UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities
Exchange Act of 1934 (Amendment No.
)
Filed by the Registrant
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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þ
Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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ATLANTIC COAST FEDERAL CORPORATION
(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):
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þ
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No fee required.
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o
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
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(1)
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Title of each class of securities to which
transaction applies:
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(2)
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Aggregate number of securities to which
transaction applies:
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(3)
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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):
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(4)
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Proposed maximum aggregate value of transaction:
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o
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Fee paid previously with preliminary materials.
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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April 6, 2005
Dear Stockholder:
We cordially invite you to attend the 2005 Annual Meeting of Stockholders of Atlantic Coast Federal
Corporation, the parent company of Atlantic Coast Federal. The annual meeting will be held at the
Waycross Exchange Club Center, 2401 Knight Avenue, Waycross, Georgia 31501, at 10:00 a.m., local
time, on May 27, 2005.
The enclosed notice of annual meeting of stockholders and proxy statement describes the formal
business to be transacted at the annual meeting. During the annual meeting we will also report on
the operations of Atlantic Coast Federal Corporation. Directors and officers of Atlantic Coast
Federal Corporation will be present to respond to any questions that stockholders may have.
The business to be conducted at the annual meeting includes the election of five directors, the
approval of the Atlantic Coast Federal Corporation 2005 Stock Option Plan, the approval of the
Atlantic Coast Federal Corporation 2005 Recognition and Retention Plan, and the ratification of the
appointment of Crowe Chizek and Company LLC as the independent registered public accounting firm
for Atlantic Coast Federal Corporation for the fiscal year ending December 31, 2005.
The board of directors of Atlantic Coast Federal Corporation has determined that the matters to be
considered at the annual meeting are in the best interests of Atlantic Coast Federal Corporation
and its stockholders. For the reasons set forth in the proxy statement, the board of directors
unanimously recommends a vote FOR each matter to be considered.
Also enclosed for your review is our 2004 Annual Report to Stockholders, which contains detailed
information concerning the activities and operating performance of Atlantic Coast Federal
Corporation. On behalf of the board of directors, we urge you to vote your shares of common stock
as soon as possible even if you currently plan to attend the annual meeting. You can vote your
shares of common stock prior to the annual meeting by mailing the enclosed proxy card in accordance
with the instructions on the proxy card. This will not prevent you from voting in person, but will
assure that your vote is counted if you are unable to attend the annual meeting.
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Sincerely,
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/s/ Robert J. Larison, Jr.
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Robert J. Larison, Jr.
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President and Chief Executive Officer
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ATLANTIC COAST FEDERAL CORPORATION
505 Haines Avenue
Waycross, Georgia 31501
(912) 284-2211
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To be held on May 27, 2005
Notice is hereby given that the 2005 Annual Meeting of Stockholders of Atlantic Coast Federal
Corporation will be held at the Waycross Exchange Club Center, 2401 Knight Avenue, Waycross,
Georgia 31501, on May 27, 2005, at 10:00 a.m., local time.
A proxy card and a proxy statement for the annual meeting are enclosed.
The annual meeting is being held for the purpose of considering and acting upon:
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1.
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The election of five directors of Atlantic Coast Federal Corporation;
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2.
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The approval of the Atlantic Coast Federal Corporation 2005 Stock Option Plan;
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3.
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The approval of the Atlantic Coast Federal Corporation 2005 Recognition and
Retention Plan;
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4.
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The ratification of the appointment of Crowe Chizek and Company LLC as the
independent registered public accounting firm for Atlantic Coast Federal Corporation
for the fiscal year ending December 31, 2005; and
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such other matters as may properly come before the annual meeting, or any adjournments thereof.
The board of directors of Atlantic Coast Federal Corporation is not aware of any other business to
come before the annual meeting.
Any action may be taken on the foregoing proposals at the annual meeting on the date specified
above, or on any date or dates to which the annual meeting may be adjourned. Stockholders of
record at the close of business on March 31, 2005, are the stockholders entitled to vote at the
annual meeting, and any adjournments thereof.
EVEN IF YOU DO NOT PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES OF COMMON STOCK
WITHOUT DELAY. YOU CAN VOTE YOUR SHARES OF COMMON STOCK PRIOR TO THE ANNUAL MEETING BY MAILING THE
ENCLOSED PROXY CARD IN ACCORDANCE WITH THE INSTRUCTIONS ON THE PROXY CARD. YOU MAY REVOKE A PROXY
AT ANY TIME BEFORE WE VOTE AT THE ANNUAL MEETING. YOU MAY DO SO BY EXECUTING AND RETURNING A PROXY
CARD DATED LATER THAN A PREVIOUSLY SUBMITTED PROXY BY SUBMITTING A WRITTEN REVOCATION TO THE
SECRETARY OF ATLANTIC COAST FEDERAL CORPORATION BEFORE THE VOTE IS TAKEN AT THE ANNUAL MEETING. IF
YOU HOLD SHARES OF COMMON STOCK THROUGH A BROKER, YOU SHOULD FOLLOW THE INSTRUCTIONS OF YOUR BROKER
REGARDING REVOCATION OF PROXIES. IF YOU ATTEND THE ANNUAL MEETING YOU MAY REVOKE YOUR PROXY AND
VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE ANNUAL MEETING. HOWEVER, IF YOUR SHARES ARE NOT
REGISTERED IN YOUR NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE IN
PERSON AT THE ANNUAL MEETING.
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By Order of the Board of Directors
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/s/ Pamela M. Tanner
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Pamela M. Tanner
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Secretary
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Waycross, Georgia
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April 6, 2005
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A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES.
TABLE OF CONTENTS
Proxy Statement
ATLANTIC COAST FEDERAL CORPORATION
505 Haines Avenue
Waycross, Georgia 31501
(912) 284-2211
ANNUAL MEETING OF STOCKHOLDERS
May 27, 2005
This proxy statement is being furnished in connection with the solicitation of proxies on
behalf of the board of directors of Atlantic Coast Federal Corporation to be used at the 2005
Annual Meeting of Stockholders of Atlantic Coast Federal Corporation, which will be held at the
Waycross Exchange Club Center, 2401 Knight Avenue, Waycross, Georgia 31501, on May 27, 2005, at
10:00 a.m., local time, and all adjournments of the annual meeting. The accompanying notice of
annual meeting of stockholders and this proxy statement are first being mailed to stockholders on
or about April 6, 2005.
REVOCATION OF PROXIES
Stockholders who execute proxies in the form solicited hereby retain the right to revoke them
in the manner described below. Unless so revoked, the shares represented by such proxies will be
voted at the annual meeting and all adjournments thereof. Proxies solicited on behalf of the board
of directors of Atlantic Coast Federal Corporation will be voted in accordance with the directions
given thereon.
You can vote your shares of Atlantic Coast Federal Corporation common stock prior
to the annual meeting by signing and returning the enclosed proxy card to Atlantic Coast Federal
Corporation, in accordance with instructions set forth on the proxy card. Proxies received by
Atlantic Coast Federal Corporation, which are signed, but contain no instructions for voting, will
be voted FOR the proposals set forth in this proxy statement.
Proxies may be revoked by sending written notice of revocation to the Secretary of Atlantic
Coast Federal Corporation, Pamela M. Tanner, at the address of Atlantic Coast Federal Corporation
shown above, by delivering a duly executed proxy bearing a later date, or by attending the annual
meeting and voting in person. The presence at the annual meeting of any stockholder who had given
a proxy shall not revoke such proxy unless the stockholder delivers his or her ballot in person at
the annual meeting or delivers a written revocation to the Secretary of Atlantic Coast Federal
Corporation prior to the voting of such proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Holders of record of Atlantic Coast Federal Corporations common stock, par value $0.01 per
share, as of the close of business on March 31, 2005 are entitled to one vote for each share then
held. As of March 31, 2005, there were 14,547,500 shares of common stock issued and outstanding.
The presence in person or by proxy of a majority of the outstanding shares of common stock entitled
to vote is necessary to constitute a quorum at the annual meeting. Abstentions and broker
non-votes will be counted for purposes of determining that a quorum is present.
As to the election of directors, the proxy card being provided by the board of directors
enables a stockholder to vote FOR the election of the nominees proposed by the
governance/nominating committee of the board of directors, or to WITHHOLD authority to vote for one
or more of the nominees being proposed. Directors are elected by a plurality of votes cast,
without regard to either broker non-votes, or proxies as to which the authority to vote for the
nominees being proposed is withheld.
As to the approval of the Atlantic Coast Federal Corporation 2005 Stock Option Plan, by
checking the appropriate box, a stockholder may: (i) vote FOR the approval; (ii) vote AGAINST the
approval; or (iii) ABSTAIN from voting on such approval. The affirmative vote of (x) a majority of
the votes eligible to be cast at the annual meeting and (y) a majority of the votes cast at the
annual meeting by stockholders other than Atlantic Coast Federal,
MHC (without regard to broker non-votes or proxies marked ABSTAIN) is required for the
approval of the Atlantic Coast Federal Corporation 2005 Stock Option Plan.
As to the approval of the Atlantic Coast Federal Corporation 2005 Recognition and Retention
Plan, by checking the appropriate box, a stockholder may: (i) vote FOR the approval; (ii) vote
AGAINST the approval; or (iii) ABSTAIN from voting on such approval. The affirmative vote of (x) a
majority of the votes eligible to be cast at the annual meeting and (y) a majority of the votes
cast at the annual meeting by stockholders other than Atlantic Coast Federal, MHC (without regard
to broker non-votes or proxies marked ABSTAIN) is required for the approval of the Atlantic Coast
Federal Corporation 2005 Recognition and Retention Plan.
As to the ratification of the appointment of Crowe Chizek and Company LLC as Atlantic Coast
Federal Corporations independent registered public accounting firm, by checking the appropriate
box, a stockholder may: (i) vote FOR the ratification; (ii) vote AGAINST the ratification; or (iii)
ABSTAIN from voting on such ratification. The affirmative vote of holders of a majority of the
votes cast at the annual meeting in person or by proxy is required for the ratification of the
appointment of Crowe Chizek and Company LLC as the independent registered public accounting firm
for the fiscal year ending December 31, 2005. The ratification of this matter shall be determined
by a majority of the votes cast at the annual meeting, without regard to broker non-votes or
proxies marked ABSTAIN.
Management of Atlantic Coast Federal Corporation anticipates that Atlantic Coast Federal, MHC,
the majority stockholder of Atlantic Coast Federal Corporation, will vote all of its shares of
common stock in favor of all the matters set forth above. If Atlantic Coast Federal, MHC votes all
of its shares in favor of each proposal, the approval of the election of the director nominees and
the ratification of the appointment of Crowe Chizek and Company LLC as Atlantic Coast Federal
Corporations independent registered public accounting firm would be assured. As of March 31,
2005, Atlantic Coast Federal, MHC held 8,728,500 shares of common stock and persons other than
Atlantic Coast Federal, MHC held 5,819,000 shares of common stock.
Persons and groups who beneficially own in excess of 5% of the common stock of Atlantic Coast
Federal Corporation are required to file certain reports with the Securities and Exchange
Commission regarding such ownership pursuant to the Securities Exchange Act of 1934, as amended.
The following table sets forth, as of March 31, 2005, the shares of common stock beneficially owned
by each person who was the beneficial owner of more than 5% of the outstanding shares of common
stock of Atlantic Coast Federal Corporation, as well as shares beneficially owned in the aggregate
by Atlantic Coast Federal Corporation and all directors and executive officers as a group.
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Amount of Shares
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Owned and Nature
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Percent of Shares
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Name and Address of
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of Beneficial
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of Common Stock
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Beneficial Owners
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Ownership
(1)
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Outstanding
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Atlantic Coast Federal, MHC
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8,728,500
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60.0
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%
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505 Haines Avenue
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Waycross, Georgia 31501
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Atlantic Coast Federal, MHC,
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9,132,070
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62.8
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%
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and all of Atlantic Coast Federal
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Corporations and Atlantic Coast Federals
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directors and executive officers as a group
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(18 directors and officers)
(2)
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(1)
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In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, a person is deemed to be the beneficial owner for purposes of this table, of any
shares of common stock if he has shared voting or investment power with respect to such
security, or has a right to acquire beneficial ownership at any time within 60 days from the
date as of which beneficial ownership is being determined. As used herein, voting power is
the power to vote or direct the voting of shares and investment power is the power to
dispose or direct the disposition of shares, and includes all shares held directly as well as
by spouses and minor children, in trust and other indirect ownership, over which shares the
named individuals effectively exercise sole or shared voting or investment power.
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2
(2)
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Includes shares of common stock held by Atlantic Coast Federal, MHC, of which
Atlantic Coast Federal Corporations and Atlantic Coast Federals directors and two of its
executive officers are also executive officers and directors. Atlantic Coast Federal
Corporations and Atlantic Coast Federals executive officers and directors beneficially owned
403,570 shares of common stock, or 2.77% of the outstanding shares of common stock.
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PROPOSAL I ELECTION OF DIRECTORS
Atlantic Coast Federal Corporations board of directors consists of nine members. Atlantic
Coast Federal Corporations bylaws provide that approximately one-third of the directors are to be
elected annually. Directors of Atlantic Coast Federal Corporation are generally elected to serve
for a three-year period, or a shorter period if the director is elected to fill a vacancy, and
until their respective successors shall have been elected and shall qualify. Five directors will
be elected at the annual meeting and will serve until their successors have been elected and
qualified. The governance/nominating committee of Atlantic Coast Federal Corporation has nominated
Jon C. Parker, Sr., Robert J. Larison, Jr. and W. Eric Palmer to serve as directors for three-year
terms and Frederick D. Franklin, Jr., and Thomas F. Beeckler to serve for a one and two year term,
respectively. Except for Messrs. Franklin, Palmer and Beeckler, all of the nominees are currently
members of the board of directors.
Mr. Palmer has been nominated to fill the position of Mr. John M. Hinson who has notified
Atlantic Coast Federal Corporation that he will not seek re-election to the board of directors.
Mr. Franklin has been nominated to fill the unexpired term of Mr. Cyril M. Morris who has notified
Atlantic Coast Federal Corporation that he intends to retire from the board of directors at the
annual meeting. Mr. Beeckler has been nominated to fill the unexpired term of Mr. I. J. McGahee
who has notified Atlantic Coast Federal Corporation that he intends to retire from the board of
directors at the annual meeting.
The table below sets forth certain information regarding the composition of Atlantic Coast
Federal Corporations board of directors as of March 31, 2005, and the new nominees, including the
terms of office of board members. It is intended that the proxies solicited on behalf of the board
of directors (other than proxies in which the vote is withheld as to a nominee) will be voted at
the annual meeting for the election of the nominees identified below. If the nominees are unable
to serve, the shares represented by all such proxies will be voted for the election of such
substitute as the board of directors may recommend. At this time, the board of directors knows of
no reason why the nominees might be unable to serve, if elected. Except as indicated herein, there
are no arrangements or understandings between the nominees and any other person pursuant to which
such nominees were selected.
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Positions
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Shares of
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Held with Atlantic
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Common Stock
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Coast Federal
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Director
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Term to
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Beneficially
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Percent
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Name
(1)
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Age
(2)
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Corporation
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Since
(3)
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Expire
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Owned
(4)
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of Class
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NOMINEES
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Jon C. Parker, Sr.
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34
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Director, Vice
President and Chief
Financial Officer
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2003
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2008
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41,808
(5)
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*
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Robert J. Larison, Jr.
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48
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Director, President
and Chief Executive
Officer
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2003
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2008
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52,127
(6)
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*
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W. Eric Palmer
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42
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Director
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2008
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1,000
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*
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Thomas F. Beeckler
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58
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Director
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2007
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6,000
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*
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Frederick D. Franklin,
Jr.
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49
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Director
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2006
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*
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DIRECTORS CONTINUING
IN OFFICE
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H. Dennis Woods
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59
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Director
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1987
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2006
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14,100
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*
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Robert J. Smith
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44
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Director
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2003
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2006
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7,100
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*
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Charles E. Martin, Jr.
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58
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Chairman of the Board
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1982
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2007
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13,473
(7)
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*
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Forrest W. Sweat, Jr.
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47
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Director
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2001
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2007
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37,334
(8)
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*
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DIRECTORS NOT
CONTINUING IN OFFICE
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John M. Hinson
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72
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Director
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1990
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2005
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13,500
(9)
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*
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Cyril M. Morris
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81
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Director
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1988
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2006
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5,000
(10)
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*
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I. J. McGahee
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79
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Director
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1969
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2007
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30,740
(11)
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*
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3
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EXECUTIVE OFFICERS
WHO ARE NOT DIRECTORS
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Carl W. Insel**
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41
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Executive Vice
President
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N/A
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N/A
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16,119
(12)
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*
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Diane S. Wade**
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51
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Senior Vice
President
Corporate Banking
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N/A
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N/A
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19,235
(13)
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*
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marsha A. Boyette**
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|
52
|
|
|
|
Senior Vice
President-Administration
|
|
|
N/A
|
|
|
|
N/A
|
|
|
48,993
(14)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Herman T. Klinger**
|
|
50
|
|
|
|
Senior Vice
President Central
Operations
|
|
|
N/A
|
|
|
|
N/A
|
|
|
35,244
(15)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joanne Q. Heinrich**
|
|
43
|
|
|
|
Senior Vice
President Lending
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
3,939
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip S. Hubacher**
|
|
47
|
|
|
|
Treasurer
|
|
|
N/A
|
|
|
|
N/A
|
|
|
51,729
(16)
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors and
executive officers as
a group (18
persons)
(17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
403,570
(18)
|
|
2.77%
|
|
|
*
|
|
Less than 1%.
|
|
**
|
|
Carl W. Insel, Diane S. Wade, Marsha A. Boyette, Herman T. Klinger, Joanne Q. Heinrich and
Philip S. Hubacher are officers of Atlantic Coast Federal only.
