Exhibit 10.6 Form of Proposed Change in Control Agreement between EFC
Bancorp, Inc. and certain executive officers
FORM OF
EFC BANCORP, INC.
THREE YEAR CHANGE IN CONTROL AGREEMENT
This AGREEMENT is made effective as of ________________, by and between
EFC Bancorp, Inc. (the "Holding Company"), a corporation organized under the
laws of the State of Delaware, with its office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ _____ and _________________ ("Executive"). The term "Institution"
refers to Elgin Financial Center, S.B., the wholly-owned subsidiary of the
Holding Company or any successor thereto.
WHEREAS, the Holding Company recognizes the substantial contribution
Executive has made to the Holding Company and wishes to protect his position
therewith for the period provided in this Agreement; and
WHEREAS, Executive has agreed to serve in the employ of the Holding
Company or an affiliate thereof.
NOW, THEREFORE, in consideration of the contribution and responsibilities
of Executive, and upon the other terms and conditions hereinafter provided,
the parties hereto agree as follows:
1. TERM OF AGREEMENT.
The period of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of thirty-six (36)
full calendar months thereafter. Commencing on the date of the execution of
this Agreement, the term of this Agreement shall be extended for one day each
day until such time as the board of directors of the Holding Company (the
"Board") or Executive elects not to extend the term of the Agreement by
giving written notice to the other party in accordance with Section 4 of this
Agreement, in which case the term of this Agreement shall be fixed and shall
end on the third anniversary of the date of such written notice.
2. CHANGE IN CONTROL.
(a) Upon the occurrence of a Change in Control of the Holding Company
(as herein defined) followed at any time during the term of this Agreement by
the termination of Executive's employment, the provisions of Section 3 shall
apply. Upon the occurrence of a Change in Control, Executive shall have the
right to elect to voluntarily terminate his employment at any time during the
term of this Agreement following any demotion, loss of title, office or
significant authority, material reduction in annual compensation or material
reduction in benefits, or relocation of his principal place of employment by
more than 25 miles from its location immediately prior to the Change in
Control unless such termination is because of death or termination for Cause.
(b) For purposes of this Agreement, a "Change in Control" of the Holding
Company or the Institution shall mean 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 Securities Exchange Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇"); 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 Institution and the Rules and Regulations
promulgated by the Office of Thrift Supervision ("OTS") (or its predecessor
agency), as in effect on the date hereof 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 Institution or the Holding Company representing 20%
or more of the Institution's or the Holding Company's outstanding voting
securities or right to acquire such securities except for any voting
securities of the Institution purchased by the Holding Company and any voting
securities purchased by any employee benefit plan of the Holding Company or
its Subsidiaries, or (B) individuals who constitute the Board 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 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
Institution or the Holding Company or similar transaction occurs or is
effectuated in which the Institution 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 Institution
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 Institution or the Holding Company shall be distributed, or (E) a tender
offer is made for 20% or more of the voting securities of the Institution or
Holding Company then outstanding.
(c) Executive shall not have the right to receive termination benefits
pursuant to Section 3 hereof upon Termination for Cause. The term
"Termination for Cause" shall mean termination because of: 1) Executive's
personal dishonesty, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, regulation (other than traffic violations or
similar offenses), final cease and desist order or material breach of any
provision of this Agreement which results in a material loss to the
Institution or the Holding Company, or 2) Executive's conviction of a crime
or act involving moral turpitude or a final judgement rendered against
Executive based upon actions of Executive which involve moral turpitude. For
the purposes of this Section, no act, or the failure to act, on Executive's
part shall be "willful" unless done, or omitted to be done, not in good faith
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and without reasonable belief that the action or omission was in the best
interests of the Bank or its affiliates. Notwithstanding the foregoing,
Executive shall not be deemed to have been Terminated for Cause unless and
until there shall have been delivered to him a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members
of the Board at a meeting of the Board called and held for that purpose
(after reasonable notice to Executive and an opportunity for him, together
with counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, Executive was guilty of conduct justifying Termination
for Cause and specifying the particulars thereof in detail. Executive shall
not have the right to receive compensation or other benefits for any period
after Termination for Cause. During the period beginning on the date of the
Notice of Termination for Cause pursuant to Section 4 hereof through the Date
of Termination, stock options and related limited rights granted to Executive
under any stock option plan shall not be exercisable nor shall any unvested
awards granted to Executive under any stock benefit plan of the Institution,
the Holding Company or any subsidiary or affiliate thereof, vest. At the
Date of Termination, such stock options and related limited rights and any
such unvested awards shall become null and void and shall not be exercisable
by or delivered to Executive at any time subsequent to such Termination for
Cause.
