<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 Section 240.14a-11(c) or Section
240.14a-12
EFC BANCORP, INC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
EFC BANCORP, INC.
1695 LARKIN AVENUE
ELGIN, ILLINOIS 60123
(847) 741-3900
September 21, 1998
Fellow Shareholders:
You are cordially invited to attend the special meeting of shareholders
(the "Special Meeting") of EFC Bancorp, Inc. (the "Company"), the holding
company for Elgin Financial Savings Bank (the "Bank"), Elgin, Illinois, in
order to consider the approval of the EFC Bancorp, Inc. 1998 Stock-Based
Incentive Plan ("Incentive Plan") and such other matters as may properly come
before the Special Meeting, which will be held on October 27, 1998, at 2:00
p.m., Central Time, at the Elgin Plaza Hotel, 345 West River Road, Elgin,
Illinois.
The attached Notice of the Special Meeting and the Proxy Statement
describes the Incentive Plan. Directors and officers of the Company will be
present at the Special Meeting to respond to any questions that our
shareholders may have regarding the Incentive Plan.
The Board of Directors of EFC Bancorp, Inc. has determined that approval
of the Incentive Plan at the Special Meeting is in the best interests of the
Company and its shareholders. FOR THE REASONS SET FORTH IN THE PROXY
STATEMENT, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF THE INCENTIVE PLAN.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR
COOPERATION IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE
REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE
CONDUCT OF BUSINESS AT THE SPECIAL MEETING.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I thank you for your continued interest and support.
Sincerely yours,
/s/ John J. Brittain
John J. Brittain
CHAIRMAN OF THE BOARD
<PAGE>
EFC BANCORP, INC.
1695 LARKIN AVENUE
ELGIN, ILLINOIS 60123
__________________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 27, 1998
__________________________________
NOTICE IS HEREBY GIVEN that the special meeting of shareholders (the
"Special Meeting") of EFC Bancorp, Inc. (the "Company"), the holding company
for Elgin Financial Savings Bank (the "Bank"), will be held on October 27,
1998 at 2:00 p.m., Central Time, at the Elgin Plaza Hotel, 345 West River
Road, Elgin, Illinois.
The purpose of the Special Meeting is to consider and vote upon the
following matters:
1. The approval of the EFC Bancorp, Inc. 1998 Stock-Based Incentive Plan;
and
2. Such other matters as may properly come before the meeting and at any
adjournments thereof, including whether or not to adjourn the meeting.
The Board of Directors has established September 11, 1998, as the record
date for the determination of shareholders entitled to receive notice of and
to vote at the Special Meeting and at any adjournments thereof. Only record
holders of the common stock of the Company as of the close of business on
such record date will be entitled to vote at the Special Meeting or any
adjournments thereof. In the event there are not sufficient votes for a
quorum or to approve the foregoing proposal at the time of the Special
Meeting, the Special Meeting may be adjourned in order to permit further
solicitation of proxies by the Company. A list of shareholders entitled to
vote at the Special Meeting will be available at EFC Bancorp, Inc., 1695
Larkin Avenue, Elgin, Illinois 60123, for a period of ten days prior to the
Special Meeting and will also be available at the Special Meeting itself.
By Order of the Board of Directors
/s/ Ursula Wilson
Ursula Wilson
Corporate Secretary
Elgin, Illinois
September 21, 1998
<PAGE>
EFC BANCORP, INC.
_______________________
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 27, 1998
_______________________
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to shareholders of EFC Bancorp,
Inc. (the "Company") in connection with the solicitation by the Board of
Directors ("Board of Directors" or "Board") of proxies to be used at the
special meeting of shareholders (the "Special Meeting"), to be held on
October 27, 1998 at 2:00 p.m. Central Time at the Elgin Plaza Hotel, 345 West
River Road, Elgin, Illinois, and at any adjournments thereof. This Proxy
Statement is first being mailed to record holders on or about September 21,
1998.
Regardless of the number of shares of common stock owned, it is
important that record holders of a majority of the shares be represented by
proxy or in person at the Special Meeting. Shareholders are requested to
vote by completing the enclosed proxy card and returning it signed and dated
in the enclosed postage-paid envelope. Shareholders are urged to indicate
their vote in the spaces provided on the proxy card. PROXIES SOLICITED BY
THE BOARD OF DIRECTORS OF THE COMPANY WILL BE VOTED IN ACCORDANCE WITH THE
DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXY
CARDS WILL BE VOTED FOR THE APPROVAL OF THE EFC BANCORP, INC. 1998
STOCK-BASED INCENTIVE PLAN (THE "INCENTIVE PLAN").
Other than the matters listed on the attached Notice of Special Meeting
of Shareholders, the Board of Directors knows of no additional matters that
will be presented for consideration at the Special Meeting. EXECUTION OF A
PROXY, HOWEVER, CONFERS ON THE DESIGNATED PROXY HOLDERS DISCRETIONARY
AUTHORITY TO VOTE THE SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH
OTHER BUSINESS, IF ANY, THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING AND
AT ANY ADJOURNMENTS THEREOF, INCLUDING WHETHER OR NOT TO ADJOURN THE SPECIAL
MEETING.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Special Meeting and voting in person. HOWEVER, IF YOU ARE A
SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED
APPROPRIATE DOCUMENTATION FROM YOUR RECORD HOLDER TO ATTEND THE SPECIAL
MEETING AND VOTE PERSONALLY AT THE SPECIAL MEETING.
The cost of solicitation of proxies on behalf of management will be
borne by the Company. In addition to the solicitation of proxies by mail,
Kissel-Blake Inc., a proxy solicitation firm, will assist the Company in
soliciting proxies for the Special Meeting and will be paid a fee of $4,000
plus out-of-pocket expenses. Proxies may also be solicited personally or by
telephone by directors, officers and other employees of the Company and its
subsidiary, Elgin Financial Savings Bank (the "Bank"), without additional
compensation therefor. 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 material to, and obtain
proxies from, such beneficial owners, and will reimburse such holders for
their reasonable expenses in doing so.
<PAGE>
VOTING SECURITIES AND REQUIRED VOTE
The securities which may be voted at the Special Meeting consist of
shares of common stock of the Company ("Common Stock"), with each share
entitling its owner to one vote on all matters to be voted on at the Special
Meeting, except as described below.
The close of business on September 11, 1998, has been fixed by the Board
of Directors as the record date (the "Record Date") for the determination of
shareholders of record entitled to notice of and to vote at the Special
Meeting and at any adjournments thereof. The total number of shares of
Common Stock outstanding on the Record Date was 7,491,434 shares.
As provided in the Company's Certificate of Incorporation, for quorum
purposes, holders of Common Stock who beneficially own in excess of 10% of
the outstanding shares of Common Stock (the "Limit") are not entitled to any
vote in respect of the shares held in excess of the Limit and are not treated
as outstanding for voting purposes. A person or entity is deemed to
beneficially own shares owned by an affiliate of, as well as, by persons
acting in concert with, such person or entity. The Company's Certificate of
Incorporation authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the Limit, including
determining whether persons or entities are acting in concert, and (ii) to
demand that any person who is reasonably believed to beneficially own stock
in excess of the Limit to supply information to the Company to enable the
Board of Directors to implement and apply the Limit.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote
(after subtracting any shares in excess of the Limit pursuant to the
Company's Certificate of Incorporation) is necessary to constitute a quorum
at the Special Meeting. In the event that there are not sufficient votes for
a quorum or to approve or ratify any proposal at the time of the Special
Meeting, the Special Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the proposed approval of the Incentive Plan submitted for
shareholder action set forth in the Proposal, the proxy card being provided
by the Board of Directors enables a shareholder to check the appropriate box
on the proxy card to (i) vote "FOR" the Proposal, (ii) vote "AGAINST" the
Proposal, or (iii) "ABSTAIN" from voting on such item. Under Delaware law
and the Company's Bylaws, an affirmative vote of the holders of a majority of
the shares of Common Stock present in person or by proxy at the Special
Meeting at which a quorum is present and entitled to vote on the Proposal is
required to constitute shareholder approval of the Proposal. Shares as to
which the "ABSTAIN" box has been selected on the proxy card with respect to
the Proposal will be counted as present and entitled to vote and have the
effect of a vote against the matter for which the "ABSTAIN" box has been
selected. In contrast, shares underlying broker non-votes are not counted as
entitled to vote on the Proposal and have no effect on the vote on the
Proposal. For further information on the vote required to implement the
Proposal during the first year following the Bank's conversion from mutual to
stock form, which was completed on April 3, 1998 ("Conversion"), see the
discussion under the Proposal herein.
Proxies solicited hereby are to be returned to the Company's transfer
agent, LaSalle National Bank ("LaSalle National"). The Board of Directors
has designated LaSalle National to act as inspectors of election and tabulate
the votes at the Special Meeting. LaSalle National is not
2
<PAGE>
otherwise employed by, or a director of, the Company or any of its
affiliates. After the final adjournment of the Special Meeting, the proxies
will be returned to the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons believed
by management to be beneficial owners of more than 5% of the Company's
outstanding shares of Common Stock on the Record Date or as disclosed in
certain reports received to date regarding such ownership filed by such
persons with the Company and with the Securities and Exchange Commission
("SEC"), in accordance with Sections 13(d) and 13(g) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"). Other than those persons
listed below, the Company is not aware of any person, as such term is defined
in the Exchange Act, that owns more than 5% of the Company's Common Stock as
of the Record Date.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
- ---------------- ------------------------------------------- ----------- ----------------
<S> <C> <C> <C>
Common Stock Elgin Financial Center, S.B. Employee 599,314(1) 8.0%
Stock Ownership Plan ("ESOP")
1695 Larkin Avenue
Elgin, Illinois 60123
Common Stock Elgin Financial Foundation
1695 Larkin Avenue
Elgin, Illinois 60123
554,921(2) 7.4%
</TABLE>
____________________________
(1) Shares of Common Stock were acquired by the ESOP in the Bank's Conversion.
The ESOP Committee administers the ESOP. Marine Midland Bank has been
appointed as the trustee for the ESOP ("ESOP Trustee"). The ESOP Trustee
must vote all allocated shares held in the ESOP in accordance with the
instructions of the participants. As of September 11, 1998, no shares had
been allocated under the ESOP and 599,314 shares remain unallocated. Each
participant, however, will be deemed to have one share of Common Stock in
the ESOP allocated to such participant's account for the purpose of
providing voting instructions to the ESOP Trustee. Under the ESOP,
unallocated shares and allocated shares as to which voting instructions are
not given by participants are to be voted by the ESOP Trustee in a manner
calculated to most accurately reflect the instructions received from
participants regarding the allocated stock so long as such vote is in
accordance with the fiduciary provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
(2) Elgin Financial Foundation (the "Foundation") was established and funded by
the Company in connection with the Bank's Conversion with an amount of the
Company's Common Stock equal to 7.4% of the total amount of Common Stock
issued in the Conversion. The Foundation is a Delaware non-stock
corporation and is dedicated to charitable purposes within the communities
in which the Bank operates. The Foundation is governed by a board of
directors with nine members, all of whom are directors of the Company and
the Bank. Pursuant to the terms of the contribution of Common Stock, all
shares of Common Stock held by the Foundation must be voted in the same
ratio as all other shares of the Company's Common Stock on all proposals
considered by stockholders of the Company.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of the Record Date as to shares
of Common Stock beneficially owned by directors and by all executive officers
and directors as a group. Ownership information is based upon information
furnished by the respective individuals.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT OF
NAME TITLE(1) OWNED(2)(3) CLASS(4)
- ------------------------------ ------------------------------------------ ------------ ----------
<S> <C> <C> <C>
DIRECTORS
John J. Brittain Chairman of the Board 27,358 *
Leo M. Flanagan, Jr. Vice Chairman of the Board 26,311 *
President, Chief Executive Officer and
Barrett J. O'Connor Director 21,911 *
Senior Vice President, Chief Financial
James J. Kovac Officer and Director 44,398 *
Director of the Company and the Bank, and
Vincent C. Norton Vice President of the Bank 33,037 *
Thomas I. Anderson Director 30,000 *
Ralph W. Helm, Jr. Director 46,200 *
Peter A. Traeger Director 20,000 *
Scott H. Budd Director 15,000 *
All directors and executive
officers as a group (13 persons) 354,058 4.73%
</TABLE>
___________________
* Does not exceed 1.0% of the Company's voting securities.
