EXHIBIT 10.3
SUPPLEMENTAL RETIREMENT AGREEMENT
THIS SUPPLEMENTAL RETIREMENT AGREEMENT dated as of the 1st day of
November, 2002 by and between ATLANTIC COAST FEDERAL, its successors and assigns
and ROBERT J. LARISON, JR. (the "Executive").
WITNESSETH:
WHEREAS, the Executive has heretofore performed his duties in an
exemplary and efficient manner as a long standing employee of Atlantic Coast
Federal;
WHEREAS, Atlantic Coast Federal wishes to provide the Executive with
supplemental retirement benefits consistent with his executive duties on behalf
of Atlantic Coast Federal and its subsidiaries, as well as comparable to the
type of non-qualified retirement benefits provided by other employers to
similarly situated executives with similar responsibilities, duties and
functions; and
WHEREAS, Atlantic Coast Federal believes that the supplemental
retirement benefits to be provided to the Executive pursuant to this Agreement
will induce continued service by the Executive with Atlantic Coast Federal,
which continued service is deemed essential for the future growth and success of
Atlantic Coast Federal and its subsidiaries:
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, Atlantic Coast Federal and the Executive hereby agree as follows:
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, 2.5% for each full calendar quarter
of the Executive's employment since January 1, 2002, calculated
through the last day of the calendar quarter in which the
Executive (i) experiences a Separation from Service or (ii)
attains the Normal Retirement Date, whichever shall first occur;
PROVIDED, HOWEVER, that in no event shall the Accrued Benefit
Percentage exceed 60%, PROVIDED, FURTHER, HOWEVER, the Accrued
Benefit Percentage shall be increased by 3% for each full year
of employment following the Normal Retirement Date (e.g., for
the first additional year the Accrued Benefit Percentage shall
be 63%). There shall be no duplication of the Accrued Benefit
Percentage for service with more than one employer.
(b) ADMINISTRATOR shall mean the person or committee appointed by
the Board of Directors of Atlantic Coast Federal 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
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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 monetary compensation earned by
the Executive from Atlantic Coast Federal and its affiliates and
subsidiaries (or any successors thereto by merger or purchase)
during the three annual periods in the ten year period prior to
his Separation from Service that results in the largest total,
including but not limited to salary, bonuses and incentive
compensation (but excluding specifically stock-based
compensation, such as restricted stock, stock options and stock
appreciation rights). An annual period shall consist of any
twelve (12) month consecutive period not including any portion
of another twelve (12) month period.
(d) BENEFIT COMMENCEMENT DATE shall mean the first business day of
the calendar month following the Executive's Separation from
Service after the earlier of the (i) Early Retirement Date or
(ii) Normal Retirement Date.
(e) CAUSE shall mean a Separation from Service that arises from the
Executive's gross negligence, 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 except as provided in this section, the term
"Change in Control" shall mean:
(i) a transaction at the conclusion of which Atlantic Coast
Federal or a mutual holding company ("MHC") controlling the
institution becomes in stock form and any person or company or
group of persons or companies acting in concert, as defined in
12 C.F.R. Part 574 (the "OTS Control Regulations") controls
Atlantic Coast Federal or the MHC under the OTS Control
Regulations;
(ii) an event of a nature that (a) results in a change in
control within the meaning of the Home Owners' Loan Act or the
OTS Control Regulations, of Atlantic Coast Federal or a company
controlling Atlantic Coast Federal (the "Holding Company") after
the date of this Agreement or (b) would be required to be
reported in response to Item 1 of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13(d)
or 14(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") if such requirements were applicable to Atlantic Coast
Federal or the Holding Company;
(iii) any person (as the term is used in Rule 13d-3 under the
Exchange Act), directly or indirectly, acquires securities of
Atlantic Coast Federal or the Holding Company representing 20%
or more of any class of voting securities of Atlantic Coast
Federal or the Holding Company;
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(iv) individuals who are members of the board of directors of
Atlantic Coast Federal on the date of this Agreement (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election or appointment was
approved by at least three-quarters of the directors comprising
the Incumbent Board or whose nomination for election by Atlantic
Coast Federal's stockholders or members was approved by the
nominating committee serving under an Incumbent board, shall be
considered a member of the Incumbent Board; or
(v) a reorganization, merger, consolidation, sale of all or
substantially all of the assets of Atlantic Coast Federal or a
Holding Company or a similar transaction in which Atlantic Coast
Federal or a Holding Company is not the resulting entity or a
transaction at the completion of which the former stockholders
of the acquired corporation become the holders of more than 40%
of the outstanding common stock of Atlantic Coast Federal or the
Holding Company and it is the resulting entity of such
transaction.
