ATLANTIC COAST BANK
AMENDED AND RESTATED
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

This Amended and Restated Atlantic Coast Bank Supplemental Executive Retirement
Plan (the “Plan”) was originally established on November 1, 2002, and was
amended and restated effective October 1, 2004, and most recently is amended and
restated by this document, effective January 1, 2005, in order to comply with
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and
the 2007 final regulations issued thereunder.  The Plan is being amended and
restated to make certain changes to the Plan’s vesting and benefit calculation
provisions.
 
The purpose of the Plan is to provide supplemental retirement benefits to those
members of senior management who have contributed significantly to the success
and growth of Atlantic Coast Bank (the “Bank”) and its holding company, Atlantic
Coast Federal Corporation (the “Company”) (and any successors thereto), and the
Bank’s predecessor, Atlantic Coast Federal Credit Union, whose services are
vital to its continued growth and success in the future and who are to be
encouraged to remain a valuable part of our future success.
 
ARTICLE I
ELIGIBILITY AND VESTING
 
1.1          Eligibility. Each individual who is selected by the Plan
Administrator shall be eligible to participate in the Plan. Such individuals are
“Participants.” The Plan is intended to only be available to a select group of
management or highly compensated employees, and as such, is intended to be a
“top hat” plan for purposes of the Employee Retirement Income Security Act of
1974, as amended.
 
1.2         Vesting.
 
(a)           Participants shall vest in their benefits under this Plan upon the
earliest to occur of the date (i) Atlantic Coast Federal, MHC completes a
Second-Step Conversion, (ii) a Change in Control (as defined below) occurs,
(iii) the Participant dies in accordance with Section 2.2, or (iv) the Plan
Administrator, in its sole discretion, accelerates vesting.  Notwithstanding the
preceding provisions, any Participant who resigns at the request of, or is
removed from service by, the Office of Thrift Supervision, Federal Deposit
Insurance Corporation or any other regulatory authority for the Bank, shall be
ineligible to participate and shall forfeit any benefits under this Plan.
 
(b)          “Change in Control” means:
 
(i)           A “change in the ownership” of the Bank or the Company, a “change
in the effective control” of the Bank or the Company, or a “change in the
ownership of a substantial portion of the assets” of the Bank or the Company,
each 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.

 

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(ii)          A “change in ownership” occurs on the date that anyone person, or
more than one person acting as a group (as defined in Treasury Regulation
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 percent of the total fair market value or total voting power of the
stock of such corporation.
 
(iii)         A “change in the effective control” of the Bank or Company occurs
on the date that either (A) anyone person, or more than one person acting as a
group (as defined in Treasury Regulation 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 percent or more of the total voting power of the stock of
the Bank or Company, or (B) 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 subsection is inapplicable where a majority
shareholder of the Bank or Company is another corporation.
 
(iv)        A “change in a substantial portion of the assets” of the Bank or the
Company occurs on the date that anyone person or more than one person acting as
a group (as defined in Treasury Regulation 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
percent of the total gross fair market value of (A) all of the assets of the
Bank or Company, or (B) 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 Regulation
Section 1.409A-3(i)(5), except to the extent that such regulations are
superseded by subsequent guidance.
 
(c)           “Second-Step Conversion” means the conversion and reorganization
of Atlantic Coast Federal, MHC, the Company and the Bank from a mutual holding
company structure to a fully public ownership structure.
 
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ARTICLE II
BENEFITS
 
2.1          Appreciation Benefit.
 
(a)           Upon Separation from Service (as defined below) at or after age
sixty-five (65) (“Normal Retirement Age”), the Bank shall pay the Participant an
Appreciation Benefit (as defined below).  The Appreciation Benefit will be
divided by 20 and will be paid in equal annual installments commencing on
January 1st of the year following Separation from Service and on each
anniversary thereafter for a period of 20 years.  Notwithstanding the preceding
sentence, to the extent a Participant is a “Specified Employee” (as defined
below), solely to the extent necessary to avoid penalties under Code Section
409A, payment shall be delayed until the first day of the seventh month
following the Participant’s Separation from Service.  A “Specified Employee”
means an employee of the Bank or Company who is also a “key employee” as such
term is defined in Code Section 416(i), without regard to Paragraph 5 thereof,
but only if the Bank or the Company (or any successors) is a publicly traded
company.
 