(1) Titles are for both the Company and the Bank unless otherwise indicated.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting and dispositive power as to shares
reported.
(3) Does not include options and awards intended to be granted under the
Incentive Plan, which is subject to stockholder approval. For a discussion
of the options and awards that are intended to be granted under the
Incentive Plan, see the Proposal.
(4) As of the Record Date, there were 7,491,434 shares of Common Stock
outstanding.
4
<PAGE>
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Upon obtaining stockholder approval, the Company and the Bank intend to
grant to directors, officers and employees of the Bank and the Company
stock options and awards in the form of shares of Common Stock under the
Incentive Plan, being presented for approval in the Proposal.
DIRECTORS' COMPENSATION
FEE AGREEMENT. All directors of the Bank receive a fee of $2,000 for
each regular and special Board meeting which they attend. All outside
directors of the Bank receive a fee of $200 to $250 (depending on the
committee) for each committee meeting attended, except that no fees are
paid for attending a meeting of the Executive, Compensation or CRA
Committees. All directors of the Company receive a $5,000 annual
retainer, payable semi-annually.
INCENTIVE PLAN. The Company is presenting to shareholders for
approval the Incentive Plan, under which all directors of the Company and
the Bank are eligible to receive awards. See the Proposal for a summary
of the material terms of the Incentive Plan.
ADVISORY DIRECTORS. The Bank maintains a Board of Advisory Directors
which consists of former Directors of the Bank. Pursuant to the Bank's
bylaws, Directors must retire in the year they reach age 70 and any
Director who retires because of such age limitation is eligible to be
elected as an Advisory Director. Advisory Directors have no vote and
receive meeting fees as determined by resolution of the Directors of the
Bank, currently $1,000 for each Board meeting attended.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table shows, for the
years ended December 31, 1997, 1996 and 1995, the cash compensation paid,
as well as certain other compensation paid or accrued for that year to the
Chief Executive Officer of the Company and the Bank and three other
executive officers of the Company and the Bank who earned and/or received
salary and bonus in excess of $100,000 in fiscal year 1997 ("Named
Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
POSITIONS YEAR ($) ($) ($)(2) ($)(3) (#)(4) ($)(5) ($)(6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Barrett J. O'Connor 1997 $162,500 $33,000 -- -- -- -- $9,500
President and 1996 150,500 30,000 -- -- -- -- 9,500
Chief Executive 1995 142,500 27,500 -- -- -- -- 9,236
Officer of the
Company and the
Bank
James J. Kovac 1997 $143,500 $35,000 -- -- -- -- $9,500
Senior Vice 1996 133,000 25,000 -- -- -- -- 9,500
President and 1995 126,500 21,500 -- -- -- -- 8,596
Chief Financial
Officer of the
Company and the
Bank
John J. Brittain 1997 $126,000 $22,000 -- -- -- -- $9,500
Chairman of the 1996 118,000 20,000 -- -- -- -- 8,271
Board of the 1995 114,000 10,000 -- -- -- -- 7,482
Company
and the Bank
Vincent C. Norton 1997 $96,000 $16,000 -- -- -- -- $6,600
Vice President- 1996 91,000 16,000 -- -- -- -- 5,790
Loan Originations 1995 90,000 15,000 -- -- -- -- 5,345
of the Bank
</TABLE>
_____________________________________
(1) Under Annual Compensation, the column titled "Salary" includes directors'
fees and amounts deferred by the Named Executive Officer pursuant to the
Bank's 401(k) Plan.
(2) For 1997, 1996 and 1995, there were no (a) perquisites over the lesser of
$50,000 or 10% of the individual's total 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; (d) tax payment reimbursements; or (e)
preferential discounts on stock. For 1997, 1996 and 1995, the Bank had no
restricted stock or stock related plans in existence.
(3) No stock awards were granted or earned in 1997, 1996 and 1995. SEE the
Proposal.
(4) No stock options or SARs were earned or granted in 1997, 1996 and 1995.
SEE the Proposal.
(5) For 1997, 1996 and 1995, there were no payouts or awards under any
long-term incentive plan.
(6) Other Compensation includes the Bank's matching contribution under the
Bank's 401(k) Plan.
6
<PAGE>
EMPLOYMENT AGREEMENTS. The Bank and the Company have entered into
employment agreements with Messrs. O'Connor and Kovac (individually, the
"Executive") (collectively, the "Employment Agreements") which became
effective as of April 3, 1998. The Employment Agreements are intended to
ensure that the Bank and the Company will be able to maintain a stable and
competent management base. The continued success of the Bank and the
Company depends to a significant degree on the skills and competence of
Messrs. O'Connor and Kovac.
The Employment Agreements provide for three-year terms for each
Executive. The term of the Employment Agreements shall be extended on a
daily basis unless written notice of non-renewal is given by the Board of
Directors. The Employment Agreements provide that the Executive's base
salary will be reviewed annually. The base salaries effective for such
Employment Agreements for Messrs. O'Connor and Kovac are $165,000 and
$135,000, respectively. In addition to base salary, the Employment
Agreements provide for, among other things, participation in stock-based
compensation programs and other fringe benefits available to executive
personnel. The Employment Agreements provide for termination by the Bank
or the Company for cause, as defined in the Employment Agreements, at any
time. In the event the Bank or the Company chooses to terminate the
Executive's employment for reasons other than for cause, or in the event
of the Executive's resignation from the Bank and the Company upon: (i)
failure to re-elect the Executive to his current offices; (ii) a material
change in the Executive's functions, duties or responsibilities; (iii) a
relocation of the Executive's principal place of employment by more than
25 miles; (iv) a reduction in the benefits and perquisites being provided
to the Executive in the Employment Agreement; (v) liquidation or
dissolution of the Bank or the Company; or (vi) a breach of the Employment
Agreement by the Bank or the Company, the Executive or, in the event of
death, the Executive's beneficiary, would be entitled to receive an amount
generally equal to the remaining base salary and bonus payments that would
have been paid to the Executive during the remaining term of the
Employment Agreement. In addition, the Executive would receive a payment
attributable to the contributions that would have been made on the
Executive's behalf to any employee benefit plans of the Bank or the
Company during the remaining term of the Employment Agreements, together
with the value of any stock-based incentives awarded to the Executive.
The Bank and the Company would also continue and pay for the Executive's
life, health, dental and disability coverage for the remaining term of the
Employment Agreement. Upon any termination of the Executive, the
Executive is subject to a one year non-competition agreement.
Under the Employment Agreements, if voluntary or involuntary
termination follows a change in control of the Bank or the Company, the
Executive or, in the event of the Executive's death, the Executive's
beneficiary, would be entitled to a severance payment equal to the greater
of: (i) the payments due for the remaining terms of the agreement
including the value of any stock-based incentives awarded to the
Executive; or (ii) three times the average of the five preceding taxable
years' annual compensation. The Bank and the Company would also continue
the Executive's life, health, and disability coverage for thirty-six
months. Notwithstanding that both the Bank and Company Employment
Agreements provide for a severance payment in the event of a change in
control, the Executive would only be entitled to receive a severance
payment under one agreement.
7
<PAGE>
Payments to the Executive under the Bank's Employment Agreement will
be guaranteed by the Company in the event that payments or benefits are
not paid by the Bank. Payment under the Company's Employment Agreement
would be made by the Company. All reasonable costs and legal fees paid or
incurred by the Executive pursuant to any dispute or question of
interpretation relating to the Employment Agreements shall be paid by the
Bank or Company, respectively, if the Executive is successful on the
merits pursuant to a legal judgment, arbitration or settlement. The
Employment Agreements also provide that the Bank and Company shall
indemnify the Executive to the fullest extent allowable under Illinois and
Delaware law, respectively. In the event of a change in control of the
Bank or the Company, the total amount of payments due under the
Agreements, based solely on cash compensation paid to the officers who
will receive Employment Agreements over the past five fiscal years and
excluding any benefits under any employee benefit plan which may be
payable, would be approximately $706,000.
CHANGE IN CONTROL AGREEMENTS. The Bank has entered into three-year
Change in Control Agreements with Messrs. Brittain and Flanagan and four
other executive officers of the Bank, none of whom will be covered by
employment contracts. The Company has entered into three-year Change in
Control Agreements with Mr. Brittain and Mr. Flanagan. The Change in
Control Agreements shall be extended on a daily basis unless written
notice of non-renewal is given by the Board of Directors. The Change in
Control Agreements provide that in the event that voluntary or involuntary
termination follows a change in control of the Company or the Bank, the
officer would be entitled to receive a severance payment equal to three
times the officer's average annual compensation for the five most recent
taxable years. The Bank and the Company Change in Control Agreements also
provide that the Executive's life, medical and disability insurance shall
be continued for thirty-six months following termination. In the event of
a change in control of the Company or the Bank, the total payments that
would be due under the Change in Control Agreements, based solely on the
current annual compensation paid to the officers covered by the Change in
Control Agreements and excluding any benefits under any employee benefit
plan which may be payable, would be approximately $1.1 million.
EMPLOYEE SEVERANCE COMPENSATION PLAN. In connection with the
Conversion, the Bank's Board of Directors established the Elgin Financial
Center, S.B. Employee Severance Compensation Plan ("Severance Plan") which
provides eligible employees with severance pay benefits in the event of a
change in control of the Bank or the Company. Management personnel with
Employment Agreements or Change in Control Agreements are not eligible to
participate in the Severance Plan. Generally, employees are eligible to
participate in the Severance Plan if they have completed at least one year
of service with the Bank. The Severance Plan vests in each participant a
contractual right to the benefits such participant is entitled to
thereunder. Under the Severance Plan, in the event of a change in control
of the Bank or the Company, eligible employees who are terminated from or
terminate their employment within one year (for reasons specified under
the Severance Plan), will be entitled to receive a severance payment. If
the participant, whose employment has terminated, has completed at least
one year of service, the participant will be entitled to a cash severance
payment equal to one-twelfth of his or her annual compensation for each
year of service up to a maximum of 199% of annual compensation. In the
event the provisions of the Severance Plan are
8
<PAGE>
triggered, the total amount of payments that would be due thereunder,
based solely upon current salary levels, would be approximately $1.1
million.
INCENTIVE PLAN. The Company is presenting to stockholders for
approval the Incentive Plan under which all employees and outside
directors of the Company and the Bank are eligible to receive awards. See
the Proposal for a summary of the material terms of the Incentive Plan.
401(k) PLAN. The Bank also sponsors the Elgin Financial Center, S.B.
401(k) Employee Benefit Plan ("401(k) Plan"), a tax-qualified profit
sharing and salary reduction plan under Sections 401(a) and 401(k) of the
Code. Generally, employees other than (i) employees who are collective
bargaining unit employees and employees who are non-resident aliens or
(ii) leased employees, become eligible to participate in the 401(k) Plan
upon the attainment of age 20-1/2 and the completion of six months of
service. Under the 401(k) Plan, participants may make salary reduction
contributions equal to 2% to 10% of their compensation or the legally
permissible limit (currently $10,000). The Bank, at its discretion, may
make a matching contribution to each 401(k) Plan participant based on his
or her elective deferrals in a percentage set by the Bank prior to the end
of the Plan Year.
Participants are always 100% vested in their salary reduction
contributions. Participants become 20% vested in Bank matching
contributions after the completion of two years of service with the Bank.
Participants' vested interest in Bank matching contribution increase by
20% for each additional year of service completed, so that after the
completion of 6 years of service, participants are 100% vested in Bank
matching contributions. A participant who terminates employment due to
death, disability, or retirement immediately becomes fully vested in the
Bank's matching contributions credited to his or her account regardless of
the participant's years of service. A participant's vested portion of his
or her 401(k) Plan account is distributable from the 401(k) Plan upon the
termination of the participant's employment, death, disability or
retirement. In addition, a participant may be eligible for hardship
withdrawals and loans under the 401(k) Plan. Any distribution made to a
participant prior to the participant's attainment of age 59-1/2 is subject
to a 10% excise tax in addition to federal income taxes. The Board of
Directors may at any time discontinue the Bank's contributions to employee
accounts. The 401(k) Plan currently permits participants to invest their
401(k) plan account balances in a single investment vehicle, including
Company Common Stock.
ESOP. The ESOP, established in connection with the Conversion,
provides eligible employees with the opportunity to receive a Bank-funded
retirement benefit based on the value of the Company's Common Stock. All
full-time salaried employees who have attained the age of 21 and have
completed six months of service are eligible to participate in the ESOP.
