SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Atlantic Liberty Financial Corp.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Alan Schick, Esq.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
.......................................................................
2) Aggregate number of securities to which transaction applies:
.......................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
.......................................................................
4) Proposed maximum aggregate value of transaction:
.......................................................................
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed: October 14, 2003
October 14, 2003
Dear Fellow Stockholders:
On behalf of the Board of Directors and management of Atlantic Liberty Financial
Corp., we cordially invite you to attend a Special Meeting of Stockholders. The
meeting will be held at 3:30 p.m., (local time) on November 19, 2003, at our
main office located at 186 Montague Street, Brooklyn, New York.
We encourage you to attend the meeting in person. Whether or not you plan to
attend, however, please read the enclosed proxy statement and then complete,
sign and date the enclosed proxy card and return it in the accompanying postpaid
return envelope as promptly as possible. This will save us additional expense in
soliciting proxies and will ensure that your shares are represented at the
special meeting.
The enclosed Notice of Special Meeting and Proxy Statement describe the formal
business to be transacted at the special meeting. The special meeting is being
held so that stockholders may vote for the adoption of the Atlantic Liberty
Financial Corp. 2003 Incentive Stock Benefit Plan.
Your Board of Directors has determined that the matter to be considered at the
special meeting is in the best interests of Atlantic Liberty Financial Corp. and
its stockholders. For the reasons set forth in the proxy statement, the Board of
Directors unanimously recommends a vote "For" the adoption of the Atlantic
Liberty Financial Corp. 2003 Incentive Stock Benefit Plan.
Sincerely,
/s/ Barry M. Donohue
Barry M. Donohue
President and Chief Executive Officer
Atlantic Liberty Financial Corp.
186 Montague Street
Brooklyn, New York 11201
(718) 855-3555
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On November 19, 2003
Notice is hereby given that the Special Meeting of Atlantic Liberty
Financial Corp. (the "Company") will be held at our main office located at 186
Montague Street, Brooklyn, New York, on November 19, 2003 at 3:30 p.m., local
time.
A Proxy Card and a Proxy Statement for the Special Meeting are enclosed.
The Special Meeting is for the purpose of considering and acting upon:
1. Approval of the Atlantic Liberty Financial Corp. 2003 Incentive Stock
Benefit Plan; and
2. Such other matters as may properly come before the Special Meeting, or
any adjournments thereof.
The Board of Directors is not aware of any other business to come before
the Special Meeting.
Any action may be taken on the foregoing proposals at the Special Meeting
on the date specified above, or on any date or dates to which the Special
Meeting may be adjourned. Stockholders of record at the close of business on
October 1, 2003 are the stockholders entitled to vote at the Special Meeting,
and any adjournments thereof.
Each stockholder, whether he or she plans to attend the Special Meeting, is
requested to sign, date and return the enclosed proxy card without delay in the
enclosed postage-paid envelope. Any proxy given by the stockholder may be
revoked at any time before it is exercised. A proxy may be revoked by filing
with the Secretary of the Company a written revocation or a duly executed proxy
bearing a later date. Any stockholder present at the Special Meeting may revoke
his or her proxy and vote personally on each matter brought before the Special
Meeting. However, if you are a stockholder whose shares are not registered in
your own name, you will need additional documentation from your record holder in
order to vote personally at the special meeting.
By Order of the Board of Directors
/s/ William M. Gilfillan
----------------------------------
William M. Gilfillan
Corporate Secretary
Brooklyn, New York
October 14, 2003
IMPORTANT: A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
PROXY STATEMENT
Atlantic Liberty Financial Corp.
186 Montague Street
Brooklyn, New York 11201
(718) 855-3555
SPECIAL MEETING OF STOCKHOLDERS
November 19, 2003
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Atlantic Liberty Financial Corp.
(the "Company") to be used at the Special Meeting of Stockholders of the Company
(the "Special Meeting"), which will be held at our main office located at 186
Montague Street, Brooklyn, New York, on November 19, 2003 at 3:30 p.m., local
time, and any adjournment thereof. The accompanying Notice of Special Meeting of
Stockholders and this Proxy Statement are first being mailed to stockholders on
or about October 14, 2003.
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 Special Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon. Where
no instructions are indicated, proxies will be voted "FOR" the proposal set
forth in this Proxy Statement for consideration at the Special Meeting.
Proxies may be revoked by sending written notice of such revocation to the
Secretary of the Company, at the address of the Company shown above, executing a
later-dated proxy or by attending the Special Meeting and voting in person. The
presence at the Special 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 Special Meeting or delivers a written revocation to the Secretary
of the Company prior to the voting of such proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Holders of record of the Company's common stock, par value $.10 per share
(the "Common Stock"), as of the close of business on October 1, 2003 (the
"Record Date") are entitled to one vote for each share then held. As of the
Record Date, the Company had 1,710,984 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 Special Meeting. As to the approval of the Atlantic Liberty Financial Corp.
2003 Incentive Stock Benefit Plan, stockholders may vote (i) "FOR" approval,
(ii) "AGAINST" approval, or (iii) "ABSTAIN" from voting on the proposal. The
approval of the Atlantic Liberty Financial Corp. 2003 Incentive Stock Benefit
Plan must be approved by a majority of the shares voted at the Special Meeting
without regard to broker non-votes or proxies marked "ABSTAIN."
Persons and groups who beneficially own in excess of five percent of the
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC") regarding such ownership pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"). The following table sets forth, as of
the Record Date, the shares of Common Stock beneficially owned by named
executive officers and directors individually, by executive officers and
directors as a group and by each person who was the beneficial owner of more
than five percent of the Company's outstanding shares of Common Stock on the
Record Date.
Amount of Shares Owned and
Nature of Beneficial Percent of Shares of
Name and Address of Beneficial Owner Ownership Common Stock Outstanding
- -------------------------------------------------------- --------------------------- --------------------------
Owners of More Than 5% of the outstanding common stock:
- -------------------------------------------------------
Atlantic Liberty Savings 136,879 8.00%
Employee Stock Ownership Plan (1)
BRT Realty Trust 159,800(2) 9.34%
60 Cutter Mill Road
Great Neck, New York 11021
Wellington Management Company, LLP 100,000(3) 5.84%
75 State Street
Boston, Massachusetts 02109
Officers and Directors (1):
- ---------------------------
Richard T. Arkwright 76,468(4) 4.47%
Barry M. Donohue 11,707(5) 0.68%
Hon. Guy J. Mangano 10,000 0.58%
Thomas M. De Martino 6,939 0.41%
George M. Spanakos 10,400 0.61%
William M. Gilfillan 6,008(5) 0.35%
All officers and directors
as a group (6 persons) 121,522 7.10%
___________________________
<FN>
(1) The address of the referenced person or entity is 186 Montague Street,
Brooklyn, New York.
(2) Based on the Schedule 13D filed on April 2, 2003 by BRT Realty Trust and
Sass Gould Financial Securities, LLC, BRT Realty Trust claims sole
dispositive and voting power over 133,950 of the reported shares and Sass
Gould Financial Securities, LLC claims sole dispositive and voting powers
over 25,850 of the reported shares.
(3) Based on the Schedule 13G filed on February 12, 2003 by Wellington
Management Company, LLP.
(4) Mr. Arkwright directly owns 56,468 shares. Mr. Arkwright may be deemed to
be the indirect owner of 20,000 shares beneficially owned by Analytic Asset
Management, Inc. of which he is Chairman. Mr. Arkwright disclaims ownership
over such shares.
(5) Includes 1,508 shares allocated pursuant to the employee stock option plan.
</FN>
In accordance with the provisions of the Certificate of Incorporation of
Atlantic Liberty Financial Corp., record holders of common stock who
beneficially own in excess of 10% of the issued and outstanding shares of common
stock are not entitled to vote any of the shares held in excess of that limit.
The Certificate of Incorporation further authorizes the Board of Directors (i)
to make all determinations necessary to implement and apply that limit,
including determining whether persons or entities are acting in concert, and
(ii) to demand that any person who is reasonably believed to beneficially own
shares of common stock in excess of the limit supply information to enable the
Board of Directors to implement and apply the limit.
