a successor Trustee or Trustees
appointed by the Company.
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ARTICLE III
-----------
SHARES AVAILABLE UNDER PLAN
---------------------------
SECTION 3.1 SHARES AVAILABLE UNDER PLAN.
The maximum number of Shares under the Plan shall be 280,370.
An aggregate maximum of 84,108 Shares may be granted to Eligible Directors, with
a maximum of 14,018 granted to any one Eligible Director.
ARTICLE IV
----------
ADMINISTRATION
--------------
SECTION 4.1 COMMITTEE.
The Plan shall be administered by the members of the
Compensation Committee of the Company who are Disinterested Board Members. If
the Committee consists of fewer than two Disinterested Board Members, then the
Board shall appoint to the Committee such additional Disinterested Board Members
as shall be necessary to provide for a Committee consisting of at least two
Disinterested Board Members.
SECTION 4.2 COMMITTEE ACTION.
The Committee shall hold such meetings, and may make such
administrative rules and regulations, as it may deem proper. A majority of the
members of the Committee shall constitute a quorum, and the action of a majority
of the members of the Committee present at a meeting at which a quorum is
present, as well as actions taken pursuant to the unanimous written consent of
all of the members of the Committee without holding a meeting, shall be deemed
to be actions of the Committee. All actions of the Committee shall be final and
conclusive and shall be binding upon the Company and all other interested
parties. Any Person dealing with the Committee shall be fully protected in
relying upon any written notice, instruction, direction or other communication
signed by the Secretary of the Committee and one member of the Committee, by two
members of the Committee or by a representative of the Committee authorized to
sign the same in its behalf.
SECTION 4.3 COMMITTEE RESPONSIBILITIES.
Subject to the terms and conditions of the Plan and such
limitations as may be imposed by the Board, the Committee shall be responsible
for the overall management and administration of the Plan and shall have such
authority as shall be necessary or appropriate in order to carry out its
responsibilities, including, without limitation, the authority:
(a) to interpret and construe the Plan, and to determine all
questions that may arise under the Plan as to eligibility for Awards
under the Plan, the amount of Shares, if any, to be granted pursuant to
an Award, and the terms and conditions of such Award;
(b) to adopt rules and regulations and to prescribe forms for
the operation and administration of the Plan; and
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(c) to take any other action not inconsistent with the
provisions of the Plan that it may deem necessary or appropriate.
ARTICLE V
---------
THE TRUST FUND
--------------
SECTION 5.1 CONTRIBUTIONS.
The Company shall contribute, or cause to be contributed, to
the Trust, from time to time, such amounts of money or property as shall be
determined by the Board, in its discretion. No contributions by Eligible
Directors or Eligible Employees shall be permitted.
SECTION 5.2 THE TRUST FUND.
The Trust Fund shall be held and invested under the Trust
Agreement with the Trustee. The provisions of the Trust Agreement shall include
provisions conferring powers on the Trustee as to investment, control and
disbursement of the Trust Fund, and such other provisions not inconsistent with
the Plan as may be prescribed by or under the authority of the Board. No bond or
security shall be required of any Trustee at any time in office.
SECTION 5.3 INVESTMENTS.
The Trustee shall invest the Trust Fund in Shares and in such
other investments as may be permitted under the Trust Agreement, including
savings accounts, time or other interest bearing deposits in or other interest
bearing obligations of the Company, in such proportions as shall be determined
by the Committee; PROVIDED, HOWEVER, that in no event shall the Trust Fund be
used to purchase more than 280,370 Shares. Notwithstanding the immediately
preceding sentence, the Trustee may temporarily invest the Trust Fund in
short-term obligations of, or guaranteed by, the U.S. Government or an agency
thereof, or the Trustee may retain the Trust Fund uninvested or may sell assets
of the Trust Fund to provide amounts required for purposes of the Plan.
ARTICLE VI
----------
AWARDS
------
SECTION 6.1 AWARDS TO ELIGIBLE DIRECTORS.
On the Effective Date, each Person who is then an Eligible
Director shall be granted an Award of 14,018 Shares.
SECTION 6.2 AWARDS TO ELIGIBLE EMPLOYEES.