The ESOP is a tax-qualified retirement plan designed to invest primarily
in the Company Common Stock and a trust established to hold ESOP assets
("ESOP Trust") was funded with 599,314 shares of Company Common Stock.
9
<PAGE>
The Company Common Stock held by the ESOP was funded with a loan from
the Company which is to be repaid over a fifteen year term and is
collateralized by the shares held by the ESOP. The pledged shares are
released on an annual basis in an amount proportional to the loan
repayment. The released shares are allocated to the accounts of ESOP
participants as follows: first, for each eligible ESOP participant, a
portion of the shares released for the plan year will be allocated to a
special "matching" account under the ESOP equal in value to the amount of
matching contribution, if any, and/or if applicable, that such participant
would be entitled to under the terms of the 401(k) Plan for the plan year;
and second, the remaining shares which have been released for the plan
year will be allocated to each eligible participant's general ESOP account
based on the ratio of each such participant's base compensation to the
total base compensation of all eligible ESOP participants. Participants
will vest in their ESOP account at a rate of 20% annually commencing after
the completion of two years of service, with 100% vesting upon the
completion of 6 years of service. For purposes of determining a
participant's vested percentage, all years of service with the Bank or
Company shall be included. The ESOP may reallocate forfeitures among
remaining participants, in the same proportion as contributions. Benefits
under the ESOP will become payable upon death, retirement, early
retirement, or separation from service.
MANAGEMENT SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. In connection
with the Conversion, the Bank implemented a non-qualified Management
Supplemental Executive Retirement Plan ("Management SERP") to provide
certain officers and highly compensated employees, designated by the Board
of Directors, with additional retirement benefits. The Management SERP
benefit is intended to make up benefits lost under the ESOP allocation
procedures to participants who retire prior to the complete repayment of
the ESOP loan. At the retirement of a participant, the benefits under the
SERP are determined by first: (i) projecting the number of shares that
would have been allocated to the participant under the ESOP if they had
been employed throughout the period of the ESOP loan (measured from the
participant's first date of ESOP participation); and (ii) reducing the
number determined by (i) above by the number of shares actually allocated
to the Participant's account under the ESOP; and second, by multiplying
the number of shares that represent the difference between such figures by
the average fair market value of the Common Stock over the preceding five
years. Benefits under the Management SERP vest in 20% annual increments
over a five-year period commencing as of the date of a Participant's
participation in the Management SERP. The vested portion of the
Management SERP Participant's benefits are payable upon the retirement of
the Participant upon or after the attainment of age 65.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. In connection with the
Conversion, the Bank implemented a non-qualified Supplemental Executive
Retirement Plan ("SERP") to provide a select group of employees,
designated by the Board of Directors, with additional retirement benefits.
The benefits provided under the SERP will make up the benefits lost to
SERP participants due to the application of limitations imposed by the
Code on compensation and maximum benefits applicable to the Bank's 401(k)
Plan and ESOP. Benefits will be provided under the SERP at the same time
and in the same manner as the related benefits will be provided under the
401(k) Plan and ESOP.
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<PAGE>
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Bank offers directors, officers and full-time employees of the
Bank who satisfy certain criteria and the general underwriting standards
of the Bank, adjustable-rate mortgage loans with interest rates which may
be up to 1% below the rates offered to the Bank's other customers, the
Employee Mortgage Rate ("EMR"). The EMR is limited to the purchase or
refinance of a director's, officer's or employee's owner-occupied primary
residence. Loan application fees are waived for all EMR loans. The EMR
normally ceases upon termination of employment. Upon termination of the
EMR, the interest rate reverts to the contract rate in effect at the time
that the loan was originated. All other terms and conditions contained in
the original mortgage and note continue to remain in effect. With the
exception of EMR loans, the Bank currently makes loans to its executive
officers, directors and employees on the same terms and conditions offered
to the general public. Loans made by the Bank to its directors and
executive officers are made in the ordinary course of business, on
substantially the same terms (except for EMR loans), including collateral,
as those prevailing at the time for comparable transactions with other
persons and do not involve more than the normal risk of collectibility or
present other unfavorable features. Set forth below is certain
information with respect to loans made by the Bank on preferential terms
to executive officers or directors of the Bank or the Company and their
affiliates which in the aggregate exceeded $60,000 at any time since
January 1, 1997, plus any additional indebtedness of such persons to the
Bank.
<TABLE>
<CAPTION>
LARGEST
AMOUNT INTEREST
MATURITY OUTSTANDING BALANCE RATE AS OF
DATE DATE SINCE AS OF JUNE 30, TYPE OF
NAME POSITION OF LOAN OF LOAN JANUARY 1, 1997 JUNE 30, 1998 1998 LOAN
<S> <C> <C> <C> <C> <C> <C> <C>
Anderson, Thomas Director 02/20/98 03/01/13 $215,700 $211,510 5.65% First mortgage loan
Brittain, John Chairman 02/03/98 03/01/03 115,000 107,546 5.75 First mortgage loan
Brittain, John Chairman 01/13/98 01/13/08 34,400 34,400 8.00 Home equity loan(1)
Brittain and Ketcham Affiliate 06/15/98 06/15/99 -- -- 8.50 Commercial line of
credit(1)
Brittain Oil Express Affiliate 01/05/98 01/05/99 52,987 46,000 8.50 Commercial line of
credit(1)
Budd, Scott Director 01/21/98 02/01/13 125,000 121,911 6.00 First mortgage loan
Flanagan, Leo Vice Chairman 03/09/98 04/01/13 160,000 156,865 5.75 First mortgage loan
Flanagan, Leo Vice Chairman 06/17/94 06/17/99 38,953 34,270 8.00 Home equity loan(1)
Gosse, Jerry Compliance Off. 03/20/97 03/01/27 140,000 137,941 5.75 First mortgage loan
Gosse, Jerry Compliance Off. 04/04/97 04/01/02 27,200 26,627 8.00 Home equity loan(1)
Helm, Ralph Director 02/27/98 06/01/13 200,250 197,140 5.50 First mortgage loan
Helm, Ralph Director 12/16/93 12/01/23 110,800 96,034 6.75 First mortgage loan(1)
Helm, Ralph Director 02/16/98 04/01/18 225,000 222,318 7.75 First mortgage loan(1)
Norton, Vincent Vice Pres./ 02/02/98 03/01/13 114,000 112,561 5.50 First mortgage loan
Director
O'Connor, Barrett C.E.O./ 02/20/98 03/01/13 144,000 142,443 5.50 First mortgage loan
Director
Schneff, James Vice President 03/23/98 04/01/18 140,000 139,175 5.90 First mortgage loan
Schneff, James Vice President 02/16/95 02/16/00 25,000 24,150 8.00 Home equity loan(1)
Schneff, James Vice President 03/07/96 03/01/01 17,000 11,689 9.00 Auto loan(1)
Sommers, Sandra Vice President 03/27/98 05/01/13 25,000 23,913 5.50 First mortgage loan
Sommers, Sandra Vice President 04/07/98 04/07/18 -- -- 8.00 Home equity loan(1)
Traeger, Peter Director 09/30/96 09/01/26 300,000 290,337 5.50 First mortgage loan
</TABLE>
________________________
(1) Loan is not made on any preferential terms.
11
<PAGE>
John J. Brittain and Leo M. Flanagan, Jr. are partners in the law
firm of Brittain & Ketcham, P.C. (the "firm"), which acts as counsel to
the Company and the Bank. During 1997, the Company and the Bank made
payments to the firm for legal services totalling $29,159.
PROPOSAL 1: APPROVAL OF THE
EFC BANCORP, INC.
1998 STOCK-BASED INCENTIVE PLAN
The Board of Directors of the Company is presenting for stockholder
approval the EFC Bancorp, Inc. 1998 Stock-Based Incentive Plan (the
"Incentive Plan"), in the form attached hereto as Appendix A. The purpose
of the Incentive Plan is to attract and retain qualified personnel in key
positions, provide officers, employees and non-employee directors
("Outside Directors") of the Company and any of its affiliates, including
the Bank, with a proprietary interest in the Company as an incentive to
contribute to the success of the Company, promote the attention of
management to other stockholder's concerns, and reward employees for
outstanding performance. The following is a summary of the material terms
of the Incentive Plan which is qualified in its entirety by the complete
provisions of the Incentive Plan attached hereto as Appendix A.
GENERAL
The Incentive Plan authorizes the granting of options to purchase
Common Stock of the Company ("Options"), awards of shares of Common Stock
("Stock Awards") and certain related rights (collectively referred to as
"Awards"). Subject to certain adjustments to prevent dilution of Awards to
participants, the maximum number of shares of Common Stock reserved for
Awards under the Incentive Plan is 1,048,800 shares, consisting of 749,143
shares reserved for Options and 299,657 shares reserved for Stock Awards.
All full-time employees, Outside Directors and Advisory Directors of the
Company and its affiliates, including the Bank, are eligible to receive
Awards under the Incentive Plan. The Incentive Plan will be administered
by a committee (the "Committee") consisting of members of the Board who
are not employees of the Company or its affiliates. Authorized but
unissued shares or shares previously issued and reacquired by the Company
may be used to satisfy Awards under the Incentive Plan. If authorized but
unissued shares are used to satisfy Stock Awards and the exercise of
Options granted under the Incentive Plan, it will result in an increase in
the number of shares outstanding and will have a dilutive effect on the
holdings of existing shareholders. The Company currently anticipates that
it will establish a trust (the "Incentive Plan Trust"), under which the
trustee will purchase, with contributions from the Company or the Bank,
previously issued shares to fund the Company's obligation for Stock
Awards. As of the date of this Proxy Statement, no Awards have been
granted under the Incentive Plan.
TYPES OF AWARDS
GENERAL. The Incentive Plan authorizes the grant of Awards in the form of:
(i) Options intended to qualify as incentive stock options under Section 422 of
the Code (Options which afford certain tax benefits to the recipients upon
compliance with applicable requirements, but which do
12
<PAGE>
not result in tax deductions to the Company), referred to as "Incentive
Stock Options"; (ii) Options that do not so qualify (Options which do not
afford the same income tax benefits to recipients, but which may provide
tax deductions to the Company), referred to as "Non-Statutory Stock
Options"; (iii) grants of restricted shares of stock ("Stock Awards"); and
(iv) related rights which become exercisable only upon a "change in
control" (as defined in the Incentive Plan) of the Company or Bank
("Limited Option Rights" and "Limited Stock Rights"). Each type of Award
may be subject to certain vesting or service requirements or other
conditions imposed by the Committee.
OPTIONS. Subject to the terms of the Incentive Plan and applicable
regulation, the Committee has the authority to determine the amount of
Options granted to any individual and the date or dates on which each
Option shall become exercisable and any other conditions applicable to an
Option. The exercise price of all Options shall be determined by the
Committee but shall be at least 100% of the fair market value of the
underlying Common Stock at the time of grant. The exercise price of any
Option may be paid in cash, Common Stock, or any other form permitted by
the Committee at its discretion. See "Alternate Option Payments." The
term of Options shall be determined by the Committee, but in no event
shall an Option be exercisable more than ten years from the date of grant
(or five years from date of grant for a 10% owner with respect to
Incentive Stock Options).
All Options granted under the Incentive Plan to officers and
employees may, at the discretion of the Committee, qualify as Incentive
Stock Options to the extent permitted under Section 422 of the Code.
Under certain circumstances, Incentive Stock Options, may be converted
into Non-Statutory Stock Options. In order to qualify as Incentive Stock
Options under Section 422 of the Code, the Option must generally be
granted only to an employee, must not be transferable (other than by will
or the laws of descent and distribution), the exercise price must not be
less than 100% of the fair market value of the Common Stock on the date of
grant, the term of the Option may not exceed ten years from the date of
grant, and no more than $100,000 of options may become exercisable for the
first time in any calendar year. Notwithstanding the foregoing
requirements, Incentive Stock Options granted to any person who is the
beneficial owner of more than 10% of the outstanding voting stock of the
Company may be exercised only for a period of five years from the date of
grant and the exercise price must be at least equal to 110% of the fair
market value of the underlying Common Stock on the date of grant. Each
Outside Director of the Company or its affiliates, as well as employees,
will be eligible to receive Non-Statutory Stock Options.
