SUPPLEMENTAL RETIREMENT AGREEMENT
THIS SUPPLEMENTAL RETIREMENT AGREEMENT is made as of January 1, 2008
by and between ATLANTIC COAST BANK (the "Bank"), its successors and assigns and
THOMAS B. WAGERS, SR. (the "Executive").
1. Definitions. In this Agreement, the following words and phrases shall have
the following meanings:
(a) Accrued Benefit Percentage shall mean, except as otherwise provided in
this Agreement, 2.50% for each full calendar quarter of the
Executive's employment with the Bank since January 1, 2008, calculated
through the earliest of: (i) the last day of the calendar quarter in
which the Executive experiences a Separation from Service or (ii)
attains the Normal Retirement Date; provided, however, that in no
event shall the Accrued Benefit Percentage exceed 60%.
(b) Administrator shall mean the person or committee appointed by the
Board of Directors of the Bank to administer this Agreement. If a
committee is appointed by the Board of Directors, a majority of those
persons shall constitute a quorum and the act of the majority of such
of persons either at a meeting or by written consent, shall be the act
of the Administrator. The administrator may adopt such rules and
procedures, not inconsistent with this Agreement, as it deems
necessary or appropriate in order to administer this Agreement.
(c) Average Compensation shall mean the amount determined by dividing by
three (3) the total compensation reported in Box 1 of Form W-2
(excluding taxable income attributable to any restricted stock awards,
stock options, stock appreciation rights or any other awards made
under any equity plan maintained by the Bank or its affiliates) earned
by the Executive from the Bank and its affiliates and subsidiaries (or
any successors thereto by merger or purchase) during the three
calendar years in the ten year period prior to his Separation from
Service that results in the largest total.
(d) Benefit Determination Date shall mean the first business day of the
calendar month following the earliest of (i) the Executive's Normal
Retirement Date; (ii) the Executive's Separation from Service; (iii)
the Executive's death; (iv) the Executive's Disability; or (v) a
Change in Control.
(e) Cause shall mean a Separation from Service due to the Executive's
personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to
perform stated duties, and willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses) or
final cease-and-desist order.
(f) Change in Control shall mean the following:
(1) "Change in Control" shall mean (i) a change in the ownership of
the Bank or Atlantic Coast Federal Corporation (the "Company"), (ii) a
change in the effective control of the Bank or Company, or (iii) a
change in the ownership of a substantial portion of the assets of the
Bank or Company, as described below. Notwithstanding anything herein
to the contrary, the reorganization of Atlantic Coast Federal, MHC by
way of a "second-step conversion" shall not be deemed a Change in
Control.
(2) A change in ownership occurs on the date that any one person, or
more than one person acting as a group (as defined in Treasury
Regulations section 1.409A-3(i)(5)(v)(B)), acquires ownership of stock
of the Bank or Company that, together with stock held by such person
or group, constitutes more than 50% of the total fair market value or
total voting power of the stock of such corporation.
(3) A change in the effective control of the Bank or Company occurs on
the date that either (i) any one person, or more than one person
acting as a group (as defined in Treasury Regulations section
1.409A-3(i)(5)(vi)(B)) acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such
person or persons) ownership of stock of the Bank or Company
possessing 30% or more of the total voting power of the stock of the
Bank or Company, or (ii) a majority of the members of the Bank's or
Company's board of directors is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority
of the members of the Bank's or Company's board of directors prior to
the date of the appointment or election, provided that this
sub-section "(ii)" is inapplicable where a majority shareholder of the
Bank or Company is another corporation.
(4) A change in a substantial portion of the Bank's or Company's
assets occurs on the date that any one person or more than one person
acting as a group (as defined in Treasury Regulations section
1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such
person or persons) assets from the Bank or Company that have a total
gross fair market value equal to or more than 40% of the total gross
fair market value of (i) all of the assets of the Bank or Company, or
(ii) the value of the assets being disposed of, either of which is
determined without regard to any liabilities associated with such
assets. For all purposes hereunder, the definition of Change in
Control shall be construed to be consistent with the requirements of
Treasury Regulations section 1.409A-3(i)(5), except to the extent that
such regulations are superseded by subsequent guidance.
(g) Disabled or Disability shall mean the Executive:
(1) is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can
be expected to result in death, or last for a continuous period of not
less than 12 months;
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(2) by reason of any medically determinable physical or mental
impairment which can be expected to result in death, or last for a
continuous period of not less than 12 months, is receiving income
replacement benefits for a period of not less than three months under
an accident and health plan covering employees of the Bank; or
(3) is determined to be totally disabled by the Social Security
Administration.