Subject to section 6.8 and such limitations as the Board may
from time to time impose, the number of Shares as to which an Eligible Employee
may be granted an Award shall be determined by the Committee in its discretion;
PROVIDED HOWEVER, that in no event shall the number of Shares allocated to an
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Eligible Employee in an Award exceed the number of Shares then held in the Trust
and not allocated in connection with other Awards.
SECTION 6.3 AWARDS IN GENERAL.
Any Award shall be evidenced by a written notice issued by the
Committee to the Eligible Director or Eligible Employee, which notice shall:
(a) specify the number of Shares covered by the Award;
(b) specify the Award Date;
(c) specify the dates on which such Shares shall become
available for distribution to the Eligible Director or Eligible
Employee, in accordance with sections 7.1 and 7.2; and
(d) contain such other terms and conditions not inconsistent
with the Plan as the Board may, in its discretion, prescribe.
SECTION 6.4 SHARE ALLOCATIONS.
Upon the grant of an Award to an Eligible Director or Eligible
Employee, the Committee shall notify the Trustee of the Award and of the number
of Shares subject to the Award. Thereafter, until such time as the Shares
subject to such Award become vested or are forfeited, the books and records of
the Trustee shall reflect that such number of Shares are being held for the
benefit of the Award recipient.
SECTION 6.5 DIVIDEND RIGHTS.
(a) Any cash dividends or distributions declared and paid with
respect to Shares in the Trust Fund that are, as of the record date for such
dividend, allocated to an Eligible Director or Eligible Employee in connection
with an Award shall be promptly paid to such Eligible Director or Eligible
Employee. Any cash dividends declared and paid with respect to Shares that are
not, as of the record date for such dividend, allocated to any Eligible Director
or Eligible Employee in connection with any Award shall, at the direction of the
Committee, be held in the Trust or used to pay the administrative expenses of
the Plan, including any compensation due to the Trustee.
(b) Any dividends or distributions declared and paid with
respect to Shares in property other than cash shall be held in the Trust Fund.
If, as of the record date for such dividend or distribution, the Shares with
respect to which it is paid are allocated to an Eligible Director or Eligible
Employee in connection with an Award, the property so distributed shall be
similarly allocated such Eligible Director or Eligible Employee in connection
with such Award and shall be held for distribution or forfeiture in accordance
with the terms and conditions of the Award.
SECTION 6.6 VOTING RIGHTS.
(a) Each Eligible Director or Eligible Employee to whom an
Award has been made that is not fully vested shall have the right to direct the
manner in which all voting rights appurtenant to the Shares related to such
Award will be exercised while such Shares are held in the Trust Fund. Such a
direction shall be given by completing and filing, with the inspector of
elections, the Trustee or such other person who shall be independent of the
Company as the Committee shall designate in the direction, a written direction
in the
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form and manner prescribed by the Committee. If no such direction is given by an
Eligible Director or Eligible Employee, then the voting rights appurtenant to
the Shares allocated to him shall not be exercised.
(b) To the extent that the Trust Fund contains Shares that are
not allocated in connection with an Award, all voting rights appurtenant to such
Shares shall be exercised by the Trustee in such manner as the Committee shall
direct to reflect the voting directions given by Eligible Director or Eligible
Employees with respect to Shares allocated in connection with their Awards.
(c) The Committee shall furnish, or cause to be furnished, to
each Eligible Director or Eligible Employee, all annual reports, proxy materials
and other information furnished by Home Bancorp of Elgin, Inc., or by any proxy
solicitor, to the holders of Shares.
SECTION 6.7 TENDER OFFERS.
(a) Each Eligible Director or Eligible Employee to whom an
Award has been made that is not fully vested shall have the right to direct,
with respect to the Shares related to such Award, the manner of response to any
tender offer, exchange offer or other offer made to the holders of Shares. Such
a direction shall be given by completing and filing, with the inspector of
elections, the Trustee or such other person who shall be independent of the
Company as the Committee shall designate in the direction, a written direction
in the form and manner prescribed by the Committee. If no such direction is
given by an Eligible Director or Eligible Employee, then the Shares shall not be
tendered or exchanged.