3. TERMINATION BENEFITS.
(a) Upon the occurrence of a Change in Control, followed at any time
during the term of this Agreement by the voluntary or involuntary termination
of Executive's employment, other than for Termination for Cause, the Holding
Company shall be obligated to pay Executive, or in the event of his
subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, a sum equal to three (3) times Executive's average annual
compensation for the five most recent taxable years that Executive has been
employed by the Institution or such lesser number of years in the event that
Executive shall have been employed by the Institution for less than five
years. Such annual compensation shall include base salary, commissions,
bonuses, any other cash compensation, contributions or accruals on behalf of
Executive to any pension and profit sharing plan, severance payments,
director or committee fees and fringe benefits paid or to be paid to the
Executive during such years. At the election of Executive which election is
to be made prior to a Change in Control, such payment shall be made in a lump
sum. In the event that no election is made, payment to Executive will be
made on a monthly basis in approximately equal installments during the
remaining term of this Agreement.
(b) Upon the occurrence of a Change in Control of the Institution or the
Holding Company followed at any time during the term of this Agreement by
Executive's termination of employment, other than for Termination for Cause,
the Holding Company shall cause to be continued life, medical and disability
coverage substantially identical to the coverage maintained by the
Institution for Executive prior to his severance, except to the extent such
coverage may be changed in its application to all Institution employees.
Such coverage and payments shall cease upon expiration of thirty-six (36)
full calendar months following the Date of Termination.
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4. CHANGE OF CONTROL RELATED PROVISIONS.
In each calendar year that Executive is entitled to receive payments or
benefits under the provisions of this Agreement, the Holding Company shall
determine if an excess parachute payment (as defined in Section 4999 of the
Internal Revenue Code of 1986, as amended, and any successor provision
thereto, (the "Code")) exists. Such determination shall be made after taking
any reductions permitted pursuant to Section 280G of the Code and the
regulations thereunder. Any amount determined to be an excess parachute
payment after taking into account such reductions shall be hereafter referred
to as the "Initial Excess Parachute Payment". As soon as practicable after a
Change in Control, the Initial Excess Parachute Payment shall be determined.
Upon the Date of Termination following a Change in Control, the Holding
Company shall pay Executive, subject to applicable withholding requirements
under applicable state or federal law, an amount equal to:
(1) twenty (20) percent of the Initial Excess Parachute Payment (or such
other amount equal to the tax imposed under Section 4999 of the
Code); and
(2) such additional amount (tax allowance) as may be necessary to
compensate Executive for the payment by Executive of state and
federal income and excise taxes on the payment provided under clause
(1) and on any payments under this Clause (2). In computing such
tax allowance, the payment to be made under Clause (1) shall be
multiplied by the "gross up percentage" ("GUP"). The GUP shall be
determined as follows:
Tax Rate
GUP = _____________
1- Tax Rate
The "Tax Rate" for purposes of computing the GUP shall be the sum of
the highest marginal federal and state income and employment-related
tax rates, including any applicable excise tax rates, applicable to
the Executive in the year in which the payment under Clause (1) is
made.
(3) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final
administrative settlement to which Executive is a party that the
excess parachute payment as defined in Section 4999 of the Code,
reduced as described above, is more than the Initial Excess
Parachute Payment (such different amount being hereafter referred to
as the "Determinative Excess Parachute Payment") then the Holding
Company's independent accountants shall determine the amount (the
"Adjustment Amount") the Holding Company must pay to the Executive
in order to put the Executive in the same position as the Executive
would have been if the Initial Excess Parachute Payment
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had been equal to the Determinative Excess Parachute Payment. In
determining the Adjustment Amount, independent accountants of the
Holding Company shall take into account any and all taxes (including
any penalties and interest) paid by or for Executive or refunded to
Executive or for Executive's benefit. As soon as practicable after
the Adjustment Amount has been so determined, the Holding Company
shall pay the Adjustment Amount to Executive. In no event however,
shall Executive make any payment under this paragraph to the Holding
Company.