(h) Involuntary Termination shall mean Separation from Service other than
for Cause without the Executive's express written consent and
voluntary resignation due to a material diminution of or interference
with the Executive's duties, responsibilities and benefits as Chief
Operating Officer of the Bank, including (without limitation) any of
the following actions unless consented to in writing by the Executive:
(i) a change in the principal workplace of the Executive to a location
outside of a 30 mile radius from the Executive's principal workplace
as of the date hereof; (ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of other
personnel reporting to the Executive or a material reduction in the
frequency with which, or on the nature of the matters with respect to
which, such personnel are to report to the Executive, other than as
part of an institution-wide reduction in staff; (iv) a material
adverse change in the Executive's salary, perquisites, benefits,
contingent benefits or vacation, other than as part of an overall
program applied uniformly and with equitable effect to all members of
the senior management of the Bank; and (v) a material permanent
increase in the required hours of work or the workload of the
Executive; provided that the Executive has notified the Bank of the
existence of such a condition no later than 90 days after the initial
existence of such condition and the Bank has at least 30 days to cure
such condition. The term "Involuntary Termination" does not include
termination for Cause or termination of employment due to retirement,
death, Disability or suspension or temporary or permanent prohibition
from participation in the conduct of the Bank's affairs under Section
8 of the Federal Deposit Insurance Act.
(i) Monthly Benefit shall mean the Average Compensation multiplied by the
Accrued Benefit Percentage and then divided by twelve (12), calculated
at the Benefit Determination Date.
(j) Normal Retirement Date shall mean January 1, 2014.
(k) Separation from Service shall mean the date of cessation of the
employment relationship (other than an approved leave of absence)
between the Executive and the Bank and its affiliates and subsidiaries
(including any successor in interest, if applicable), and shall be
construed to comply with Code Section 409A and Treasury Regulations
Section 1.409A-1(h).
(l) Specified Employee shall mean a key employee of the Bank within the
meaning of Code Section 416(i) without regard to paragraph 5 thereof,
determined in accordance with Code Section 409A and Treasury
Regulations Section 1.409A-1(i).
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2. Payment of Benefits.
(a) Normal Benefit. If Monthly Benefits have not already started due to
Separation from Service, Disability or Change in Control, the Bank
shall pay the Monthly Benefit to Executive starting on the first
business day of the month following the Normal Retirement Date and on
the first business day of each calendar month thereafter for a total
of 180 months (i.e., monthly payments for 15 years), regardless of
whether the Executive has experienced a Separation from Service;
provided however, that, if the Executive has experienced a Separation
from Service, then, to the extent necessary to avoid penalties under
Code Section 409A and the regulations thereunder, such payments shall
not commence until the first day of the seventh month following the
date of the Executive's Separation from Service if the Executive is a
Specified Employee on his date of Separation from Service.
(b) Death Benefit.
(i) Death Before Benefit Period Begins. If the Executive dies
prior to the Normal Retirement Date, Separation from
Service, Disability or Change in Control, the Bank shall pay
to the beneficiary designated on Exhibit A, using an Accrued
Benefit Percentage of 60%, the Monthly Benefit commencing on
the first business day of the month following the
Executive's Normal Retirement Date and on the first business
day of each calendar month thereafter for a period of 180
months. The Average Compensation calculation shall assume
that the Executive's compensation increased by 3% for each
full calendar year that occurs prior to what would have been
his Normal Retirement Date.
(ii) Death During Benefit Period. If the Executive dies after
Normal Retirement Date, Separation from Service, Disability
or Change in Control, the Bank shall make any remaining
monthly payments due to the Executive to the beneficiary
designated by the Executive on Exhibit A.
(c) Disability Benefit. If the Executive becomes Disabled before the
Normal Retirement Date, death, Separation from Service or Change in
Control, the Bank shall pay the Monthly Benefit to him, using an
Accrued Benefit Percentage of not less than 60%, starting on the first
business day of the calendar month following the date on which the
Executive became Disabled and on the first business day of each
calendar month thereafter for a total of 180 months (i.e., monthly
payments for 15 years). If the Executive dies after becoming entitled
to Disability benefits, the Bank shall continue to make the remaining
monthly payments due to the Executive to the beneficiary designated by
the Executive on Exhibit A.