(b) To the extent that the Trust Fund contains Shares that are
not allocated in connection with an Award, all responses to tender, exchange and
other offers appurtenant to such Shares shall be given by the Trustee in such
manner as the Committee shall direct to reflect the responses given by Eligible
Director or Eligible Employees with respect to Shares allocated in connection
with their Awards.
(c) The Committee shall furnish, or cause to be furnished, to
each Eligible Director or Eligible Employee, all information furnished by the
offeror to the holders of Shares.
SECTION 6.8 LIMITATIONS ON AWARDS.
(a) Notwithstanding anything in the Plan to the contrary:
(i) No Award shall be granted under the Plan prior to the
earlier of the date on which the Plan is approved by shareholders
pursuant to section 9.8 or September 26, 1997;
(ii) No Eligible Employee may be granted Awards covering
in excess of 70,092 Shares;
(iii) each Award shall become vested and distributable as
follows:
(A) prior to the May 1 following the first
anniversary of the date on which the Plan is approved by
shareholders pursuant to section 9.8, the Award shall not be
vested;
(B) on the May 1 following the first anniversary of
the date on which the Plan is approved by shareholders
pursuant to section 9.8, the Award will be vested as to twenty
percent (20%) of the Shares subject to the Award when granted;
(C) on the May 1 following the second anniversary of
the date on which the Award is granted, the Award will be
vested as to an additional twenty percent (20%) of the Shares
subject to the Award when granted;
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(D) on the May 1 following the third anniversary of
the date on which the Plan is approved by shareholders
pursuant to section 9.8, the Award will be vested as to an
additional twenty percent (20%) of the Shares subject to the
Award when granted;
(E) on the May 1 following the fourth anniversary of
the date on which the Plan is approved by shareholders
pursuant to section 9.8, the Award will be vested as to an
additional twenty percent (20%) of the Shares subject to the
Award when granted; and
(F) on the May 1 following the fifth anniversary of
the date on which the Plan is approved by shareholders
pursuant to section 9.8, the Award will be vested as to an
additional twenty percent (20%) of the Shares subject to the
Award when granted;
PROVIDED, HOWEVER, that such an Award shall become fully vested on the
date of the Award holder's death or Disability; and PROVIDED, FURTHER,
that the Committee may establish a different vesting schedule if not
inconsistent with section 563b.3(g) of OTS Regulations.
(b) An Award by its terms shall not be transferable by the
Eligible Director or Eligible Employee other than by will or by the laws of
descent and distribution, and the Shares granted pursuant to such Award shall be
distributable, during the lifetime of the Recipient, only to the Recipient.
ARTICLE VII
-----------
VESTING AND DISTRIBUTION OF SHARES
----------------------------------
SECTION 7.1 VESTING OF SHARES GRANTED TO ELIGIBLE DIRECTORS.
The Shares subject to each Award granted to Eligible Directors
under the Plan shall become vested as follows: (i) twenty percent (20%) of such
Shares shall become vested upon the May 1 following the first anniversary of the
date the Plan is approved by shareholders pursuant to section 9.8; (ii) 20% of
such Shares shall become vested upon the May 1 following the second anniversary
of the date the Plan is approved by shareholders pursuant to section 8.8; (iii)
20% of such Shares shall become vested upon the May 1 following the third
anniversary of the date the Plan is approved by shareholders pursuant to section
8.8; (iv) 20% of such Shares shall become vested upon the May 1 following the
fourth anniversary of the date the Plan is approved by shareholders pursuant to
section 8.8; and (v) 20% of such Shares shall become vested upon the May 1
following the fifth anniversary of the date the Plan is approved by shareholders
pursuant to section 8.8; PROVIDED, HOWEVER, that the Eligible Director has
remained on the services of an Employer during the entire period commencing with
the date the Plan is approved by shareholders pursuant to section 8.8 and ending
on the applicable anniversary of the date of shareholder approval; AND PROVIDED,
FURTHER, an Award shall become 100% vested upon the Award holder's death or
Disability; AND PROVIDED, FURTHER, that to the extent not inconsistent with
section 563b.3(g)(4) of the OTS Regulations, all Awards granted under section
6.1 shall not be subject to the foregoing provisions of section 7.1, but shall
be vested and distributable on the date of grant.