The term "Change in Control" shall not include: (i) an
acquisition of securities by an employee benefit plan of
Atlantic Coast Federal or a Holding Company, (ii) a transaction,
independent of any transaction with a third party, in which
Atlantic Coast Federal forms an MHC controlling the institution;
or (iii) a corporate reorganization in which the ultimate parent
holding company of Atlantic Coast Federal immediately prior to
such transaction and control of such ultimate parent holding
company do not change. In the application of 12 C.F.R. Part 574
to a determination of a Change in Control, determinations to be
made by the OTS shall be made by the Incumbent Board.
(g) DISABLED OR DISABILITY shall mean the Executive's suffering a
sickness, accident or injury which has been determined by the
carrier of any individual or group long-term disability
insurance policy carried by Atlantic Coast Federal covering the
Executive, or if no such policy exists, then as determined by
the Social Security Administration, to be a disability rendering
the Executive totally and permanently disabled. The Executive
must submit proof to Atlantic Coast Federal of the carrier's or
Social Security Administration's determination to Atlantic Coast
Federal.
(h) EARLY RETIREMENT DATE shall mean a date selected by the
Executive for his voluntary Separation from Service prior to the
Normal Retirement Date.
(i) INVOLUNTARY TERMINATION shall mean Separation from Service
without the Executive's express written consent, and shall
include a material diminution of or interference with the
Executive's duties, responsibilities and benefits as President
and Chief Executive Officer of Atlantic Coast Federal, 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
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from Atlantic Coast Federal's main office 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
Atlantic Coast Federal; and (v) a material permanent increase in
the required hours of work or the workload of the Executive. 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 Atlantic Coast Federal's
affairs under Section 8 of the Federal Deposit Insurance Act.
(j) MONTHLY BENEFIT shall mean the Average Compensation multiplied
by the Accrued Benefit Percentage and then divided by twelve
(12), calculated at the time of Separation from Service.
(k) NORMAL RETIREMENT DATE shall mean the date the Executive attains
age 55.
(l) SEPARATION FROM SERVICE shall mean the date of cessation of the
employment relationship (other than an approved leave of
absence) between the Executive and Atlantic Coast Federal and
its affiliates and subsidiaries (including any successor in
interest, if applicable).
2. PAYMENT OF BENEFITS.
(a) RETIREMENT BENEFIT.
If the Executive is living on the Benefit Commencement Date,
Atlantic Coast Federal shall pay the Monthly Benefit to him on
each of the Benefit Commencement Date and on the first business
day of each calendar month thereafter for a total of 180 months.
(b) DEATH BENEFIT.
(i) DEATH DURING OR AFTER SERVICE. If the Executive dies
prior to receiving any payments under this Agreement,
Atlantic Coast Federal 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 what would
have been 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
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3% for each full calendar year that occurs prior to what
would have been his 55th birthday.
(ii) DEATH DURING BENEFIT PERIOD. If the Executive dies while
receiving payments under this Agreement, Atlantic Coast
Federal's obligation to make the monthly payments under
the applicable section of this Agreement shall continue
to the beneficiary designated on Exhibit A.
(c) DISABILITY BENEFIT. In the event that the Executive incurs a
Separation from Service due to a Disability, Atlantic Coast
Federal shall pay the Executive in accordance with the
Disability Benefit Election Form, attached as Exhibit B, which
shall be completed and filed with Atlantic Coast Federal by the
Executive.
(d) INVOLUNTARY TERMINATION BENEFIT. In the event the Executive
incurs a Separation from Service due to an Involuntary
Termination, Atlantic Coast Federal shall pay the Monthly
Benefit to the Executive, using an Accrued Benefit Percentage of
60%, commencing 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.