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(1)
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The mailing address for each person listed is 505 Haines Avenue, Waycross, Georgia
31501.
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|
(2)
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As of March 31, 2005.
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(3)
|
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Reflects initial appointment to the board of directors of Atlantic Coast Federal
Credit Union, the predecessor to Atlantic Coast Federal, with the exception of Directors
Larison, Parker, Sweat, Smith, Franklin, Palmer and Beeckler. Each director of Atlantic Coast
Federal Corporation is also a director of Atlantic Coast Federal and Atlantic Coast Federal,
MHC, which owns the majority of the issued and outstanding shares of common stock of Atlantic
Coast Federal Corporation.
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(4)
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|
See definition of beneficial ownership in the table in Voting Securities and
Principal Holders Thereof.
|
|
(5)
|
|
Includes 6,627 shares of common stock held in Mr. Parkers 401(k) Plan account and
2,181 shares of common stock held in Mr. Parkers spouses 401(k) Plan account.
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|
(6)
|
|
Includes 6,869 shares of common stock held in Mr. Larisons individual retirement
accounts, 12,164 shares of common stock held in Mr. Larisons 401(k) Plan account and 1,225
shares of common held by Mr. Larison as custodian for his daughter.
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|
(7)
|
|
Includes 473 shares of common stock held in Mr. Martins individual retirement
account.
|
|
(8)
|
|
Includes 20,819 shares of common stock held in Mr. Sweats individual retirement
account and 16,175 shares of common stock held in Mr. Sweats spouses individual retirement
account.
|
|
(9)
|
|
Includes 9,448 shares of common stock held in Mr. Hinsons individual retirement
account and 3,180 shares of common stock held in Mr. Hinsons spouses individual retirement
account.
|
|
(10)
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|
Includes 2,209 shares of common stock held in Mr. Morris individual retirement
account and 1,000 shares of common stock held in Mr. Morris spouses individual retirement
account.
|
|
(11)
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|
Includes 5,000 shares of common stock held in Mr. McGahees individual retirement
account.
|
|
(12)
|
|
Includes 1,119 shares of common stock held in Mr. Insels 401(k) Plan account.
|
|
(13)
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|
Includes 9,944 shares of common stock held in Ms. Wades spouses individual
retirement account and 9,291 shares of common stock held in Ms. Wades 401(k) Plan account.
|
|
(14)
|
|
Includes 7,014 shares of common stock held in Ms. Boyettes 401(k) Plan account.
|
|
(15)
|
|
Includes 5,031 shares of common stock held in Mr. Klingers individual retirement
account, 6,013 shares of common stock held in Mr. Klingers 401(k) Plan account and 300 shares
of common stock held by Mr. Klinger as custodian for his son.
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(16)
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|
Includes 18,776 shares of common stock held in Mr. Hubachers individual retirement
account and 11,453 shares of common stock held in Mr. Hubachers 401(k) Plan account.
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|
(17)
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|
After the annual meeting of stockholders, Directors Hinson, Morris and McGahee will
no longer serve on the board of directors of Atlantic Coast Federal Corporation.
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(18)
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Includes 6,129 shares of common stock allocated to the accounts of executive
officers under the Atlantic Coast Federal Corporation employee stock ownership plan and
excludes the remaining 459,391 shares of common stock, or 3.16% of the common stock
outstanding, owned by the employee stock ownership plan for the benefit of employees. Under
the terms of the employee stock ownership plan, shares of common stock allocated to the
account of employees are voted in accordance with instructions of the respective employees.
Unallocated shares of common stock are voted by the trustee of the employee stock ownership
plan.
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4
Directors
The principal occupation during the past five years of each continuing and nominee director of
Atlantic Coast Federal Corporation is set forth below. All directors have held their present
positions for five years unless otherwise stated.
Jon C. Parker, Sr.
Mr. Parker has served as vice president and chief financial officer of
Atlantic Coast Federal Corporation since its organization in 2003 and senior vice president and
chief financial officer of Atlantic Coast Federal and Atlantic Coast Federal Credit Union since
September 1999. Prior to such time he served as controller.
Robert J. Larison, Jr.
Mr. Larison has served as president and chief executive officer of
Atlantic Coast Federal Corporation since its organization in 2003 and Atlantic Coast Federal and
Atlantic Coast Federal Credit Union since 1983.
W. Eric Palmer.
Mr. Palmer is employed by the Mayo Clinic, Jacksonville, Florida, where he
has served as a director of patient financial services for the past two years. Prior to serving as
a director, Mr. Palmer served as a section manager of accounts receivable at the Mayo Clinic for
four years.
Thomas F. Beeckler.
Mr. Beeckler is the owner, president and chief executive officer of the
Beeckler Company, Jacksonville, Florida, a real estate development firm. Mr. Beeckler founded the
company in 1990.
Frederick D. Franklin, Jr.
Mr. Franklin has been a partner in the law firm of Rogers Towers,
P.A., Jacksonville, Florida since January 2004. From 1997 to 2004, he was a partner in the law
firm of Holland & Knight, Jacksonville, Florida. Mr. Franklin specializes in complex commercial
litigation.
H. Dennis Woods.
Mr. Woods has been employed by CSX Transportation, Inc., Waycross, Georgia,
since 1964. He currently serves as the business manager of the companys warehouse in Waycross,
Georgia.
Robert J. Smith
. Mr. Smith is a certified public accountant. He has served as a mortgage
banking executive with PHH Mortgage in Jacksonville, Florida, since January 2001 except for the
period from April 2002 to July 2003, during which he was employed by Basis 100, a technology
company which served the mortgage banking industry. Prior to his employment with PHH Mortgage
(formerly known as Cendant Mortgage) in 2001, he was employed by Merrill Lynch Credit Corporation,
Jacksonville, Florida, for over 10 years and, prior to that, was a Senior Manager for Deloitte &
Touche LLP, where he was recognized as a National Industry Specialist in the savings and loan and
real estate industries.
Charles E. Martin, Jr.
Mr. Martin is a retired employee of CSX Transportation, Inc.,
Waycross, Georgia, where he worked as a machinist for over 20 years.
Forrest W. Sweat, Jr.
Mr. Sweat is a partner in the law firm of Walker & Sweat, Waycross,
Georgia. He has practiced law since 1982.
Executive Officers Who Are Not Directors
The business experience for at least the past five years for each of the executive officers of
Atlantic Coast Federal and its predecessor, Atlantic Coast Federal Credit Union, who do not serve
as directors, is set forth below.
Carl W. Insel.
Mr. Insel has served as executive vice president since his appointment in
October 2004. He is in charge of new business development. Mr. Insel previously served as senior
vice president for retail banking at the National Bank of Commerce, Atlanta, Georgia, where he
worked since 1996.
Diane S. Wade.
Ms. Wade has served as senior vice president of corporate banking since July
2000. From 1998 until such time she served as vice president for business development. She has
served in various capacities with Atlantic Coast Federal since 1978.
5
Marsha A. Boyette.
Ms. Boyette has served as senior vice president of administration since
July 2000. She has also served in various capacities with Atlantic Coast Federal since 1987.
Herman T. Klinger
.
Mr. Klinger has served as senior vice president of central operations
since 2000. Prior to such time he was in charge of information technology starting in 1996.
Joanne Q. Heinrich.
Ms. Heinrich joined Atlantic Coast Federal in January 2003 as senior vice
president of lending. From 1993 until 2001 she served as a mortgage banking officer with Merrill
Lynch Credit Corporation and First National Bank of Nassau County, Jacksonville, Florida.
Philip S. Hubacher.
Mr. Hubacher has served as treasurer of Atlantic Coast Federal since
1988. He is a lieutenant colonel in the United States Air Force Reserve.
Board Independence
The board of directors consists of a majority of independent directors within the meaning of
the Nasdaq corporate governance listing standards. The board of directors of Atlantic Coast
Federal Corporation has determined that directors are each independent within the meaning of the
Nasdaq corporate governance listing standards with the exception of Robert J. Larison, Jr. and Jon
C. Parker, Sr., who serve as executive officers of Atlantic Coast Federal Corporation and Atlantic
Coast Federal. In addition, the board of directors has determined that nominees Palmer, Franklin
and Beeckler are also independent under these standards. The board of directors has adopted a
policy that the independent directors of the board shall meet in executive sessions periodically,
which meetings may be held in conjunction with regularly scheduled board meetings.
Meetings and Committees of the Board of Directors
The business of Atlantic Coast Federal Corporation is conducted at regular and special
meetings of the full board of directors and its standing committees. The standing committees
consist of the executive, audit, compensation and governance/nominating committees. During the
fiscal year ended December 31, 2004, the board of directors met at six regular meetings and three
special meetings. No director attended fewer than 75% in the aggregate of the total number of
board meetings held and the total number of committee meetings on which he served during fiscal
2004.
Executive Committee
. The executive committee consists of directors Martin, who serves as
chairman, Woods and Sweat. The executive committee meets as needed. The executive committee is
generally authorized to act on behalf of the full board of directors when certain business matters
require prompt action. The executive committee met five times during the fiscal year ended
December 31, 2004.
Audit Committee
. The audit committee currently consists of directors Smith, who serves as
chairman, Hinson and Morris. Following the annual meeting of stockholders, the audit committee
will consist of directors Smith, who will continue to serve as chairman, Franklin and Palmer since
directors Hinson and Morris will not continue as directors of Atlantic Coast Federal Corporation or
Atlantic Coast Federal or as members of the audit committee. The audit committee meets with the
internal auditor to review audit programs and the results of audits of specific areas as well as
other regulatory compliance issues. In addition, the audit committee meets with the independent
registered public accounting firm on a quarterly basis to discuss the results of operations and on
an annual basis to review the results of the annual audit and other related matters. Other than as
described above, the audit committee meets as needed. Each member of the audit committee is
independent as defined in the Nasdaq corporate governance listing standards. The board of
directors has determined that director Smith qualifies as an audit committee financial expert as
that term is used in the rules and regulations of the Securities and Exchange Commission. Atlantic
Coast Federal Corporations board of directors has adopted a written charter for the audit
committee. The audit committee met six times during the fiscal year ended December 31, 2004.
Compensation Committee
. The compensation committee is responsible for recommending to the
full board the compensation of the chief executive officer and senior management, reviewing and
administering overall compensation policy, including setting performance measures and goals,
approving benefit programs, establishing
6
compensation of the board of directors and other matters of personnel policy and practice and
coordinating such actions with the benefits committee of Atlantic Coast Federal. The compensation
committee of Atlantic Coast Federal Corporation is comprised of directors Martin, who serves as
chairman, Sweat and Woods. Each member of the compensation committee is considered independent
as defined in the Nasdaq corporate governance listing standards. The report of the compensation
committee of Atlantic Coast Federal Corporation is included elsewhere in this proxy statement. The
compensation committee of Atlantic Coast Federal Corporation met twice during the fiscal year ended
December 31, 2004.
Governance/Nominating Committee
. The governance/nominating committee of Atlantic Coast
Federal Corporation currently consists of directors Morris and Sweat. Following the annual meeting
of stockholders, the governance/nominating committee will consist of directors Sweat and Palmer
since director Morris will not continue as a director of Atlantic Coast Federal Corporation or
Atlantic Coast Federal or as a member of the governance/nominating committee. Each member of the
governance/nominating committee is considered independent as defined in the Nasdaq corporate
governance listing standards. The board of directors of Atlantic Coast Federal Corporation has
adopted a written charter for the governance/nominating committee, which is available on Atlantic
Coast Federal Corporations website at
www.acfederal.net.
The governance/nominating committee of
Atlantic Coast Federal Corporation met once during the fiscal year ended December 31, 2004.
The functions of the governance/nominating committee include the following:
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leading the search for individuals qualified to become members of the board of
directors and to select director nominees to be presented for stockholder approval;
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|
developing and recommending to the board of directors other specific criteria not
specified in its charter for the selection of individuals to be considered for election
or re-election to the board of directors;
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|
adopting procedures for the submission of recommendations by stockholders for
nominees for the board of directors; and
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|
annually reviewing the adequacy of its charter and recommending any proposed changes
to the board of directors.
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The governance/nominating committee identifies nominees by first evaluating the current
members of the board of directors willing to continue in service. Current members of the board of
directors with skills and experience that are relevant to Atlantic Coast Federal Corporations
business and who are willing to continue in service are first considered for re-nomination,
balancing the value of continuity of service by existing members of the board of directors with
that of obtaining a new perspective. In addition, the governance/nominating committee is
authorized by its charter to engage a third party to assist in the identification of director
nominees. The governance/nominating committee would seek to identify a candidate who, at a
minimum, satisfies the following criteria:
|
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the highest personal and professional ethics and integrity and whose values are
compatible with Atlantic Coast Federal Corporations values;
|
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|
|
experience and achievements that have given them the ability to exercise and develop
good business judgment;
|
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|
|
a willingness to devote the necessary time to the work of the board of directors and
its committees, which includes being available for board and committee meetings;
|
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|
|
a familiarity with the communities in which Atlantic Coast Federal Corporation
operates and/or is actively engaged in community activities;
|
7
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|
involvement in other activities or interests that do not create a conflict with
their responsibilities to Atlantic Coast Federal Corporation and its stockholders; and
|
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|
|
the capacity and desire to represent the balanced, best interests of the
stockholders of Atlantic Coast Federal Corporation as a group, and not primarily a
special interest group or constituency.
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The governance/nominating committee will also take into account whether a candidate satisfies
the criteria for independence under the Nasdaq corporate governance listing standards.
Procedures for the Nomination of Directors by Stockholders.
The governance/nominating
committee has adopted procedures for the submission of director nominees by stockholders of
Atlantic Coast Federal Corporation. If a determination is made that an additional candidate is
needed for the board of directors, the governance/nominating committee will consider candidates
submitted by Atlantic Coast Federal Corporations stockholders. Stockholders can submit the names
of qualified candidates for director by writing to the chairman of the governance/nominating
committee at 505 Haines Avenue, Waycross, Georgia 31501. The chairman must receive a submission
not less than one hundred and twenty (120) days prior to the date of Atlantic Coast Federal
Corporations proxy materials for the preceding years annual meeting. The submission must include
the following information:
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a statement that the writer is a stockholder of Atlantic Coast Federal Corporation
and is proposing a candidate for consideration by the governance/nominating committee;
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the name and address of the stockholder as they appear on Atlantic Coast Federal
Corporations stockholder records, and number of shares of Atlantic Coast Federal
Corporations common stock that are owned beneficially by such stockholder (if the
stockholder is not a holder of record, appropriate evidence of the stockholders
ownership will be required);
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the name, address and contact information for the candidate, and the number of
shares of common stock of Atlantic Coast Federal Corporation that are owned by the
candidate (if the candidate is not a holder of record, appropriate evidence of the
stockholders ownership should be provided);
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a statement of the candidates business and educational experience;
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such other information regarding the candidate as would be required to be included
in the proxy statement pursuant to Regulation 14A of the Securities Exchange Act of
1934;
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a statement detailing any relationship between the candidate and any customer,
supplier or competitor of Atlantic Coast Federal Corporation or its affiliates;
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detailed information about any relationship or understanding between the proposing
stockholder and the candidate; and
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a statement from the candidate that the candidate is willing to be considered and
willing to serve as a director of Atlantic Coast Federal Corporation if nominated and
elected.
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A nomination submitted by a stockholder for presentation by the stockholder at an annual
meeting of stockholders of Atlantic Coast Federal Corporation must comply with the procedural and
informational requirements described in Atlantic Coast Federal Corporations bylaws.
Stockholder Communications with the Board of Directors.
A stockholder of Atlantic Coast
Federal Corporation who wants to communicate with the board of directors or with any individual
director can write to Atlantic Coast Federal Corporation at 505 Haines Avenue, Waycross, Georgia
31501, attention: chairman of the governance/nominating committee. The letter should indicate that
the author is a stockholder of Atlantic Coast Federal Corporation and, if shares are not held of
record, should include appropriate evidence of stock ownership. Depending on the subject matter,
management will:
8
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forward the communication to the director or directors to whom it is addressed;
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attempt to handle the inquiry directly, or forward the communication for response by
another employee of Atlantic Coast Federal Corporation. For example, a request for
information about Atlantic Coast Federal Corporation as a stock-related matter may be
forwarded to Atlantic Coast Federal Corporations stockholder relations officer; or
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not forward the communication if it is primarily commercial in nature, relates to an
improper or irrelevant topic, or is unduly hostile, threatening, illegal or otherwise
inappropriate.
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At each board of directors meeting, management shall present a summary of all communications
received since the last meeting that were not forwarded and make those communications available to
the directors.