SECTION 7.2 VESTING OF SHARES GRANTED TO ELIGIBLE EMPLOYEES.
Subject to section 6.8 and the terms and conditions of the
Plan, each Award to an Eligible Employee made under the Plan shall become vested
at the times and upon the conditions specified by the
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Committee in the Award notice; PROVIDED, HOWEVER, that an Award shall become
fully vested on the date of the Award holder's death or Disability.
SECTION 7.3 DESIGNATION OF BENEFICIARY.
An Eligible Director or Eligible Employee who has received an
Award may designate a Beneficiary to receive any undistributed Shares that are,
or become, available for distribution on, or after, the date of his death. Such
designation (and any change or revocation of such designation) shall be made in
writing in the form and manner prescribed by the Committee. In the event that
the Beneficiary designated by an Eligible Director or Eligible Employee dies
prior to the Eligible Director or Eligible Employee, or in the event that no
Beneficiary has been designated, any undistributed Shares that are, or become,
available for distribution on, or after, the Eligible Director's or Eligible
Employee's death shall be paid to the executor or administrator of the Eligible
Director's or Eligible Employee's estate, or if no such executor or
administrator is appointed within such time as the Committee, in its sole
discretion, shall deem reasonable, to such one or more of the spouse and
descendants and blood relatives of such deceased person as the Committee may
select.
SECTION 7.4 MANNER OF DISTRIBUTION.
(a) As soon as practicable following the date any Shares
granted pursuant to an Award become vested pursuant to sections 7.1 and 7.2, the
Committee shall take such actions as are necessary to cause the transfer of
record ownership of the Shares that have become vested from the Trustee to the
Award holder and shall cause the Trustee to distribute to the Award holder all
property other than Shares then being held in connection with the Shares being
distributed.
(b) The Company's obligation to deliver Shares with respect to
an Award shall, if the Committee so requests, be conditioned upon the receipt of
a representation as to the investment intention of the Eligible Director or
Eligible Employee or Beneficiary to whom such Shares are to be delivered, in
such form as the Committee shall determine to be necessary or advisable to
comply with the provisions of applicable federal, state or local law. It may be
provided that any such representation shall become inoperative upon a
registration of the Shares or upon the occurrence of any other event eliminating
the necessity of such representation. The Company shall not be required to
deliver any Shares under the Plan prior to (i) the admission of such Shares to
listing on any stock exchange on which Shares may then be listed, or (ii) the
completion of such registration or other qualification under any state or
federal law, rule or regulation as the Committee shall determine to be necessary
or advisable.
SECTION 7.5 TAXES.
The Company, the Committee or the Trustee shall have the right
to require any person entitled to receive Shares pursuant to an Award to pay the
amount of any tax which is required to be withheld with respect to such Shares,
or, in lieu thereof, to retain, or to sell without notice, a sufficient number
of Shares to cover the amount required to be withheld.
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ARTICLE VIII
------------
AMENDMENT AND TERMINATION
-------------------------
SECTION 8.1 TERMINATION.
The Board may suspend or terminate the Plan in whole or in
part at any time by giving written notice of such suspension or termination to
the Committee; PROVIDED, HOWEVER, that the Plan may not be terminated while
there are outstanding Awards that may thereafter become vested. Upon the
termination of the Plan, the Trustee shall make distributions from the Trust
Fund in such amounts and to such persons as the Committee may direct and shall
return the remaining assets of the Trust Fund, if any, to Home Bancorp of Elgin,
Inc.
SECTION 8.2 AMENDMENT.
The Board may amend or revise the Plan in whole or in part at
any time.
SECTION 8.3 ADJUSTMENTS IN THE EVENT OF A BUSINESS
REORGANIZATION.
(a) In the event of any merger, consolidation, or other
business reorganization (including but not limited to a Change of Control) in
which Home Bancorp of Elgin, Inc. is the surviving entity, and in the event of
any stock split, stock dividend or other event generally affecting the number of
Shares held by each person who is then a holder of record of Shares, the number
of Shares held in the Trust Fund, including Shares covered by Awards, shall be
adjusted to account for such event. Such adjustment shall be effected by
multiplying such number of Shares by an amount equal to the number of Shares
that would be owned after such event by a person who, immediately prior to such
event, was the holder of record of one Share; provided, however, that the
Committee may, in its discretion, establish another appropriate method of
adjustment.