(d) Separation from Service Benefit. In the event the Executive incurs a
Separation from Service due to an Involuntary Termination before the
Normal Retirement Date, Disability, death or Change in Control, the
Bank shall pay the Monthly Benefit to the Executive, using an Accrued
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Benefit Percentage of not less than 60%, commencing on the first
business day of the month following the Separation from Service and on
the first business day of each calendar month thereafter for a total
of 180 months; (i) provided, however, that in the event of Separation
from Service due to Cause, except as may be prohibited by federal law,
the Executive shall only be entitled to the Monthly Benefit calculated
at the time of his Separation from Service with payment commencing on
the first business day of the month following the Separation from
Service and on the first business date of each calendar month
thereafter for a total of 180 months; and (ii) provided, further,
that, to the extent necessary to avoid penalties under Code Section
409A and the regulations thereunder, such payments shall not commence
until the first day of the seventh month following the date of the
Executive's Separation from Service if the Executive is a Specified
Employee on his date of Separation from Service.
(e) Change in Control Benefit. If a Change in Control occurs before the
Normal Retirement Date, Separation from Service, Disability or death,
then, within 30 calendar days after such Change in Control, the Bank
shall pay the Executive a lump sum equal to the present value of the
Monthly Benefit that would otherwise be paid to the Executive
hereunder, using an Accrued Benefit Percentage of not less than 60%,
regardless of whether the Executive has experienced a Separation from
Service; provided however, that, if the Executive has experienced a
Separation from Service, then, to the extent necessary to avoid
penalties under Code Section 409A and the regulations thereunder, such
payments shall not be made until the first day of the seventh month
following the date of the Executive's Separation from Service if the
Executive is a Specified Employee on his date of Separation from
Service.
(f) Funding of Monthly Benefit. The Bank reserves the right to purchase a
contract from a life insurance company with a minimum rating of AA
from Standard & Poors and Moody's in order to provide all or any
portion of the Monthly Benefit described herein. Upon the Bank's
purchase of such contract and distribution of the contract to
Executive or his Beneficiary, the Bank's liability to provide the
Monthly Benefit hereunder shall cease and such contract shall be the
sole source of funds for providing such Monthly Benefit.
3. Required Provisions.
(a) The Bank may terminate Executive's employment at any time, but any
termination by the Bank other than Separation from Service for Cause
as defined above shall not prejudice Executive's right to compensation
or other benefits under this Agreement. Executive shall have no right
to receive compensation or other benefits for any period after
Separation from Service for Cause.
(b) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice
served under Section 8(e)(3) [12 USC ss.1818(e)(3)] or 8(g)(1) [12 USC
ss.1818(g)(1)] of the Federal Deposit Insurance Act (the "FDI Act"),
the Bank's obligations under this Agreement shall be suspended as of
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the date of service, unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, the Bank may in its discretion
(i) pay Executive all or part of the compensation withheld while its
contract obligations were suspended and (ii) reinstate (in whole or in
part) any of its obligations which were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued
under Section 8(e)(4) [12 USC ss.1818(e)(4)] or 8(g)(1) [12 USC
ss.1818(g)(1)] of the FDI Act, all obligations of the Bank under this
Agreement shall terminate as of the effective date of the order, but
vested rights of the contracting parties shall not be affected.
(d) If the Bank is in default as defined in Section 3(x)(1) [12 USC
ss.1813(x)(1)] of the FDI Act, all obligations of the Bank under this
Agreement shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting
parties.
(e) All obligations under this Agreement shall be terminated, except to
the extent determined that continuation of this Agreement is necessary
for the continued operation of the Bank, (i) by the Director of the
Office of Thrift Supervision ("OTS") or his or her designee, at the
time the FDIC enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) [12
USC ss.1823(c)] of the FDI Act; or (ii) by the Director or his or her
designee at the time the Director or his or her designee approves a
supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director to be in an unsafe
or unsound condition. Any rights of the parties that have already
vested, however, shall not be affected by such action.
(f) Notwithstanding anything herein contained to the contrary, any
payments to Executive by the Company, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the FDI Act, 12 U.S.C. Section
1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part
359.
4. Claims. In the event a claim for benefits is wholly or partially denied
under this Agreement, the Executive or any other person claiming benefits
under this Agreement (a "Claimant") shall be given notice in writing within
30 calendar days after the Administrator's receipt of the claim. For good
cause shown, the Administrator may extend this period for an additional 30
calendar days. Any denial must specifically set forth the reasons for the
denial and any additional information necessary to rescind such denial. The
Claimant shall have the right to seek a review of the denial by filing a
written request with the Administrator within 60 calendar days of receipt
of the denial. Such request may be supported by such documentation and
evidence deemed relevant by the Claimant. Following receipt of this
information, the Administrator shall make a final determination and notify
the Claimant in writing within 60 calendar days of the Administrator's
receipt of the request for review together with the specific reasons for
the decision.