Compensation of the Board of Directors of Atlantic Liberty Financial Corp.
Director Fees. Atlantic Liberty Financial Corp. pays each non-employee
director an annual retainer of $12,000, except for the Chairman of the Board who
receives a retainer of $16,000. In addition, directors receive $1,000 for
attendance at each regular meeting of the Board of Directors and $500 for
attendance of each committee meeting of the Board of Directors. An additional
$100 per meeting is paid to committee chairmen.
2
Executive Compensation
Summary Compensation Table. The following table sets forth for the years
ended March 31, 2003 and 2002, certain information as to the total remuneration
paid by the Company and Atlantic Liberty Savings, F.A. to its Chief Executive
Officer, as well as to the other executive officer of the Company, who received
total annual compensation in excess of $100,000.
Annual Compensation(1)
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Other Annual All Other
Compensation Compensation
Name and Principal Position Year Salary($) Bonus($) ($)(2) LTIP Payouts (3)
- --------------------------------- ---- --------- --------- ------------ ------------ -------------
Barry M. Donohue,................ 2003 $ 170,000 $240,000 -- -- $12,000
President and Chief Executive 2002 136,923 77,000 -- -- 10,000
Officer
William M. Gilfillan,............ 2003 138,125 200,000 -- -- 12,000
Executive Vice President and 2002 114,615 71,000 -- -- 20,000
Chief Financial Officer
Stephen P. Parisi,............... 2003 96,250 15,000 -- -- 6,700
Vice President and Treasurer 2002 95,000 10,000 -- -- 6,300
______________________________________
<FN>
(1) Summary compensation information is excluded for the fiscal year ended
March 31, 2001, as Atlantic Liberty Savings, F.A. was not a public company
during this period.
(2) Atlantic Liberty Savings, F.A. provides certain of its executive officers
with non-cash benefits and perquisites, such as the use of employer-owned
or leased automobiles. Management believes that the aggregate value of
these benefits for fiscal 2002 did not, in the case of any executive
officer, exceed $50,000 or 10% of the aggregate salary and annual bonus
reported for him in the Summary Compensation Table.
(3) Represents employer contributions under the 401(k) plan.
</FN>
Benefit Plans
Employment Agreements. Atlantic Liberty Financial Corp. and Atlantic
Liberty Savings, F.A. have entered into substantially similar employment
agreements with Messrs. Donohue and Gilfillan. Each agreement has a three-year
term. Commencing on January 31, 2004 and continuing on January 31 of each year
thereafter, the agreements will be renewed for an additional year so that the
remaining term will be three years, subject to termination on notice as provided
in the agreements. Under the agreements, the current base salaries for Messrs.
Donohue and Gilfillan are $200,000 and $162,500, respectively. In addition to
the base salary, each agreement provides for, among other things, participation
in bonus programs and other employee pension benefit and fringe benefit plans
applicable to executive employees. Mr. Donohue's agreements provide that he will
be entitled to the use of an automobile and the payment of reasonable expenses
associated with such use. The executive's employment may be terminated for cause
at any time, in which event the executive would have no right to receive
compensation or other benefits for any period after termination.
Certain events resulting in the executive's termination or resignation
entitle the executive to payments of severance benefits following termination of
employment. In the event the executive's employment is terminated for reasons
other than for cause, disability or retirement, or in the event the executive
resigns during the term of the agreement following (i) failure to elect or
reelect or to appoint or reappoint the executive to his executive position, (ii)
a significant change in the nature or scope of the executive's authority, (iii)
the liquidation or dissolution of Atlantic Liberty Savings, F.A. or Atlantic
Liberty Financial Corp. that would affect the status of the executive, or (iv) a
breach of the employment agreement by the applicable corporation, then the
executive would be entitled to payment of an amount equal to three times the sum
of (i) the average annual rate of base salary paid to him in the last three
years ending in the year of termination and (ii) the average rate of bonus
awarded to him during the prior three years, payable, at the executive's
election, either in a lump sum or in bi-weekly installments during the remaining
term of the agreement. In the event of the executive's involuntary termination
by Atlantic Liberty Savings, F.A. or voluntary resignation from Atlantic Liberty
Savings, F.A.'s employment upon a change in control or at any time following a
change in control, the executive would be entitled to the payment of a sum equal
to three times the sum of his base salary and the highest rate of bonus awarded
to him during the prior three years, payable, at his election, in a lump sum or
bi-weekly during the remaining term of the agreement. Also, the executive would
be entitled to a cash payment equal to the difference, if any, between (i) the
present value of benefits to which he would be entitled under Atlantic Liberty
Savings, F.A.'s pension plan if he continued working for Atlantic Liberty
3
Savings, F.A. for an additional 36 months, over (ii) the present value of the
benefits to which he is actually entitled under Atlantic Liberty Savings, F.A.'s
pension plan due to his termination. The executive also would be entitled to a
cash payment equal to the present value of Atlantic Liberty Savings, F.A.'s
contributions that would have been made on his behalf under Atlantic Liberty
Savings 401(k) plan and employee stock ownership plan and any other defined
contribution plan maintained by Atlantic Liberty Savings, F.A. if he had
continued working for Atlantic Liberty Savings, F.A. for 36 months following his
termination. In addition, the executive would be entitled to continuation of
life, medical, dental and disability benefits for a period of 36 months after
termination. He also would become vested in any outstanding unvested stock
options or shares of restricted stock that have been awarded to him. In the
event payments to the executive include an "excess parachute payment" as defined
in the Internal Revenue Code, payments under the employment agreements with
Atlantic Liberty Savings, F.A. would be reduced in order to avoid this result.
If Atlantic Liberty Savings, F.A. or Atlantic Liberty Financial Corp. does not
renew the agreement prior to the agreement's anniversary date, the executive may
resign and will be entitled to three times his annual rate of base salary.
Upon termination of the executive's employment other than in connection
with a change in control, the executive agrees not to compete with Atlantic
Liberty Savings, F.A. within a 25-mile radius for a period of one year following
termination. Should the executive become disabled, he would be entitled to the
payment of his base salary for the remaining term of his employment agreement or
one year, whichever is longer, provided that any amount paid the executive
pursuant to any disability insurance would reduce the compensation he would
receive. In the event the executive dies while employed by Atlantic Liberty
Savings, F.A., the executive's estate will be paid the executive's base salary
for one year and the executive's family will be entitled to continuation of
health benefits coverage for one year. Any payment to the executive under the
agreements with Atlantic Liberty Savings, F.A. will reduce proportionately the
amounts due the executive under the agreements with Atlantic Liberty Financial
Corp.
Change in Control Agreements. Atlantic Liberty Savings, F.A. entered into
change in control agreements with two individuals who are officers of Atlantic
Liberty Savings, F.A. These agreements provide certain benefits in the event of
a change in control of Atlantic Liberty Savings, F.A. or Atlantic Liberty
Financial Corp. Each of the change in control agreements provides for a term of
up to 36 months. Commencing on each anniversary date, the Board of Directors may
extend any change in control agreement for an additional year. The change in
control agreements enable Atlantic Liberty Savings, F.A. to offer to designated
officers certain protections against termination without cause in the event of a
change in control (as defined in the agreements). These protections against
termination without cause in the event of a change in control are frequently
offered by other financial institutions, and Atlantic Liberty Savings, F.A. may
be at a competitive disadvantage in attracting and retaining key employees if it
does not offer similar protections.
Following a change in control of Atlantic Liberty Financial Corp. or
Atlantic Liberty Savings, F.A., an officer is entitled to a payment under the
change in control agreement if the officer's employment is involuntarily
terminated during the term of such agreement, other than for cause, as defined,
or if the officer voluntarily terminates employment during the term of such
agreement as the result of a demotion, loss of title, office or significant
authority, reduction in his annual compensation or benefits, or relocation of
his principal place of employment by more than 30 miles from its location
immediately prior to the change in control. In the event that an officer who is
a party to a change in control agreement is entitled to receive payments
pursuant to the change in control agreement, he will receive a cash payment up
to a maximum of three times the sum of base salary and highest rate of bonuses
awarded to the executive over the prior three years, subject to applicable
withholding taxes. In addition to the severance payment, each covered officer is
entitled to receive life, health, dental and disability coverage for a period of
up to 36 months from the date of termination. Notwithstanding any provision to
the contrary in the change in control agreements, payments under the change in
control agreements are limited so that they will not constitute an excess
parachute payment under Section 280G of the Internal Revenue Code.