(b) In the event of any merger, consolidation, or other
business reorganization (including but not limited to a Change of Control) in
which Home Bancorp of Elgin, Inc. is not the surviving entity, the Trustee shall
hold in the Trust Fund any money, stock, securities or other property received
by holders of record of Shares in connection with such merger, consolidation, or
other business reorganization. Any Award with respect to which Shares had been
allocated to an Eligible Director or Eligible Employee shall be adjusted by
allocating to the Eligible Director or Eligible Employee receiving such Award
the amount of money, stock, securities or other property received by the Trustee
for the Shares allocated to such Eligible Director or Eligible Employee.
ARTICLE IX
----------
MISCELLANEOUS
-------------
SECTION 9.1 STATUS AS AN EMPLOYEE BENEFIT PLAN.
This Plan is not intended to satisfy the requirements for
qualification under section 401(a) of the Code or to satisfy the definitional
requirements for an "employee benefit plan" under section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended. It is intended to be a
non-qualified incentive compensation program that is exempt from the regulatory
requirements of the Employee Retirement Income Security Act of 1974, as amended.
The Plan shall be construed and administered so as to effectuate this intent.
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SECTION 9.2 NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the establishment of the Plan nor any provisions of
the Plan nor any action of the Board or the Committee with respect to the Plan
shall be held or construed to confer upon any Eligible Director or Eligible
Employee any right to a continuation of employment by the Company. The Employers
reserve the right to dismiss any Eligible Director or Eligible Employee or
otherwise deal with any Eligible Director or Eligible Employee to the same
extent as though the Plan had not been adopted.
SECTION 9.3 CONSTRUCTION OF LANGUAGE.
Whenever appropriate in the Plan, words used in the singular
may be read in the plural, words used in the plural may be read in the singular,
and words importing the masculine gender may be read as referring equally to the
feminine or the neuter. Any reference to an Article or section number shall
refer to an Article or section of this Plan unless otherwise indicated.
SECTION 9.4 GOVERNING LAW.
The Plan shall be construed and enforced in accordance with
the laws of the State of Illinois without giving effect to the conflict of laws
principles thereof, except to the extent that such laws are preempted by the
federal laws of the United States of America. The Plan shall be construed to
comply with applicable OTS Regulations.
SECTION 9.5 HEADINGS.
The headings of Articles and sections are included solely for
convenience of reference. If there is any conflict between such headings and the
text of the Plan, the text shall control.
SECTION 9.6 NON-ALIENATION OF BENEFITS.
The right to receive a benefit under the Plan shall not be
subject in any manner to anticipation, alienation or assignment, nor shall such
right be liable for or subject to debts, contracts, liabilities, engagements or
torts, except to the extent provided in a qualified domestic relations order as
defined in section 414(p) of the Code.
SECTION 9.7 NOTICES.
Any communication required or permitted to be given under the
Plan, including any notice, direction, designation, comment, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is personally delivered or 5 days after mailing if mailed,
postage prepaid, by registered or certified mail, return receipt requested,
addressed to such party at the address listed below, or at such other address as
one such party may by written notice specify to the other:
(a) If to the Compensation Committee:
Home Bancorp of Elgin, Inc.
16 North Spring Street
Elgin, Illinois 60010
Attention: CORPORATE SECRETARY
-------------------
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(b) If to an Eligible Director or Eligible Employee, to
the Eligible Director's or Eligible Employee's
address as shown in the Employer's records.
SECTION 9.8 APPROVAL OF SHAREHOLDERS.
The Plan shall not be effective or implemented prior to the
first year anniversary of the conversion of Home Federal Savings and Loan
Association to stock form unless approved by the holders of a majority of the
total votes eligible to be cast at any duly called annual or special meeting of
the Company, in which case the Plan shall be effective as of the later of (a)
March 26, 1996 or (b) the date of such approval. If not effective prior to such
one year anniversary, the Plan shall be effective on such later date as is
specified by the Board.