5. General Assets and Funding. The amounts payable under this Agreement are
payable from the general assets of the Bank and no special fund or
arrangement is intended to be established hereby nor shall the Bank be
required to earmark, place in trust or otherwise segregate assets with
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respect to this Agreement or any benefits hereunder. The Administrator
reserves the right to determine how the Bank will fund its obligation
undertaken by this Agreement. Should the Administrator elect to purchase
assets relating to this Agreement, in whole or in part, through the medium
of life insurance or annuities, or both, the Bank shall be the owner and
beneficiary of each such policy unless otherwise provided by this
Agreement. Bank reserves the absolute right, in its sole discretion, to
terminate such life insurance or annuities, as well as any other investment
program, at any time, in whole or in part unless otherwise provided by this
Agreement. Such termination shall in no way affect the Bank's obligation to
pay the Executive the benefits as provided in this Agreement. At no time
shall the Executive be deemed to have any right, title, or interest in or
to any specific asset or assets of the Bank, including but not by way of
restriction, any insurance or annuity contract and contracts or the
proceeds therefrom.
6. Certain Reductions. Notwithstanding any other provision of this Agreement,
if the value and amounts of benefits under this Agreement, together with
any other amounts and the value of benefits received or to be received by
the Executive in connection with a Change in Control would cause any amount
to be nondeductible for federal income tax purposes by the Bank or the
consolidated group of which the Bank is a member pursuant to Section 280G
of the Code, then amounts and benefits under this Agreement shall be
reduced (not less than zero) to the extent necessary so as to maximize
amounts and the value of benefits to the Employee without causing any
amount to become nondeductible by Bank pursuant to or by reason of such
Section 280G. The Employee shall determine the allocation of such reduction
among payments and benefits to the Employee.
7. Beneficiary Designations. The Executive shall designate a beneficiary by
filing with Bank a written designation of beneficiary on a form
substantially similar to the form attached as Exhibit A. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Bank during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the
beneficiary predeceases the Executive, or if the Executive names a spouse
as beneficiary and the marriage is subsequently dissolved. If the Executive
dies without a valid beneficiary designation, all payments shall be made to
the Executive's surviving spouse, if any, and if none, to the Executive's
surviving children and the descendants of any deceased child by right of
representation, and if no children or descendants survive, to the
Executive's estate.
If a benefit is payable to a minor, to a person declared incompetent, or to
a person incapable of handling the disposition of his or her property, the
Bank may pay such benefit to the guardian, legal representative or person
having the care or custody of such minor, incompetent person or incapable
person, or to a custodian selected by the Bank under the Georgia Uniform
Transfers to Minors Act for the benefit of such minor. The Bank may require
proof of incompetency, minority or guardianship as it may deem appropriate
prior to distribution of the benefit. Such distribution shall completely
discharge the Bank from all liability with respect to such benefit.
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8. Amendment and Termination.
(a) Amendment. The Bank may at any time amend the Agreement in whole or in
part, provided, however, that no amendment shall decrease or restrict
the amount accrued to the date of amendment.
(b) Termination. The Bank may at any time partially or completely
terminate the Agreement, if, in its judgment, the tax, accounting, or
other effects of the continuance of the Agreement, or potential
payments thereunder, would not be in the best interests of the Bank.
(i) Partial Termination. In the event of a partial termination,
the Agreement shall continue to operate and be effective with regard to
benefits accrued prior to the effective date of such partial termination,
but no further benefits shall accrue after the date of such partial
termination.
(ii) Complete Termination. Subject to the requirements of Code
Section 409A, in the event of complete termination, the Agreement shall
cease to operate and the Bank shall pay the Executive his Account as if he
had terminated service as of the effective date of the complete
termination. Such complete termination of the Agreement shall occur only
under the following circumstances and conditions.
(A) The Bank may terminate the Agreement within 12 months of a
corporate dissolution taxed under Code section 331, or with approval of a
bankruptcy court pursuant to 11 U.S.C. ss.503(b)(1)(A), provided that the
amounts accrued under the Agreement are included in the Executive's gross
income in the latest of (i) the calendar year in which the Agreement
terminates; (ii) the calendar year in which the amount is no longer subject
to a substantial risk of forfeiture; or (iii) the first calendar year in
which the payment is administratively practicable.