Executive Incentive Bonus Plan. For the year ended March 31 2003, Atlantic
Liberty Savings, F.A. adopted an executive incentive bonus plan for the benefit
of Messrs. Donohue and Gilfillan. The Plan provided financial incentives based
on bank level performance criteria that reflect objective measurements of
profitability and efficiency and individual performance criteria that reflect
the ability of the executive to accomplish the goals in a manner consistent with
the management philosophy of Atlantic Liberty Savings, F. A. The various
criteria were weighted by the plan administrator and a bonus pool was
established that was based on approximately 5% of base salary and 40% of
Atlantic Liberty Savings, F.A.'s income exceeding core income (defined as net
4
income before non-recurring expense). The plan administrator set a minimum core
income threshold that must be met in order for a bonus to be paid. Assuming the
minimum threshold was achieved, the maximum bonus payable increased as core
income increased. For the fiscal year ended March 31, 2003, Messrs. Donohue and
Gilfillan received bonuses under the executive incentive bonus plan of $240,000
and $200,000, respectively. For the fiscal year commencing April 1, 2003, the
incentive bonus plan was revised to provide financial incentives to Messrs.
Gilfillan and Donohue solely based on performance criteria of Atlantic Liberty
Savings, F. A. that reflect objective measurements of profitability, such as
deposit and mortgage growth, return on equity, earnings per share and Atlantic
Liberty Savings, F. A.'s efficiency ratio. The objective measurements upon which
the financial incentives are based, and the weight assigned to each measurement
may be modified annually in the discretion of the compensation committee of the
Board of Directors. The maximum award payable to an executive under the
incentive bonus plan, as revised, is seventy-five percent (75%) of such
executive's base salary.
Insurance Plans. Our officers and employees are covered by a contributory
medical insurance plan.
Defined Benefit Pension Plan. We maintain a qualified noncontributory
defined benefit plan ("Retirement Plan") for employees. All employees age 21 or
older who have worked at Atlantic Liberty Savings, F.A. for a period of one year
and who have been credited with 1,000 or more hours of employment with Atlantic
Liberty Savings, F.A. during the year are eligible to accrue benefits under the
Retirement Plan. We make annual contributions to the Retirement Plan in order to
satisfy the actuarially determined minimum funding requirements in accordance
with the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
At the normal retirement age of 65, the plan is designed to provide a
single life annuity with no ancillary benefits. For a married participant, the
normal form of benefit is an actuarially reduced joint and survivor annuity
where, upon the participant's death, the participant's spouse is entitled to
receive a benefit equal to 50% of the amount paid during the participant's
lifetime. The joint and survivor annuity will be actuarially equivalent to the
single life annuity. The annual retirement benefit provided is an amount equal
to (i) 2% of a participant's average annual compensation based on the average of
the five consecutive years of the last 10 calendar years providing the highest
average compensation, multiplied by (ii) the participant's years of credited
service to the normal retirement date (not to exceed 30 years). Retirement
benefits are also payable upon retirement due to early and late retirement,
disability or death. A reduced benefit is payable upon early retirement at or
after age 55 and the completion of 10 years of service with Atlantic Liberty
Savings, F.A. Upon termination of employment other than as specified above, a
participant who has a vested benefit under the Retirement Plan is eligible to
receive his or her accrued benefit reduced for early retirement, if applicable,
or a deferred retirement benefit commencing on such participant's normal
retirement date. Benefits are payable in various annuity forms as well as in the
form of a single lump sum payment. At March 31, 2003, the market value of the
Retirement Plan trust fund equaled approximately $1.1 million. For the fiscal
year ended March 31, 2003, no contribution to the Retirement Plan was made.
The following table indicates the annual retirement benefit that would be
payable under the Retirement Plan upon retirement at age 65 in calendar year
2003, expressed in the form of a single life annuity for the final average
salary and benefit service classification specified below.
YEARS OF BENEFIT SERVICE AT RETIREMENT
Final
Average Compensation 15 20 25 30 35 40
-------------------- -------- -------- -------- -------- -------- --------
$ 25,000 $ 7,500 $10,000 $ 12,800 $ 15,000 $ 15,000 $ 15,000
$ 50,000 $15,000 $20,000 $ 25,000 $ 30,000 $ 30,000 $ 30,000
$ 75,000 $22,500 $30,000 $ 37,500 $ 45,000 $ 45,000 $ 45,000
$100,000 $30,000 $40,000 $ 50,000 $ 60,000 $ 60,000 $ 60,000
$150,000 $45,000 $60,000 $ 75,000 $ 90,000 $ 90,000 $ 90,000
$200,000 and above $60,000 $80,000 $100,000 $120,000 $120,000 $120,000
As of March 31, 2003, Mr. Donohue and Mr. Gilfillan had 11 years and two
years of service under the plan, respectively.
Salary Reduction Plan. We maintain a Salary Reduction Plan for employees,
which is a qualified, tax-exempt profit sharing plan with a cash-or-deferred
feature under Section 401(k) of the Code (the "401(k) Plan"). All employees who
5
have attained age 21 and have completed 12 consecutive months of employment in
which they completed 1,000 hours of service are eligible to participate on the
date that such requirements are first satisfied.
Under the 401(k) Plan, participants are permitted to make salary reduction
contributions to the plan from their compensation from 1% to 20% of
compensation. For these purposes, "compensation" includes regular salary, wages
and bonuses, including any salary reduction contributions made under the 401(k)
Plan, but does not include overtime and commissions, or compensation in excess
of the Internal Revenue Code Section 401(a)(17) limits (in 2002, this limit is
$200,000). The participants' salary reduction contribution will be matched by
us, up to 100% of the participants' first 6% of compensation contributed to the
401(k) Plan. All employee contributions and earnings thereon are fully and
immediately vested. Atlantic Liberty Savings, F.A. may make discretionary
employee contributions to the 401(k) Plan. Employer discretionary contributions,
if made, will vest at the rate of 20% per year beginning in the second year
until a participant is 100% vested after six years of service. Participants will
also vest in employer discretionary contributions upon the attainment of their
normal retirement date (i.e., age 65), death or disability regardless of their
years of service. A participant may also withdraw salary reduction contributions
in the event the participant suffers a financial hardship. The 401(k) Plan
permits employees to direct the investment of their own accounts into various
investment options.
Plan benefits will be paid to each participant in a lump sum payment. At
March 31, 2003, the market value of the 401(k) Plan trust fund equaled
approximately $863,000. The contribution to the 401(k) Plan for the Plan year
ended March 31, 2003 was $63,633. During the year ended March 31, 2003, we
contributed $12,000 and $12,000 to the 401(k) plan for the accounts of Mr.
Donohue and Mr. Gilfillan, respectively.
Employee Stock Ownership Plan and Trust. We established an employee stock
ownership plan in connection with our conversion from the mutual to stock form
of organization in 2002. Employees who are at least 21 years old with at least
one year of employment with Atlantic Liberty Savings, F.A. are eligible to
participate in the plan. The employee stock ownership plan trust borrowed funds
from Atlantic Liberty Financial Corp. to purchase 136,879 shares, which is equal
to 8% of the common stock sold in the conversion offering. Collateral for the
loan is the common stock purchased by the employee stock ownership plan. The
loan will be repaid principally from Atlantic Liberty Savings, F.A.
discretionary contributions to the employee stock ownership plan over a period
of up to 10 years. The loan may be repaid over a shorter period, without
penalty. The interest rate for the loan is a floating rate equal to the prime
rate. Shares purchased by the employee stock ownership plan are held in a
suspense account for allocation among participants as the loan is repaid.