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[FORM OF PROXY - FRONT]
HOME BANCORP OF ELGIN, INC. REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HOME BANCORP
OF ELGIN, INC.FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON APRIL 17, 1997.
The undersigned stockholder of Home Bancorp of Elgin, Inc. hereby appoints
George L. Perucco, Lyle N. Dolan and Kenneth L. Moran, and each of them, with
full powers of substitution, to represent and to vote as proxy, as designated,
all shares of common stock of Home Bancorp of Elgin, Inc. held of record by the
undersigned on February 21, 1997, at the 1997 Annual Meeting of Stockholders
(the "Annual Meeting") to be held at 2:00 p.m., Central Time, on April 17, 1997,
or at any adjournment or postponement thereof, upon the matters described in the
accompanying Notice of the 1997 Annual Meeting of Stockholders and Proxy
Statement, dated March 13, 1997, and upon such other matters as may properly
come before the Annual Meeting. The undersigned hereby revokes all prior
proxies.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL NOMINEES LISTED IN ITEM 1 AND FOR THE PROPOSALS
LISTED IN ITEMS 2, 3, 4 AND 5.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
[FORM OF PROXY - BACK]
<TABLE>
<CAPTION>
I will attend the / /
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/ Annual Meeting
[ ]
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES
NAMED IN ITEM 1 AND A VOTE "FOR" EACH OF THE PROPOSALS IN ITEMS 2, 3, 4 AND 5.
<S> <C> <C> <C>
1. Election of three Directors for terms of three years each. For Withhold For All
All All Except
-------------------
NOMINEES: Henry R. Hines, Thomas S. Rakow and Richard S. Scheflow / / / / / / Nominee Exception
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY to vote for any individual nominee, mark
the oval "For All Except" and write that nominee's name in the space provided.
2. Approval of the Home Bancorp of Elgin, Inc. For Against Abstain
1997 Stock Option Plan.
/ / / / / /
3. Approval of the Home Bancorp of Elgin, For Against Abstain
Inc. 1997 Recognition and Retention Plan.
/ / / / / /
4. Ratification of the appointment of KPMG For Against Abstain
Peat Marwick LLP as independent auditors
for the fiscal year ending December 31, / / / / / /
1997.
5. Authorization of the Board of Directors, in For Against Abstain
its discretion, to direct the vote of proxies
upon such matters incident to the conduct of / / / / / /
the Annual Meeting as may properly come
before the Annual Meeting, and any
adjournment or postponement thereof,
including, without limitation, a motion to
adjourn the Annual Meeting.
The undersigned hereby acknowledges receipt of the Notice of the 1997 Annual
Meeting of Stockholders and the Proxy Statement, dated March 13, 1997 for the
Annual Meeting.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s)
Dated: , 1997
----------------------------------------------------------------
Please sign exactly as your name appears on this proxy. Joint owners should each
sign personally. If signing as attorney, executor, administrator, trustee or
guardian, please include your full title. Corporate or partnership proxies
should be signed by an authorized officer.
<PAGE>
[VOTING AUTHORIZATION LETTER]
March 13, 1997
TO: ALL EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP") PARTICIPANTS
Re: Annual Meeting of Stockholders to be held on April 17, 1997
-----------------------------------------------------------
As you know, when Home Federal Savings and Loan Association of Elgin
("Association") completed its stock conversion last year its parent company,
Home Bancorp of Elgin, Inc. ("Company"), established a new benefit plan and
trust for the benefit of eligible employees of the Company and the Association.
This Plan is known as the "Home Bancorp of Elgin, Inc. Employee Stock Ownership
Plan" or "ESOP." Shares of the Company's common stock ("Common Stock") are
purchased by the ESOP, held in trust by its trustee Harris Bank Barrington, N.A.
("Trustee"), and then allocated to the accounts of ESOP participants over a
period of years. The ESOP allows its participants (including any former
participants and beneficiaries) to have certain voting rights at the Company's
stockholder meetings with respect to shares of Common Stock held by the Trustee.