5. NOTICE OF TERMINATION.
(a) Any purported termination by the Holding Company, or by Executive
shall be communicated by Notice of Termination to the other party hereto.
For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given);
provided, however, that if a dispute regarding the Executive's termination
exists, the "Date of Termination" shall be determined in accordance with
Section 5(c) of this Agreement.
(c) If, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, by a binding arbitration
award, or by a final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal
having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute
in connection with a Change in Control, in the event that the Executive is
terminated for reasons other than Termination for Cause, the Institution will
continue to pay Executive the payments and benefits due under this Agreement
in effect when the notice giving rise to the dispute was given (including,
but not limited to his annual salary) until the earlier of: (1) the
resolution of the dispute in accordance with this Agreement; or (2) the
expiration of the remaining term of this Agreement as determined as of the
Date of Termination.
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6. SOURCE OF PAYMENTS.
It is intended by the parties hereto that all payments provided in this
Agreement shall be paid in cash or check from the general funds of the
Holding Company. Further, the Holding Company guarantees such payment and
provision of all amounts and benefits due hereunder to Executive and, if such
amount and benefits due from the Institution are not timely paid or provided
by the Institution, such amounts and benefits shall be paid and provided by
the Holding Company.
7. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior agreement between the Holding Company and
Executive, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to Executive of a kind elsewhere
provided. No provision of this Agreement shall be interpreted to mean that
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
Nothing in this Agreement shall confer upon Executive the right to
continue in the employ of the Holding Company or shall impose on the Holding
Company any obligation to employ or retain Executive in its employ for any
period.
8. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and
any attempt, voluntary or involuntary, to affect any such action shall be
null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Holding Company and their respective successors and assigns.
9. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party
charged with such waiver or estoppel. No such written waiver shall be deemed
a continuing waiver unless specifically stated therein, and each such waiver
shall operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
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10. EFFECT OF ACTION UNDER INSTITUTION AGREEMENT.
Notwithstanding any provision herein to the contrary, to the extent that
payments and benefits are paid to or received by Executive under the
Institution Agreement between Executive and Institution, the amount of such
payments and benefits paid by the Institution will be subtracted from any
amount due simultaneously to Executive under similar provisions of this
Agreement.
11. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other
provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full
extent consistent with law continue in full force and effect.
12. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement. In addition, references herein
to the masculine shall apply to both the masculine and the feminine.
13. GOVERNING LAW.
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Delaware.
14. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by Executive within
fifty (50) miles from the location of the Holding Company, in accordance with
the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having jurisdiction;
provided, however, that Executive shall be entitled to seek specific
performance of his right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with
this Agreement.
15. PAYMENT OF COSTS AND LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be
paid or reimbursed by the Holding Company if Executive is successful pursuant
to a legal judgment, arbitration or settlement.
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16. INDEMNIFICATION.
The Holding Company shall provide Executive (including his heirs,
executors and administrators) with coverage under a standard directors' and
officers' liability insurance policy at its expense, or in lieu thereof,
shall indemnify Executive (and his heirs, executors and administrators) to
the fullest extent permitted under Delaware law and as provided in the
Holding Company's certificate of incorporation against all expenses and
liabilities reasonably incurred by him in connection with or arising out of
any action, suit or proceeding in which he may be involved by reason of his
having been a director or officer of the Holding Company (whether or not he
continues to be a director or officer at the time of incurring such expenses
or liabilities), such expenses and liabilities to include, but not be limited
to, judgments, court costs and attorneys' fees and the cost of reasonable
settlements.
17. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all
or substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Holding Company's obligations under this Agreement, in the same manner and to
the same extent that the Holding Company would be required to perform if no
such succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, EFC Bancorp, Inc. has caused this Agreement to be
executed by its duly authorized officer, and Executive has signed this
Agreement, on the __th day of ________, 1997.
ATTEST: EFC BANCORP, INC.
_____________________________ By: ___________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
Secretary
WITNESS:
_____________________________ _________________________________
[NAME]
Executive
Seal
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