Contributions to the employee stock ownership plan and shares released from
the suspense account in an amount proportional to the repayment of the employee
stock ownership plan loan are allocated among employee stock ownership plan
participants on the basis of compensation in the year of allocation. Benefits
under the plan vest at the rate of 20% per year, starting upon completion of two
years of credited service, and become fully vested upon completion of six years
of credited service, with credit given to participants for years of service
prior to the adoption of the plan. A participant's interest in his account under
the plan will also fully vest in the event of termination of service due to a
participant's early or normal retirement, death, disability, or upon a change in
control (as defined in the plan). Vested benefits are payable in the form of
common stock and/or cash. Atlantic Liberty Savings, F.A.'s contributions to the
employee stock ownership plan are discretionary, subject to the loan terms and
tax law limits. Therefore, benefits payable under the employee stock ownership
plan cannot be estimated. Pursuant to SOP 93-6, we are required to record
compensation expense each year in an amount equal to the fair market value of
the shares released from the suspense account. In the event of a change in
control, the employee stock ownership plan will terminate.
6
PROPOSAL I - APPROVAL OF THE ATLANTIC LIBERTY FINANCIAL CORP.
2003 INCENTIVE STOCK BENEFIT PLAN
The Board of Directors has adopted the 2003 Incentive Stock Benefit Plan
(the "2003 Stock Benefit Plan") to provide officers, employees and directors of
Atlantic Liberty Financial Corp. and its affiliates with additional incentives
to share in our growth and performance. The following is a summary of the
material features of the 2003 Stock Benefit Plan, which is qualified in its
entirety by reference to the provisions of the Plan attached hereto as Exhibit
A.
General
The 2003 Stock Benefit Plan will remain in effect for a period of ten years
following adoption by stockholders. The 2003 Stock Benefit Plan authorizes the
issuance of up to 256,648 shares of Atlantic Liberty Financial Corp. common
stock pursuant to grants of stock options or stock awards. The Board of
Directors expects that of the awards of common stock under the 2003 Stock
Benefit Plan at least 85,550 shares will be available to be granted as stock
awards and at least 85,550 shares will be available for issuance pursuant to the
grant of stock options.
The 2003 Stock Benefit Plan will be administered by a committee (the
"Committee") appointed by the Board of Directors which will consist of either at
least two "Non-employee Directors" or the entire Board of Directors. The
Committee has the power within the limitations set forth in the 2003 Stock
Benefit Plan to make all decisions and determinations regarding the selection of
participants and the granting of awards; establishing the terms and conditions
relating to each award; adopting rules, regulations and guidelines for carrying
out the Plan's purposes; and interpreting and otherwise construing the 2003
Stock Benefit Plan, provided, however, that the Board has the power to take any
action the Committee can take and may reverse or override the Committee action.
The 2003 Stock Benefit Plan may be amended by the Board or the Committee,
without the approval of stockholders, but no such amendments may adversely
affect any outstanding awards under the 2003 Stock Benefit Plan without the
consent of the holders thereof.
Eligibility
Key employees and outside directors of Atlantic Liberty Financial Corp. and
its affiliates are eligible to receive awards under the 2003 Stock Benefit Plan.
In addition, as of the date of this proxy statement no awards have been made to
the chief executive officer, other executive officers, any of our directors who
are not executive officers and to any of our employees including officers who
are not executive officers, and such awards are not determinable.
Types of Awards
The Committee may determine the type and terms and conditions of awards
under the Plan. Awards may be granted in a combination of options, limited
rights, reload options, dividend equivalent rights and stock awards. Such awards
may have terms providing that the settlement or payment of one type of award
automatically reduces or cancels the remaining award. Awards may include, but
are not limited to, the following:
Stock Options. A stock option gives the recipient the right to purchase
shares of common stock at a specified price for a specified period of time. The
exercise price of each option may not be less than 100% of fair market value on
the date of grant. Fair market value for purposes of the 2003 Stock Benefit Plan
means the reported closing price of the common stock on the day the option is
granted or, if the common stock is not traded on such date, on the next
preceding day on which the common stock was traded.
Stock options are either "incentive" stock options or "non-qualified" stock
options. Incentive stock options have certain tax advantages and must comply
with the requirements of Section 422 of the Internal Revenue Code. Only
employees are eligible to receive incentive stock options. A stock option may be
exercised in whole or in installments, which may be cumulative. Shares of common
stock purchased upon the exercise of a stock option must be paid for in full at
the time of exercise either in cash, the surrender of shares of common stock, or
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via a "cashless exercise" (as defined in the 2003 Stock Benefit Plan). Stock
options are subject to vesting conditions as determined by the Committee.
Limited Rights. A limited right gives the option holder the right, upon a
change in control of Atlantic Liberty Financial Corp. or Atlantic Liberty
Savings, F.A., to receive the excess of the market value of the shares
represented by the limited right 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 cash or, in the event of a merger
transaction, in shares of the acquiring corporation or its parent, as
applicable.
Limited rights may be granted at the time of, and must be related to, the
grant of a stock option. The exercise of a limited right is in lieu of the
exercise of a stock option and vice versa. 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.
Reload Options. Reload options entitle the option holder, who has delivered
shares of common stock as payment of the exercise price for option stock, to a
new option to acquire additional shares equal in an amount to the shares the
option holder has traded. Reload options also may be granted at the time of the
grant of a stock option. Reload options also may be granted to replace option
shares retained by Atlantic Liberty Financial Corp. for payment of the option
holder's withholding tax. The option price at which additional shares of stock
may be purchased through the exercise of a reload option is equal to the market
value of the common stock that was surrendered to pay the exercise price of the
option at the time it was surrendered. The option period during which the reload
option may be exercised expires at the same time as that of the original option
that was exercised.
Dividend Equivalent Rights. Dividend equivalent rights entitle the option
holder to receive an amount of cash at the time that certain extraordinary
dividends are declared equal to the difference between the amount of the
extraordinary dividend per share of common stock and the average dividend per
share of common stock based on the current and preceding three quarters
(assuming dividends were paid in each quarter, and if not then based on the
average of the last four quarters in which dividends were paid), multiplied by
the number of options that the person holds. For these purposes, an
extraordinary dividend is defined under the 2003 Stock Benefit Plan as any
dividend paid on shares of common stock where the dividend rate exceeds 200% of
Atlantic Liberty Savings, F.A.'s weighted average cost of funds on
interest-bearing liabilities for the current quarter and preceding three
quarters and the annualized aggregate dollar amount of the dividend exceeds
Atlantic Liberty Savings, F.A.'s net income after taxes for the current quarter
and preceding three quarters.
Stock Awards. Stock awards may constitute actual shares of Common Stock or
may be denominated in stock units that entitle the recipient to receive future
payments in either shares, cash, or a combination thereof. Stock awards will be
subject to conditions established by the Committee which are set forth in the
award agreement, and may include continuous service with Atlantic Liberty
Financial Corp., achievement of specific business objectives, and other
measurements of performance. Any stock awards will be evidenced by agreements
approved by the Committee which set forth the terms and conditions of each
award.
Generally, all awards, except non-incentive stock options, granted under
the 2003 Stock Benefit Plan will be nontransferable except by will or in
accordance with the laws of descent and distribution or pursuant to a domestic
relations order. During the life of the recipient, incentive stock options may
be exercised only by him or her. However, a participant may designate a
beneficiary to exercise his/her rights under any stock option, reload option,
limited right or dividend equivalent right under the 2003 Stock Benefit Plan
upon the participant's death.
Termination of Employment
Upon termination of employment for any reason other than disability,
retirement, change in control, death or termination for cause, an employee's
stock options will be exercisable only as to those shares immediately
purchasable by or vested in the employee at the date of termination, and such
options may be exercised only for three months following termination. Upon
termination because of disability, retirement, change in control or death, the
employee's stock options will be exercisable as to all shares, whether or not
then exercisable, for up to five years following termination and the employee's
outstanding unvested stock awards will vest. In no event will the exercise
8
period extend beyond the expiration of the stock option term. In the event of
termination for cause, awards will expire upon such termination.