Code of Ethics
The board of directors has adopted a Code of Business Conduct and Ethics that applies to all
of Atlantic Coast Federal Corporations and Atlantic Coast Federals officers, directors and
employees, and a Code of Ethics for the Chief Executive Officer and Senior Financial Officers
(collectively the Codes). The Codes are intended to promote honest and ethical conduct, full and
accurate reporting and compliance with laws. The Codes are available on Atlantic Coast Federal
Corporations website at
www.acfederal.net.
Amendments to and waivers from the Codes will also be
disclosed on Atlantic Coast Federal Corporations website.
Audit Committee Report
The audit committee of Atlantic Coast Federal Corporation operates under a written charter
adopted by the board of directors which is attached as
Appendix A
to this proxy statement. The
audit committee charter is also available on Atlantic Coast Federal Corporations website at
www.acfederal.net.
The audit committee of Atlantic Coast Federal Corporation has issued a report
which states that it has:
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reviewed and discussed with management and Atlantic Coast Federal Corporations
independent registered public accounting firm, Atlantic Coast Federal Corporations
audited consolidated financial statements for the fiscal year ended December 31, 2004;
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discussed with the independent registered public accounting firm the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communications with
Audit Committees
, as amended; and
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received the written disclosures and the letter from the independent registered
public accounting firm required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees
, and have discussed with the independent
registered public accounting firm their independence from Atlantic Coast Federal
Corporation.
|
Based on the review and discussions referred to above, the audit committee recommended to the
board of directors of Atlantic Coast Federal Corporation that the audited consolidated financial
statements be included in Atlantic Coast Federal Corporations annual report on Form 10-K for the
fiscal year ended December 31, 2004 and be filed with the Securities and Exchange Commission. In
addition, the audit committee approved the appointment of Crowe Chizek and Company LLC as the
independent registered public accounting firm for Atlantic Coast Federal Corporation for the fiscal
year ending December 31, 2005, subject to the ratification of this appointment by the stockholders
of Atlantic Coast Federal Corporation.
This report shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that Atlantic
Coast Federal Corporation specifically incorporates this report by reference, and shall not
otherwise be deemed filed with the Securities and Exchange Commission.
9
This report has been provided by the audit committee.
Robert J. Smith, Chairman
John M. Hinson
Cyril M. Morris
Section 16(a) Beneficial Ownership Reporting Compliance
The common stock of Atlantic Coast Federal Corporation is registered pursuant to Section 12(g)
of the Securities Exchange Act of 1934, as amended. The officers and directors of Atlantic Coast
Federal Corporation and beneficial owners of greater than 10% of the common stock of Atlantic Coast
Federal Corporation (10% beneficial owners) are required to file reports on Forms 3, 4 and 5 with
the Securities and Exchange Commission disclosing beneficial ownership and changes in beneficial
ownership of the common stock of Atlantic Coast Federal Corporation. Securities and Exchange
Commission rules require disclosure in a companys annual proxy statement and annual report on Form
10-K of the failure of an officer, director or 10% beneficial owner of the common stock to file a
Form 3, 4 or 5 on a timely basis. Each of executive officers Boyette, Heinrich and Wade filed a
late Form 4 to reflect one purchase of shares of common stock. Executive officer Parker filed a
late Form 4 to reflect two purchases of common stock and one sale of common stock. Based on
Atlantic Coast Federal Corporations review of such ownership reports, no other officer, director
or 10% beneficial owner of Atlantic Coast Federal Corporation failed to file such ownership reports
on a timely basis for the fiscal year ended December 31, 2004.
Compensation Committee Interlocks and Insider Participation
The compensation committee is composed of independent directors within the meaning of the
Nasdaq corporate governance listing standards. The compensation committee consists of directors
Martin, who serves as chairman, Sweat and Woods. Under the boards policies, Mr. Larison, and any
other director who is also an executive officer of Atlantic Coast Federal Corporation and Atlantic
Coast Federal, will not participate in the board of directors determination of compensation for
their respective offices.
Report of the Compensation Committee on Executive Compensation
Under rules established by the Securities and Exchange Commission, Atlantic Coast Federal
Corporation is required to provide certain data and information regarding compensation and benefits
provided to its chief executive officer and other executive officers. The disclosure requirements
for the chief executive officer and other executive officers include a report explaining the
factors and criteria that led to fundamental executive compensation decisions affecting those
individuals. In fulfillment of this requirement, the compensation committee of the board of
directors of Atlantic Coast Federal Corporation has prepared the following report for inclusion in
this proxy statement. Atlantic Coast Federal Corporation does not independently compensate its
directors or executive officers.
The role of the compensation committee is to annually review the compensation levels of the
executive officers and recommend compensation changes to the board of directors. The compensation
committee is composed entirely of outside, non-employee directors. It is intended that the
executive compensation program will enable Atlantic Coast Federal Corporation and Atlantic Coast
Federal to attract, develop and retain talented executive officers who are capable of maximizing
Atlantic Coast Federal Corporations performance for the benefit of the stockholders. The
compensation committee has adopted a compensation strategy that seeks to provide competitive,
performance-based compensation strongly aligned with the financial and stock performance of
Atlantic Coast Federal Corporation. The compensation program has three key elements of total
direct compensation: base salary, annual incentive compensation and long-term incentives. Another
component of the compensation program is benefits, such as stock-based incentive plans.
While the compensation committee does not use strict numerical formulas to determine changes
in compensation for the chief executive officer and other executive officers, and while it weighs a
variety of different factors in its deliberations, it has emphasized and expects to continue to
emphasize the profitability and scope of Atlantic Coast Federal Corporations operations, the
experience, expertise and management skills of the executive officers and their roles in the future
success of Atlantic Coast Federal Corporation, as well as compensation surveys
10
prepared by professional firms to determine compensation paid to executives performing similar
duties for similarly sized institutions. While each of the quantitative and non-quantitative
factors described above was considered by the compensation committee, such factors were not
assigned a specific weight in evaluating the performance of the chief executive officer and other
executive officers. Rather, all factors were considered.
Base Salaries.
Base salary and changes to base salary reflect a variety of factors including
the results of the independent review of the competitiveness of the total compensation program, the
individuals performance and contribution to the long-term goals of Atlantic Coast Federal
Corporation, performance targets, Atlantic Coast Federal Corporations financial performance and
other relevant factors.
Annual Incentives
. Payouts under Atlantic Coast Federals annual incentive compensation
program are based on the attainment of annual performance objectives. Individual payouts are a
function of Atlantic Coast Federals financial performance and the performance of the individual
executive based upon goals established by the individual and approved by the compensation
committee. The compensation committee believes that this formula provides a direct link between
financial performance and actual compensation.
In addition, the compensation committee believes that long-term incentives, specifically stock
options and stock awards, should be a key component of the executive compensation program. These
incentives strongly align the rewards provided to executives with the value created for
stockholders through stock price appreciation.
Atlantic Coast Federal Corporation intends to make initial stock option and stock award
program grants to executives and a broader employee population in the future. The Atlantic Coast
Federal Corporation 2005 Stock Option Plan and the Atlantic Coast Federal Corporation 2005
Recognition and Retention Plan are being submitted for stockholder approval for such purposes.
Assuming stockholder approval of these plans, awards thereunder will consider performance,
competitive market practices and other relevant factors.
Chief Executive Officer
.
For the year ended December 31, 2004, the compensation committee
did not increase the base salary level of the chief executive officer . For the year ended
December 31, 2004, the chief executive officer earned an annual bonus of $18,000 under the annual
incentive plan, based on the compensation committees review of the goals established for the chief
executive officer and approved by the compensation committee. The compensation committee intends
to provide the chief executive officer with stock option and stock awards consistent with the
approach discussed for other executives assuming awards are available for issuance.
This report has been provided by the compensation committee:
Charles E. Martin, Jr., Chairman
Forrest M. Sweat, Jr.
H. Dennis Woods
11
Stock Performance Graph
Set forth hereunder is a stock performance graph comparing (a) the cumulative total return on
the common stock of Atlantic Coast Federal Corporation between October 5, 2004, the day the common
stock commenced trading, and December 31, 2004, (b) the cumulative total return on stocks included
in the Total Return Index for the Nasdaq Composite over such period, and (c) the cumulative total
return on stocks included in the SNL MHC Thrift Index over such period. Cumulative return assumes
the reinvestment of dividends, and is expressed in dollars based on an assumed investment of $100.
There can be no assurance that Atlantic Coast Federal Corporations stock performance will
continue in the future with the same or similar trend depicted in the graph. Atlantic Coast
Federal Corporation will not make or endorse any predictions as to future stock performance.
Atlantic Coast Federal Corporation
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Period Ending
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Index
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10/05/04
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10/31/04
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|
|
11/30/04
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12/31/04
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|
Atlantic Coast Federal Corporation
|
|
|
100.00
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|
|
|
108.51
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|
|
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122.38
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117.19
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NASDAQ Composite
|
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|
100.00
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|
|
|
101.01
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|
|
|
107.32
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111.42
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SNL MHC Thrift Index
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100.00
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102.87
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111.15
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107.35
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12
Executive Compensation
The following table sets forth for the fiscal years ended December 31, 2004 and 2003, certain
information as to the total remuneration paid by Atlantic Coast Federal to Mr. Larison, who serves
as president and chief executive officer, and certain information as to the total remuneration paid
by Atlantic Coast Federal to the other most highly compensated executive officers of Atlantic Coast
Federal, other than Mr. Larison, who received annual compensation in excess of $100,000. Summary
compensation information is excluded for the year ended December 31, 2002, as Atlantic Coast
Federal Corporation was not a public company. Each of the individuals listed in the table below are
referred to as a named executive officer.
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Annual Compensation
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Long-Term Compensation
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Awards
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Payouts
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Other
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Year
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Annual
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Restricted
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All
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Name and
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Ended
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Compen-
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Stock
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Option/
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LTIP
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Other
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Principal Position
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12/31
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Salary
(1)
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Bonus
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sation
(1)
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Awards (#)
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SARS (#)
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Payouts
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Compensation
(2)(3)
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Robert J. Larison, Jr.
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2004
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$
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160,000
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$
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18,000
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$
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$
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$
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22,186
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President and Chief
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2003
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160,000
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14,102
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15,297
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Executive Officer
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Diane S. Wade
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2004
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91,330
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10,917
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5,472
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Senior Vice President
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2003
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81,652
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7,403
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4,519
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- Corporate Banking
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(1)
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For the fiscal years ended December 31, 2004 and 2003, there were no perquisites
exceeding the lesser of $50,000 or 10% of the individuals total salary and bonus for the
year.
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(2)
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Amount includes matching contributions under Atlantic Coast Federals 401(k) Plan in
the amount of $6,970 for fiscal year 2004 and $9,807 for fiscal year 2003 for Mr. Larison, as
well as $15,216 and $5,490 for fiscal 2004 and 2003, respectively, for life insurance
premiums, health insurance and individual retirement account contributions.
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(3)
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Amount represents matching contributions under Atlantic Coast Federals 401(k) Plan
for Ms. Wade.
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Employment Agreement.
Atlantic Coast Federal currently has an employment agreement with
Robert J. Larison, Jr. with a term of two years from January 1, 2005. The agreement provides for a
base salary of $164,800 and provides for certain other benefits in the form of life insurance and
disability insurance. In the event that Mr. Larison is terminated without cause, he is entitled to
a lump sum payment equal to twice his then current annual salary. If the employment of Mr. Larison
had been terminated under the circumstances entitling him to severance pay, he would have been
entitled to receive a lump sum payment of $329,600 plus a continuation of benefits for a period of
one year following the date of termination.
Supplemental Executive Retirement Agreement
. Atlantic Coast Federal has entered into a
non-qualified supplemental executive retirement agreement with Robert J. Larison, Jr. that provides
for the payment of a monthly supplemental retirement benefit equal to up to 60% of his highest
average annual compensation during the three annual periods in the 10 year period prior to
retirement. Such benefit shall be payable for a period of 15 years upon the retirement age of 55
or, under certain circumstances, prior to age 55. At December 31, 2004, Atlantic Coast Federal
Corporation had accrued $331,000 for this benefit.
Atlantic Coast Federal Executive Non-Qualified Retirement Plan.
Atlantic Coast Federal also
maintains a supplemental executive retirement plan for the benefit of certain senior executives,
excluding Mr. Larison, that have been designated to participate in the program. The program
provides for annual payments of $20,000 for 20 years following normal retirement at age 65 and with
10 years of service. Reduced benefits are paid for early retirement and for lesser years of
service. For the fiscal year ended December 31, 2004, Atlantic Coast Federal had accrued $227,000
for this benefit.
Director Compensation
Members of the board of directors and the committees of Atlantic Coast Federal Corporation do
not receive separate compensation for their service on the board of directors or the committees of
Atlantic Coast Federal Corporation.
13
Members of Atlantic Coast Federals board of directors receive a fee of $1,236 per regular
monthly meeting attended. Employee members do not receive board fees. The chairman of the board
receives a stipend of $1,545 per regular monthly meeting and the vice chairman of the board and
chairman of the audit committee both receive a fee of $1,339 per regular monthly meeting. The
directors received a bonus of $5,055 each for fiscal 2004. In addition, Atlantic Coast Federal
established a director deferred fee plan that permits a board member to defer some or all of his
board fees. At December 31, 2004, Atlantic Coast Federal had accrued a liability of $75,000 for
this plan. Other than described above, committee members are not separately compensated for their
service.
Director Retirement Plan
. Atlantic Coast Federal also maintains a director retirement plan
providing for an annual payment of $10,000 for a period of 10 years upon retirement. Directors are
fully vested after 10 years of service with credit for previous service at the time the plan was
adopted in 2002. At December 31, 2004, Atlantic Coast Federal had accrued a liability of $441,000
for this plan. Reduced benefits are paid for early retirement and reduced levels of service.
Director Emeritus Program
. Atlantic Coast Federal has established a director emeritus
program. The plan currently provides for an annual benefit of $10,288 for a period of five years
for directors who retire from active service on the board of directors of Atlantic Coast Federal
Corporation and Atlantic Coast Federal. Retiring directors Hinson, McGahee and Morris will become
directors emeritus under this plan. The first payment under the director emeritus program will be
paid within 30 days of retirement and will follow each year thereafter for the remaining term. In
the event of the death of a director, the remaining benefits will be paid to his beneficiary. At
December 31, 2004, Atlantic Coast Federal accrued no liability for this plan.
Benefits
General.
Atlantic Coast Federal currently provides health and welfare benefits to its
employees, including hospitalization and comprehensive medical insurance, life insurance, subject
to deductibles and co-payments by employees. Atlantic Coast Federal also provides its employees
with a qualified profit sharing plan under the applicable provisions of the Internal Revenue Code
of 1986, as amended.
In connection with its stock offering, Atlantic Coast Federal Corporation adopted the Atlantic
Coast Federal Corporation Employee Stock Ownership Plan (ESOP) for eligible employees of Atlantic
Coast Federal Corporation and any subsidiary, including Atlantic Coast Federal. The ESOP borrowed
$4.6 million from Atlantic Coast Federal Corporation to purchase 465,520 shares of the common stock
sold in Atlantic Coast Federal Corporations stock offering. The loan from Atlantic Coast Federal
Corporation will be repaid principally from Atlantic Coast Federals contributions to the ESOP over
a period of 10 years. Shares purchased by the ESOP are held in a suspense account and are released
to participants accounts as debt service payments are made. Shares released from the ESOP are
allocated to each eligible participants ESOP account based on the ratio of each such participants
compensation to the total compensation of all eligible participants.
Transactions With Certain Related Persons
Atlantic Coast Federal has a policy of granting loans to officers and directors, which fully
complies with all applicable federal regulations. Loans to directors and executive officers are
made in the ordinary course of business and on the same terms and conditions as those of comparable
transactions with unaffiliated third parties prevailing at the time, in accordance with our
underwriting guidelines, and do not involve more than the normal risk of collectibility or present
other unfavorable features. In addition, all loans to directors and executive officers are
approved by at least a majority of the independent, disinterested members of the board of
directors.
All loans Atlantic Coast Federal makes to its directors and executive officers are subject to
regulations restricting loans and other transactions with affiliated persons of Atlantic Coast
Federal. Loans to all directors and executive officers and their associates totaled approximately
$1.3 million at December 31, 2004, which was 1.3% of Atlantic Coast Federal Corporations
stockholders equity at that date. All loans to directors and executive officers were performing
in accordance with their terms at December 31, 2004.
14
Equity Compensation Plan Information
As of December 31, 2004, Atlantic Coast Federal Corporation did not have any equity
compensation plans under which Atlantic Coast Federal Corporation common stock was authorized for
issuance.
PROPOSAL II APPROVAL OF THE ATLANTIC COAST FEDERAL CORPORATION
2005 STOCK OPTION PLAN
General
Subject to stockholder approval at the annual meeting of stockholders, Atlantic Coast Federal
Corporation has established the Atlantic Coast Federal Corporation 2005 Stock Option Plan (the
Stock Option Plan). Pursuant to the Stock Option Plan, options to purchase up to 712,827 shares
of common stock may be granted to Atlantic Coast Federal Corporations or Atlantic Coast Federals
employees and directors. As of March 31, 2005, the market value of the common stock was $12.46 per
share. The board of directors of Atlantic Coast Federal Corporation believes that it is
appropriate to adopt a flexible and comprehensive stock option plan that permits the granting of a
variety of long-term incentive awards to directors and employees as a means of enhancing and
encouraging the recruitment and retention of those individuals on whom the continued success of
Atlantic Coast Federal Corporation and Atlantic Coast Federal most depends. The following
discussion is qualified in its entirety by reference to the Stock Option Plan, the text of which is
attached hereto as
Appendix B
. The principal features of the Stock Option Plan are summarized
below.
