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.
<PAGE>
(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;
2
<PAGE>
(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).
3
<PAGE>
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 Contr