Termination of Service as a Director
Upon termination of a director's service for any reason other than
disability, retirement, change in control, death or termination for cause, the
director's stock options will be exercisable only as to those shares immediately
purchasable by or vested in the director at the date of termination, and such
options may be exercised for one year following termination. Upon termination of
a director's service because of disability, retirement, change in control or
death, the director's stock options will be exercisable as to all shares,
whether or not then exercisable, for up to five years following termination and
the director's outstanding unvested stock awards will vest. In no event will the
exercise period extend beyond the expiration of the stock option term. In the
event of termination for cause, awards will expire upon such termination.
Tax Consequences
The following are the federal tax consequences generally arising with
respect to awards granted under the 2003 Stock Benefit Plan. The grant of an
option or limited right will create no tax consequences for a recipient or
Atlantic Liberty Financial Corp. The recipient will have no taxable income upon
exercising an incentive stock option and Atlantic Liberty Financial Corp. will
receive no deduction when an incentive stock option is exercised, however, the
spread between the fair market value of the common stock and the exercise price
on the date of exercise is a tax preference item for purposes of the alternative
minimum tax. Upon exercising a non-qualified option, the recipient must
recognize ordinary income equal to the difference between the exercise price and
the fair market value of the stock on the date of exercise, and Atlantic Liberty
Financial Corp. will be entitled to a deduction for the same amount. The tax
treatment for a recipient on a disposition of shares acquired through the
exercise of an option depends on how long the shares have been held and whether
such shares were acquired by exercising an incentive stock option or a
non-qualified option. Generally, there will be no tax consequences to Atlantic
Liberty Financial Corp. in connection with the disposition of shares acquired
pursuant to an option, except that Atlantic Liberty Financial Corp. may be
entitled to a deduction if shares acquired pursuant to an incentive stock option
are sold before the required holding periods have been satisfied.
With respect to other awards granted under the 2003 Stock Benefit Plan that
are settled either in cash or in stock, the participant must recognize ordinary
income equal to the cash or the fair market value of shares or other property
received and Atlantic Liberty Financial Corp. will be entitled to a deduction
for the same amount. With respect to awards that are settled in stock, the
participant must recognize ordinary income equal to the fair market value of the
shares received at the time the shares became transferable or not subject to
substantial risk of forfeiture, whichever occurs earlier. Atlantic Liberty
Financial Corp. will be entitled to a deduction for the same amount.
No options have been granted or stock awards made under the 2003 Stock
Benefit Plan as of the date of this proxy statement. There are four outside
directors of Atlantic Liberty Financial Corp. and its subsidiaries and 19
employees eligible to participate in the 2003 Stock Benefit Plan.
As of October 1, 2003, the last sale price of the common stock, as reported
on the Nasdaq National Market, was $20.00. The affirmative vote of the holders
of a majority of the votes cast at the Special Meeting is required to approve
the 2003 Stock Benefit Plan. The purpose of obtaining shareholder approval of
the 2003 Stock Benefit Plan is to qualify the plan for the granting of incentive
stock options, to obtain an exemption for awards under the Securities Exchange
Act short swing profit trading rules and to satisfy the requirement for listing
the common stock on the Nasdaq National Market.
Amendment to the 2003 Stock Benefit Plan
The Board of Directors or the Committee may at any time modify or amend the
Plan as it deems necessary or appropriate or modify or amend an award received
by employees and/or outside directors; however, no such amendment shall
adversely affect any outstanding awards under the 2003 Stock Benefit Plan
without the consent of the holders of such awards.
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
ATLANTIC LIBERTY FINANCIAL CORP. 2003 INCENTIVE STOCK BENEFIT PLAN.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in Atlantic Liberty Financial Corp.'s
proxy materials for next year's Annual Meeting of Stockholders, any stockholder
proposal to take action at such meeting must be received at Atlantic Liberty
Financial Corp.'s executive office, 186 Montague Street, Brooklyn, New York
11201, no later than March 21, 2004. Any such proposals shall be subject to the
requirements of the proxy rules adopted under the Securities and Exchange Act of
1934.
Our Bylaws provide an advance notice procedure before certain business or
nominations to the Board of Directors may be brought before an annual meeting.
In order for a stockholder to properly bring business before an annual meeting,
or to propose a nominee to the Board, the stockholder must give written notice
to the Secretary of Atlantic Liberty Financial Corp. not less than 90 days
before the date fixed for such meeting; provided, however, that in the event
that less than 100 days notice or prior public disclosure of the date of the
meeting is given or made, to be timely, notice by the stockholder must be
received no later than the close of business on the tenth day following the day
on which such notice of the date of the annual meeting was mailed or such public
disclosure was made. The notice must include the stockholder's name, record
address, and number of shares owned by the stockholder, describe briefly the
proposed business, the reasons for bringing the business before the annual
meeting, and any material interest of the stockholder in the proposed business.
In the case of nominations to the Board, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
Atlantic Liberty Financial Corp. to include in its proxy statement and proxy
relating to an annual meeting any stockholder proposal which does not meet all
of the requirements for inclusion established by the SEC in effect at the time
such proposal is received.
The date on which the Annual Meeting of Stockholders is expected to be held
is August 18, 2004. Accordingly, advance written notice of business or
nominations to the Board of Directors to be brought before the next Annual
Meeting of Stockholders must be given to the Company no later than May 20, 2004.
MISCELLANEOUS
The Board of Directors is not aware of any business to come before the
Special Meeting other than the matters described above in the Proxy Statement.
However, if any matters should properly come before the Special Meeting, it is
intended that holders of the proxies will act as directed by a majority of the
Board of Directors, except for matters related to the conduct of the Special
Meeting, as to which they shall act in accordance with their best judgment.
The cost of solicitation of proxies will be borne by Atlantic Liberty
Financial Corp. Atlantic Liberty Financial Corp. has engaged Georgeson
Shareholder Communications, Inc. to assist in the solicitation of proxies in
connection with the Special Meeting. Georgeson Shareholders Communications, Inc.
will receive a fee of $6,500. Atlantic Liberty Financial Corp. 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. In addition to solicitations by mail, directors, officers and
regular employees of Atlantic Liberty Savings, F.A. may solicit proxies
personally or by telegraph or telephone without additional compensation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ William M. Gilfillan
----------------------------------
William M. Gilfillan
Corporate Secretary
Brooklyn, New York
October 14, 2003
10
EXHIBIT A
ATLANTIC LIBERTY FINANCIAL CORP.
2003 INCENTIVE STOCK BENEFIT PLAN
1. PURPOSE. The purpose of the Atlantic Liberty Financial Corp. 2003
Incentive Stock Benefit Plan (the "Plan") is to (i) provide employees, officers
and directors of Atlantic Liberty Financial Corp. (the "Company"), Atlantic
Liberty Savings, F. A. (the "Association") and any Affiliates of the Company (as
defined below), with additional incentives to improve the growth and performance
of the Company, and (ii) to attract and retain qualified and experienced
personnel to the Company and its Affiliates.
2. TERM. The Plan shall be effective as of the date of stockholder approval
(the "Effective Date"), and shall remain in effect for ten years thereafter,
unless sooner terminated by the Company's Board of Directors (the "Board").
After termination of the Plan, no additional awards may be granted, but
previously granted awards shall remain outstanding in accordance with their
applicable terms and conditions and the terms and conditions of the Plan.
3. PLAN ADMINISTRATION.
(a) Role of the Committee. The Plan shall be administered by the Committee.
The Committee shall consist of either (i) at least two "Non-Employee
Directors" of the Company, or (ii) the entire Board of the Company. A
"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 from the Company as a consultant (or in
any capacity other 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. The
interpretation and construction by the Committee of any provisions of the
Plan or of any Award granted hereunder shall be final and binding, except
as set forth herein below. 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, the Committee may adopt such rules and procedures
as it deems appropriate for the conduct of its affairs. The Committee shall
have the power to interpret and implement the Plan and any rules,
regulations, guidelines or agreements adopted hereunder, and to adopt such
rules, regulations and guidelines for carrying out the Plan as it may deem
necessary or proper. These powers shall include, but not be limited to: (i)
determination of the type or types of awards to be granted under the Plan;
(ii) determination of the terms and conditions of any awards under the
Plan; (iii) determination of whether, to what extent and under what
circumstances awards may be settled, paid or exercised in cash, shares,
other securities, other awards, other property, or accelerated, canceled,
extended, forfeited or suspended; (iv) adoption of modifications,
amendments, procedures, and subplans as may be necessary; (v) subject to
the rights of participants, modification, amendment or cancellation of any
award to correct an administrative error; and (vi) taking any other action
the Committee deems necessary or desirable for the administration of the
Plan. 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, subject to the requirements
set forth in subsection (a) above. 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 the Board may not revoke any
Award except in the event of revocation for Cause or with respect to
unearned Awards in the event the Recipient of an Award voluntarily
terminates employment with the Company or its Affiliates prior to Normal
Retirement.