The Stock Option Plan complies with the requirements of the Office of Thrift Supervision and
the Office of Thrift Supervision does not endorse or approve the Stock Option Plan in any manner.
The number of shares to be awarded as a percentage of the shares not held by Atlantic Coast
Federal, MHC (Minority Shares) and as a percentage of all outstanding shares is as follows:
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Number of Shares
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% of Minority Shares
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% of Total Outstanding Shares
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712,827
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12.25
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%
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4.9
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%
|
Principal Features of the Stock Option Plan
The Stock Option Plan provides for awards in the form of stock options and/or limited stock
appreciation rights (Limited Rights). Each award shall be on such terms and conditions,
consistent with the Stock Option Plan and applicable Office of Thrift Supervision regulations, as
the committee administering the Stock Option Plan may determine.
The term of stock options generally will not exceed 10 years from the date of grant. Stock
options granted under the Stock Option Plan may be either Incentive Stock Options as defined
under Section 422 of the Internal Revenue Code or stock options not intended to qualify as such.
No stock option awards have been granted to date under the Stock Option Plan.
Shares issued upon the exercise of a stock option may be either authorized but unissued
shares, treasury shares, or shares acquired by Atlantic Coast Federal Corporation in open market
purchases. Any shares of Atlantic Coast Federal Corporation common stock subject to an award that
expires or is terminated or unexercised will again be available for issuance under the Stock Option
Plan. Generally, in the discretion of the board of directors, all or any vested non-qualified
stock options granted under the Stock Option Plan may be transferable by the participant but only
to the persons or classes of persons determined by the board of directors. No other award or any
right or interest therein is assignable or transferable except under certain limited exceptions set
forth in the Stock Option Plan.
The Stock Option Plan will be administered by a committee (the Committee) consisting of
either (i) at least two non-employee directors (as defined in the Stock Option Plan) of Atlantic
Coast Federal Corporation, or (ii) the entire board of directors of Atlantic Coast Federal
Corporation. The members of the Committee shall be
15
appointed by the board of directors of Atlantic
Coast Federal Corporation. Pursuant to the terms of the Stock Option
Plan, outside directors and key employees of Atlantic Coast Federal Corporation, Atlantic
Coast Federal or their affiliates are eligible to participate. As of March 31, 2005, there were
seven non-employee directors eligible to participate in the Stock Option Plan. Subject to the
provisions of the Stock Option Plan and Office of Thrift Supervision regulations and policy, the
Committee will determine to whom the awards will be granted, in what amounts, and the period over
which such awards will vest. Under Office of Thrift Supervision regulations, the vesting amount
may not be more than 20% per year. In addition, the aggregate amount of the awards granted to the
directors may not exceed 30% of the shares in the plan, no individual director may receive more
than 5% of the shares in the plan and no employee may receive more than 25% of the shares in the
plan. The Committee may accelerate the time period for exercising options subject to Office of
Thrift Supervision regulations.
In granting awards under the Stock Option Plan, the Committee will consider, among other
things, position and years of service, and the value of the individuals services to Atlantic Coast
Federal and Atlantic Coast Federal Corporation. The exercise price of stock options will be at
least the fair market value of the underlying common stock at the time of the grant. Once granted,
stock options may not be re-priced (i.e., the exercise price may not be changed other than
adjustments for stock splits, stock dividends and similar events). The exercise price may be paid
in cash, common stock, or via a broker-assisted cashless exercise (as defined in the Stock Option
Plan).
Stock Options
. Incentive stock options can only be granted to employees of Atlantic Coast
Federal, Atlantic Coast Federal Corporation or an affiliate (i.e., a parent or subsidiary
corporation of Atlantic Coast Federal and Atlantic Coast Federal Corporation). Outside directors
will be granted non-qualified stock options. No option granted to an officer in connection with
the Stock Option Plan will be exercisable as an incentive stock option subject to incentive tax
treatment if exercised more than three months after the date on which the optionee terminates
employment with Atlantic Coast Federal and/or Atlantic Coast Federal Corporation, except as set
forth below. In the event a participant ceases to maintain continuous service with Atlantic Coast
Federal Corporation or an affiliate by reason of death, disability or following a change in
control, options still subject to restrictions will vest and be free of these restrictions and can
be exercised for up to one year after cessation of service but in no event beyond the expiration of
the options original term. In the event a participant ceases to maintain continuous service for
any other reason, the participant will forfeit all nonvested options. The participants vested
options will remain exercisable for up to three months in the case of incentive stock options, and
one year in the case of non-qualified stock options. If an optionee terminates employment with
Atlantic Coast Federal, Atlantic Coast Federal Corporation or an affiliate, any incentive stock
options exercised more than three months following the date the optionee terminates employment
shall be treated as a non-qualified stock option; provided, however, that in the event of death or
disability, incentive stock options may be exercised and receive incentive tax treatment for up to
at least one year following termination of employment, subject to the requirements of the Internal
Revenue Code.
In the event of death or disability of an optionee, Atlantic Coast Federal Corporation, if
requested by the optionee or beneficiary, may elect, in exchange for the option, to pay the
optionee or beneficiary the amount by which the fair market value of the common stock exceeds the
exercise price of the option on the date of the optionees termination of service for death or
disability.
Limited Stock Appreciation Rights
. The Committee may grant Limited Rights (as defined in the
Stock Option Plan) to employees simultaneously with the grant of any option. A Limited Right gives
the option holder the right, upon a change in control of Atlantic Coast Federal Corporation or
Atlantic Coast Federal, to receive the excess of the market value of the shares represented by the
Limited Rights on the date exercised over the exercise price. Limited Rights generally will be
subject to the same terms and conditions and exercisable to the same extent as stock options, as
described above. Payment upon exercise of a Limited Right will be in shares of Atlantic Coast
Federal Corporation.
Limited Rights may be granted at the time of, and must be related to, the grant of a stock
option. The exercise of one will reduce to that extent the number of shares represented by the
other. If a Limited Right is granted with and related to an incentive stock option, the Limited
Right must satisfy all the restrictions and limitations to which the related incentive stock option
is subject.
Effect of Adjustments
. Shares as to which awards may be granted under the Stock Option Plan,
and shares then subject to awards, will be adjusted by the Committee in the event of any merger,
consolidation, reorganization,
16
recapitalization, stock dividend, stock split, combination or
exchange of shares or other change in the corporate
structure of Atlantic Coast Federal Corporation without receipt of payment or consideration by
Atlantic Coast Federal Corporation.
In the case of any merger, consolidation or combination of Atlantic Coast Federal Corporation
with or into another holding company or other entity, whereby holders of common stock will receive
a cash payment (the Merger Price) for each share of common stock exchanged in the transaction,
any individual with exercisable options will receive an amount equal to the difference between the
Merger Price times the number of shares of common stock subject to such options and the aggregate
exercise price of all surrendered options.
Amendment and Termination
. The board of directors of Atlantic Coast Federal Corporation may
at any time amend, suspend or terminate the Stock Option Plan or any portion thereof, provided,
however, that no such amendment, suspension or termination shall impair the rights of any
individual, without his consent, in any award made pursuant to the plan. Unless previously
terminated, the Stock Option Plan shall continue in effect for a term of 10 years, after which no
further awards may be granted under the Stock Option Plan.
Federal Income Tax Consequences
. The following brief description of the tax consequences of
stock option grants under the Stock Option Plan is based on federal income tax laws currently in
effect and does not purport to be a complete description of such federal income tax consequences.
The exercise of a stock option which is an Incentive Stock Option within the meaning of
Section 422 of the Internal Revenue Code will generally not, by itself, result in the recognition
of taxable income to the individual nor entitle Atlantic Coast Federal Corporation to a deduction
at the time of such exercise. However, the difference between the exercise price and the fair
market value of the option shares on the date of exercise is an adjustment to alternative minimum
taxable income, which may, in certain situations, trigger the alternative minimum tax. The
alternative minimum tax is incurred only when it exceeds the regular income tax. The disposition
of an Incentive Stock Option share prior to the end of the applicable holding period (i.e., the
longer of two years from the date of grant or one year from the date of exercise) will cause any
gain to be taxed at ordinary income tax rates, with respect to the spread between the exercise
price and the fair market value of the share on the date of exercise and at applicable capital
gains rates with respect to any post exercise appreciation in the value of the share.
The exercise of a non-qualified stock option will result in the recognition of ordinary income
on the date of exercise in an amount equal to the difference between the exercise price and the
fair market value of the shares on the date of exercise.
The exercise of a Limited Right will result in the recognition of ordinary income by the
individual on the date of exercise equal to the fair market value of the shares of Atlantic Coast
Federal Corporation acquired pursuant to the exercise.
Atlantic Coast Federal Corporation will be allowed a deduction at the time, and in the amount
of, any ordinary income recognized by the individual under the various circumstances described
above, provided that Atlantic Coast Federal Corporation meets its federal withholding tax
obligations.
The affirmative vote of (x) a majority of the votes eligible to be cast at the annual meeting
and (y) a majority of the votes cast at the annual meeting by stockholders other than Atlantic
Coast Federal, MHC (without regard to broker non-votes or proxies marked ABSTAIN) is required for
the approval of the Atlantic Coast Federal Corporation 2005 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE STOCK OPTION PLAN.
17
PROPOSAL III APPROVAL OF THE ATLANTIC COAST FEDERAL CORPORATION
2005 RECOGNITION AND RETENTION PLAN
General
Subject to stockholder approval at the annual meeting of stockholders, Atlantic Coast Federal
Corporation has established the Atlantic Coast Federal Corporation 2005 Recognition and Retention
Plan (the Recognition Plan) as a method of providing certain key employees and outside directors
of Atlantic Coast Federal Corporation and Atlantic Coast Federal with a proprietary interest in
Atlantic Coast Federal Corporation in a manner designed to encourage such persons to remain with
Atlantic Coast Federal Corporation and/or Atlantic Coast Federal, and to provide further incentives
to achieve corporate objectives. The following discussion is qualified in its entirety by
reference to the Recognition Plan, the text of which is attached hereto as
Appendix C
.
Atlantic Coast Federal Corporation intends to contribute stock or sufficient funds for the
Recognition Plan to acquire 285,131 shares of common stock of Atlantic Coast Federal Corporation,
which will be available to be awarded to key employees and outside directors of Atlantic Coast
Federal Corporation and Atlantic Coast Federal. It is expected that such shares will be purchased
in the open market, although authorized but unissued shares and treasury shares may be used. No
stock awards have been granted to date under the Recognition Plan.
The Recognition Plan complies with the requirements of the Office of Thrift Supervision and
the Office of Thrift Supervision does not endorse or approve the Recognition Plan in any manner.
The number of shares to be awarded as a percentage of the Minority Shares and as a percentage
of all outstanding shares is as follows:
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Number of Shares
|
|
% of Minority Shares
|
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% of Total Outstanding Shares
|
285,131
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|
|
4.90
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%
|
|
|
1.96
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%
|
Principal Features of the Recognition Plan
The Recognition Plan provides for the award of shares of common stock (Recognition Plan
Shares) subject to the restrictions described below. As of March 31, 2005, the market value of
the common stock was $12.46 per share. Each award under the Recognition Plan will be made on terms
and conditions consistent with the Recognition Plan.
The Recognition Plan will be administered by a committee (the Committee), which shall be
appointed by the board of directors of Atlantic Coast Federal Corporation and shall consist of
either (i) at least two non-employee directors (as defined in the Recognition Plan) of Atlantic
Coast Federal Corporation or (ii) the entire board of directors of Atlantic Coast Federal
Corporation. The Committee will select the recipients and terms of awards pursuant to the
Recognition Plan. Pursuant to the terms of the Recognition Plan, any director or key employee of
Atlantic Coast Federal Corporation, Atlantic Coast Federal or its affiliates may be selected by the
Committee to participate in the Recognition Plan. In determining to whom and in what amount to
grant awards, the Committee will consider the position and responsibilities of eligible persons,
the value of their services to Atlantic Coast Federal Corporation and Atlantic Coast Federal and
other factors it deems relevant. As of March 31, 2005, there were seven non-employee directors
eligible to participate in the Recognition Plan.
The Committee will determine the period during which or at the expiration of which the shares
awarded as restricted stock vest. Under Office of Thrift Supervision regulations the vesting
amount may not be more than 20% per year. In addition, the aggregate amount of the awards granted
to the directors may not exceed 30% of the shares in the plan, no individual director may receive
more than 5% of the shares in the plan and no employee may receive more than 25% of the shares in
the plan. In its discretion, the Committee may accelerate the time at which any or all of the
restrictions will lapse, or to remove any or all of such restrictions, whenever it may determine
that such action is appropriate by reason of changes in applicable tax or other laws or other
changes in circumstances occurring after the commencement of such restricted period. Subject to
the above restrictions, in the event a recipient ceases to maintain continuous service with
Atlantic Coast Federal Corporation or Atlantic Coast Federal by reason of death or disability or
following a change in control, the Recognition Plan Shares still subject to restrictions
(restricted
18
stock) will vest and be free of these restrictions. In the event of termination for
any other reason, all nonvested
restricted stock will be forfeited. Prior to vesting of the nonvested restricted stock, a
recipient will have the right to vote the nonvested restricted stock, which has been awarded to the
recipient and will receive any dividends declared on such nonvested restricted stock. Nonvested
restricted stock is subject to forfeiture if the recipient fails to remain in the continuous
service (as defined in the Recognition Plan) as an employee, officer, or director of Atlantic Coast
Federal Corporation or Atlantic Coast Federal for the restricted period.
Effect of Adjustments
. Restricted stock awarded under the Recognition Plan will be adjusted
by the Committee in the event of a reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or other change in corporate structure.
Federal Income Tax Consequences
. Holders of restricted stock will recognize ordinary income
on the date that the shares of restricted stock are no longer subject to a substantial risk of
forfeiture, in an amount equal to the fair market value of the shares on that date. In certain
circumstances, a holder may elect to recognize ordinary income and determine such fair market value
on the date of the grant of the restricted stock. Holders of restricted stock will also recognize
compensation income (or in the case of non-employee directors, self employment income) equal to
their dividend payments when such payments are received. Generally, the amount of income
recognized by individuals will be a deductible expense for tax purposes by Atlantic Coast Federal
Corporation.
Amendment and Termination of the Recognition Plan
. The board of directors of Atlantic Coast
Federal Corporation may at any time amend, suspend or terminate the Recognition Plan or any portion
thereof, provided, however, that no such amendment, suspension or termination shall impair the
rights of any award recipient, without his consent, in any award therefore made pursuant to the
Recognition Plan. Unless previously terminated, the Recognition Plan shall continue in effect for
a term of 10 years, after which no further awards may be granted under the Recognition Plan.
The affirmative vote of (x) a majority of the votes eligible to be cast at the annual meeting
and (y) a majority of the votes cast at the annual meeting by stockholders other than Atlantic
Coast Federal, MHC (without regard to broker non-votes or proxies marked ABSTAIN) is required for
the approval of the Atlantic Coast Federal Corporation 2005 Recognition and Retention Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE RECOGNITION PLAN.
PROPOSAL IV RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Atlantic Coast Federal Corporations independent registered public accounting firm for the
year ended December 31, 2004 was Crowe Chizek and Company LLC. The audit committee of Atlantic
Coast Federal Corporation has approved the appointment of Crowe Chizek and Company LLC to be
Atlantic Coast Federal Corporations independent registered public accounting firm for the fiscal
year ending December 31, 2005, subject to the ratification of the appointment by Atlantic Coast
Federal Corporations stockholders. At the annual meeting, the stockholders of Atlantic Coast
Federal Corporation will consider and vote on the ratification of the appointment of Crowe Chizek
and Company LLC for Atlantic Coast Federal Corporations fiscal year ending December 31, 2005. A
representative of Crowe Chizek and Company LLC is expected to attend the annual meeting.
Set forth below is certain information concerning aggregate fees billed for professional
services rendered by Crowe Chizek and Company LLC during the fiscal years ended December 31, 2004
and December 31, 2003.
The aggregate fees included in the audit category were fees billed for the fiscal years for
the audit of Atlantic Coast Federal Corporations annual financial statements and the review
Atlantic Coast Federal Corporations quarterly financial statements. The aggregate fees included
in each of the other categories were fees billed in the noted fiscal years.
19
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|
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|
|
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2004
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|
2003
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Audit Fees
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$
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417,660
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$
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100,885
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Audit-Related Fees
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$
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75,350
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$
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83,829
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Tax Fees
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$
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21,745
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|
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$
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17,435
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All Other Fees
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$
|
|
|
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$
|
|
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Audit Fees.
Audit fees of $100,885 in fiscal year 2003 were for professional services
rendered for the audit of the financial statements of Atlantic Coast Federal Corporation and
preliminary work associated with Atlantic Coast Federal Corporations initial stock offering.
Audit fees of $417,660 in fiscal 2004 were for the audit of the consolidated financial statements
of Atlantic Coast Federal Corporation. The audit fees for fiscal 2004 includes fees relating to
Atlantic Coast Federal Corporations initial public offering, review of the financial statements
included in Atlantic Coast Federal Corporations quarterly reports on Form 10-Q and review of the
Annual Report on Form 10-K.