In connection with the Annual Meeting of Stockholders of Home Bancorp
of Elgin, Inc. to be held on April 17, 1997, enclosed are the following
documents:
1. Confidential Voting Instruction card for the ESOP;
2. Proxy Statement dated March 13, 1997, including a
Notice of Annual Meeting of Stockholders; and
3. 1997 Annual Report to Stockholders.
As a participant in the ESOP, you have the right to direct the Trustee
how to vote the shares allocated to your account under the ESOP as of February
21, 1997, the record date for the Annual Meeting ("Record Date"), on the
proposals to be voted on by the Company's stockholders. Your rights as a
participant in the ESOP will vary depending on whether the matter being voted on
is an "Anticipated Proposal" or an "Unanticipated Proposal."
<PAGE>
-2-
ANTICIPATED PROPOSALS
Each ESOP participant has the right to specify how the ESOP Trustee
should vote the shares in his or her ESOP account as of the Record Date. In
general, the Trustee will vote the shares in your ESOP account by casting votes
FOR, AGAINST, or ABSTAIN with respect to each proposal as you specify on the
Confidential Voting Instruction card accompanying this letter. The number of
shares in your ESOP account are shown on the enclosed Confidential Voting
Instruction card.
The Trustee's fiduciary duties require it to vote any shares for which
it receives no voting instructions, as well as any shares not yet allocated to
ESOP participants, in a manner determined to be prudent and solely in the
interest of the ESOP participants and beneficiaries. If you do not direct the
Trustee how to vote the shares in your ESOP account, the Trustee will, to the
extent consistent with its fiduciary duties, vote your shares in a manner
calculated to most accurately reflect the instructions received from other
participants in the ESOP. The same is true of shares of Common Stock not yet
placed in anyone's ESOP account.
UNANTICIPATED PROPOSALS
It is possible, although very unlikely, that proposals other than those
specified on the enclosed Confidential Voting Instruction card will be presented
for stockholder action at the 1997 Annual Meeting of Stockholders. If this
should happen, the Trustee will vote upon such matters in its discretion, or
cause such matters to be voted upon in the discretion of the individuals named
in any proxies executed by it.
* * * * *
Your instruction is very important. You are encouraged to review the
enclosed material carefully and to complete, sign and date the enclosed
Confidential Voting Instruction card to signify your direction to the Trustee.
YOU SHOULD THEN SEAL THE COMPLETED CARD IN THE ENCLOSED ENVELOPE AND RETURN IT
DIRECTLY TO THE TRUSTEE USING THE POSTAGE-PAID RETURN ENVELOPE PROVIDED. The
Confidential Voting Instruction card must be received by the Trustee no later
than April 9, 1997.
PLEASE NOTE THAT THE VOTING INSTRUCTIONS OF INDIVIDUAL PARTICIPANTS ARE
TO BE KEPT CONFIDENTIAL BY THE TRUSTEE, WHO HAS BEEN INSTRUCTED NOT TO DISCLOSE
THEM TO ANYONE AT THE ASSOCIATION OR THE COMPANY. IF YOU HAVE ANY QUESTIONS
REGARDING YOUR VOTING RIGHTS OR THE TERMS OF THE ESOP, PLEASE CALL PAT A. LENART
AT (847) 742-3800.
Very truly yours,
THE COMPENSATION COMMITTEE OF
HOME BANCORP OF ELGIN, INC.
Enclosures
<PAGE>
[VOTING INSTRUCTION AUTHORIZATION FORM - FRONT]
HOME BANCORP OF ELGIN, INC.
CONFIDENTIAL VOTING INSTRUCTION
SOLICITED BY THE COMPENSATION COMMITTEE
OF HOME BANCORP OF ELGIN, INC.
FOR THE HOME BANCORP OF ELGIN, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
The undersigned participant, former participant or beneficiary of a
deceased former participant of the Home Bancorp of Elgin, Inc. Employee Stock
Ownership Plan (the "ESOP") hereby provides the voting instructions specified to
the trustee ("Trustee") of the ESOP trust (the "ESOP Trust"), which instructions
shall be taken into account by the Trustee in voting, in person, by limited or
general power of attorney, or by proxy, the shares and fractional shares of
common stock of Home Bancorp of Elgin, Inc. that are held by the Trustee, in its
capacity as Trustee of the ESOP, as of February 21, 1997, at the 1997 Annual
Meeting of Stockholders of Home Bancorp of Elgin, Inc. to be held on April 17,
1997, and at any adjournment or postponement thereof.