(c) Plan Administration Restrictions. All transactions involving a grant,
award or other acquisitions from the Company shall:
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(i) be approved by the Company's full Board or by the Committee;
(ii) 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
(iii)result in the acquisition of an Option or Limited Right that is
held by the Recipient for a period of six months following the
date of such acquisition.
(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 Company or its
Affiliates shall indemnify such member against all expenses (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 acted in good faith and in a manner he reasonably believed
to be in the best interests of the Company and its Affiliates and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
4. ELIGIBILITY TO PARTICIPATE. Officers and employees of the Company and
its Affiliates shall be eligible to receive Incentive Stock Options,
Non-Statutory Stock Options, Stock Awards, Limited Rights, Reload Options and
/or Dividend Equivalent Rights under the Plan (collectively, "awards"). Outside
directors shall be eligible to receive Non-Statutory Stock Options, Reload
Options, Dividend Equivalent Rights and Stock Awards under the Plan. The term
"Company" includes any entity that is directly or indirectly controlled by the
Company or any entity in which the Company has a significant equity interest, as
determined by the Committee. The term "Affiliate" means any "parent corporation"
or "subsidiary corporation" of the Company within the meaning of Sections 424(e)
and (f) of the Internal Revenue Code ("Code"), respectively. An "outside
director" means a director of the Company or an Affiliate who is not an employee
of the Company or an Affiliate.
5. SHARES OF STOCK SUBJECT TO THE PLAN. 256,648 shares of common stock of
the Company ("Common Stock") in the aggregate are reserved for issuance under
the Plan, which shares shall be available for issuance (subject to adjustment as
provided in Section 6) pursuant to the exercise of Stock Options, granted under
Sections 7(a) and 7(c) of the Plan, or Stock Awards, under Section 7(d) of the
Plan. The maximum number of Stock Options that may be granted to any one
employee of the Company is 60,000.
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. In addition, any shares that are used for
the full or partial payment of the exercise price of any option or in full or
partial payment of a tax-withholding obligation under the Plan will not be
counted as issued under the Plan and will be available for future grants under
the Plan.
Any shares issued under the Plan may consist, in whole or in part, of
authorized and unissued shares, treasury shares or shares purchased by the Plan.
No fractional shares shall be issued under the Plan. Cash may be paid in lieu of
any fractional shares in settlement of awards under the Plan.
6. ADJUSTMENTS.
If the number of outstanding shares of Common Stock is increased or
decreased or the shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company on account
of any recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other distribution
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payable in capital stock, or other increase or decrease in such shares effected
without receipt of consideration by the Company occurring after the Effective
Date, the number and kinds of shares for which grants of awards may be made
under the Plan shall be adjusted proportionately and accordingly by the Company.
In addition, the number and kind of shares for which grants are outstanding
shall be adjusted proportionately and accordingly so that the proportionate
interest of the grantee immediately following such event shall, to the extent
practicable, be the same as immediately before such event. Any such adjustment
in outstanding Stock Options shall not change the aggregate Stock Option
purchase price payable with respect to shares that are subject to the
unexercised portion of the Stock Option outstanding but shall include a
corresponding proportionate adjustment in the Stock Option purchase price per
share.
Adjustments under this Section 6 relating to shares of Common Stock or
securities of the Company shall be made by the Committee, whose determination in
that respect shall be final, binding and conclusive. No fractional shares or
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share. The granting of awards pursuant to
the Plan shall not affect or limit in any way the right or power of the Company
to make adjustments, reclassifications, reorganizations, or changes of its
capital or business structure or to merge, consolidate, dissolve, or liquidate,
or to sell or transfer all or any part of its business or assets.
7. AWARDS. The Committee shall determine the type or types of award(s) to
be made to each participant under the Plan and shall approve the terms and
conditions governing these awards in accordance with Section 11. Awards may be
granted singly, in combination or in tandem so that the settlement or payment of
one automatically reduces or cancels the other. The types of awards that may be
made under the Plan are set forth below.
(a) "Stock Option" - means a grant of a right to purchase a specified
number of shares of Common Stock under the Plan during a specified period.
A Stock Option may be in the form of an "Incentive Stock Option", which
means a Stock Option granted by the Committee that complies with Section
422 of the Code, as amended, and the regulations thereunder at the time of
grant, or of a Non-Statutory Stock Option, as defined in this paragraph. A
"Non-Statutory Stock Option" means a Stock Option granted by the Committee
to (i) an outside director or (ii) to 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. The exercise price of each Stock Option shall be the per share
Fair Market Value of Common Stock on the date the award 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 shareholder, 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 Company's Common Stock on the date the Incentive Stock Option
is granted. A Stock Option may be exercised in whole or in installments,
which may be cumulative. The price at which shares of Common Stock may be
purchased under a Stock Option shall be paid in full at the time of the
exercise, in either cash or such other methods as provided by the Committee
at the time of grant or as provided in the form of agreement approved in
accordance herewith, including tendering (either actually or by
attestation) Common Stock at Fair Market Value on the date of surrender, or
any combination thereof.
(b) "Limited Right" - means the right to receive an amount of cash based
upon the terms set forth in Section 12.
(c) "Reload Option" - means an additional Stock Option granted pursuant to
Section 13.
(d) "Dividend Equivalent Right" means the right to receive an amount of
cash based upon the terms set forth in Section 14 hereof.
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(e) "Stock Award" - means an award under the Plan, made in stock or
denominated in units of stock. All or part of any Stock Award may be
subject to conditions established by the Committee, and set forth in the
award agreement, which may include, but are not limited to, continuous
service with the Company, achievement of specific business objectives, and
other measurements of individual, business unit or Company performance.
8. DEFERRALS AND SETTLEMENTS. Payment of awards may be in the form of
Common Stock or other awards, or in the case of Limited Rights, cash, or in
combinations thereof as the Committee determines at the time of grant, and with
such restrictions as it may impose. No Stock Option is to be considered
exercised until payment in full is accepted by the Committee. The means by which
a recipient of an award may make payment is set forth below.
(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 a Stock Option to be paid from borrowed
funds.
(b) Cashless Exercise. Subject to vesting requirements, if applicable, a
participant may engage in a "cashless exercise" of the Stock Option. Upon a
cashless exercise, the participant shall give the Company written notice of
the exercise of the Stock 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 Stock Option and to deliver enough of the proceeds to
the Company to pay the Stock Option exercise price and any applicable
withholding taxes. If the participant does not sell the Common Stock
subject to the Stock Option through a registered broker-dealer or
equivalent third party, the participant may give the Company written notice
of the exercise of the Stock Option and the third-party purchaser of the
Common Stock subject to the Stock Option shall pay the Stock Option
exercise price plus applicable withholding taxes to the Company.
(c) Exchange of Common Stock. The Committee may permit payment of the Stock
Option exercise price by the tendering of previously acquired shares of
Common Stock. All shares of Common Stock tendered in payment of the
exercise price of a Stock 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 prior exercise of a Stock Option or as awards
under this or any other stock award plan sponsored by the Company 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.
9. FAIR MARKET VALUE. "Fair Market Value" for all purposes under the Plan
shall mean the reported closing price of Common Stock as reported by the Nasdaq
stock market on such date (as reported in The Wall Street Journal, if
published), or if the Common Stock was not traded on such date, on the next
preceding day on which Common Stock was traded thereon. If the Common Stock is
not reported on the Nasdaq stock 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.
Under no circumstances shall Fair Market Value be less than the par value
of the Common Stock.