Audit-Related Fees.
Audit-related fees of $83,829 in fiscal year 2003 were for loan review
assistance and reviews of the information systems area, which are reasonable related to the
performance of the audit and that are not reports in Audit Fees above, and the annual audit of
the 401(k) Plan. Audit fees for $75,350 in fiscal year 2004 were for reviews of the information
system area, which is reasonable related to the performance of the audit and that are not reported
in Audit Fees above, services associated with a due diligence review of a potential acquisition,
and the annual audit of the 401(k) Plan.
Tax Fees.
Tax fees of $21,745 in fiscal year 2004 and $17,435 in fiscal year 2003 were for
services related to tax compliance and tax planning.
The audit committees policy is to pre-approve all audit and non-audit services provided by
the independent registered public accounting firm. These services may include audit services,
audit-related services, tax services and other services. The audit committee has delegated
pre-approval authority to its chairman when expedition of services is necessary. The independent
registered public accounting firm and management are required to periodically report to the full
audit committee regarding the extent of services provided by the independent registered public
accounting firm in accordance with this pre-approval, and the fees for the services performed to
date.
In order to ratify the appointment of Crowe Chizek and Company LLC as the independent
registered public accounting firm for the fiscal year ending December 31, 2005, the proposal must
receive at least a majority of the votes cast, without regard to broker non-votes, either in person
or by proxy, in favor of such ratification. The audit committee of the board of directors
recommends a vote FOR the ratification of the appointment of Crowe Chizek and Company LLC as the
independent registered public accounting firm for the fiscal year ending December 31, 2005.
ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED
AT AN ANNUAL MEETING
The bylaws of Atlantic Coast Federal Corporation provide an advance notice procedure for
certain business, or nominations to the board of directors, to be brought before an annual meeting.
For business to be properly brought before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of Atlantic Coast Federal Corporation.
To be timely a stockholders notice must be delivered to or mailed and received at the principal
executive offices Atlantic Coast Federal Corporation no later than five days before the date of the
meeting. A stockholders notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (a) a brief description of the business desired to be
brought before the annual meeting, (b) the name and address, as they appear on Atlantic Coast
Federal Corporations books, of the stockholder proposing such business, (c) the class and number
of shares of Atlantic Coast Federal Corporation which are beneficially owned by the stockholder,
and (d) any material interest of the stockholder in such business. The chairman of an annual
meeting may, if the facts warrant, determine and declare to the meeting that certain business was
not properly brought before the meeting in accordance with the provisions of Atlantic Coast Federal
Corporations bylaws, and if he should so determine, he shall so declare to the meeting and any
such business not properly brought before the meeting shall not be transacted. This provision is
not a limitation
20
on any other applicable laws and regulations. Accordingly, advance written notice of business or
nominations to the board of directors to be brought before the 2006 Annual Meeting of Stockholders
must be given to Atlantic Coast Federal Corporation no later than five days prior to the date of
the meeting, as indicated above.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in Atlantic Coast Federal Corporations proxy materials
for Atlantic Coast Federal Corporations 2006 Annual Meeting of Stockholders, any stockholder
proposal to take action at such meeting must be received at Atlantic Coast Federal Corporations
executive office, 505 Haines Avenue, Waycross, Georgia 31501, no later than December 7, 2005. Any
such proposals shall be subject to the requirements of the proxy rules adopted under the Securities
Exchange Act of 1934, as amended.
OTHER MATTERS
The board of directors is not aware of any business to come before the annual meeting other
than the matters described above in the proxy statement. However, if any matters should properly
come before the annual meeting, it is intended that the holders of the proxies will act in
accordance with their best judgment.
MISCELLANEOUS
The cost of solicitation of proxies will be borne by Atlantic Coast Federal Corporation.
Atlantic Coast Federal Corporation will reimburse brokerage firms and other custodians, nominees
and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of common stock. Atlantic Coast Federal Corporation has retained Corporate
Communications, Inc., the companys regularly retained investor relations firm, to assist in the
solicitation of proxies. Corporate Communications, Inc. will not receive any additional
compensation for this service. In addition to solicitations by mail, directors, officers and
regular employees of Atlantic Coast Federal Corporation may solicit proxies personally or by
telegraph or telephone without additional compensation. Atlantic Coast Federal Corporations 2004
Annual Report to Stockholders has been mailed to all stockholders of record as of March 31, 2005.
Any stockholder who has not received a copy of such annual report may obtain a copy by writing
Atlantic Coast Federal Corporation at the address below. Such annual report is not to be treated
as a part of the proxy solicitation material nor as having been incorporated herein by reference.
HOUSEHOLDING OF PROXY STATEMENTS AND ANNUAL REPORTS
Atlantic Coast Federal Corporation intends to deliver only one annual report and proxy
statement to multiple registered stockholders sharing the same address unless it has received
contrary instructions from one or more of the stockholders. If individual stockholders wish to
receive a separate copy of the annual report or proxy statement they may call or write and request
separate copies currently or in the future as follows:
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Atlantic Coast Federal Corporation Investor Relations
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Corporate Communications, Inc.
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523 Third Avenue, South
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Nashville, Tennessee 37210
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Phone: (615) 254-3376
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Fax: (615) 254-3420
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21
Registered stockholders sharing the same address and receiving multiple copies of annual reports or
proxy statements may request the delivery of a single copy by writing or calling the above address
or phone number.
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BY ORDER OF THE BOARD OF DIRECTORS
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/s/ Pamela M. Tanner
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Pamela M. Tanner
Secretary
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Waycross, Georgia
April 6, 2005
22
APPENDIX A
ATLANTIC COAST FEDERAL CORPORATION
AUDIT COMMITTEE CHARTER
I. Statement of Policy
The Audit Committee (Committee) is appointed by the Board of Directors of Atlantic Coast Federal
Corporation and subsidiaries (the Company) to assist the Board of Directors in fulfilling its
oversight responsibility relating to the integrity of the Companys financial statements and the
financial reporting processes; the systems of internal control over financial reporting; compliance
with legal and regulatory requirements; the performance of the Companys internal audit function;
and the Companys relationship with its independent auditors. The Committee is empowered to
investigate any matter, with full access to all necessary books, records, facilities and personnel
of the Company, and has the authority to retain at the Companys expense legal, accounting or other
advisors, consultants or experts, as it deems appropriate.
It is recognized that members of the Committee are not employees of the Company. The Companys
management is responsible for preparing the Companys financial statements. The independent
auditors are responsible for expressing an opinion on those financial statements based upon an
audit conducted in accordance with generally accepted auditing standards. It is not the duty or
responsibility of the Committee or its members to conduct auditing or accounting reviews or
procedures, and each member of the Committee shall be entitled to rely on the integrity of those
persons and organizations within and outside the Company that it receives information from and the
accuracy of the financial and other information provided to the Committee by such persons or
organizations, absent actual knowledge to the contrary (which shall be promptly reported to the
Board of Directors).
II. Audit Committee Composition and Meetings
The Committee shall be comprised of three or more directors appointed by the Board of Directors,
each of whom shall be an independent director qualified to serve on the Committee as defined by the
NASDAQ Stock Market, and each of whom shall be free from any relationship that would interfere with
the exercise of his or her independent judgment. A chairperson may be designated by the Board or
may be chosen by a majority of the full Committee membership. Each Committee member shall meet the
requirements of applicable law and SEC regulations for service on the Committee and shall be
financially literate, as such qualification is interpreted by the Board of Directors in its
business judgment. At least one member must be a financial expert as the SEC defines that term
and have financial sophistication as the NASDAQ stock market defines that term and as the Board of
Directors interprets such terms in its business judgment.
The Committee shall meet at least four times annually or more frequently if circumstances dictate.
The Committee chairperson shall prepare and/or approve an agenda in advance of each meeting. If the
chairperson is not available for a meeting, the other members of the Committee may appoint a
temporary chairperson for such meeting. The Committee may ask members of management or others to
attend meetings and provide pertinent information as necessary. The Committee will meet privately
in executive session at such times as the Committee may determine, and shall meet with management,
the chief internal auditor, the independent auditors, regulatory examiners and as a committee to
discuss any matters that the Committee or each of these groups believes should be discussed.
III. Audit Committee Duties, Responsibilities and Processes
The following shall be the principal duties, responsibilities and recurring processes of the
Committee in carrying out its oversight role. The processes are set forth as a guide with the
understanding that the Committee may supplement them as appropriate. As part of its oversight
responsibility, the Committee shall conduct and/or oversee the following functions:
Financial Reporting Review
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Review and discuss prior to release all earnings press releases. Prior to the filing of
quarterly and annual earnings with the SEC, review with financial management and the
independent auditors: (i) matters that materially affect the Companys consolidated
financial statements and disclosures under Managements Discussion and Analysis of
Financial Condition and Results of Operations including the presentation of any pro forma,
non-financial or off-balance sheet data; (ii) the results of the independent auditors
interim reviews, annual audit and report, and any other matters required to be communicated
to the Committee by the independent auditors, as well as discussions regarding qualitative
judgments of the independent auditors about the appropriateness, not just the
acceptability, of the Companys accounting principles, and the clarity of the financial
statements; (iii) all critical accounting policies and practices to be used; and (iv) other
material written communications between the independent auditor and management including
the management letter and schedule of unadjusted differences.
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In consultation with the management, the independent auditors and the internal auditors,
monitor the integrity and effectiveness of the Companys financial reporting processes and
disclosure controls; review significant findings relating to the foregoing prepared by the
independent auditors or the internal auditors, together with managements responses and
follow-up to these reports.
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Establish and maintain a whistleblower policy and procedures for receiving and
processing complaints or employee concerns about accounting, financial reporting, internal
accounting controls and auditing matters and for the confidential anonymous submission by
employees of concerns regarding questionable financial, accounting or auditing matters.
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Assess qualifications of the independent auditor and its lead partner for audit and,
when required, the attestation of managements report on internal control over financial
reporting.
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Independent Auditors and Other External Services
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Review the independence and performance of the independent auditors annually and, if
appropriate, remove them. The Committee is directly responsible for the appointment,
termination, compensation and oversight of the work of the independent auditor, including
review of disagreements between management and the independent auditor regarding financial
reporting, internal control over financial reporting or other matters. Monitor the
rotation of the lead (or coordinating) audit partner having primary responsibility for the
audit and the audit partner responsible for reviewing the audit as required by applicable
law or regulation.
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Approve the engagement letters and the fees to be paid to the independent auditors.
Pre-approve, except as permitted by law, all audit and non-audit services to be provided by
the independent auditors and consider the possible effect that these services could have on
the independence of such auditors. Ensure that prohibited non-audit services are not
performed. The Committee may delegate to one or more of its members pre-approval authority
of non-audit services in accordance with applicable law.
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On an annual basis, review and discuss with the independent auditors all significant
relationships they have with the Company that could impair the auditors independence and
receive the written disclosures and letter from the independent auditors required by
Independence Standards Board Standard No. 1.
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Review the audit plan of the independent auditors discuss scope, staffing, timing,
estimated and actual fees, reliance upon management and internal audit and general audit
approach.
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Review with the independent auditor any audit problems or difficulties and managements
response.
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A-2
Internal Audit Function
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Review the budget, program, changes in program, activities, strategies, organizational
structure and qualifications of the internal audit function, as needed, it being understood
that the internal audit function reports directly to the Committee. Evaluate whether the
internal audit function operation and structure permits unrestricted access by the internal
auditors to records, personnel and physical properties relevant to the performance of its
responsibilities and to top management, the Committee, and the Board. Assess the
appropriateness of the resources allocated to internal auditing. Evaluate the effectiveness
of the internal audit function.
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Review the objectivity, appointment, performance and replacement of the individual/firm
heading the internal audit function. Decisions regarding hiring or termination of this
person require endorsement by the Committee. The chairperson of the Committee will also be
involved in performance evaluation and compensation decisions related to this person/firm.
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Review significant issues presented by the internal audit function together with
managements response and follow-up to these reports.
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Review with the Companys independent auditors, the internal auditor and management, the
adequacy and effectiveness of its internal control over financial reporting.
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Review reports of management and the Companys independent auditors on internal control
over financial reporting including, when required by applicable law or regulation, an
annual management report and independent auditor attestation on internal controls over
financial reporting.
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Other Audit Committee Responsibilities
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Annually prepare a report to shareholders as required by the SEC for inclusion in the
Companys proxy statement.
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Review and reassess the adequacy of this Charter at least annually, and submit the
Charter to the Board for approval annually and have the document published at least every
three years in accordance with SEC regulations.
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Maintain minutes of meetings and periodically report to the Board of Directors on
results of the foregoing activities.
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Review and approve in advance all Company transactions with related parties as required
by the NASDAQ Stock Market and the OTS.
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Review with the Companys counsel: any significant legal matter that could have a
material impact on the Companys financial statements; and reports of evidence of a
material violation of securities laws or breaches of fiduciary duty.
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Review disclosures made to the Committee by the Companys CEO and CFO during their
certification process for the Form 10-K and Form 10-Q.
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Perform any other activities consistent with this Charter, the Companys Bylaws or
governing law as the Committee or the Board of Directors deems necessary or appropriate.
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A-3
APPENDIX B
ATLANTIC COAST FEDERAL CORPORATION
2005 STOCK OPTION PLAN
1.
Purpose
The purpose of the Atlantic Coast Federal Corporation 2005 Stock Option Plan (the Plan) is
to advance the interests of Atlantic Coast Federal Corporation (the Company) and its stockholders
by providing Key Employees and Outside Directors of the Company and its Affiliates, including
Atlantic Coast Federal (the Bank), upon whose judgment, initiative and efforts the successful
conduct of the business of the Company and its Affiliates largely depends, with an additional
incentive to perform in a superior manner as well as to attract people of experience and ability.
2.
Definitions
Affiliate
means any parent corporation or subsidiary corporation of the Company or the
Bank, as such terms are defined in Section 424(e) or 424(f), respectively, of the Code, or a
successor to a parent corporation or subsidiary corporation.
Award
means an Award of Non-Statutory Stock Options, Incentive Stock Options, and Limited
Rights granted under the provisions of the Plan.
Bank
means Atlantic Coast Federal, or a successor corporation.
Beneficiary
means the person or persons designated by a Participant to receive any benefits
payable under the Plan in the event of such Participants death. Such person or persons shall be
designated in writing on forms provided for this purpose by the Committee and may be changed from
time to time by similar written notice to the Committee. In the absence of a written designation,
the Beneficiary shall be the Participants surviving spouse, if any, or if none, his/her estate.
Board
or
Board of Directors
means the board of directors of the Company, unless otherwise
noted herein.
Cause
means personal dishonesty, incompetence, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties, or the willful
violation of any law, rule or regulation (other than traffic violations or similar offenses) or a
final cease-and-desist order, any of which results in a material loss to the Company or an
Affiliate.
Change in Control
of the Bank or the Company means a change in control of a nature that: (i)
would be required to be reported in response to Item 5.01 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 1934
(the Exchange Act); or (ii) results in a Change in Control of the Bank or the Company within the
meaning of the Home Owners Loan Act, as amended (HOLA), and applicable rules and regulations
promulgated thereunder, as in effect at the time of the Change in Control; 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
securities of the Company representing 25% or more of the combined voting power of Companys
outstanding securities, except for any securities purchased by the Companys employee stock
ownership plan or trust; 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 Companys stockholders was approved by the same Nominating Committee serving under
an Incumbent Board, shall be, for purposes of this clause (b), considered as though he/she 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 Company or similar transaction occurs in which
the Bank or Company is not the surviving institution; or (d) a proxy statement soliciting proxies
from stockholders of the Company, by someone other than the current management of the Company,
seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or
similar transaction with one or more corporations as a result of which the outstanding shares
of the class of securities then subject to the Plan are to be exchanged for or converted into cash
or property or securities not issued by the Company; or (e) a tender offer is made for 25% or more
of the voting securities of the Company and the stockholders owning beneficially or of record 25%
or more of the outstanding securities of the Company have tendered or offered to sell their shares
pursuant to such tender offer and such tendered shares have been accepted by the tender offeror.
Code
means the Internal Revenue Code of 1986, as amended.
Committee
means the committee consisting of either (i) at least two Non-Employee Directors
of the Company, or (ii) the entire Board of the Company.
Common Stock
means shares of the common stock of the Company, par value $.01 per share.
Company
means Atlantic Coast Federal Corporation, the stock holding company of the Bank, or
a successor corporation.
Continuous Service
means employment as a Key Employee and/or service as an Outside Director
without any interruption or termination of such employment and/or service. Continuous Service
shall also mean a continuation as a member of the Board of Directors following a cessation of
employment as a Key Employee or continuation of service as a Director Emeritus following
termination of service as a Director. In the case of a Key Employee, employment shall not be
considered interrupted in the case of sick leave, military leave or any other approved leave of
absence or in the case of transfers between payroll locations of the Company, its subsidiaries or
its successor.
Date of Grant
means the actual date on which an Award is granted by the Committee.
Director
means a member of the Board.
Director Emeritus
means a former member of the Board who has been appointed to a Director
Emeritus position.
Disability
means the inability to engage in any substantial gainful activity by reason of
any medically determinable mental or physical impairment which can be expected to result in death
or which lasted or can be expected to last for a continuous period of not less than 12 months. An
individual shall not be considered to be permanently and totally disabled unless he furnishes proof
of the existence thereof in such form and manner, and at such times, as the Secretary of the
Treasury may require, in accordance with Section 22(e)(3) of the Code.