Unless otherwise determined by the Committee, upon termination of an
optionee's services for any reason other than death, disability, retirement,
change in control or termination for cause, all then exercisable Options shall
remain exercisable for a period of time (three months in the case of termination
from service in general, one year in the cases of retirement or termination
following a Change in Control) following termination and all unexercisable
Options shall be canceled. In the event of the death or disability of an
optionee, all unexercisable Options held by such optionee will become fully
exercisable and remain exercisable for up to one year thereafter. In the event
of termination for cause, all exercisable and unexercisable Options held by the
optionee shall be canceled. In the event of the retirement of an optionee, the
Committee shall, subject to applicable regulation, have the discretion to allow
unexercisable Options to continue to vest or become exercisable in accordance
with their original terms. In the event of termination subsequent to a
13
<PAGE>
change in control, an optionee's unexercisable options shall continue to
become exercisable in accordance with their original terms regardless of
the optionee's service with the Company, or any successor entity shall
provide the optionee with options or consideration at least equivalent in
value and subject to similar conditions as such unexercisable options.
LIMITED OPTION RIGHTS. The Incentive Plan also provides the
Committee with the ability to grant a Limited Option Right simultaneously
with the grant of any Option. Limited Option Rights become automatically
exercisable by the Company on the individual's behalf only upon a change
in control of the Company or the Bank subject to applicable regulations
and certain conditions. Upon exercise, the holder will receive a lump
sum cash payment equal to the difference between the exercise price of the
related Option and the fair market value of the shares of Common Stock
subject to the Option on the date of exercise of the right less any
applicable tax withholding.
STOCK AWARDS. Subject to the terms of the Incentive Plan and
applicable regulation, the Committee has the authority to determine the
amounts of Stock Awards granted to any individual and the dates on which
Stock Awards granted will vest or any other conditions which must be
satisfied prior to vesting.
Stock Award recipients may also receive amounts equal to accumulated
cash and stock dividends (if any) with respect thereto plus earnings
thereon minus any required tax withholding amounts. Prior to vesting,
recipients of Stock Awards may direct the voting of shares of Common Stock
granted to them and held in the Incentive Plan Trust. Shares of Common
Stock held by the Incentive Plan trust which have not been allocated or
for which voting has not been directed are voted by the trustee in the
same proportion as the awarded shares are voted in accordance with the
directions given by all recipients of Awards.
Unless otherwise determined by the Committee, upon termination of the
services of a holder of a Stock Award for any reason other than death,
disability, retirement or termination for cause, all such holder's rights
in unvested Stock Awards shall be canceled. In the event of the death or
disability of the holder of the Stock Award, all unvested Stock Awards
held by such individual will become fully vested. In the event of
termination for cause of a holder of a Stock Award, all unvested Stock
Awards held by such individual shall be canceled. In the event of
retirement of the holder of a Stock Award, the Committee shall, to
applicable regulation, have the discretion to determine that all unvested
Stock Awards shall continue to vest in accordance with their original
terms. In the event of termination subsequent to a change in control, a
recipient's unvested Stock Awards shall continue to vest in accordance
with their original terms regardless of recipient's service to the
Company, or any successor entity shall provide the recipient with stock or
consideration at least equivalent in value and subject to similar
conditions as such unvested Stock Awards.
LIMITED STOCK RIGHTS. The Incentive Plan also provides the Committee with
the ability to grant a Limited Stock Right simultaneously with the grant of any
Stock Award. Limited Stock Rights are related to specific Awards granted and
become automatically exercisable by the Company on the individual's behalf only
upon a change in control of the Company or the Bank, subject to applicable
regulations and certain conditions. Upon exercise, the holder will receive a
lump sum cash
14
<PAGE>
payment equal to the fair market value of the shares of Common Stock,
multiplied by the number of Limited Stock Rights exercised on the date of
such change in control less any applicable tax withholding.
TAX TREATMENT
OPTIONS. An optionee will generally not be deemed to have recognized
taxable income upon grant or exercise of any Incentive Stock Option,
provided that shares transferred in connection with the exercise are not
disposed of by the optionee for at least one year after the date the
shares are transferred in connection with the exercise of the Option and
two years after the date of grant of the Option. If these holding periods
are satisfied, upon disposal of the shares, the aggregate difference
between the per share Option exercise price and the fair market value of
the Common Stock is recognized as income taxable at capital gains rates.
No compensation deduction may be taken by the Company as a result of the
grant or exercise of Incentive Stock Options, assuming these holding
periods are met.
In the case of the exercise of a Non-Statutory Stock Option, an
optionee will be deemed to have received ordinary income upon exercise of
the Option in an amount equal to the aggregate amount by which the fair
market value of the Common Stock exceeds the exercise price of the Option.
In the event shares received through the exercise of an Incentive Stock
Option are disposed of prior to the satisfaction of the holding periods (a
"disqualifying disposition"), the exercise of the Option will essentially
be treated as the exercise of a Non-Statutory Stock Option, except that
the optionee will recognize the ordinary income for the year in which the
disqualifying disposition occurs. The amount of any ordinary income
recognized by an optionee upon the exercise of a Non-Statutory Stock
Option or due to a disqualifying disposition will be a deductible expense
of the Company for federal income tax purposes, subject to the limitations
imposed by Code Section 162(m) (discussed below).
STOCK AWARDS. When shares of Common Stock, as Stock Awards, are
distributed upon vesting, the recipient recognizes ordinary income equal
to the fair market value of such shares at the date of distribution plus
any dividends and earnings on such shares (provided such date is more than
six months after the date of grant) and the Company is permitted a
commensurate compensation expense deduction for income tax purposes.
LIMITED OPTION AND STOCK RIGHTS. Upon the exercise of Limited Option
Rights and Limited Stock Rights, the holder will recognize as income the
value of the cash received in the year in which the payment is made and
the Company and the Bank would generally be entitled to a deduction for
the payment.
PERFORMANCE AWARDS
GENERAL. The Incentive Plan provides the Committee with the ability
to condition or restrict the vesting or exercisability of any Award upon
the achievement of performance targets or goals as set forth under the
Incentive Plan. Any Award subject to such conditions or restrictions is
15
<PAGE>
considered to be a "Performance Award." Subject to the express provisions
of the Plan and as discussed in this paragraph, the Committee has
discretion to determine the terms of any Performance Award, including the
amount of the award, or a formula for determining such, the performance
criteria and level of achievement related to these criteria which
determine the amount of the award granted, issued, retainable and/or
vested, the period as to which performance shall be measured for
determining achievement of performance (a "performance period"), the
timing of delivery of any awards earned, forfeiture provisions, the effect
of termination of employment for various reasons, and such further terms
and conditions, in each case not inconsistent with the Plan, as may be
determined from time to time by the Committee. The performance criteria
upon which Performance Awards are granted, issued, retained and/or vested
may be based on financial performance and/or personal performance
evaluations, except that for any Performance Award that is intended by the
Committee to satisfy the requirements for "performance based compensation"
under Code Section 162(m), the performance criteria shall be a measure
based on one or more Qualifying Performance Criteria (as defined below).
Notwithstanding satisfaction of any performance goals, the number of
Shares granted, issued, retainable and/or vested under a Performance Award
may be adjusted by the Committee on the basis of such further
considerations as the Committee in its sole discretion shall determine.
However, the Committee may not increase the amount earned upon
satisfaction of any performance goal by any Participant who is a "covered
employee" within the meaning of Section 162(m) of the Code.
QUALIFYING PERFORMANCE CRITERIA AND SECTION 162(m) LIMITS. Subject
to shareholder approval of the Plan, the Performance Criteria for any
Performance Award that is intended to satisfy the requirements for
"performance based compensation" under the Code Section 162(m) shall be
based upon any one or more of the following Performance Criteria, either
individually, alternatively or in any combination, applied to either the
Company as a whole or to a business unit or subsidiary, either
individually, alternatively or in any combination, and measured either on
an absolute basis or relative to a pre-established target, to previous
years' results or to a designated comparison group, in each case as
preestablished by the Committee under the terms of the Award: net income,
as adjusted for non-recurring items; cash earnings; earnings per share;
cash earnings per share; return on equity; return on assets; assets; stock
price; total shareholder return; capital; net interest income; market
share; cost control or efficiency ratio; and asset growth.
MAXIMUM AWARDS. The aggregate amount of Options granted under the
Plan during any 60-month period to any one Participant may not exceed 25%
of the total amount of options available to be granted under the Incentive
Plan. The aggregate amount of shares of Common Stock issuable under a
Stock Award granted under the Plan for any 60-month period to any one
Participant may not exceed 25% of the total amount of Stock Awards
available to be granted under the Incentive Plan.
ALTERNATE OPTION PAYMENTS
Subject to the terms of the Incentive Plan, the Committee has
discretion to determine the form of payment for the exercise of an Option.
The Committee may indicate acceptable forms in the Award Agreement
covering such Options or may reserve its decision to the time of exercise.
No Option is to be considered exercised until payment in full is accepted
by the Committee. Any shares
16
<PAGE>
of Common Stock tendered in payment of the exercise price of an Option
shall be valued at the fair market value of the Common Stock on the date
prior to the date of exercise.
AMENDMENTS
Subject to certain restrictions contained in the Incentive Plan, the
Board of Directors or Committee may amend the Incentive Plan in any
respect, at any time, provided that no amendment may affect the rights of
the holder of an Award without his or her permission and such amendment
must comply with applicable law and regulation. The Incentive Plan may be
subject to certain federal regulations. Such federal regulations provide
that any stock-based benefit plan, such as the Incentive Plan, that is
adopted by a converted savings institution within the first year after
conversion may not provide for the granting of Awards which vest or become
exercisable in installments at a rate greater than 20% per year and may
not permit the acceleration of vesting or exercisability, except in the
case of death or disability. In the event such federal regulations are
deemed to be applicable to the Incentive Plan, the Board of Directors
intends to take any necessary action, including the amendment of the the
Incentive Plan, to provide for the acceleration of vesting or
exercisability of Awards upon the occurrence of a change in control of the
Company or the Bank and other circumstances. It is intended that any such
amendment would be submitted to shareholders for approval to the extent
required by applicable regulations.
ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock
of the Company by reason of any stock dividend or split, recapitalization,
merger, consolidation, spin-off, reorganization, combination or exchange
of shares, or other similar corporate change, or other increase or
decrease in such shares without receipt or payment of consideration by the
Company, or in the event an extraordinary capital distribution is made,
including the payment of an extraordinary dividend, the Committee may make
such adjustments to previously granted Awards, to prevent dilution,
diminution or enlargement of the rights of the holder; provided, however,
that in the case of an extraordinary dividend, the Committee may be
required to obtain OTS approval prior to any such adjustment. All Awards
under this Incentive Plan shall be binding upon any successors or assigns
of the Company.
NONTRANSFERABILITY
Unless determined otherwise by the Committee, Awards under the
Incentive Plan shall not be transferable by the recipient other than by
will or the laws of intestate succession or pursuant to a domestic
relations order. With the consent of the Committee, a recipient may
permit transferability or assignment for valid estate planning purposes of
a Non-Statutory Stock Option as permitted under the Code or Rule 16b-3
under the Exchange Act and a participant may designate a person or his or
her estate as beneficiary of any Award to which the recipient would then
be entitled, in the event of the death of the participant.
17
<PAGE>
SHAREHOLDER APPROVAL, EFFECTIVE DATE OF PLAN AND REGULATORY COMPLIANCE
The Incentive Plan is subject to the regulations of the Illinois
Office of Banks and Real Estate ("IOBRE") and the Federal Deposit
Insurance Company ("FDIC"). Neither the IOBRE nor the FDIC has endorsed
or approved the Incentive Plan.
The Incentive Plan provides that it shall become effective upon the
earlier of: (i) the date that it is approved by a majority of votes
eligible to be cast by the Company's shareholders at a duly called meeting
of shareholders; or (ii) April 4, 1999. Accordingly, if the Incentive
Plan is not approved by a majority of the votes eligible to be cast by
shareholders at the Special Meeting, the Incentive Plan and any grants
thereunder shall become effective on April 4, 1999 without further
shareholder approval unless it is terminated by the Board of Directors.
In the absence of the approval of the Incentive Plan by a majority of
shares cast at the Special Meeting, the Options granted under the
Incentive Plan would not qualify as Incentive Stock Options under the Code
and the Common Stock of the Company may no longer be eligible for listing
on the American Stock Exchange. Additionally, certain federal regulations
may apply to the Incentive Plan with regard to the vesting or
exercisability of Awards. See "Amendments" above.