10. TRANSFERABILITY AND EXERCISABILITY. All awards under the Plan, other
than Non-Statutory Stock Options, will be nontransferable and shall not be
assignable, alienable, saleable or otherwise transferable by the participant
other than by will or the laws of descent and distribution, except pursuant to a
domestic relations order entered by a court of competent jurisdiction or as
otherwise determined by the Committee.
If so permitted by the Committee, a participant may designate a beneficiary
or beneficiaries to exercise his rights under any Stock Option, Reload Option,
Limited Right or Dividend Equivalent Right who would be entitled to and receive
any distributions under the Plan upon the participant's death. However, in the
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case of participants who are subject to Section 16 of the Securities Exchange
Act 1934 (the "1934 Act"), any contrary requirements of Rule 16b-3 under the
1934 Act, or any successor rule, shall prevail over the provisions of this
Section.
Awards granted pursuant to the Plan may be exercisable pursuant to a
vesting schedule as determined by the Committee. The Committee may, in its sole
discretion, accelerate or extend the time during which any Stock Option may be
exercised, or any Stock Award may vest, in whole or in part, provided, however,
that with respect to an Incentive Stock Option, it must be consistent with the
terms of Section 422 of the Code in order to continue to qualify as an Incentive
Stock Option. Notwithstanding the above, in the event of Retirement (as defined
in Section 26 hereof), death or Disability (as defined in Section 26 hereof),
all awards shall immediately vest.
11. AWARD AGREEMENTS. Each award of Stock Options, Reload Options, Limited
Rights, Dividend Equivalent Rights and Stock Award under the Plan shall be
evidenced by an agreement that is approved by the Committee. The agreement must
set forth the terms, conditions and limitations to an award and the provisions
applicable in the event the participant's employment terminates, provided,
however, in no event shall the term of any Incentive Stock Option exceed a
period of ten years from the date of its 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 shareholder, 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.
In addition, 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. In the event the amount
exercisable shall exceed $100,000, 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.
12. LIMITED RIGHTS. The Committee may grant a Limited Right simultaneously
with the grant of any Stock Option, 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 Limited Rights. A Limited Right shall not 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 or the Association.
The Limited Right may be exercised only when the underlying Stock 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 Stock Option.
Upon exercise of a Limited Right, the related Stock Option shall cease to
be exercisable. Upon exercise or termination of a Stock Option, any related
Limited Rights shall terminate. The Limited Right 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 Stock Option. The Limited
Right is transferable only when the underlying Stock Option is transferable
and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall promptly
receive from the Company an amount of cash equal to the positive difference
between the Fair Market Value on the date of grant of the related Stock
Option and the Fair Market Value of the underlying shares on the date the
Limited Right is exercised, multiplied by the number of shares with respect
to which such Limited Right is being exercised. In the event of a merger
transaction, the Limited Right shall be exercisable solely for shares of
the acquiring corporation or its parent, as applicable. The number of
shares to be received on the exercise of such Limited Right shall be
determined by dividing the amount of cash that would have been available
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under the first sentence above by the Fair Market Value at the time of
exercise of the shares underlying the option subject to the Limited Right.
13. RELOAD OPTION. Simultaneously with the grant of any Stock Option to a
participant, the Committee may grant a Reload Option with respect to all or some
of the shares covered by such Stock Option. A Reload Option may be granted to a
participant who satisfies all or part of the exercise price of the Stock Option
with shares of Common Stock. The Reload Option represents an additional Stock
Option to acquire the same number of shares of Common Stock used by the
participant to pay for the original Stock Option. Reload Options may also be
granted to replace Common Stock withheld by the Company for payment of a
participant's withholding tax under Section 16. A Reload Option is subject to
all of the same terms and conditions as the original Stock Option, including the
remaining option exercise term, except that (i) the exercise price of the shares
of Common Stock subject to the Reload Option will be determined at the time the
original Stock Option is exercised, and (ii) such Reload Option will conform to
all provisions of the Plan at the time the original option is exercised.
14. DIVIDEND EQUIVALENT RIGHTS. Simultaneously with the grant of any Stock
Option to a participant, the Committee may grant a Dividend Equivalent Right
with respect to all or some of the shares covered by such Stock Option. Dividend
Equivalent Rights granted under this Plan are subject to the following terms and
conditions:
(a) Terms of Rights. The Dividend Equivalent Right provides the participant
with a cash benefit per share for each share underlying the unexercised
portion of the related Stock Option equal to the amount of any
extraordinary dividend (as defined in Section 14 (c)) per share of Common
Stock declared by the Company. The terms and conditions of any Dividend
Equivalent Right shall be evidenced in the option agreement entered into
with the participant and shall be subject to the terms and conditions of
the Plan. The Dividend Equivalent Right is transferable only when the
related option is transferable and under the same conditions.
(b) Payment. Upon the payment of an extraordinary dividend, the participant
holding a Dividend Equivalent Right with respect to Stock Options or
portions thereof which have vested shall promptly receive from the Company
or its Affiliate, as applicable, the amount of cash equal to the difference
between the amount of the extraordinary dividend per share of Common Stock
and the average dividend per share of Common Stock based on the current and
preceding three quarters (assuming dividends were paid in each quarter, and
if not then based on the average of the quarters in the last four quarters
in which dividends were paid), multiplied by the number of shares of Common
Stock underlying the unexercised portion of the related Stock Option. With
respect to Stock Options or portions thereof which have not vested, the
amount that would have been received pursuant to the Dividend Equivalent
Right with respect to the shares underlying such unvested Stock Option or
portion thereof shall be paid to the participant holding such Dividend
Equivalent Right together with earnings thereon, on such date as the Stock
Option or portion thereof becomes vested. Payment of an extraordinary
dividend will be decreased by the amount of any applicable tax withholding
prior to distribution to the participant as set forth in Section 16.
(c) Extraordinary Dividend. For purposes of this Section 14, an
extraordinary dividend is any cash dividend paid on shares of Common Stock
where (i) the dividend rate exceeds 200% of the Association's weighted
average cost of funds on interest-bearing liabilities for the current
quarter and preceding three quarters, and (ii) the annualized aggregate
dollar amount of the dividend exceeds the Association's net income after
taxes for the current quarter and preceding three quarters. For purposes of
this Section 14, the dividend rate equals the quotient, expressed as a
percentage, of (i) the annualized dollar amount of the dividend, and (ii)
the last trade price of the Company's Common Stock on the day immediately
before the dividend is declared.
15. PLAN AMENDMENT. The Board or the Committee may modify or amend the Plan
as it deems necessary or appropriate or modify or amend an award received by key
employees and/or outside directors. No such amendment shall adversely affect any
outstanding awards under the Plan without the consent of the holders thereof.
16. TAX WITHHOLDING. The Company may deduct from any settlement of an award
made under the Plan, including the delivery or vesting of shares, an amount
sufficient to cover the minimum withholding required by law for any federal,
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state or local taxes or to take such other action as may be necessary to satisfy
any such withholding obligations. The Committee may permit shares to be used to
satisfy the minimum required tax withholding and such shares shall be valued at
the Fair Market Value as of the settlement date of the applicable award.
17. OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Settlements of awards
received by participants under the Plan shall not be deemed a part of a
participant's regular, recurring compensation for purposes of calculating
payments or benefits from any Company benefit plan, severance program or
severance pay law of any country, unless otherwise determined by the Committee,
or unless the contrary is specifically provided in a Company benefit plan that
is exempt from tax under Section 401(a) of the Code.
18. UNFUNDED PLAN. Unless otherwise determined by the Committee, the Plan
is an unfunded plan. The Plan shall not create (or be construed to create) a
trust or a separate fund or funds. The Plan shall not establish any fiduciary
relationship between the Company and any participant or other person. To the
extent any person holds any rights by virtue of a grant awarded under the Plan,
such right (unless otherwise determined by the Committee) shall be no greater
than the right of an unsecured general creditor of the Company.
19. FUTURE RIGHTS. No person shall have any claim or right to be granted an
award under the Plan, and no participant shall have any rights by reason of the
grant of any award under the Plan to continued employment by the Company or any
subsidiary of the Company.