Effective Date
means the date of, or a date determined by the Board of Directors following,
approval of the Plan by the Companys stockholders.
Fair Market Value
means, when used in connection with the Common Stock on a certain date,
the mean between the highest and lowest quoted selling prices of the Common Stock as reported on
the Nasdaq stock market (or over-the-counter market) on such date, or if the Common Stock was not
traded on such date, then on the day prior to such date or on the next preceding day on which the
Common Stock was traded;
provided, however
, that if the Common Stock is not reported on the Nasdaq
stock market (or over the counter market), Fair Market Value shall mean the average sale price of
all shares of Common Stock sold during the 30-day period immediately preceding the date on which
such stock option was granted, and if no shares of stock have been sold within such 30-day period,
the average sale price of the last three sales of Common Stock sold during the 90-day period
immediately preceding the date on which such stock option was granted. In the event Fair Market
Value cannot be determined in the manner described above, then Fair Market Value shall be
determined by the Committee. The Committee is authorized, but is not required, to obtain an
independent appraisal to determine the Fair Market Value of the Common Stock.
Incentive Stock Option
means an Option granted by the Committee to a Key Employee, which
Option is designated as an Incentive Stock Option pursuant to Section 9.
B-2
Key Employee
means any person who is currently employed by the Company or an Affiliate who
is chosen by the Committee to participate in the Plan.
"
Limited Right
means the right to receive a number of shares of Common Stock based upon the
terms set forth in Section 10.
Non-Employee Director
means, for purposes of the Plan, a Director who (a) is not employed by
the Company or an Affiliate; (b) does not receive compensation directly or indirectly as a
consultant (or in any other capacity than as a Director) greater than $60,000; (c) does not have an
interest in a transaction requiring disclosure under Item 404(a) of Regulation S-K; or (d) is not
engaged in a business relationship for which disclosure would be required pursuant to Item 404(b)
of Regulation S-K.
Non-Statutory Stock Option
means an Option granted by the Committee to (i) an Outside
Director or (ii) any other Participant and such Option is either (a) not designated by the
Committee as an Incentive Stock Option, or (b) fails to satisfy the requirements of an Incentive
Stock Option as set forth in Section 422 of the Code and the regulations thereunder.
OTS
means the Office of Thrift Supervision.
Option
means an Award granted under Section 8 or Section 9.
Outside Director
means a Director of the Company or an Affiliate who is not an employee of
the Company or an Affiliate.
Participant
means a Key Employee or Outside Director of the Company or its Affiliates who
receives or has received an Award under the Plan.
"
Right
means a Limited Right.
Termination for Cause
means the termination of employment or termination of service on the
Board caused by the individuals personal dishonesty, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties, or the willful
violation of any law, rule or regulation (other than traffic violations or similar offenses), or a
final cease and desist order, any of which results in material loss to the Company or one of its
Affiliates.
3.
Administration of the Plan
(a)
Role of the Committee
. The Plan shall be administered by the Committee. The
interpretation and construction by the Committee of any provisions of the Plan or of any Option
granted hereunder shall be final and binding. The Committee shall act by vote or written consent
of a majority of its members. Subject to the express provisions and limitations of the Plan and
subject to OTS regulations and policy, the Committee may adopt such rules and procedures as it
deems appropriate for the conduct of its affairs. The Committee shall report its actions and
decisions with respect to the Plan to the Board at appropriate times, but in no event less than one
time per calendar year.
(b)
Role of the Board
. The members of the Committee shall be appointed or approved by, and
will serve at the pleasure of, the Board of Directors of the Company. The Board may in its
discretion from time to time remove members from, or add members to, the Committee. The Board
shall have all of the powers allocated to it in the Plan, may take any action under or with respect
to the Plan that the Committee is authorized to take, and may reverse or override any action taken
or decision made by the Committee under or with respect to the Plan.
(c)
Plan Administration Restrictions
. All transactions involving a grant, award or other
acquisitions from the Company shall:
(i)
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be approved by the Companys full Board or by the Committee;
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B-3
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(ii)
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be approved, or ratified, in compliance with Section 14 of the
Exchange Act, by either: the affirmative vote of the holders of a majority of
the shares present, or represented and entitled to vote at a meeting duly held
in accordance with the laws under which the Company is incorporated; or the
written consent of the holders of a majority of the securities of the issuer
entitled to vote, provided that such ratification occurs no later than the date
of the next annual meeting of stockholders; or
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(iii)
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result in the acquisition of Common Stock that is held by the
Recipient for a period of six months following the date of such acquisition.
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(d)
Limitation on Liability
. No member of the Board or the Committee shall be liable for any
determination made in good faith with respect to the Plan or any Awards granted under it. If a
member of the Board or the Committee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or not done by him in such capacity
under or with respect to the Plan, the Bank or the Company shall indemnify such member against
expense (including attorneys fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if he/she acted in
good faith and in a manner he/she reasonably believed to be in the best interests of the Bank and
the Company and, with respect to any criminal action or proceeding, had no reasonable cause to
believe his/her conduct was unlawful.
Notwithstanding anything herein to the contrary, and subject to any adjustment that may be
made pursuant to Section 16 hereof, once an Option has been awarded at Fair Market Value, the
Committee shall not have authority to reprice such Option so that the exercise price of the Option
shall be less than the exercise price on the Date of Grant.
4.
Types of Awards
Awards under the Plan may be granted in any one or a combination of: (a) Incentive Stock
Options; (b) Non-Statutory Stock Options, and (c) Limited Rights.
5.
Stock Subject to the Plan
Subject to adjustment as provided in Section 16, the maximum number of shares reserved for
issuance under the Plan is 712,827 shares. Shares issued under the Plan may be issued by the
Company from authorized but unissued shares, treasury shares, or acquired by the Company in open
market purchases. The maximum number of Options that may be awarded to a Key Employee is 178,206.
The maximum aggregate number of shares of Common Stock that may be issued pursuant to the exercise
of Incentive Stock Options is 712,827. For these purposes, only the net number of shares issued
pursuant to the exercise of an Incentive Stock Option are counted against the maximum number of
shares.
To the extent that Options or Rights granted under the Plan are exercised, the shares covered
will be unavailable for future grants under the Plan; to the extent that Options together with any
related Rights granted under the Plan terminate, expire or are forfeited without having been
exercised, new Awards may be made with respect to these shares.
Any shares that are issued by the Company, and any Awards that are granted by, or become
obligations of, the Company, through the assumption by the Company or an affiliate thereof, or in
substitution for, outstanding Awards previously granted by an acquired company, shall not be
counted against the shares available for issuance under the Plan.
6.
Eligibility
Key Employees of the Company and its Affiliates shall be eligible to receive Incentive Stock
Options, Non-Statutory Stock Options, and Limited Rights under the Plan. Outside Directors shall
be eligible to receive Non-Statutory Stock Options under the Plan.
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7.
General Terms and Conditions of Options and Rights
(a) The Committee shall have full and complete authority and discretion, subject to OTS
regulations and policy and except as expressly limited by the Plan, to grant Options and/or Rights
and to provide the terms and conditions (which need not be identical among Participants) thereof.
In particular, the Committee shall prescribe the following terms and conditions: (i) the Exercise
Price of any Option or Right, which shall not be less than the Fair Market Value per share on the
Date of Grant, (ii) the number of shares of Common Stock subject to, and the expiration date of,
any Option or Right, which expiration date shall not exceed ten years from the Date of Grant, (iii)
the manner, time and rate (cumulative or otherwise) of exercise of such Option or Right, and (iv)
the restrictions, if any, to be placed upon such Option or Right or upon shares of Common Stock
which may be issued upon exercise of such Option or Right.
(b) The following provisions shall apply to all Awards made under this Plan: no individual
officer shall be granted Awards with respect to more than 25% of the total shares (or 178,206
shares) subject to the Plan; no Outside Director shall be granted Awards with respect to more than
5% of the total shares of Common Stock subject to the Plan; all Outside Directors in the aggregate
may not be granted Awards with respect to more than 30% of the total shares of Common Stock subject
to the Plan; no Awards shall begin vesting earlier than one year from the date the Plan is approved
by stockholders of the Company; and no Awards shall vest at a rate in excess of 20% per year
beginning one year from the Date of Grant.
(c) Notwithstanding any provision of this Plan to the contrary, all executive officers or
directors must exercise or forfeit their Awards in the event that the Bank becomes critically
undercapitalized (as defined in 12 C.F.R. §565.4), becomes subject to enforcement action by the
OTS, or receives a capital direction from the OTS pursuant to 12 C.F.R. §565.7.
(d) The Company, or its designee, shall timely furnish to individuals in the Plan following
the individuals exercise of an Incentive Stock Option a written information statement containing
the information set forth in Treasury Regulation Section 1.6039-1(a).
8.
Non-Statutory Stock Options
The Committee may, from time to time, grant Non-Statutory Stock Options to eligible Key
Employees and Outside Directors. Non-Statutory Stock Options granted under the Plan, including
Non-Statutory Stock Options granted in exchange for and upon surrender of previously granted
Awards, are subject to the terms and conditions set forth in this Section.
(a)
Option Agreement
. Each Option shall be evidenced by a written option agreement between
the Company and the Participant specifying the number of shares of Common Stock that may be
acquired through its exercise and containing such other terms and conditions that are not
inconsistent with the terms of the Plan.
(b)
Price
. The purchase price per share of Common Stock deliverable upon the exercise of each
Non-Statutory Stock Option shall be the Fair Market Value of the Common Stock of the Company on the
Date of Grant. Shares may be purchased only upon full payment of the purchase price in one or more
of the manners set forth in Section 12 hereof, as determined by the Committee.
(c)
Vesting
. Subject to Section 7(b) hereof, a Non-Statutory Stock Option granted under the
Plan shall vest in a Participant at the rate or rates determined by the Committee. No Options
shall become vested in a Participant unless the Participant maintains Continuous Service until the
vesting date of such Option, except as set forth herein. The Committee may, subject to OTS
regulations and policy, accelerate the time at which any Non-Statutory Stock Option may be
exercised in whole or in part.
(d)
Exercise of Options
. A vested Option may be exercised from time to time, in whole or in
part, by delivering a written notice of exercise to the President or Chief Executive Officer of the
Company, or his/her designee. Such notice shall be irrevocable and must be accompanied by full
payment of the purchase price in cash or shares of Common Stock at the Fair Market Value of such
shares, determined on the exercise date in the manner
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described in Section 2 hereof. If previously
acquired shares of Common Stock are tendered in payment of all or part of the exercise price, the
value of such shares shall be determined as of the date of such exercise.
(e)
Amount of Awards
. Subject to Section 7(b) hereof, Non-Statutory Stock Options may be
granted to any Key Employee or Outside Director in such amounts as determined by the Committee. In
granting Non-Statutory Stock Options, the Committee shall consider such factors as it deems
relevant, which factors may include, among others, the position and responsibility of the Key
Employee or Outside Director, the length and value of his/her service to the Bank, the Company or
the Affiliate, the compensation paid to the Key Employee or Outside Director, and the Committees
evaluation of the performance of the Bank, the Company or the Affiliate, according to measurements
that may include, among others, key financial ratios, level of classified assets and independent
audit findings.
(f)
Term of Options
. Unless the Committee determines otherwise, the term during which
Non-Statutory Stock Options may be exercised shall not exceed ten years from the Date of Grant. In
no event shall a Non-Statutory Stock Option be exercisable in whole or in part more than ten years
from the Date of Grant.
(g)
Termination of Continuous Service
. Upon the termination of a Key Employees or Outside
Directors Continuous Service, for any reason other than death, Disability, Termination for Cause,
termination following a Change in Control (other than for Cause following a Change in Control), the
Participants Non-Statutory Stock Options shall be exercisable only as to those shares that were
vested on the date of termination and only for one year following termination. In the event of
Termination for Cause, all rights under a Participants Non-Statutory Stock Options shall expire
upon termination. In the event of the Participants termination of Continuous Service due to
death, Disability, or following a Change in Control, all Non-Statutory Stock Options held by the
Participant, whether or not vested at such time, shall vest and become exercisable by the
Participant or his/her legal representative or beneficiaries for one year following the date of
such termination, death or cessation of employment or service,
provided
that in no event shall the
period extend beyond the expiration of the Non-Statutory Stock Option term.
(h)
Transferability
. In the discretion of the Board, all or any Non-Statutory Stock Option
granted hereunder may be transferable by the Participant once the Option has vested in the
Participant, provided, however, that the Board may limit the transferability of such Option or
Options to a designated class or classes of persons.
9.
Incentive Stock Options
The Committee may, from time to time, grant Incentive Stock Options to Key Employees.
Incentive Stock Options granted pursuant to the Plan shall be subject to the following terms and
conditions:
(a)
Option Agreement
. Each Option shall be evidenced by a written option agreement between
the Company and the Key Employee specifying the number of shares of Common Stock that may be
acquired through its exercise and containing such other terms and conditions that are consistent
with the terms of the Plan.
(b)
Price
. Subject to Section 16 hereof and Section 422 of the Code, the purchase price per
share of Common Stock deliverable upon the exercise of each Incentive Stock Option shall be not
less than 100% of the Fair Market Value of the Companys Common Stock on the date the Incentive
Stock Option is granted. However, if a Key Employee owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or its Affiliates (or under
Section 424(d) of the Code is deemed to own stock representing more than 10% of the total combined
voting power of all classes of stock of the Company or its Affiliates by reason of the ownership of
such classes of stock, directly or indirectly, by or for any brother, sister, spouse, ancestor or
lineal descendent of such Key Employee, or by or for any corporation, partnership, estate or trust
of which such Key Employee is a stockholder, partner or Beneficiary), the purchase price per share
of Common Stock deliverable upon the exercise of each Incentive Stock Option shall not be less
than 110% of the Fair Market Value of the Companys Common Stock on the date the Incentive Stock
Option is granted. Shares may be purchased only upon payment of
the full purchase price. Payment of the purchase price may be made, in whole or in part,
through the surrender of shares of the Common Stock of the Company at the Fair Market Value of such
shares determined on the exercise date.
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(c)
Vesting
. Subject to Section 7(b) hereof, Incentive Stock Options awarded to Key Employees
shall vest at the rate or rates determined by the Committee. No Incentive Stock Option shall
become vested in a Participant unless the Participant maintains Continuous Service until the
vesting date of such Option, except as set forth herein.
(d)
Exercise of Options
. Vested Options may be exercised from time to time, in whole or in
part, by delivering a written notice of exercise to the President or Chief Executive Officer of the
Company, or his/her designee. Such notice is irrevocable and must be accompanied by full payment
of the exercise price in cash or shares of Common Stock at the Fair Market Value of such shares
determined on the exercise date.
The Options comprising each installment may be exercised in whole or in part at any time after
such installment becomes vested,
provided
that the amount able to be first exercised in a given
year is consistent with the terms of Section 422 of the Code. To the extent required by Section
422 of the Code, the aggregate Fair Market Value (determined at the time the Option is granted) of
the Common Stock for which Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year (under all plans of the Company and its Affiliates) shall not
exceed $100,000.
The Committee may, in its sole discretion and subject to OTS regulations and policy,
accelerate the time at which any Incentive Stock Option may be exercised in whole or in part,
provided
that it is consistent with the terms of Section 422 of the Code. Notwithstanding the
above, in the event of a Change in Control of the Company, all Incentive Stock Options that have
been awarded shall become immediately exercisable,
provided, however
, that if the aggregate Fair
Market Value (determined at the time the Option is granted) of Common Stock for which Options are
exercisable as a result of a Change in Control, together with the aggregate Fair Market Value
(determined at the time the Option is granted) of all other Common Stock for which Incentive Stock
Options become exercisable during such year, exceeds $100,000, then the first $100,000 of Incentive
Stock Options (determined as of the Date of Grant) shall be exercisable as Incentive Stock Options
and any excess shall be exercisable as Non-Statutory Stock Options (but shall remain subject to the
provisions of this Section to the extent permitted).
(e)
Amounts of Awards
. Subject to Section 7(b) hereof, Incentive Stock Options may be granted
to any eligible Key Employee in such amounts as determined by the Committee;
provided
that the
amount granted is consistent with the terms of Section 422 of the Code. In granting Incentive
Stock Options, the Committee shall consider such factors as it deems relevant, which factors may
include, among others, the position and responsibilities of the Key Employee, the length and value
of his/her service to the Bank, the Company, or the Affiliate, the compensation paid to the Key
Employee and the Committees evaluation of the performance of the Bank, the Company, or the
Affiliate, according to measurements that may include, among others, key financial ratios, levels
of classified assets, and independent audit findings. The provisions of this subsection (e) shall
be construed and applied in accordance with Section 422(d) of the Code and the regulations, if any,
promulgated thereunder.