NEW PLAN BENEFITS
As of the date of this Proxy Statement, no determination had been
made regarding the granting of Awards or Options under the Incentive Plan.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE APPROVAL OF
THE EFC BANCORP, INC. 1998 STOCK-BASED INCENTIVE PLAN.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THE EFC BANCORP, INC. 1998 STOCK-BASED INCENTIVE PLAN.
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
Since no annual meeting of stockholders at which a proxy statement
was distributed has been previously held, to be considered for inclusion
in the Company's proxy statement and form of proxy relating to the 1999
Annual Meeting of Shareholders, a stockholder proposal must be received by
a reasonable time before the proxy solicitation for such annual meeting is
made. Any such proposal will be subject to 17 C.F.R. Section 240.14a-8 of
the Rules and Regulations under the Exchange Act.
18
<PAGE>
NOTICE OF BUSINESS TO BE CONDUCTED AT A SPECIAL OR ANNUAL MEETING
The Bylaws of the Company set forth the procedures by which a
shareholder may properly bring business before a meeting of shareholders.
Pursuant to the Bylaws, only business brought by or at the direction of
the Board of Directors may be conducted at a special meeting. The Bylaws
of the Company provide an advance notice procedure for a shareholder to
properly bring business before an annual meeting. The shareholder must
give written advance notice to the Secretary of the Company not less than
ninety (90) days before the date originally fixed for such meeting;
PROVIDED, HOWEVER, that in the event that less than one hundred (100) days
notice or prior public disclosure of the date of the meeting is given or
made to shareholders, notice by the shareholder to be timely must be
received not later than the close of business on the tenth day following
the date on which the Company's notice to shareholders of the annual
meeting date was mailed or such public disclosure was made. The advance
notice by shareholders must include the shareholder's name and address, as
they appear on the Company's record of shareholders, a brief description
of the proposed business, the reason for conducting such business at the
annual meeting, the class and number of shares of the Company's capital
stock that are beneficially owned by such shareholder and any material
interest of such shareholder in the proposed business. In the case of
nominations to the Board of Directors, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to
require the Company to include in its proxy statement or the proxy
relating to any annual meeting any shareholder proposal which does not
meet all of the requirements for inclusion established by the SEC in
effect at the time such proposal is received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented
for consideration at the Special Meeting other than as stated in the
Notice of Special Meeting of Shareholders. If, however, other matters are
properly brought before the Special Meeting, it is the intention of the
persons named in the accompanying proxy to vote the shares represented
thereby on such matters in accordance with their best judgment.
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Whether or not you intend to be present at the Special Meeting, you
are urged to return your proxy card promptly. If you are then present at
the Special Meeting and wish to vote your shares in person, your original
proxy may be revoked by voting at the Special Meeting. However, if you
are a stockholder whose shares are not registered in your own name, you
will need appropriate documentation from your recordholder to vote
personally at the Special Meeting.
By Order of the Board of Directors
/s/ Ursula Wilson
Ursula Wilson
Corporate Secretary
Elgin, Illinois
September 21, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE
REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
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APPENDIX A
EFC BANCORP, INC.
1998 STOCK-BASED INCENTIVE PLAN
1. DEFINITIONS.
(a) "Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Holding Company, as such terms are defined in Sections
424(e) and 424(f) of the Code.
(b) "Award" means, individually or collectively, a grant under the Plan
of Non-Statutory Stock Options, Incentive Stock Options, Stock Awards,
Limited Option Rights, and Limited Stock Rights.
(c) "Award Agreement" means an agreement evidencing and setting forth
the terms of an Award.
(d) "Bank" means Elgin Financial Savings Bank.
(e) "Board of Directors" means the board of directors of the Holding
Company.
(f) "Change in Control" of the Holding Company or the Bank means an
event of a nature that: (i) would be required to be reported in response to
Item 1(a) of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Exchange Act; or (ii) results in a
"change in control" of the Bank or the Holding Company within the meaning of
the Change in Bank Control Act and the Rules and Regulations promulgated by
the Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R. Section
303.4(a), with respect to the Bank, and the Rules and Regulations promulgated
by the Office of Thrift Supervision ("OTS") (or its predecessor agency), with
respect to the Holding Company; or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of voting securities of the Bank or the Holding
Company representing 20% or more of the Bank's or the Holding Company's
outstanding voting securities or right to acquire such securities except for
any voting securities of the bank purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Holding
Company or its Affiliates, or (B) individuals who constitute the Board of
Directors on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote
of at least three-quarters of the directors comprising the Incumbent Board,
or whose nomination for election by the Holding Company's stockholders was
approved by a Nominating Committee solely composed of members which are
Incumbent Board members, shall be, for purposes of this clause (B),
considered as though he were a member of the Incumbent Board, or (C) a plan
of reorganization, merger, consolidation, sale of all or substantially all
the assets of the Bank or the Holding Company or similar transaction occurs
or is effectuated in which the Bank or Holding Company is not the resulting
entity, or (D) a proxy statement has been distributed soliciting proxies from
stockholders of the Holding Company, by someone other than the current
management of the Holding Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Holding Company or Bank with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Holding Company shall be distributed, or (E) a tender offer is made
for 20% or more of the voting securities of the Bank or Holding Company then
outstanding.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the committee designated by the Board of
Directors, pursuant to Section 2 of the Plan, to administer the Plan.
(i) "Common Stock" means the Common Stock of the Holding Company,
par value, $.01 per share.
(j) "Date of Grant" means the effective date of an Award.
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(k) "Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits for under a
long-term disability plan of the Holding Company or an Affiliate, or in the
absence of such a long-term disability plan or coverage under such a plan,
"Disability" shall mean a physical or mental condition which, in the sole
discretion of the Committee, is reasonably expected to be of indefinite
duration and to substantially prevent the Participant from fulfilling his
duties or responsibilities to the Holding Company or an Affiliate.
(l) "Effective Date" means the earlier of the date the Plan is approved
by shareholders or April 4, 1999.
(m) "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are employed by the Holding Company or an Affiliate
shall be considered Employees under the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(o) "Exercise Price" means the price at which a Participant may
purchase a share of Common Stock pursuant to an Option.
(p) "Fair Market Value" means the market price of Common Stock,
determined by the Committee as follows:
(i) If the Common Stock was traded on the date in question on The
Nasdaq Stock Market then the Fair Market Value shall be equal to
the last transaction price quoted for such date by The Nasdaq
Stock Market;
(ii) If the Common Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the
closing price reported by the applicable composite transactions
report for such date; and
(iii) If neither of the foregoing provisions is applicable, then
the Fair Market Value shall be determined by the Committee
in good faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the
Committee shall be based on the prices reported in THE WALL STREET JOURNAL.
The Committee's determination of Fair Market Value shall be conclusive and
binding on all persons.
(q) "Holding Company" means EFC Bancorp, Inc.
(r) "Incentive Stock Option" means a stock option granted to a
Participant, pursuant to Section 7 of the Plan, that is intended to meet the
requirements of Section 422 of the Code.
(s) "Limited Option Right" means an Award granted to a Participant
pursuant to Section 9(a) of the Plan.
(t) "Limited Stock Right" means an Award granted to a Participant
pursuant to Section 9(b) of the Plan.
(u) "Non-Statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to be
and is not identified as an Incentive Stock Option or a stock option granted
under the Plan which is intended to be and is identified as an Incentive
Stock Option but which does not meet the requirements of Section 422 of the
Code.
(v) "Option" means an Incentive Stock Option or Non-Statutory Stock
Option.
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(w) "Outside Director" means a member of the board(s) of directors of
the Holding Company or an Affiliate who is not also an Employee of the
Holding Company or an Affiliate.
(x) "Participant" means any person who holds an outstanding Award.
(y) "Performance Award" means an Award granted to a Participant
pursuant to Section 10 of the Plan.
(z) "Plan" means this EFC Bancorp, Inc. 1998 Stock-Based Incentive Plan.
(aa) "Retirement" means retirement from employment with the Holding
Company or an Affiliate in accordance with the then current retirement
policies of the Holding Company or Affiliate, as applicable. "Retirement"
with respect to an Outside Director means the termination of service from the
board(s) of directors of the Holding Company and any Affiliate following
written notice to such board(s) of directors of the Outside Director's
intention to retire.
(bb) "Stock Award" means an Award granted to a Participant pursuant to
Section 8 of the Plan.
(cc) "Termination for Cause" shall mean, in the case of an Outside
Director, removal from the board(s) of directors of the Holding Company and
its Affiliates in accordance with the applicable by-laws of the Holding
Company and its Affiliates or, in the case of an Employee, as defined under
any employment agreement with the Holding Company or an Affiliate; PROVIDED,
HOWEVER, that if no employment agreement exists with respect to the Employee,
Termination for Cause shall mean termination of employment because of a
material loss to the Holding Company or an Affiliate, as determined by and in
the sole discretion of the Board of Directors or its designee(s).
(dd) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Common Stock or other property for the
purposes set forth in the Plan.
(ee) "Trustee" means any person or entity approved by the Board of
Directors or its designee(s) to hold any of the Trust assets.
2. ADMINISTRATION.
(a) The Committee shall administer the Plan. The Committee shall
consist of two or more disinterested directors of the Holding Company, who
shall be appointed by the Board of Directors. A member of the Board of
Directors shall be deemed to be "disinterested" only if he satisfies (i) such
requirements as the Securities and Exchange Commission may establish for
non-employee directors administering plans intended to qualify for exemption
under Rule 16b-3 (or its successor) under the Exchange Act and (ii) such
requirements as the Internal Revenue Service may establish for outside
directors acting under plans intended to qualify for exemption under Section
162(m)(4)(C) of the Code. The Board of Directors may also appoint one or
more separate committees of the Board of Directors, each composed of one or
more directors of the Holding Company or an Affiliate who need not be
disinterested and who may grant Awards and administer the Plan with respect
to Employees and Outside Directors who are not considered officers or
directors of the Holding Company under Section 16 of the Exchange Act or for
whom Awards are not intended to satisfy the provisions of Section 162(m) of
the Code.
(b) The Committee shall (i) select the Employees and Outside Directors
who are to receive Awards under the Plan, (ii) determine the type, number,
vesting requirements and other features and conditions of such Awards, (iii)
interpret the Plan and Award Agreements in all respects and (iv) make all
other decisions relating to the operation of the Plan. The Committee may
adopt such rules or guidelines as it deems appropriate to implement the Plan.
The Committee's determinations under the Plan shall be final and binding on
all persons.
(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be required by the Plan and
otherwise approved by the Committee. Each Award Agreement shall
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constitute a binding contract between the Holding Company or an Affiliate and
the Participant, and every Participant, upon acceptance of an Award
Agreement, shall be bound by the terms and restrictions of the Plan and the
Award Agreement. The terms of each Award Agreement shall be in accordance
with the Plan, but each Award Agreement may include any additional provisions
and restrictions determined by the Committee, in its discretion, provided
that such additional provisions and restrictions are not inconsistent with
the terms of the Plan. In particular and at a minimum, the Committee shall
set forth in each Award Agreement (i) the type of Award granted; (ii) the
Exercise Price of any Option; (iii) the number of shares subject to the
Award; (iv) the expiration date of the Award; (v) the manner, time and rate
(cumulative or otherwise) of exercise or vesting of such Award; and (vi) the
restrictions, if any, placed upon such Award, or upon shares which may be
issued upon exercise of such Award. The Chairman of the Committee and such
other directors and officers as shall be designated by the Committee is
hereby authorized to execute Award Agreements on behalf of the Company or an
Affiliate and to cause them to be delivered to the recipients of Awards.
(d) The Committee may delegate all authority for: (i) the determination
of forms of payment to be made by or received by the Plan and (ii) the
execution of any Award Agreement. The Committee may rely on the
descriptions, representations, reports and estimates provided to it by the
management of the Holding Company or an Affiliate for determinations to be
made pursuant to the Plan, including the satisfaction of any conditions of a
Performance Award. However, only the Committee or a portion of the Committee
may certify the attainment of any conditions of a Performance Award intended
to satisfy the requirements of Section 162(m) of the Code.
3. TYPES OF AWARDS AND RELATED RIGHTS.
The following Awards may be granted under the Plan:
(a) Non-Statutory Stock Options.
(b) Incentive Stock Options.
(c) Stock Awards.
(d) Limited Option Rights.
(e) Limited Stock Rights.