20. GENERAL RESTRICTION. Each award shall be subject to the requirement
that, if at any time the Committee shall determine, in its sole discretion, that
the listing, registration or qualification of any award under the Plan upon any
securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such award or the grant or
settlement thereof, such award may not be exercised or settled in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Committee.
21. GOVERNING LAW. The validity, construction and effect of the Plan and
any actions taken or relating to the Plan shall be determined in accordance with
the laws of the State of Delaware.
22. SUCCESSORS AND ASSIGNS. The Plan shall be binding on all successors and
permitted assigns of a participant, including, without limitation, the guardian
or estate of such participant and the executor, administrator or trustee of such
estate, or any receiver or trustee in bankruptcy or representative of the
participant's creditors.
23. RIGHTS AS A SHAREHOLDER. A participant shall have no rights as a
shareholder with respect to awards under the Plan until he or she becomes the
holder of record of shares granted under the Plan.
24. CHANGE IN CONTROL. Notwithstanding anything to the contrary in the
Plan, the following shall apply to all outstanding awards granted under the Plan
in the event of a Change in Control:
(a) Definition. A "Change in Control" of the Association or the Company
means a change in control of a nature that: (i) would be required to be
reported in response to Item 1(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Association 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 Company's outstanding securities
except for any securities purchased by the Association's 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
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least a majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was approved by
the same Nominating Committee serving under an Incumbent Board, shall be,
for purposes of this clause (b), considered as though he were a member of
the Incumbent Board; or (c) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the
Association or the Company or similar transaction in which the Association
or Company is not the surviving corporation occurs; or (d) a proxy
statement soliciting proxies from stockholders of the Company, by someone
other than the current Board of Directors 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 common stock of the Company
are 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 shareholders 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.
(b) Acceleration of Vesting and Payment of Limited Rights.
(1) Upon the occurrence of an event constituting a Change in Control,
all Limited Rights, Stock Options, Stock Awards or any other
award granted pursuant to this Plan outstanding on such date
shall become 100% vested.
(2) Upon the occurrence of an event constituting a Change in Control
involving an exchange of stock, all Stock Options shall become
options to purchase the exchanged stock at the applicable
exchange ratio (with no change in the aggregate exercise price).
(c) Effect of a Change in Control on Stock 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:
(1) provide that such Stock Options shall be assumed, or equivalent
stock options shall be substituted ("Substitute Options") by the
acquiring or succeeding corporation (or an affiliate thereof),
provided that: (A) any such Substitute Options exchanged for
Incentive Stock Options shall meet the requirements of Section
424(a) of the Code, and (B) 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 Stock Option surrendered equal to
the difference between (1) the 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 Stock Options, and (2) the aggregate
exercise price of all such surrendered Stock Options; or
(2) in the event of a Change in Control transaction whereby the
holders of Common Stock will receive 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 Stock
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 Stock Options.
25. COMPLIANCE WITH SECTION 16. With respect to persons subject to Section
16 of the 1934 Act, transactions under this Plan are intended to comply with all
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applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the
extent any provisions of the Plan or actions of the Committee fail to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
26. TERMINATION OF EMPLOYMENT. Upon the termination of an employee's
employment for any reason other than Disability, Retirement, Change in Control,
death or Termination for Cause, the employee's Stock Options shall be
exercisable, but only as to those shares that were immediately purchasable by,
or vested in, such employee at the date of termination, and such options may be
exercised only for a period of three (3) months following such termination. Upon
the termination of an employee's service because of Disability, Retirement,
Change in Control or death, the employee's Stock Options shall be exercisable as
to all shares whether or not then exercisable, and the employee's Stock Awards
shall vest as to all shares subject to an outstanding award, whether or not
otherwise immediately vested in such employee at the date of termination and
options may be exercised for a period of five (5) years following termination.
Notwithstanding anything to the contrary herein, in no event shall the exercise
period extend beyond the expiration of the Stock Option term. In the event of
termination of employment or service for Cause (as defined herein) all rights
and awards granted to an employee or director under the Plan not exercised or
vested shall expire upon termination.
No option shall be eligible for treatment as an Incentive Stock Option in
the event such option is exercised more than three (3) months following the date
of the employee's Retirement or termination of employment following a Change in
Control; and provided further, that no option shall be eligible for treatment as
an Incentive Stock Option in the event such option is exercised more than one
year following termination of employment due to Disability, and provided
further, in order to obtain Incentive Stock Option treatment for options
exercised by heirs or devisees of an optionee, the optionee's death must have
occurred while employed or within three (3) months of termination of employment.
"Disability" means, with respect to an employee, 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. Additionally, a medical doctor
selected or approved by the Board of Directors 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 the employee's lifetime.
"Retirement" means, with respect to an employee, retirement at the normal
or early retirement date set forth in the Association's employee stock ownership
plan, or as determined by the Board of Directors, or such other time as
determined by written resolution of the Committee.
Termination "for Cause" means the termination upon 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.
27. TERMINATION OF SERVICE AS A DIRECTOR. Upon the termination of a
director's service for any reason other than Disability, Retirement, Change in
Control, death or Termination for Cause, the director's Stock Options shall be
exercisable, but only as to those shares that were immediately purchasable by,
or vested in, such director at the date of termination, and options may be
exercised for a period of one (1) year following termination of service, and all
of the director's unvested Stock Awards shall be forfeited. In the event of
termination of service for Cause (as defined above) all rights granted to the
director under the Plan not exercised by or vested in such director shall expire
upon termination of service. Upon the termination of a director's service
because of Retirement, Disability, Change in Control or death, the director's
Stock Options shall be exercisable as to all shares, whether or not then
exercisable, and the director's Stock Awards shall vest as to all shares subject
to an outstanding award, whether or not otherwise immediately vested in such
director at the date of termination, and options may be exercised for a period
of five (5) years following such termination. In no event shall the exercise
period extend beyond the expiration of the Stock Option term.
"Disability" means, with respect to an outside director, the permanent and
total inability by reason of mental or physical infirmity or both, of a director
to carry out the responsibilities of a director of the Company or an Affiliate,
as required by applicable state and federal law.
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"Retirement" means, with respect to a director, retirement on or after
attainment of age sixty-five (65) or seven (7) years of service at the Company
or an Affiliate, or such other time as determined by written resolution of the
Committee.
"Termination for Cause" has the same meaning as set forth under Paragraph
26 above.
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REVOCABLE PROXY
Atlantic Liberty Financial Corp.
SPECIAL MEETING OF STOCKHOLDERS
November 19, 2003
The undersigned hereby appoints the full Board of Directors, with full
powers of substitution to act as attorneys and proxies for the undersigned to
vote all shares of common stock of Atlantic Liberty Financial Corp. which the
undersigned is entitled to vote at a Special Meeting of Stockholders ("Meeting")
to be held at our main office located at 186 Montague Street, Brooklyn, New
York, at 3:30 p.m., (local time) on November 19, 2003. The official proxy
committee is authorized to cast all votes to which the undersigned is entitled
as follows:
FOR AGAINST ABSTAIN
--- ------- -------
1. Approval of the Atlantic Liberty Financial Corp. [ ] [ ] [ ]
2003 Incentive Stock Benefit Plan.
The Board of Directors recommends a vote "FOR" the listed proposal.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSITION STATED ABOVE. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE ABOVE-NAMED PROXIES
AT THE DIRECTION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Secretary of Atlantic
Liberty Financial Corp. at the Meeting of the stockholder's decision to
terminate this proxy, then the power of said attorneys and proxies shall be
deemed terminated and of no further force or effect. This proxy may also be
revoked by sending written notice to the Secretary of Atlantic Liberty Financial
Corp. at the address set forth on the Notice of Special Meeting of Stockholders,
or by the filing of a later proxy statement prior to a vote being taken on a
particular proposal at the Meeting.
The undersigned acknowledges receipt from Atlantic Liberty Financial Corp.
prior to the execution of this proxy of a Notice of Special Meeting and a proxy
statement dated October 14, 2003.
Dated: _________________, 2003
[ ] Check Box if You Plan to Attend Meeting
___________________________________ ____________________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
___________________________________ ____________________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder should sign.
Please complete and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.