(f)
Terms of Options
. The term during which each Incentive Stock Option may be exercised
shall be determined by the Committee, provided, however, in no event shall an Incentive Stock
Option be exercisable in whole or in part more than 10 years from the Date of Grant. If any Key
Employee, at the time an Incentive Stock Option is granted to him, owns stock representing more
than 10% of the total combined voting power of all classes of stock of the Company or its Affiliate
(or, under Section 424(d) of the Code, is deemed to own stock representing more than 10% of the
total combined voting power of all classes of stock, by reason of the ownership of such classes of
stock, directly or indirectly, by or for any brother, sister, spouse, ancestor or lineal descendent
of such Key Employee, or by or for any corporation, partnership, estate or trust of which such Key
Employee is a stockholder, partner or Beneficiary), the Incentive Stock Option granted to him shall
not be exercisable after the expiration of five years from the Date of Grant.
(g)
Termination of Continuous Service
. Upon the termination of a Key Employees Continuous
Service for any reason other than death, Disability, Termination for Cause or termination following
a Change in Control (other than for Cause following a Change in Control) the Key Employees
Incentive Stock Options shall be exercisable only as to those shares that were vested by such Key Employee at the date of
termination for a period of three months following termination. Upon termination of a Key
Employees Continuous Service due to death or Disability or following a Change in Control, all
Incentive Options held by a Key Employee, whether or not vested at such time, shall vest and become
exercisable by the Participant or his/her legal representative or beneficiaries for
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one year following the date of such termination, death or cessation of Continuous Service,
provided
that in
no event shall the period extend beyond the expiration of the Stock Option term, and
provided,
further
, that, except in the event of death or Disability, such Option shall not be eligible for
treatment as an Incentive Stock Option in the event such Option is exercised more than three months
following termination. In the event of Termination for Cause, all rights under the Incentive Stock
Options shall expire upon termination.
In order to obtain Incentive Stock Option treatment for Options exercised by heirs or devisees
of an Optionee, the Optionees death must have occurred while employed or within three months of
termination of Continuous Service.
(h)
Transferability
. No Incentive Stock Option granted under the Plan is transferable except
by will or the laws of descent and distribution and is exercisable during his/her lifetime only by
the Key Employee to which it is granted.
(i)
Compliance with Code
. The options granted under this Section are intended to qualify as
Incentive Stock Options within the meaning of Section 422 of the Code, but the Company makes no
warranty as to the qualification of any Option as an Incentive Stock Option within the meaning of
Section 422 of the Code. If an Option granted hereunder fails for whatever reason to comply with
the provisions of Section 422 of the Code, and such failure is not or cannot be cured, such Option
shall be a Non-Statutory Stock Option.
10.
Limited Rights
The Committee may grant a Limited Right simultaneously with the grant of any Option to any Key
Employee of the Bank or the Company, with respect to all or some of the shares covered by such
Option. Limited Rights granted under the Plan are subject to the following terms and conditions:
(a)
Terms of Rights
. In no event shall a Limited Right be exercisable in whole or in part
before the expiration of six months from the date of grant of the Limited Right. A Limited Right
may be exercised only in the event of a Change in Control of the Company.
The Limited Right may be exercised only when the underlying Option is eligible to be
exercised,
provided
that the Fair Market Value of the underlying shares on the day of exercise is
greater than the exercise price of the related Option.
Upon exercise of a Limited Right, the related Option shall cease to be exercisable. Upon
exercise or termination of an Option, any related Limited Rights shall terminate. The Limited
Rights may be for no more than 100% of the difference between the exercise price and the Fair
Market Value of the Common Stock subject to the underlying Option. The Limited Right is
transferable only when the underlying Option is transferable and under the same conditions.
(b)
Payment
. Upon exercise of a Limited Right, the holder shall promptly receive from the
Company a number of shares of Common Stock equal in value to the difference between the Fair Market
Value of the Common Stock on the Date of Grant of the Limited Right and the Fair Market Value of
the Common Stock on the date the Limited Right is exercised, multiplied by the number of Limited
Rights being exercised. In no event shall a Limited Right be settled other than in shares of
Common Stock.
(c) Notwithstanding anything in this paragraph 10 to the contrary, in no event shall a Limited
Right be exercisable in whole or in part if the Common Stock is not traded on an established
securities market.
11.
Surrender of Option
In the event of a Participants termination of employment or termination of service as a
result of death or Disability, the Participant (or his/her personal representative(s), heir(s), or
devisee(s)) may, in a form acceptable to the Committee, make application to surrender all or part
of the Options held by such Participant in exchange for a cash payment from the Company of an
amount equal to the difference between the Fair Market Value of the Common Stock on the date of
termination of employment or the date of termination of service on the Board and the
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exercise price per share of the Option. Whether the Company accepts such application or determines to make
payment, in whole or part, is within its absolute and sole discretion, it being expressly
understood that the Company is under no obligation to any Participant whatsoever to make such
payments. In the event that the Company accepts such application and determines to make payment,
such payment shall be in lieu of the exercise of the underlying Option and such Option shall cease
to be exercisable.
12.
Alternate Option Payment Mechanism
The Committee has sole discretion to determine what form of payment it will accept for the
exercise of an Option. The Committee may indicate acceptable forms in the agreement with the
Participant 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 or its agent.
(a)
Cash Payment
. The exercise price may be paid in cash or by certified check. To the
extent permitted by law, the Committee may permit all or a portion of the exercise price of an
Option to be paid through borrowed funds.
(b)
Cashless Exercise
. Subject to vesting requirements, if applicable, a Participant may
engage in a cashless exercise of the Option. Upon a cashless exercise, the Participant shall
give the Company written notice of the exercise of the Option together with an order to a
registered broker-dealer or equivalent third party, to sell part or all of the Common Stock subject
to the Option and to deliver enough of the proceeds to the Company to pay the Option exercise price
and any applicable withholding taxes. If the Participant does not sell the Common Stock subject to
the Option through a registered broker-dealer or equivalent third party, the Participant may give
the Company written notice of the exercise of the Option and the third party purchaser of the
Common Stock subject to the Option shall pay the Option exercise price plus applicable withholding
taxes to the Company.
(c)
Exchange of Common Stock
. The Committee may permit payment of the Option exercise price
by the tendering (or constructively tendering) of previously acquired shares of Common Stock. All
shares 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. No tendered shares of Common Stock which were acquired
by the Participant upon the previous exercise of an Option or as awards under a stock award plan
(such as the Companys Recognition and Retention Plan) shall be accepted for exchange unless the
Participant has held such shares (without restrictions imposed by said plan or award) for at least
six months prior to the exchange.
13.
Rights of a Stockholder
A Participant shall have no rights as a stockholder with respect to any shares covered by a
Non-Statutory and/or Incentive Stock Option until the date of issuance of a stock certificate for
such shares. Nothing in the Plan or in any Award granted confers on any person any right to
continue in the employ of the Company or its Affiliates or to continue to perform services for the
Company or its Affiliates or interferes in any way with the right of the Company or its Affiliates
to terminate his/her services as an officer, director or employee at any time.
14.
Agreement with Participants
Each Award of Options and Limited Rights will be evidenced by a written agreement, executed by
the Participant and the Company or its Affiliates that describes the conditions for receiving the
Awards, including the date of Award, the purchase price, applicable periods, and any other terms
and conditions as may be required by the Board or applicable securities laws.
15.
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 Option or Limited Rights to which he/she would then be
entitled. Such designation will be made upon forms supplied by and delivered to the Company and
may be revoked in writing. If a Participant fails effectively to designate a Beneficiary, then
his/her estate will be deemed to be the Beneficiary.
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16.
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, pro rata return of capital to all stockholders, recapitalization, or any 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, the Committee will make such adjustments to previously granted
Awards, to prevent dilution 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 that may be awarded
under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common Stock covered by Awards
already made under the Plan; or
(c) adjustments in the purchase 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. With respect to Incentive Stock Options, no such
adjustment shall be made if it would be deemed a modification of the Award under Section 424 of
the Code.
17.
Effect of a Change in Control on Option Awards
In the event of a Change in Control, the Committee and the Board of Directors will take one or
more of the following actions to be effective as of the date of such Change in Control:
(a) provide that such Options shall be assumed, or equivalent options shall be substituted
(Substitute Options) by the acquiring or succeeding corporation (or an affiliate thereof),
provided that: (1) any such Substitute Options exchanged for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, and (2) the shares of stock issuable upon the exercise
of such Substitute Options shall be registered in accordance with the Securities Act of 1933, as
amended (1933 Act) or such securities shall be exempt from such registration in accordance with
Sections 3(a)(2) or 3(a)(5) of the 1933 Act, (collectively, Registered Securities), or in the
alternative, if the securities issuable upon the exercise of such Substitute Options shall not
constitute Registered Securities, then the Participant will receive upon consummation of the Change
in Control a cash payment for each Option surrendered equal to the difference between the (1) fair
market value of the consideration to be received for each share of Common Stock in the Change in
Control times the number of shares of Common Stock subject to such surrendered Options, and (2) the
aggregate exercise price of all such surrendered Options; or
(b) in the event of a transaction under the terms of which the holders of Common Stock will
receive upon consummation thereof a cash payment (the Merger Price) for each share of Common
Stock exchanged in the Change in Control transaction, make or provide for a cash payment to the
Participants equal to the difference between (1) the Merger Price times the number of shares of
Common Stock subject to such Options held by each Participant (to the extent then exercisable at
prices not in excess of the Merger Price), and (2) the aggregate exercise price of all such
surrendered Options.
18.
Withholding
There may be deducted from each distribution of cash and/or Common Stock under the Plan the
minimum amount of any federal or state taxes, including payroll taxes, that are applicable to such
supplemental taxable income and that are required by any governmental authority to be withheld.
Shares of Common Stock will be withheld where required from any distribution of Common Stock.
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19.
Amendment of the Plan
The Board may at any time, and from time to time, modify or amend the Plan in any respect, or
modify or amend an Award received by Key Employees and/or Outside Directors;
provided, however,
that no such termination, modification or amendment may affect the rights of a Participant, without
his/her consent, under an outstanding Award.
20.
Effective Date of Plan
The Plan shall become effective upon the date of approval of the Plan by the Companys
stockholders.
21.
Termination of the Plan
The right to grant Awards under the Plan will terminate upon the earlier of (i) 10 years after
the Effective Date, or (ii) the date on which the exercise of Options or related rights equaling
the maximum number of shares reserved under the Plan occurs. The Board may suspend or terminate the
Plan at any time,
provided
that no such action will, without the consent of a Participant,
adversely affect his/her rights under a previously granted Award.
22.
Applicable Law
(a) This Plan, the Awards, all documents evidencing Awards and all other related documents
shall be governed by, and will be construed and administered in accordance with the laws of the
State of Georgia, except to the extent that federal law shall apply.
(b) This Plan is subject to the requirements of 12 C.F.R. Part 575, including the requirements
of section 575.8 and the applicable requirements of section 563b.500. Notwithstanding any other
provision in this Plan, no shares of Common Stock shall be issued with respect to any Award to the
extent that such issuance would cause Atlantic Coast Federal, MHC to fail to qualify as a mutual
holding company under applicable federal regulations.
B-11
APPENDIX C
ATLANTIC COAST FEDERAL CORPORATION
2005 RECOGNITION AND RETENTION PLAN
1.
Establishment of the Plan; Creation of Separate Trust
(a) Atlantic Coast Federal Corporation (the Company) hereby establishes the Atlantic Coast
Federal Corporation 2005 Recognition and Retention Plan (the Plan) upon the terms and conditions
hereinafter stated in the Plan.
(b) A separate trust or trusts may be established to purchase shares of the Common Stock that
will be awarded hereunder (the Trust). If a trust is established and a Recipient hereunder fails
to satisfy the conditions of the Plan and forfeits all or any portion of the Common Stock awarded
to him/her, such forfeited shares will be returned to said Trust. If no trust is established,
forfeited shares shall be cancelled or held in treasury as determined by the Committee.
2.
Purpose of the Plan
The purpose of the Plan is to advance the interests of Atlantic Coast Federal (the Bank) and
the Company and the Companys stockholders by providing Key Employees and Outside Directors of
the Company and its Affiliates, including the Bank, upon whose judgment, initiative and
efforts the successful conduct of the business of the Company and its Affiliates largely
depends, with compensation for their contributions to the Company and its Affiliates and an
additional incentive to perform in a superior manner, as well as to attract people of experience
and ability.
3.
Definitions
The following words and phrases, when used in this Plan with an initial capital letter, unless
the context clearly indicates otherwise, shall have the meanings set forth below. Wherever
appropriate, the masculine pronoun shall include the feminine pronoun and the singular shall
include the plural:
Affiliate
means any parent corporation or subsidiary corporation of the Company or the
Bank, as such terms are defined in Section 424(e) and (f), respectively, of the Code, or a
successor to a parent corporation or subsidiary corporation.
Award
means the grant by the Committee of Restricted Stock, as provided in the Plan.
Bank
means Atlantic Coast Federal, or a successor corporation.
Beneficiary
means the person or persons designated by a Recipient to receive any benefits
payable under the Plan in the event of such Recipients death. Such person or persons shall be
designated in writing on forms provided for this purpose by the Committee and may be changed from
time to time by similar written notice to the Committee. In the absence of a written designation,
the Beneficiary shall be the Recipients surviving spouse, if any, or if none, his estate.
Board
or
Board of Directors
means the Board of Directors of the Company, unless otherwise
noted.
Cause
means personal dishonesty, willful misconduct, any breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, or the willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or a final cease-and-desist
order, any of which results in a material loss to the Company or an Affiliate.
Change in Control
of the Bank or the Company means a change in control of a nature that: (i)
would be required to be reported in response to Item 5.01 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 1934
(the Exchange Act); or (ii) results in a
Change in Control of the Bank or the Company within the
meaning of the Home Owners Loan Act, as amended (HOLA), and applicable rules and regulations
promulgated thereunder, as in effect at the time of the Change in Control; 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
securities of the Company representing 25% or more of the combined voting power of Companys
outstanding securities except for any securities purchased by the Companys employee stock
ownership plan or trust; 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 Companys stockholders was approved by the same Nominating Committee serving under
an Incumbent Board, shall be, for purposes of this clause (b), considered as though he/she 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 Company or similar transaction occurs in which
the Bank or Company is not the surviving institution; or (d) a proxy statement soliciting proxies
from stockholders of the Company, by someone other than the current management of the Company,
seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or
similar transaction with one or more corporations as a result of which the outstanding shares
of the class of securities then subject to the Plan are to be exchanged for or converted into cash
or property or securities not issued by the Company; or (e) a tender offer is made for 25% or more
of the voting securities of the Company and the stockholders owning beneficially or of record 25%
or more of the outstanding securities of the Company have tendered or offered to sell their shares
pursuant to such tender offer and such tendered shares have been accepted by the tender offeror.
Code
means the Internal Revenue Code of 1986, as amended.
Committee
means the committee of the Board of the Company consisting of either (i) at least
two Non-Employee Directors of the Company, or (ii) the entire Board of the Company.
Common Stock
means shares of the common stock of the Company, par value $.01 per share.
Company
means Atlantic Coast Federal Corporation, the stock holding company of the Bank, or
a successor corporation.
Continuous Service
means employment as a Key Employee and/or service as an Outside Director
without any interruption or termination of such employment and/or service. Continuous Service
shall also mean a continuation as a member of the Board of Directors following a cessation of
employment as a Key Employee or continuation of service as a Director Emeritus following
termination of service as a Director. In the case of a Key Employee, employment shall not be
considered interrupted in the case of sick leave, military leave or any other leave of absence
approved by the Bank or in the case of transfers between payroll locations of the Bank or between
the Bank, its parent, its subsidiaries or its successor.
Director
means a member of the Board.
Director Emeritus
means a former member of the Board who has been appointed by the Board to
a Director Emeritus position.
Disability
means the permanent and total inability by reason of mental or physical
infirmity, or both, of an employee to perform the work customarily assigned to him/her, or of a
Director or Outside Director to serve as such. Additionally, in the case of an employee, a medical
doctor selected or approved by the Board must advise the Committee that it is either not possible
to determine when such Disability will terminate or that it appears probable that such Disability
will be permanent during the remainder of such employees lifetime.
Effective Date
means the date of, or a date determined by the Board following, approval of
the Plan by the Companys stockholders.
C-2
Key Employee
means any person who is currently employed by the Company or an Affiliate who
is chosen by the Committee to participate in the Plan.
Non-Employee Director
means, for purposes of the Plan, a Director who (a) is not employed by
the Company or an Affiliate; (b) does not receive compensation directly or indirectly as a
consultant (or in any other capacity than as a Director) greater than $60,000; (c) does not have an
interest in a transaction requiring disclosure under Item 404(a) of Regulation S-K; or (d) is not
engaged in a business relationship for which disclosure would be required pursuant to Item 404(b)
of Regulation S-K.
OTS
means the Office of Thrift Supervision.
Outside Director
means a Director of the Company or an Affiliate who is not an employee of
the Company or an Affiliate.
Recipient
means a Key Employee or Outside Director of the Company or its Affiliates who
receives or has received an Award under the Plan.
Restricted Period
means the period of time selected by the Committee for the purpose of
determining when restrictions are in effect under Section 6 with respect to Restricted Stock
awarded under the Plan.
Restricted Stock
means shares of Common Stock that have been contingently awarded to a
Recipient by the Committee subject to the restrictions referred to in Section 6, so long as such
restrictions are in effect.
4.