(e) INVOLUNTARY TERMINATION WITH A CHANGE IN CONTROL. Subject to
Section 6, in the event the Executive incurs a Separation from
Service due to an Involuntary Termination in connection with a
Change in Control, Atlantic Coast Federal shall pay the
Executive the Change in Control benefit in accordance with the
Change of Control Benefit Election Form, attached as Exhibit C,
which shall be completed and filed with Atlantic Coast Federal
by the Executive.
3. TERMINATION FOR CAUSE. Except as may be prohibited by federal law, in
the event that the Executive incurs a Separation from Service due to an
termination for Cause, 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 Normal Retirement Date and on the first business date of each
calendar month thereafter for a total of 180 months.
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
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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 Atlantic Coast Federal and no special
fund or arrangement is intended to be established hereby nor shall
Atlantic Coast Federal be required to earmark, place in trust or
otherwise segregate assets with respect to this Agreement or any
benefits hereunder. The Administrator reserves the right to determine
how Atlantic Coast Federal 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, Atlantic Coast Federal shall be the
owner and beneficiary of each such policy unless otherwise provided by
this Agreement. Atlantic Coast Federal 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 Atlantic Coast Federal's obligation to pay the Executive
and spouse as provided in this Agreement. At no time shall the Executive
or spouse be deemed to have any right, title, or interest in or to any
specific asset or assets of Atlantic Coast Federal, 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 Atlantic Coast Federal or the consolidated group of which
Atlantic Coast Federal 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 Atlantic Coast Federal 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 Atlantic Coast Federal 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 Atlantic Coast Federal 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.
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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,
Atlantic Coast Federal 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
Atlantic Coast Federal under the Georgia Uniform Transfers to Minors Act
for the benefit of such minor. Atlantic Coast Federal may require proof
of incompetency, minority or guardianship as it may deem appropriate
prior to distribution of the benefit. Such distribution shall completely
discharge Atlantic Coast Federal from all liability with respect to such
benefit.
8. 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, Atlantic Coast
Federal may withhold from each such payment an amount necessary
to meet the employer'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 Atlantic Coast Federal 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) AMENDMENT OR TERMINATION OF AGREEMENT. This Agreement may be
terminated or amended, in whole or in part, only upon the mutual
written agreement of Atlantic Coast Federal and the Executive,
provided, however, in the event that any legislative,
regulatory, judicial or other action would cause the benefits to
be taxable to the Executive prior to their actual receipt,
Atlantic Coast Federal shall pay to the Executive, within 30
days of notification by the Executive under this Agreement, a
lump sum payment equal to the amount accrued by Atlantic Coast
Federal under generally accepted accounting principles for the
benefits under this Agreement.
(f) SUCCESSORS AND ASSIGNS. This Agreement and the obligations of
Atlantic Coast Federal herein shall be binding upon the
successors and assigns of Atlantic Coast Federal. This Agreement
may not be assigned by Atlantic Coast Federal without the prior
written consent of the Executive or any other beneficiary
receiving payments under this Agreement.
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(g) 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 Atlantic Coast
Federal or its affiliates or subsidiaries may now or hereafter
have.
(h) 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.
(i) HEADINGS. Headings of sections herein are inserted for
convenience of reference. They are not to be considered in the
construction of this Agreement.
(j) SAVINGS CLAUSE. If any provision of this Agreement shall be for
any reason invalid or unenforceable, the remaining provisions
shall be carried into effect.
(k) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between Atlantic Coast Federal 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.
(l) 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 Atlantic
Coast Federal
(m) TOP HAT AGREEMENT. For purposes of the Internal Revenue Code,
Atlantic Coast Federal intends this Agreement to be an unfunded,
unsecured promise to pay on the part of Atlantic Coast Federal.
For purposes of ERISA, Atlantic Coast Federal 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.
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The parties have caused this Agreement to be executed and delivered as
of the date first above written.
ATLANTIC COAST FEDERAL
By: /s/ H. Dennis Woods
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Name:
Title:
EXECUTIVE
/s/ Robert J. Larison
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Robert J. Larison, Jr.
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