EXHIBIT 10.1
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, 0.75% 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; or (iv) 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.
1
(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) 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 for 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
2
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 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.
(h) 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.
(i) NORMAL RETIREMENT DATE shall mean the date the Executive attains age
55.
(j) 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).
(k) 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).
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.
3
(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) 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 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.
(d) 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.
4
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.
(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
5
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 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.
6
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.
(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
7
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.
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.
8
(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.
(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 FEDERAL
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Vice-Chairman
EXECUTIVE
/s/ Xxx X. Xxxxxx, Xx.
-------------------------------------
Xxx X. Xxxxxx, Xx.
9