4. STOCK SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 15 of the Plan, the maximum
number of shares reserved for Awards under the Plan is 1,048,800, which
number shall not exceed 14% of the outstanding shares of the Common Stock
determined immediately as of the Effective Date. Subject to adjustment as
provided in Section 15 of the Plan, the maximum number of shares reserved
hereby for purchase pursuant to the exercise of Options, including Incentive
Stock Options, and Option-related Awards granted under the Plan is 749,143,
which number shall not exceed 10% of the outstanding shares of Common Stock
as of the Effective Date. The maximum number of the shares reserved for
Stock Awards is 299,657, which number shall not exceed 4% of the outstanding
shares of Common Stock as of the Effective Date. The shares of Common Stock
issued under the Plan may be either authorized but unissued shares or
authorized shares previously issued and acquired or reacquired by the Trustee
or the Holding Company, respectively. To the extent that Options and Stock
Awards are granted under the Plan, the shares underlying such Awards will be
unavailable for any other use including future grants under the Plan except
that, to the extent that Stock Awards or Options terminate, expire or are
forfeited without having vested or without having been exercised (in the case
of Limited Option Rights and Limited Stock Rights, exercised for cash), new
Awards may be made with respect to these shares.
5. ELIGIBILITY.
Subject to the terms of the Plan, all full-time Employees and Outside
Directors shall be eligible to receive Awards under the Plan. In addition,
the Committee may grant eligibility to consultants, advisory directors and
advisors of the Holding Company or an Affiliate, as it sees fit.
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6. NON-STATUTORY STOCK OPTIONS.
The Committee may, subject to the limitations of this Plan and the
availability of shares of Common Stock reserved but not previously awarded
under the Plan, grant Non-Statutory Stock Options to eligible individuals
upon such terms and conditions as it may determine to the extent such terms
and conditions are consistent with the following provisions:
(a) EXERCISE PRICE. The Committee shall determine the Exercise Price
of each Non-Statutory Stock Option. However, the Exercise Price shall not be
less than 100% of the Fair Market Value of the Common Stock on the Date of
Grant.
(b) TERMS OF NON-STATUTORY STOCK OPTIONS. The Committee shall
determine the term during which a Participant may exercise a Non-Statutory
Stock Option, but in no event may a Participant exercise a Non-Statutory
Stock Option, in whole or in part, more than ten (10) years from the Date of
Grant. The Committee shall also determine the date on which each
Non-Statutory Stock Option, or any part thereof, first becomes exercisable
and any terms or conditions a Participant must satisfy in order to exercise
each Non-Statutory Stock Option. The shares of Common Stock underlying each
Non-Statutory Stock Option may be purchased in whole or in part by the
Participant at any time during the term of such Non-Statutory Stock Option,
or any portion thereof, once the Non-Statutory Stock Option becomes
exercisable.
(c) NON-TRANSFERABILITY. Unless otherwise determined by the Committee
in accordance with this Section 6(c), a Participant may not transfer, assign,
hypothecate, or dispose of in any manner, other than by will or the laws of
intestate succession, a Non-Statutory Stock Option. The Committee may,
however, in its sole discretion, permit transferability or assignment of a
Non-Statutory Stock Option if such transfer or assignment is, in its sole
determination, for valid estate planning purposes and such transfer or
assignment is permitted under the Code and Rule 16b-3 under the Exchange Act.
For purposes of this Section 6(c), a transfer for valid estate planning
purposes includes, but is not limited to: (a) a transfer to a revocable
intervivos trust as to which the Participant is both the settlor and trustee,
(b) a transfer for no consideration to: (i) any member of the Participant's
Immediate Family, (ii) any trust solely for the benefit of members of the
Participant's Immediate Family, (iii) any partnership whose only partners are
members of the Participant's Immediate Family, and (iv) any limited liability
corporation or corporate entity whose only members or equity owners are
members of the Participant's Immediate Family, or (c) a transfer to the
Richmond County Savings Foundation. For purposes of this Section 6(c),
"Immediate Family" includes, but is not necessarily limited to, a
Participant's parents, grandparents, spouse, children, grandchildren,
siblings (including half bothers and sisters), and individuals who are family
members by adoption. Nothing contained in this Section 6(c) shall be
construed to require the Committee to give its approval to any transfer or
assignment of any Non-Statutory Stock Option or portion thereof, and approval
to transfer or assign any Non-Statutory Stock Option or portion thereof does
not mean that such approval will be given with respect to any other
Non-Statutory Stock Option or portion thereof. The transferee or assignee of
any Non-Statutory Stock Option shall be subject to all of the terms and
conditions applicable to such Non-Statutory Stock Option immediately prior to
the transfer or assignment and shall be subject to any other conditions
proscribed by the Committee with respect to such Non-Statutory Stock Option.
(d) TERMINATION OF EMPLOYMENT OR SERVICE (GENERAL). Unless otherwise
determined by the Committee, upon the termination of a Participant's
employment or other service for any reason other than Retirement, Disability
or death, a Change in Control, or Termination for Cause, the Participant may
exercise only those Non-Statutory Stock Options that were immediately
exercisable by the Participant at the date of such termination and only for a
period of three (3) months following the date of such termination.
(e) TERMINATION OF EMPLOYMENT OR SERVICE (RETIREMENT). In the event of a
Participant's Retirement, the Participant may exercise only those Non-Statutory
Stock Options that were immediately exercisable by the Participant at the date
of Retirement and only for a period of one (1) year following the date of
Retirement; PROVIDED, HOWEVER, that upon the Participant's Retirement, the
Committee, in its discretion, may determine that all Non-Statutory Stock Options
that were not exercisable by the Participant as of such date shall continue to
become
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exercisable in accordance with the terms of the Award Agreement if the
Participant is immediately engaged by the Holding Company or an Affiliate as
a consultant or advisor or continues to serve the Holding Company or an
Affiliate as a director, advisory director, or director emeritus.
(f) TERMINATION OF EMPLOYMENT OR SERVICE (DISABILITY OR DEATH). Unless
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or other service due to Disability or death, all
Non-Statutory Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period one (1) year following the
date of such termination.
(g) TERMINATION OF EMPLOYMENT OR SERVICE (CHANGE IN CONTROL). Subject
to applicable regulation and unless otherwise determined by the Committee, in
the event of the termination of a Participant's employment or service due to
a Change in Control, whether such termination is actual, constructive, or
otherwise, Non-Statutory Stock Options that were immediately exercisable by
the Participant at the date of such termination shall remain exercisable for
their original term without regard to the Participant's continued employment
or service with the Holding Company or its Affiliates. All Non-Statutory
Stock Options not exercisable as of the date of the Change in Control shall
be treated in accordance with Section 22 or the Plan.
(h) TERMINATION OF EMPLOYMENT OR SERVICE (TERMINATION FOR CAUSE).
Unless otherwise determined by the Committee, in the event of a Participant's
Termination for Cause, all rights with respect to the Participant's
Non-Statutory Stock Options shall expire immediately upon the effective date
of such Termination for Cause.
(i) PAYMENT. Payment due to a Participant upon the exercise of a
Non-Statutory Stock Option shall be made in the form of shares of Common
Stock.
(j) MAXIMUM INDIVIDUAL AWARD. No individual Employee shall be granted
an amount of Non-Statutory Stock Options which exceeds 25% of all Options
eligible to be granted under the Plan within any 60-month period.
7. INCENTIVE STOCK OPTIONS.
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this
Plan, grant Incentive Stock Options to an Employee upon such terms and
conditions as it may determine to the extent such terms and conditions are
consistent with the following provisions:
(a) EXERCISE PRICE. The Committee shall determine the Exercise Price
of each Incentive Stock Option. However, the Exercise Price shall not be
less than 100% of the Fair Market Value of the Common Stock on the Date of
Grant; PROVIDED, HOWEVER, that if at the time an Incentive Stock Option is
granted, the Employee owns or is treated as owning, for purposes of Section
422 of the Code, Common Stock representing more than 10% of the total
combined voting securities of the Holding Company ("10% Owner"), the Exercise
Price shall not be less than 110% of the Fair Market Value of the Common
Stock on the Date of Grant.
(b) AMOUNTS OF INCENTIVE STOCK OPTIONS. To the extent the aggregate
Fair Market Value of shares of Common Stock with respect to which Incentive
Stock Options that are exercisable for the first time by an Employee during
any calendar year under the Plan and any other stock option plan of the
Holding Company or an Affiliate exceeds $100,000, or such higher value as may
be permitted under Section 422 of the Code, such Options in excess of such
limit shall be treated as Non-Statutory Stock Options. Fair Market Value
shall be determined as of the Date of Grant with respect to each such
Incentive Stock Option.
(c) TERMS OF INCENTIVE STOCK OPTIONS. The Committee shall determine
the term during which a Participant may exercise an Incentive Stock Option,
but in no event may a Participant exercise an Incentive Stock Option, in
whole or in part, more than ten (10) years from the Date of Grant; PROVIDED,
HOWEVER, that if at the time an Incentive Stock Option is granted to an
Employee who is a 10% Owner, the Incentive Stock Option granted to such
Employee shall not be exercisable after the expiration of five (5) years from
the Date of Grant. The Committee shall
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also determine the date on which each Incentive Stock Option, or any part
thereof, first becomes exercisable and any terms or conditions a Participant
must satisfy in order to exercise each Incentive Stock Option. The shares of
Common Stock underlying each Incentive Stock Option may be purchased in whole
or in part at any time during the term of such Incentive Stock Option after
such Option becomes exercisable.
(d) NON-TRANSFERABILITY. No Incentive Stock Option shall be
transferable except by will or the laws of descent and distribution and is
exercisable, during his lifetime, only by the Employee to whom the Committee
grants the Incentive Stock Option. The designation of a beneficiary does not
constitute a transfer of an Incentive Stock Option.
(e) TERMINATION OF EMPLOYMENT (GENERAL). Unless otherwise determined
by the Committee, upon the termination of a Participant's employment or other
service for any reason other than Retirement, Disability or death, a Change
in Control, or Termination for Cause, the Participant may exercise only those
Incentive Stock Options that were immediately exercisable by the Participant
at the date of such termination and only for a period of three (3) months
following the date of such termination.
(f) TERMINATION OF EMPLOYMENT (RETIREMENT). In the event of a
Participant's Retirement, the Participant may exercise only those Incentive
Stock Options that were immediately exercisable by the Participant at the
date of Retirement and only for a period of one (1) year following the date
of Retirement; PROVIDED HOWEVER, that upon the Participant's Retirement, the
Committee, in its discretion, may determine that all Incentive Stock Options
that were not otherwise exercisable by the Participant as of such date shall
continue to become exercisable in accordance with the terms of the Award
Agreement if the Participant is immediately engaged by the Holding Company or
an Affiliate as a consultant or advisor or continues to serve the Holding
Company or an Affiliate as a director, advisory director, or director
emeritus. Any Option originally designated as an Incentive Stock Option
shall be treated as a Non-Statutory Stock Options to the extent the
Participant exercises such Option more than three (3) months following the
Date of the Participant's Retirement.
(g) TERMINATION OF EMPLOYMENT (DISABILITY OR DEATH). Unless otherwise
determined by the Committee, in the event of the termination of a
Participant's employment or other service due to Disability or death, all
Incentive Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period one (1) year following the
date of such termination.
(h) TERMINATION OF EMPLOYMENT (CHANGE IN CONTROL). Subject to
applicable regulation and unless otherwise determined by the Committee, in
the event of the termination of a Participant's employment or service due to
a Change in Control, whether such termination is actual, constructive, or
otherwise, Incentive Stock Options that were immediately exercisable by the
Participant at the date of such termination shall remain exercisable for
their original term without regard to the Participant's continued employment
or service with the Holding Company or its Affiliates; provided, however,
that any Option originally designated as an Incentive Stock Option shall be
treated as a Non-Statutory Stock Options to the extent the Participant
exercises such Option more than three (3) months following the Date of the
Participant's termination from employment. All Incentive Stock Options not
exercisable as of the date of the Change in Control shall be treated in
accordance with Section 22 of the Plan.
(i) TERMINATION OF EMPLOYMENT (TERMINATION FOR CAUSE). Unless
otherwise determined by the Committee, in the event of an Employee's
Termination for Cause, all rights under such Employee's Incentive Stock
Options shall expire immediately upon the effective date of such Termination
for Cause.
(j) PAYMENT. Payment due to a Participant upon the exercise of an
Incentive Stock Option shall be made in the form of shares of Common Stock.