As to the proposals listed on the reverse side, which are more particularly
described in the Proxy Statement dated March 13, 1997, the Trustee will vote the
common stock of Home Bancorp of Elgin, Inc. held by the ESOP Trust to reflect
the voting instructions on this Confidential Voting Instruction, in the manner
described in the accompanying letter from the Compensation Committee dated March
13, 1997.
(CONTINUED ON REVERSE SIDE. PLEASE COMPLETE, SIGN AND DATE ON THE REVERSE
SIDE AND PROMPTLY RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE.)
<PAGE>
[VOTING INSTRUCTION AUTHORIZATION FORM - BACK]
THE BOARD OF DIRECTORS OF HOME BANCORP OF ELGIN, INC. RECOMMENDS A VOTE
"FOR" ALL NOMINEES IN PROPOSAL NO. 1 AND "FOR" PROPOSALS NO. 2, NO. 3 AND NO. 4.
IF THIS CONFIDENTIAL VOTING INSTRUCTION IS SIGNED BUT NO DIRECTION IS GIVEN,
THIS VOTING INSTRUCTION CARD WILL BE DEEMED TO INSTRUCT VOTES "FOR" ALL NOMINEES
IN PROPOSAL NO. 1, AND "FOR" PROPOSALS NO. 2, NO. 3 AND NO. 4. THE DIRECTIONS,
IF ANY, GIVEN IN THIS CONFIDENTIAL VOTING INSTRUCTION WILL BE KEPT CONFIDENTIAL
FROM ALL DIRECTORS, OFFICERS AND EMPLOYEES OF HOME BANCORP OF ELGIN, INC. OR
HOME FEDERAL SAVINGS AND LOAN ASSOCIATION OF ELGIN.
<TABLE>
<CAPTION>
Please mark your votes like this
/X/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Election of three Directors for terms of FOR all nominees WITHHOLD as to all nominees
three years each. Nominees: Henry R. Hines, (except as otherwise indicated) / /
Thomas S. Rakow and Richard S. Scheflow. / /
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED:_____________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of the Home Bancorp of Elgin, Inc.
1997 Stock Option Plan. / / / / / /
- ------------------------------------------------------------------------------------------------------------------------------------
3. Approval of the Home Bancorp of Elgin, Inc.
1997 Recognition and Retention Plan. / / / / / /
- ------------------------------------------------------------------------------------------------------------------------------------
4. Ratification of the appointment of KPMG Peat
Marwick LLP as independent auditors of Home
Bancorp of Elgin, Inc. for the fiscal year
ending December 31, 1997. / / / / / /
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
In its discretion, the Trustee is authorized to vote upon such other
business as may come before the Annual Meeting or any adjournment or
postponement thereof or to cause such matters to be voted upon in the discretion
of the individuals named in any proxies executed by the Trustees.
All proposals listed above in this Confidential Voting Instruction were
proposed by Home Bancorp of Elgin, Inc.
The undersigned hereby instructs the Trustee to vote in accordance with the
voting instruction indicated above and hereby acknowledges receipt, prior to the
execution of this Confidential Voting Instruction, of a Voting Instruction
Letter, a Notice of Annual Meeting of Stockholders of Home Bancorp of Elgin,
Inc., a Proxy Statement dated March 13, 1997 for the Annual Meeting and a 1997
Annual Report to Stockholders.
PLEASE SIGN AND DATE BELOW AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOUR CONFIDENTIAL VOTING INSTRUCTION MUST BE RECEIVED NO LATER THAN
APRIL 9, 1997.
DATE_____________________________________________
SIGNATURE________________________________________
Signature of participant, former participant or
designated beneficiary of deceased former
participant. Please sign name exactly as it
appears herein. When signing as attorney,
executor, administrator, trustee or guardian,
please give your full title as such.