(B) The Bank may terminate the Agreement within the 30 days
preceding a Change in Control (but not following a Change in Control),
provided that the Agreement shall only be treated as terminated if all
substantially similar arrangements sponsored by the Bank are terminated so
that the Executive and all participants under substantially similar
arrangements are required to receive all amounts of compensation deferred
under the terminated arrangements within 12 months of the date of the
termination of the arrangements.
(C) The Bank may terminate the Agreement provided that (i) all
arrangements sponsored by the Bank that would be aggregated with this
Agreement under Treasury Regulations section 1.409A-1(c) if any individual;
covered by this Agreement was also covered by any of those other
arrangements are also terminated; (ii) no payments other than payments that
would be payable under the terms of the arrangement if the termination had
not occurred are made within 12 months of the termination of the
arrangement; (iii) all payments are made within 24 months of the
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termination of the arrangements; and (iv) the Bank does not adopt a new
arrangement that would be aggregated with any terminated arrangement under
Treasury Regulations section 1.409A-1(c) if the same individual
participated in both arrangements, at any time within three years following
the date of termination of the arrangement.
(D) The Bank may terminate the Agreement pursuant to such
other terms and conditions as the Internal Revenue Service may permit from
time to time.
9. Miscellaneous.
(a) Withholding. To the extent amounts payable under this Agreement are
determined by the Administrator, in good faith, to be subject to
federal, state or local income tax, the Bank may withhold from each
such payment an amount necessary to meet the Bank's obligation to
withhold amounts under the applicable federal, state or local law.
(b) Governing Law. This Agreement shall be construed under the laws of the
State of Georgia, except to the extent that federal law applies.
(c) Future Employment. This Agreement shall not be construed as providing
the Executive the right to be continued in the employ of the Bank or
its affiliates or subsidiaries.
(d) No Pledge or Attachment. No benefit which is or may become payable
under this Agreement shall be subject to any anticipation, alienation,
sale, transfer, pledge, encumbrance or hypothecation or subject to any
attachment, levy or similar process and any attempt to effect any such
action shall be null and void.
(e) Successors and Assigns. This Agreement and the obligations of the Bank
herein shall be binding upon the successors and assigns of the Bank.
This Agreement may not be assigned by the Bank without the prior
written consent of the Executive or any other beneficiary receiving
payments under this Agreement.
(f) Participation in Plans. Nothing contained in this Agreement shall be
construed to alter, abridge, or in any manner affect the rights and
privileges of the Executive to participate in and be covered by any
pension, profit sharing, group insurance, bonus, incentive, or other
employee plans which the Bank or its affiliates or subsidiaries may
now or hereafter have.
(g) Notices. Any notices under this Agreement shall be provided to the
Executive at his last address on file with the Administrator and shall
be provided to the Administrator in care of President, Atlantic Coast
Federal, 505 Haines Avenue, Waycross, Georgia 31501.
(h) Headings. Headings of sections herein are inserted for convenience of
reference. They are not to be considered in the construction of this
Agreement.
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(i) Savings Clause. If any provision of this Agreement shall be for any
reason invalid or unenforceable, the remaining provisions shall be
carried into effect.
(j) Entire Agreement. This Agreement constitutes the entire agreement
between the Bank and the Executive as to the subject matter hereof. No
rights are granted to the Executive be virtue of this Agreement other
than as specifically set forth herein.
(k) Suicide. No benefits shall be payable if the Executive commits suicide
within two (2) years after the date of this Agreement, or if the
Executive has made any material misstatement of fact on any
application for life insurance purchased by the Bank
(l) Top Hat Agreement. For purposes of the Internal Revenue Code, the Bank
intends this Agreement to be an unfunded, unsecured promise to pay on
the part of the Bank. For purposes of ERISA, the Bank intends this
Agreement to be an unfunded obligation solely for the benefit of the
Executive for the purpose of qualifying this Agreement for the "top
hat" exception under sections 201(2), 301(a)(3) and 401(a) of ERISA.
The parties have caused this Agreement to be executed and delivered as
of the date first above written.
ATLANTIC COAST BANK
August 4, 2008 By: /s/ Robert J. Larison, Jr.
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Date Name: Robert J. Larison, Jr.
Title: President and Chief Executive
Officer
EXECUTIVE
August 4, 2008 /s/ Thomas B. Wagers, Sr.
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Date Thomas B. Wagers, Sr.
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