EXHIBIT 10.4
SUPPLEMENTAL RETIREMENT AGREEMENT
THIS SUPPLEMENTAL RETIREMENT AGREEMENT is made as of January 1, 2006 by
and between ATLANTIC COAST FEDERAL (the "Bank"), its successors and assigns and
XXX X. XXXXXX, XX. (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, 1.15% for each full calendar quarter
of the Executive's employment with the Bank since January 1,
2006, 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%.
(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 monetary compensation earned by
the Executive from the Bank 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 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.
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(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
Proposed Treasury Regulations section 1.409A-3(g)(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 Proposed Treasury
Regulations section 1.409A-3(g)(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 35% 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 Proposed
Treasury Regulations section 1.409A-3(g)(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 Proposed Treasury Regulations section
1.409A-3(g)(5), except to the extent that such proposed
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
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 Executive
Vice President 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. 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 Commencement Date.
(J) NORMAL RETIREMENT DATE shall mean the date the Executive attains
age 55.
(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 Proposed 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
Proposed Treasury Regulations Section 1.409A-1(i).
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2. PAYMENT OF BENEFITS.
(A) NORMAL BENEFIT.
If the Executive is living on the Benefit Commencement Date, the
Bank shall pay the Monthly Benefit to him on such 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 comply with 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 DURING OR AFTER SERVICE. If the Executive
dies prior to the Normal Retirement Date, 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 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 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 on or after the Benefit Commencement Date,
the Bank shall continue to make the 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, 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, the Bank shall
pay the Monthly Benefit to the Executive, using an Accrued
Benefit Percentage of not less than 60%, commencing on the first
business day of the month following the Separation from Service
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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 comply with 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. Subject to Section 5, if a Change in
Control occurs before the Normal Retirement Date, then, within
30 calendar days of a 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 comply with 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.
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 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.
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(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
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
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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.
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.
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(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 Proposed 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 termination of the
arrangements; and (iv) the Bank does not adopt a new arrangement
that would be aggregated with any terminated arrangement under
Proposed Treasury regulations section 1.409A-1(c) if the same
individual participated in both arrangements, at any time within
five 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.
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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, 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx
00000.
(H) HEADINGS. Headings of sections herein are inserted for
convenience of reference. They are not to be considered in the
construction of this Agreement.
(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.
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(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 8th day of November, 2006.
ATLANTIC COAST FEDERAL
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-----------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Vice-Chairman/BOD
EXECUTIVE
/s/ Xxx X. Xxxxxx, Xx.
-----------------------------------
Xxx X. Xxxxxx, Xx.
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