(k) MAXIMUM INDIVIDUAL AWARD. No individual Employee shall be granted
an amount of Incentive Stock Options which exceeds 25% of all Options
eligible to be granted under the Plan within any 60-month period.
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(l) DISQUALIFYING DISPOSITIONS. Each Award Agreement with respect to
an Incentive Stock Option shall require the Participant to notify the
Committee of any disposition of shares of Common Stock issued pursuant to the
exercise of such Option under the circumstances described in Section 421(b)
of the Code (relating to certain disqualifying dispositions), within 10 days
of such disposition.
8. STOCK AWARDS.
The Committee may make grants of Stock Awards, which shall consist of
the grant of some number of shares of Common Stock, to a Participant upon
such terms and conditions as it may determine to the extent such terms and
conditions are consistent with the following provisions:
(a) GRANTS OF THE STOCK AWARDS. Stock Awards may only be made in
whole shares of Common Stock. Stock Awards may only be granted from shares
reserved under the Plan and available for award at the time the Stock Award
is made to the Participant.
(b) TERMS OF THE STOCK AWARDS. The Committee shall determine the dates
on which Stock Awards granted to a Participant shall vest and any terms or
conditions which must be satisfied prior to the vesting of any Stock Award or
portion thereof. Any such terms or conditions shall be determined by the
Committee as of the Date of Grant.
(c) TERMINATION OF EMPLOYMENT OR SERVICE (GENERAL). Unless otherwise
determined by the Committee, upon the termination of a Participant's
employment or service for any reason other than Retirement, Disability or
death, a Change in Control, or Termination for Cause, any Stock Awards in
which the Participant has not become vested as of the date of such
termination shall be forfeited and any rights the Participant had to such
Stock Awards shall become null and void.
(d) TERMINATION OF EMPLOYMENT OR SERVICE (RETIREMENT). In the event of
a Participant's Retirement, any Stock Awards in which the Participant has not
become vested as of the date of Retirement shall be forfeited and any rights
the Participant had to such unvested Stock Awards shall become null and void;
PROVIDED HOWEVER, that upon the Participant's Retirement, the Committee, in
its discretion, may determine that all unvested Stock Awards shall continue
to vest in accordance with the Award Agreement if the Participant is
immediately engaged by the Holding Company or an Affiliate as a consultant or
advisor or continues to serve the Holding Company or an Affiliate as a
director, advisory director or director emeritus.
(e) TERMINATION OF EMPLOYMENT OR SERVICE (DISABILITY OR DEATH). Unless
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to Disability or death all unvested Stock Awards
held by such Participant shall immediately vest as of the date of such
termination.
(f) TERMINATION OF EMPLOYMENT OR SERVICE (CHANGE IN CONTROL). Unless
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to a Change in Control any Stock Awards in which
the Participant has not become vested shall be treated in accordance with
Section 22 of the Plan.
(g) TERMINATION OF EMPLOYMENT OR SERVICE (TERMINATION FOR CAUSE).
Unless otherwise determined by the Committee, or in the event of the
Participant's Termination for Cause, all Stock Awards in which the
Participant had not become vested as of the effective date of such
Termination for Cause shall be forfeited and any rights such Participant had
to such unvested Stock Awards shall become null and void.
(h) MAXIMUM INDIVIDUAL AWARD. No individual Employee shall be granted
an amount of Stock Awards which exceeds 25% of all Stock Awards eligible to
be granted under the Plan within any 60-month period.
(i) ISSUANCE OF CERTIFICATES. Unless otherwise held in Trust and
registered in the name of the Trustee, reasonably promptly after the Date of
Grant with respect to shares of Common Stock pursuant to a Stock Award, the
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Holding Company shall cause to be issued a stock certificate, registered in
the name of the Participant to whom such Stock Award was granted, evidencing
such shares; provided, that the Holding Company shall not cause such a stock
certificate to be issued unless it has received a stock power duly endorsed
in blank with respect to such shares. Each such stock certificate shall bear
the following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture provisions and restrictions
against transfer) contained in the EFC Bancorp, Inc. 1998 Stock-
Based Incentive Plan and Award Agreement entered into between the
registered owner of such shares and EFC Bancorp, Inc. or its
Affiliates. A copy of the Plan and Award Agreement is on file in
the office of the Corporate Secretary of EFC Bancorp, Inc.
located at 1695 Larkin Avenue, Elgin, Illinois 60123."
Such legend shall not be removed until the Participant becomes vested in such
shares pursuant to the terms of the Plan and Award Agreement. Each
certificate issued pursuant to this Section 8(i), in connection with a Stock
Award, shall be held by the Holding Company or its Affiliates, unless the
Committee determines otherwise.
(j) NON-TRANSFERABILITY. Except to the extent permitted by the Code,
the rules promulgated under Section 16(b) of the Exchange Act or any
successor statutes or rules:
(i) The recipient of a Stock Award shall not sell, transfer,
assign, pledge, or otherwise encumber shares subject to the
Stock Award until full vesting of such shares has occurred.
For purposes of this section, the separation of beneficial
ownership and legal title through the use of any "swap"
transaction is deemed to be a prohibited encumbrance.
(ii) Unless determined otherwise by the Committee and except in the
event of the Participant's death or pursuant to a domestic
relations order, a Stock Award is not transferable and may be
earned in his lifetime only by the Participant to whom it is
granted. Upon the death of a Participant, a Stock Award is
transferable by will or the laws of descent and distribution.
The designation of a beneficiary shall not constitute a
transfer.
(iii) If a recipient of a Stock Award is subject to the provisions
of Section 16 of the Exchange Act, shares of Common Stock
subject to such Stock Award may not, without the written
consent of the Committee (which consent may be given in the
Award Agreement), be sold or otherwise disposed of within six
(6) months following the date of grant of the Stock Award.
(k) ACCRUAL OF DIVIDENDS. To the extent Stock Awards are held in Trust
and registered in the name of the Trustee, unless otherwise specified by the
Trust agreement whenever shares of Common Stock underlying a Stock Award are
distributed to a Participant or beneficiary thereof under the Plan, such
Participant or beneficiary shall also be entitled to receive, with respect to
each such share distributed, a payment equal to any cash dividends and the
number of shares of Common Stock equal to any stock dividends, declared and
paid with respect to a share of the Common Stock if the record date for
determining shareholders entitled to receive such dividends falls between the
date the relevant Stock Award was granted and the date the relevant Stock
Award or installment thereof is issued. There shall also be distributed an
appropriate amount of net earnings, if any, of the Trust with respect to any
dividends paid out on the shares related to the Stock Award.
(l) VOTING OF STOCK AWARDS. After a Stock Award has been granted but for
which the shares covered by such Stock Award have not yet been vested, earned
and distributed to the Participant pursuant to the Plan, the Participant shall
be entitled to vote or to direct the Trustee to vote, as the case may be, such
shares of Common Stock
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which the Stock Award covers subject to the rules and procedures adopted by
the Committee for this purpose and in a manner consistent with the Trust
agreement.
(m) PAYMENT. Payment due to a Participant upon the redemption of a
Stock Award shall be made in the form of shares of Common Stock.
9. LIMITED RIGHTS.
Simultaneously with the grant of any Option or Stock Award, the
Committee may, at its discretion, grant a Limited Option Right or Limited
Stock Right, as applicable, with respect to all or some of the shares of
Common Stock covered by such Option or Award, subject to the following
provisions:
(a) LIMITED OPTION RIGHT. In no event shall a Limited Option Right be
exercisable before the expiration of six (6) months from the Date of Grant of
the Limited Option Right. Unless in connection with a Change in Control the
underlying Option with respect to which a Limited Option Right has been
granted is (i) assumed by the successor corporation or its parent; (ii)
replaced with a comparable award for the purchase of shares of the common
stock of the successor corporation or its parent; (iii) replaced with a cash
incentive program of the successor corporation or its parent that preserves
the spread existing at the time of the Change in Control and provides for
subsequent payout in accordance with the same vesting schedule applicable to
such Option; or (iv) subject to other limitation imposed by the Award
Agreement, the Limited Option Right granted in connection with all then
outstanding Options of the Participant, whether exercisable or not, shall
automatically be exercised as of effective date of the Change in Control on
behalf of the Participant and the underlying Option shall expire; PROVIDED,
HOWEVER, that the Fair Market value of the Stock on such date exceeds the
Exercise Price of the underlying Option. Upon automatic exercise of a
Limited Option Right, the holder shall promptly receive from the Holding
Company or an Affiliate an amount of cash equal to the difference between the
Exercise Price of the underlying Option and the Fair Market Value of the
Common Stock subject to such Option on the date the Limited Option Right is
exercised multiplied by the number of shares with respect to which such
Limited Option Right is being exercised. The determination of comparability
of an award offered by a successor corporation or its parent under clause
(ii) above shall be made by the Committee, and the Committee's determination
shall be conclusive and binding. Any such Options that are assumed or
replaced in connection with a Change in Control and the vesting of which do
not otherwise accelerate at that time shall be accelerated in the event the
Participant's employment or service should subsequently terminate within two
(2) years following the Change in Control, unless such termination
constitutes as Termination for Cause. A Limited Option Right is transferable
only if and when the underlying Option is transferable and under the same
conditions. A Limited Option Right shall automatically expire and become
null and void upon the full vesting of the Option with respect to which the
Limited Right was simultaneously granted.
(b) LIMITED STOCK RIGHT. In no event shall a Limited Stock Right be
exercisable before the expiration of six (6) months from the Date of Grant of
the Limited Option Right. Unless in connection with a Change in Control the
underlying Stock Award with respect to which a Limited Stock Right has been
granted is (i) assumed by the successor corporation or its parent; (ii)
replaced with a comparable award for the issuance of shares of the common
stock of the successor corporation or its parent; (iii) replaced with a cash
incentive program of the successor corporation or its parent that preserves
the value of the Award existing at the time of the Change in Control and
provides for subsequent payout in accordance with the same vesting schedule
applicable to such Award; or (iv) subject to other limitation imposed by the
Award Agreement, the Limited Stock Right granted in connection with all then
outstanding Stock Awards of the Participant which have not vested shall
automatically be exercised as of effective date of the Change in Control on
behalf of the Participant and the underlying Stock Awards shall expire. Upon
automatic exercise of a Limited Stock Right, the holder shall promptly
receive from the Holding Company or an Affiliate an amount of cash equal to
the Fair Market Value of the Common Stock subject to such Stock Award on the
date the Limited Stock Right is exercised multiplied by the number of shares
with respect to which such Limited Stock Right is being exercised. The
determination of comparability of an award offered by a successor corporation
or its parent under clause (ii) above shall be made by the Committee, and the
Committee's determination shall be conclusive and binding. Any such Stock
Awards that are assumed or replaced in connection with a Change in Control
and the vesting
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of which do not otherwise accelerate at that time shall be accelerated in the
event the Participant's employment or service should subsequently terminate
within two (2) years following the Change in Control, unless such termination
constitutes as Termination for Cause. A Limited Stock Right is transferable
only if and when the underlying Stock Award is transferable and under the
same conditions. A Limited Stock Right shall automatically expire and become
null and void upon the vesting of any Stock Award with respect to which the
Limited Stock Right was simultaneously granted.
10. PERFORMANCE AWARDS.
(a) The Committee may determine to make any Award under the Plan
contingent upon the satisfaction of any conditions related to the performance
of the Holding Company, an Affiliate of the Participant. Each Performance
Award shall be evidenced in the Award Agreement, which shall set forth the
applicable conditions, the maximum amounts payable and such other terms and
conditions as are applicable to the Performance Award. Unless otherwise
determined by the Committee, each Performance Award shall be granted and
administered to comply with the requirements of Section 162(m) of the Code
and subject to the following provisions:
(b) Any Performance Award shall be made not later than 90 days after
the start of the period for which the Performance Award relates and shall be
made prior to the completion of 25% of such period. All determinations
regarding the achievement of any applicable conditions will be made by the
Committee. The Committee may not increase during a year the amount of a
Performance Award that would otherwise be payable upon satisfaction of the
conditions but may reduce or eliminate the payments as provided for in the
Award Agreement.
(c) Nothing contained in the Plan will be deemed in any way to limit or
restrict the Committee from making any Award or payment to any person under
any other plan, arrangement or understanding, whether now existing or
hereafter in effect.
(d) A Participant who receives a Performance Award payable in Common
Stock shall have no rights as a shareholder until the Company Stock is issued
pursuant to the terms of the Award Agreement. The Common Stock may be issued
without cash consideration.