Administration of the Plan
(a)
Role of the Committee
. The Plan shall be administered by the Committee. The interpretation
and construction by the Committee of any provisions of the Plan or of any Award granted hereunder
shall be final and binding. The Committee shall act by vote or written consent of a majority of
its members. Subject to the express provisions and limitations of the Plan and subject to OTS
regulations and policy, the Committee may adopt such rules and procedures as it deems appropriate
for the conduct of its affairs. The Committee shall report its actions and decisions with respect
to the Plan to the Board at appropriate times, but in no event less than one time per calendar
year.
(b)
Role of the Board
. The members of the Committee shall be appointed or approved by, and
will serve at the pleasure of, the Board of Directors of the Company. The Board may in its
discretion from time to time remove members from, or add members to, the Committee. The Board
shall have all of the powers allocated to it in the Plan, may take any action under or with respect
to the Plan that the Committee is authorized to take, and may reverse or override any action taken
or decision made by the Committee under or with respect to the Plan,
provided, however
, that except
as provided in Section 6(b), the Board may not revoke any Award except in the event of revocation
for Cause.
(c)
Plan Administration Restrictions
. All transactions involving a grant, award or other
acquisitions from the Company shall:
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(i)
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be approved by the Companys full Board or by the Committee;
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(ii)
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be approved, or ratified, in compliance with Section 14 of the
Exchange Act, by either: the affirmative vote of the holders of a majority of
the shares present, or represented and entitled to vote at a meeting duly held
in accordance with the laws under which the Company is incorporated; or the
written consent of the holders of a majority of the securities of the issuer
entitled to vote, provided that such ratification occurs no later than the date
of the next annual meeting of stockholders; or
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(iii)
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result in the acquisition of Common Stock that is held by the
Recipient for a period of six months following the date of such acquisition.
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(d)
Limitation on Liability
. No member of the Board or the Committee shall be liable for any
determination made in good faith with respect to the Plan or any Awards granted under it. If a
member of the Board or the Committee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or not done by him/her in such capacity
under or with respect to the Plan, the Bank or the Company shall indemnify such member against
expense (including attorneys fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him/her in connection with such action, suit or proceeding if he/she acted
in good faith and in a manner he/she reasonably believed to be in the best interests of the Bank
and the Company and, with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
5.
Eligibility; Awards
(a)
Eligibility
. Key Employees and Outside Directors are eligible to receive Awards.
(b)
Awards to Key Employees and Outside Directors
. The Committee may determine which of the
Key Employees and Outside Directors referenced in Section 5(a) will be granted Awards and the
number of shares covered by each Award;
provided, however
, that in no event shall any Awards be
made that will violate the Banks Charter and Bylaws, the Companys Charter and Bylaws, or any applicable federal or state law
or regulation. Shares of Restricted Stock that are awarded by the Committee shall, on the date of
the Award, be registered in the name of the Recipient and transferred to the Recipient, in
accordance with the terms and conditions established under the Plan. The aggregate number of
shares that shall be issued under the Plan is 285,131. Awards issued under the Plan may be issued
by the Company from authorized but unissued shares, treasury shares or shares acquired by the
Company in open market purchases.
(c) The following provisions shall apply to all Awards made under this plan: no individual
officer shall be granted Awards with respect to more than 25% of the total shares subject to the
Plan; no Outside Director shall be granted Awards of more than 5% of the total shares of Common
Stock subject to the Plan; all Outside Directors in the aggregate may not be granted Awards with
respect to more than 30% of the total shares of Common Stock subject to the Plan; no Awards shall
begin vesting earlier than one year from the date the Plan is approved by stockholders of the
Company; and no Awards shall vest at a rate in excess of 20% per year beginning one year from the
Date of Grant.
(d) In the event Restricted Stock is forfeited for any reason, the Committee, from time to
time, may determine which of the Key Employees and Outside Directors will be granted additional
Awards to be awarded from forfeited Restricted Stock.
(e) In selecting those Key Employees and Outside Directors to whom Awards will be granted and
the amount of Restricted Stock covered by such Awards, the Committee shall consider such factors as
it deems relevant, including among others, the position and responsibilities of the Key Employees
and Outside Directors, the length and value of their services to the Company and its Affiliates,
the compensation paid to the Key Employees or fees paid to the Outside Directors, and the Committee
may request the written recommendation of the Chief Executive Officer and other senior executive
officers of the Bank, the Company and its Affiliates or the recommendation of the full Board. All
allocations by the Committee shall be subject to review, and approval or rejection, by the Board.
No Restricted Stock shall be vested unless the Recipient maintains Continuous Service with the
Company or an Affiliate until the restrictions lapse.
(f)
Manner of Award
. As promptly as practicable after a determination is made pursuant to
Section 5(b) to grant an Award, the Committee shall notify the Recipient in writing of the grant of
the Award, the number of shares of Restricted Stock covered by the Award, and the terms upon which
the Restricted Stock subject to the Award may be vested. Upon notification of an Award of
Restricted Stock, the Recipient shall execute and return to the Company a restricted stock
agreement (the Restricted Stock Agreement) setting forth the terms and conditions under which the
Recipient shall earn the Restricted Stock, together with a stock power or stock powers endorsed in
blank. Thereafter, the Recipients Restricted Stock and stock power shall be deposited with an
escrow agent specified by the Company (Escrow Agent) who shall hold such Restricted Stock under
the terms and
C-4
conditions set forth in the Restricted Stock Agreement. Each certificate in respect
of shares of Restricted Stock Awarded under the Plan shall be registered in the name of the
Recipient.
(g)
Treatment of Forfeited Shares
. In the event shares of Restricted Stock are forfeited by a
Recipient, such shares shall be returned to the Company and shall be held and accounted for
pursuant to the terms of the Plan until such time as the Restricted Stock is re-awarded to another
Recipient, in accordance with the terms of the Plan and the applicable state and federal laws,
rules and regulations.
6.
Terms and Conditions of Restricted Stock
The Committee shall have full and complete authority, subject to Section 5(c) and the other
limitations of the Plan, to grant awards of Restricted Stock to Key Employees and Outside Directors
and, in addition to the terms and conditions contained in Sections 6(a) through 6(h), to provide
such other terms and conditions (which need not be identical among Recipients) in respect of such
Awards, and the vesting thereof, as the Committee shall determine.
(a)
General Rules
. Subject to Section 5(c) hereof, and to OTS regulations and policy,
Restricted Stock shall be vested by a Recipient at the rate or rates determined by the Committee,
provided that such Recipient maintains Continuous Service. No shares shall vest in any year in which the Bank is not
meeting all of its fully phased-in capital requirements. Subject to any such other terms and
conditions as the Committee shall provide with respect to Awards, shares of Restricted Stock may
not be sold, assigned, transferred (within the meaning of Code Section 83), pledged or otherwise
encumbered by the Recipient, except as hereinafter provided, during the Restricted Period.
(b)
Continuous Service; Forfeiture
. Except as provided in Section 6(c), if a Recipient ceases
to maintain Continuous Service for any reason, unless the Committee shall otherwise determine, all
shares of Restricted Stock theretofore awarded to such Recipient and which at the time of such
termination of Continuous Service are subject to the restrictions imposed by Section 6(a) shall
upon such termination of Continuous Service be forfeited. Any stock dividends or declared but
unpaid cash dividends attributable to such shares of Restricted Stock shall also be forfeited.
(c)
Exception for Termination Due to Death or Disability, and Following a Change in Control
.
Notwithstanding the general rule contained in Section 6(a), Restricted Stock awarded to a Recipient
whose Continuous Service with the Company or an Affiliate terminates due to death, Disability, or
following a Change in Control, shall be deemed earned as of the Recipients last day of Continuous
Service with the Company or an Affiliate.
(d)
Revocation for Cause
. Notwithstanding anything hereinafter to the contrary, the Board may
by resolution immediately revoke, rescind and terminate any Award, or portion thereof, previously
awarded under the Plan, to the extent Restricted Stock has not been redelivered by the Escrow Agent
to the Recipient, whether or not yet vested, in the case of a Key Employee whose employment is
terminated by the Company or an Affiliate or an Outside Director whose service is terminated by the
Company or an Affiliate for Cause or who is discovered after termination of employment or service
on the Board to have engaged in conduct that would have justified termination for Cause.
(e)
Restricted Stock Legend
. Each certificate in respect of shares of Restricted Stock
awarded under the Plan shall be registered in the name of the Recipient and deposited by the
Recipient, together with a stock power endorsed in blank, with the Escrow Agent, and shall bear the
following (or a similar) legend:
The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and conditions
(including forfeiture) contained in the Atlantic Coast Federal
Corporation 2005 Recognition and Retention Plan. Copies of such
Plan are on file in the offices of the Secretary of Atlantic Coast
Federal Corporation, 505 Haines Avenue, Waycross, Georgia 31501.
C-5
(f)
Payment of Dividends and Return of Capital
. After an Award has been granted but before
such Award has been vested, the Recipient shall receive any cash dividends paid with respect to
such shares, or shall share in any pro-rata return of capital to all stockholders with respect to
the Common Stock. Stock dividends declared by the Company and paid on Awards that have not yet
been vested shall be subject to the same restrictions as the Restricted Stock and the
certificate(s) or other instruments representing or evidencing such shares shall be legended in the
manner provided in Section 6(e) and shall be delivered to the Escrow Agent for distribution to the
Recipient when the Restricted Stock upon which such dividends were paid are vested. Unless the
Recipient has made an election under Section 83(b) of the Code, cash dividends or other amounts so
paid on shares that have not yet been vested by the Recipient shall be treated as compensation
income to the Recipient when paid. If dividends are paid with respect to shares of Restricted
Stock under the Plan that have been forfeited and returned to the Company or to a trust established
to hold issued and unawarded or forfeited shares, the Committee can determine to award such
dividends to any Recipient or Recipients under the Plan, to any other employee or director of the
Company or the Bank, or can return such dividends to the Company.
(g)
Voting of Restricted Shares
. After an Award has been granted, the Recipient as
conditional owner of the Restricted Stock shall have the right to vote such shares.
(h)
Delivery of Vested Shares
. At the expiration of the restrictions imposed by Section 6(a),
the Escrow Agent shall redeliver to the Recipient (or where the relevant provision of Section 6(c)
applies in the case of a deceased Recipient, to his Beneficiary) the certificate(s) and any
remaining stock power deposited with it pursuant to Section 5(f) and the shares represented by such
certificate(s) shall be free of the restrictions referred to in Section 6(a).
7.
Adjustments upon Changes in Capitalization
In the event of any change in the outstanding shares subsequent to the Effective Date by
reason of any reorganization, recapitalization, stock split, stock dividend, combination or
exchange of shares, or any merger, consolidation or any change in the corporate structure or shares
of the Company, without receipt or payment of consideration by the Company, the maximum aggregate
number and class of shares as to which Awards may be granted under the Plan shall be appropriately
adjusted by the Committee, whose determination shall be conclusive. Any shares of stock or other
securities received, as a result of any of the foregoing, by a Recipient with respect to Restricted
Stock shall be subject to the same restrictions and the certificate(s) or other instruments
representing or evidencing such shares or securities shall be legended and deposited with the
Escrow Agent in the manner provided in Section 6(e).
8.
Assignments and Transfers
No Award nor any right or interest of a Recipient under the Plan in any instrument evidencing
any Award under the Plan may be assigned, encumbered or transferred (within the meaning of Code
Section 83) except, in the event of the death of a Recipient, by will or the laws of descent and
distribution until such Award is vested.
9.
Key Employee Rights under the Plan
No Key Employee shall have a right to be selected as a Recipient nor, having been so selected,
to be selected again as a Recipient and no Key Employee or other person shall have any claim or
right to be granted an Award under the Plan or under any other incentive or similar plan of the
Company or any Affiliate. Neither the Plan nor any action taken thereunder shall be construed as
giving any Key Employee any right to be retained in the employ of the Company or any Affiliate.
10.
Outside Director Rights under the Plan
Neither the Plan nor any action taken thereunder shall be construed as giving any Outside
Director any right to be retained in the service of the Company or any Affiliate.
C-6
11.
Withholding Tax
Upon the termination of the Restricted Period with respect to any shares of Restricted Stock
(or at any such earlier time that an election is made by the Recipient under Section 83(b) of the
Code, or any successor provision thereto, to include the value of such shares in taxable income),
the Bank or the Company shall have the right to require the Recipient or other person receiving
such shares to pay the Bank or the Company the minimum amount of any federal or state taxes,
including payroll taxes, that are applicable to such supplemental income and that the Bank or the
Company is required to withhold with respect to such shares, or, in lieu thereof, to retain or sell
without notice, a sufficient number of shares held by it to cover the amount required to be
withheld. The Bank or the Company shall have the right to deduct from all dividends paid with
respect to shares of Restricted Stock the amount of any taxes which the Bank or the Company is
required to withhold with respect to such dividend payments.
12.
Amendment or Termination
The Board of the Company may amend, suspend or terminate the Plan or any portion thereof at
any time,
provided, however,
that no such amendment, suspension or termination shall impair the
rights of any Recipient, without his consent, in any Award theretofore made pursuant to the Plan.
Any amendment or modification of the Plan or an outstanding Award under the Plan, shall be approved by the Committee, or the full
Board of the Company.
13.
Governing Law
(a) This Plan, the Awards, all documents evidencing Awards and all other related documents
shall be governed by, and will be construed and administered in accordance with the laws of the
State of Georgia, except to the extent that federal law shall apply.
(b) This Plan is subject to the requirements of 12 C.F.R. Part 575, including the requirements
of section 575.8 and the applicable requirements of section 563b.500. Notwithstanding any other
provision in this Plan, no shares of Common Stock shall be issued with respect to any Award to the
extent that such issuance would cause Atlantic Coast Federal, MHC to fail to qualify as a mutual
holding company under applicable federal regulations.
14.
Term of Plan
The Plan shall become effective on the date of, or a date determined by the Board of Directors
following, approval of the Plan by the Companys stockholders. It shall continue in effect until
the earlier of (i) ten years from the Effective Date unless sooner terminated under Section 12
hereof, or (ii) the date on which all shares of Common Stock available for award hereunder, have
vested in the Recipients of such Awards.
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PLEASE
MARK VOTES AS IN THIS EXAMPLE
REVOCABLE PROXY
ATLANTIC COAST FEDERAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
MAY 27, 2005
The undersigned hereby appoints the proxy
committee of the board of directors of Atlantic Coast Federal
Corporation (the Company), with full powers of
substitution to act as attorneys and proxies for the undersigned
to vote all shares of common stock of the Company that the
undersigned is entitled to vote at the 2005 Annual Meeting of
Stockholders (the Annual Meeting) to be held at the
Waycross Exchange Club Center, 2401 Knight Avenue, Waycross,
Georgia 31501, at 10:00 a.m., local time, on May 27, 2005.
The proxy committee is authorized to cast all votes to which the
undersigned is entitled as follows:
THIS PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS
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1.
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The election as directors of the nominees listed
below (except as marked to the contrary below) for a term set
forth beside such nominees name:
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Jon C. Parker, Sr. (three year term)
Robert J. Larison, Jr. (three year term)
W. Eric Palmer (three year term)
Thomas F. Beeckler (two year term)
Frederick D. Franklin, Jr. (one year term)
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FOR
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WITHHOLD
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FOR ALL EXCEPT
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INSTRUCTION: To withhold authority
to vote for any individual nominee, mark For All
Except and write that nominees name in the space
provided below.
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2.
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The approval of the Atlantic Coast Federal
Corporation 2005 Stock Option Plan.
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FOR
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AGAINST
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ABSTAIN
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3.
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The approval of the Atlantic Coast Federal
Corporation 2005 Recognition and Retention Plan.
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FOR
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AGAINST
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ABSTAIN
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4.
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The ratification of the appointment of Crowe
Chizek and Company LLC as the independent registered public
accounting firm for Atlantic Coast Federal Corporation for the
fiscal year ending December 31, 2005.
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FOR
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AGAINST
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ABSTAIN
The board of directors recommends a vote
FOR each of the above-listed proposals.
PLEASE CHECK THE BOX IF YOU PLAN TO ATTEND THE
ANNUAL
MEETING.
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF
NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH
OF THE PROPOSALS STATED ABOVE. IF ANY OTHER BUSINESS IS
PRESENTED AT THE ANNUAL MEETING, THIS PROXY WILL BE VOTED BY THE
MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE
BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT
THE ANNUAL MEETING.
(Continued on the other side)
ATLANTIC COAST FEDERAL CORPORATION
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Please be sure to sign and date this proxy card
in the box below.
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Date
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Stockholder sign above
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Co-holder (if any) sign above
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Should the above signed be present and elect to
vote at the Annual Meeting or at any adjournment thereof and
after notification to the Secretary of the Company at the Annual
Meeting of the stockholders decision to terminate this
proxy, then the power of said attorneys and proxies shall be
deemed terminated and of no further force and effect. This proxy
may also be revoked by sending written notice to the Secretary
of the Company at the address set forth on the Notice of Annual
Meeting of Stockholders, or by the filing of a later dated proxy
prior to a vote being taken on a particular proposal at the
Annual Meeting.
The above signed acknowledges receipt from the
Company prior to the execution of this proxy of notice of the
Annual Meeting, a proxy statement dated April 6, 2005, and
audited financial statements.
Please sign exactly as your name appears on this
proxy card. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If shares are
held jointly, each holder should sign.
PLEASE COMPLETE AND DATE THIS PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE.
If your address has changed, please correct the
address in the space provided below and return this portion with
the proxy card in the envelope provided.
___________________________________________
___________________________________________
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