(e) A Participant's interest in a Performance Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.
(f) No Award or portion thereof that is subject to the satisfaction of
any condition shall be distributed or considered to be earned or vested until
the Committee certifies in writing that the conditions to which the
distribution, earning or vesting of such Award is subject have been achieved.
11. DEFERRED PAYMENTS.
The Committee, in its discretion, may permit a Participant to elect to
defer receipt of all or any part of any cash or stock payment under the Plan,
or the Committee may determine to defer receipt by some or all Participants,
of all or part of any such payment. The Committee shall determine the terms
and conditions of any such deferral, including the period of deferral, the
manner of deferral, and the method for measuring appreciation on deferred
amounts until their payout.
12. METHOD OF EXERCISE OF OPTIONS.
Subject to any applicable Award Agreement, any Option may be exercised
by the Participant in whole or in part at such time or times, and the
Participant may make payment of the Exercise Price in such form or forms
permitted by the Committee, including, without limitation, payment by
delivery of cash, Common Stock or other consideration (including, where
permitted by law and the Committee, Awards) having a Fair Market Value on the
exercise date equal to the total Exercise Price, or by any combination of
cash, shares of Common Stock and other
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consideration, including exercise by means of a cashless exercise arrangement
with a qualifying broker-dealer, as the Committee may specify in the
applicable Award Agreement.
13. RIGHTS OF PARTICIPANTS.
No Participant shall have any rights as a shareholder with respect to
any shares of Common Stock covered by an Option until the date of issuance of
a stock certificate for such Common Stock. Nothing contained herein or in
any Award Agreement confers on any person any right to continue in the employ
or service of the Holding Company or an Affiliate or interferes in any way
with the right of the Holding Company or an Affiliate to terminate a
Participant's services.
14. DESIGNATION OF BENEFICIARY.
A Participant may, with the consent of the Committee, designate a person
or persons to receive, in the event of death, any Award to which the
Participant would then be entitled. Such designation will be made upon forms
supplied by and delivered to the Holding Company and may be revoked in
writing. If a Participant fails effectively to designate a beneficiary, then
the Participant's estate will be deemed to be the beneficiary.
15. DILUTION AND OTHER ADJUSTMENTS.
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares,
or other similar corporate change, or other increase or decrease in such
shares without receipt or payment of consideration by the Holding Company, or
in the event an extraordinary capital distribution is made, the Committee may
make such adjustments to previously granted Awards, to prevent dilution,
diminution, or enlargement of the rights of the Participant, including any or
all of the following:
(a) adjustments in the aggregate number or kind of shares of Common Stock
or other securities that may underlie future Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common Stock
or other securities underlying Awards already made under the Plan;
(c) adjustments in the Exercise Price of outstanding Incentive and/or
Non-statutory Stock Options, or any Limited Rights attached to such
Options.
No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards
under this Plan shall be binding upon any successors or assigns of the
Holding Company.
16. TAX WITHHOLDING.
(a) Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon exercise or payment of an Award or any other event with
respect to rights and benefits hereunder, the Committee shall be entitled to
require as a condition of delivery (i) that the Participant remit an amount
sufficient to satisfy all federal, state, and local withholding tax
requirements related thereto, (ii) that the withholding of such sums come
from compensation otherwise due to the Participant or from any shares of
Common Stock due to the Participant under this Plan or (iii) any combination
of the foregoing PROVIDED, HOWEVER, that no amount shall be withheld from any
cash payment or shares of Common Stock relating to an Award which was
transferred by the Participant in accordance with this Plan.
(b) If any disqualifying disposition described in Section 7(l) is made
with respect to shares of Common Stock acquired under an Incentive Stock Option
granted pursuant to this Plan, or any transfer described in Section 6(c)
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is made, or any election described in Section 17 is made, then the person
making such disqualifying disposition, transfer, or election shall remit to
the Holding Company or its Affiliates an amount sufficient to satisfy all
federal, state, and local withholding taxes thereby incurred; provided that,
in lieu of or in addition to the foregoing, the Holding Company or its
Affiliates shall have the right to withhold such sums from compensation
otherwise due to the Participant, or, except in the case of any transfer
pursuant to Section 6(c), from any shares of Common Stock due to the
Participant under this Plan.
17. NOTIFICATION UNDER SECTION 83(b).
The Committee may, on the Date of Grant or any later date, prohibit a
Participant from making the election described below. If the Committee has
not prohibited such Participant from making such election, and the
Participant shall, in connection with the exercise of any Option, or the
grant of any Stock Award, make the election permitted under Section 83(b) of
the Code, such Participant shall notify the Committee of such election within
10 days of filing notice of the election with the Internal Revenue Service,
in addition to any filing and notification required pursuant to regulations
issued under the authority of Section 83(b) of the Code.
18. AMENDMENT OF THE PLAN AND AWARDS.
(a) Except as provided in paragraph (c) of this Section 18, the Board
of Directors may at any time, and from time to time, modify or amend the Plan
in any respect, prospectively or retroactively; provided however, that
provisions governing grants of Incentive Stock Options shall be submitted for
shareholder approval to the extent required by such law, regulation or
otherwise. Failure to ratify or approve amendments or modifications by
shareholders shall be effective only as to the specific amendment or
modification requiring such ratification. Other provisions of this Plan will
remain in full force and effect. No such termination, modification or
amendment may adversely affect the rights of a Participant under an
outstanding Award without the written permission of such Participant.
(b) Except as provided in paragraph (c) of this Section 18, the
Committee may amend any Award Agreement, prospectively or retroactively;
PROVIDED, HOWEVER, that no such amendment shall adversely affect the rights
of any Participant under an outstanding Award without the written consent of
such Participant.
(c) In no event shall the Board of Directors amend the Plan or shall
the Committee amend an Award Agreement in any manner that has the effect of:
(i) Allowing any Option to be granted with an exercise below the Fair
Market Value of the Common Stock on the Date of Grant.
(ii) Allowing the exercise price of any Option previously granted
under the Plan to be reduced subsequent to the Date of Award.
(d) Notwithstanding anything in this Plan or any Award Agreement to the
contrary, if any Award or right under this Plan would, in the opinion of the
Holding Company's accountants, cause a transaction to be ineligible for
pooling of interest accounting that would, but for such Award or right, be
eligible for such accounting treatment, the Committee, at its discretion, may
modify, adjust, eliminate or terminate the Award or right so that pooling of
interest accounting is available.
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19. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon approval by the Holding Company's
shareholders in accordance with the FDIC, the Illinois Office of Banks and
Real Estate and Internal Revenue Service ("IRS") regulations or April 4,
1999, whichever is earlier. The failure to obtain shareholder ratification
for such purposes will not effect the validity of the Plan and any Awards
made under the Plan; PROVIDED, HOWEVER, that if the Plan is not ratified by
stockholders in accordance with IRS regulations, the Plan shall remain in
full force and effect, and any Incentive Stock Options granted under the Plan
shall be deemed to be Non-Statutory Stock Options and any Award intended to
comply with Section 162(m) of the Code shall not comply with Section 162(m)
of the Code.
20. TERMINATION OF THE PLAN.
The right to grant Awards under the Plan will terminate upon the earlier
of: (i) ten (10) years after the Effective Date; (ii) the issuance of a
number of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards which together with the exercise of Limited
Rights is equivalent to the maximum number of shares reserved under the Plan
as set forth in Section 4 hereof. The Board of Directors has the right to
suspend or terminate the Plan at any time, provided that no such action will,
without the consent of a Participant, adversely affect a Participant's vested
rights under a previously granted Award.
21. APPLICABLE LAW.
The Plan will be administered in accordance with the laws of the state
of Delaware to the extent not pre-empted by applicable federal law.
22. TREATMENT OF UNVESTED, UNEXERCISED, OR NON-EXERCISABLE AWARDS UPON A CHANGE
IN CONTROL.
(a) Notwithstanding any other provision of this Plan, and unless
otherwise determined by the Committee, in the event of a Change in Control,
all Awards shall continue to remain exercisable (in the case of Options) and
shall continue to vest or become exercisable (in the case of Stock Awards and
Options) in accordance with the terms and conditions of the grant of the
Awards, as set forth in the Award Agreement(s) governing the grant of such
Awards; provided, however, that the continuation or timing of vesting or
exercisability shall take place without regard to the Participant's continued
employment or service or satisfaction of any other requirements concerning
vesting or exercisability set forth in the Award Agreement(s).
(b) Subject to paragraph (a) of this Section 22, in the event of a
Change in Control where the Holding Company or the Bank is not the surviving
entity, the Board of Directors of the Holding Company and/or the Bank, as
applicable, shall require that the successor entity take one of the following
actions with respect to all Awards held by Participants at the date of the
Change in Control:
(i) Assume the Awards with the same terms and conditions as granted to
the Participant under this Plan; or
(ii) Replace the Awards with comparable Awards, subject to the same or
more favorable terms and conditions as the Award granted to the
Participant under this Plan, whereby the Participant will be granted
common stock or the option to purchase common stock of the successor
entity; or, only if the Committee determines that neither of the
alternatives set forth in clauses (i) or (ii) are legally available,
(iii) Replace the Awards with a cash payment under an incentive plan,
program, or other arrangement of the successor entity that preserves
the economic value of the Awards and makes any such cash payment
subject to the same vesting or exercisability schedule applicable to
such Awards.
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23. COMPLIANCE WITH ILLINOIS OFFICE OF BANKS AND REAL ESTATE AND FDIC
CONVERSION REGULATIONS.
Notwithstanding any other provision contained in this Plan:
(a) unless the Plan is approved by a majority vote of the outstanding
shares of the Holding Company eligible to be cast at a meeting of
stockholders to consider the Plan, as determined by Delaware law, the
Plan and any Awards under the Plan shall not become effective or
implemented prior to April 4, 1999;
(b) No Options or Stock Awards granted to any individual Employee prior to
one year from the date of the Bank's conversion from the mutual to
stock form ("Conversion") may exceed 25% of the total amount of
Options or Stock Awards, as applicable, which may be granted under the
Plan;
(c) No Options or Stock Awards granted to any individual Outside Director
prior to one year from the Bank's Conversion may exceed 5% of the
total amount of Options or Stock Awards, as applicable, which may be
granted under the Plan;
(d) The aggregate amount of Options or Stock Awards granted to all Outside
Directors prior to one year from the Bank's Conversion may not exceed
30% of the total amount of Options or Stock Awards, as applicable,
which may be granted under the Plan; and
(e) No Option granted prior to one year from the Bank's Conversion may be
granted with an exercise price which is less than the Fair Market
Value of the Common Stock underlying the Option on the Date of Grant.
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EFC BANCORP, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/
[ ]
FOR AGAINST ABSTAIN
1. The approval of the EFC Bancorp, / / / / / /
Inc. 1998 Stock-Based Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSAL.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF
NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
PROPOSAL LISTED. IF ANY OTHER BUSINESS IS PRESENTED AT THE
SPECIAL MEETING, INCLUDING WHETHER OR NOT TO ADJOURN THE
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
SPECIAL MEETING.
Date
-------------------------------------------
------------------------------------------------
------------------------------------------------
Signature(s) of Shareholder(s)
The abovesigned acknowledges receipt from the
Company prior to the execution of this proxy of
a Notice of Special Meeting of Shareholders and
of a Proxy Statement dated September 21, 1998.
Please sign exactly as your name appears on
this card. When signing as attorney, executor,
administrator, trustee or guardian, please give
your full title. If shares are held jointly,
each holder may sign but only one signature is
required.
PLEASE COMPLETE, DATE, SIGN
AND PROMPTLY MAIL THIS
PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
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<PAGE>
REVOCABLE PROXY
EFC BANCORP, INC.
MEETING OF SHAREHOLDERS
OCTOBER 27, 1998
2:00 P.M. CENTRAL TIME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of the Board
of Directors of EFC Bancorp, Inc. (the "Company"), each with full power of
substitution, to act as proxy for the undersigned, and to vote all shares of
Common Stock of the Company which the undersigned is entitled to vote only at
the Special Meeting of Shareholders, to be held on October 27, 1998, at
2:00 p.m. Central Time, at the Elgin Plaza Hotel, 345 West River Road, Elgin,
Illinois and at any and all adjournments therof, with all of the powers the
undersigned would possess if personally present at such meeting as follows:
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TRIANGLE FOLD AND DETACH HERE TRIANGLE