(b)           Upon Separation from Service at or after age fifty-five (55)
(“Early Retirement Age”) but before Normal Retirement Age, the Bank shall pay
the Participant an Appreciation Benefit reduced by five percent for each year
the Participant’s Early Retirement Age is less than the Normal Retirement
Age.  For purposes of calculating the reduction, the Participant’s age shall be
determined as of the end of the calendar year preceding the year in which the
reduced Appreciation Benefit will be paid.  The reduced Appreciation Benefit
will be divided by 20 and will be paid in equal annual installments commencing
on January 1st of the year following Separation from Service and on each
anniversary thereafter for a period of 20 years.  Notwithstanding the preceding
sentence, to the extent a Participant is a Specified Employee, solely to the
extent necessary to avoid penalties under Code Section 409A, payment shall be
delayed until the first day of the seventh month following the Participant’s
Separation from Service.
 
(c)           “Separation from Service” means the Participant’s retirement or
termination of employment with the Bank. No Separation from Service shall be
deemed to occur due to military leave, sick leave or other bona fide leave of
absence if the period of such leave does not exceed six (6) months or, if
longer, so long as the Participant’s right to reemployment is provided by law or
contract. If the leave exceeds six (6) months and the Participant’s right to
reemployment is not provided by law or by contract, then the Participant shall
have a Separation from Service on the first date immediately following such
six-month period. Whether a termination of employment has occurred is determined
based on whether the facts and circumstances indicate that the Bank and the
Participant reasonably anticipated that no further services would be performed
after a certain date or that the level of bona fide services the employee would
perform after such date (whether as an employee or as an independent contractor)
would permanently decrease to no more than 20% of the average level of bona fide
services performed over the immediately preceding 36 months (or such lesser
period of time in which the Participant has provided services for the Bank). The
determination of whether a Participant has a Separation from Service shall be
made by applying the presumptions set forth in the Treasury Regulations under
Code Section 409A.
 
(d)           “Appreciation Benefit” means an amount equal to the Prior Benefit
(as defined below) multiplied by the Issue Price (as defined below) multiplied
by the Exchange Ratio (as defined below).  For example, if the Executive’s Prior
Benefit was 20,000 shares of common stock of the Company (“Company Stock”), the
Issue Price was $10.00 and the Exchange Ratio was 60 percent, then the
Participant’s Appreciation Benefit would be equal to $120,000
[(20,000)($10.00)(.6)] payable in 20 equal annual installments.  The Company
will pay interest on unpaid balance of the Executive’s Appreciation Benefit at
the rate of three percent per annum.

 
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In the event the Executive dies or there is a Change in Control prior to the
date of closing of the Second-Step Conversion, the Fair Market Value of Company
Stock as of the date of death or Change in Control will be substituted for the
Issue Price and the Exchange Ratio.  For example, the Executive dies prior to
the closing of the Second-Step Conversion.  The Fair Market Value of Company
Stock on that date is $4.00 per share.  In this instance, the Executive’s
Appreciation Benefit is $80,000 (20,000*$4.00).  The Company will pay interest
on unpaid balance of the Executive’s Appreciation Benefit at the rate of three
percent per annum.
 
(e)           “Prior Benefit” shall mean a number of shares of Company Stock
equal to the Executive’s benefit under the Agreement as of December 11, 2009,
divided by the Fair Market Value of Company Stock on December 11, 2009.  For
example, the Executive’s prior benefit under the terms of the Agreement on
December 11, 2009 was $40,000 and the Fair Market Value of Company Stock on
December 11, 2009 was $2.00.  The Executive is deemed to have, for purposes of
the Agreement, 20,000 shares of Company Stock ($40,000/$2.00).  “Fair Market
Value of Company Stock” means the per share closing price of common stock of the
Company, as reported by the principal exchange or market over which the shares
are then listed or regularly traded.
 
(f)           “Issue Price” shall mean the initial offered price of the common
stock of the newly formed successor corporation that is issued in connection
with the Second-Step Conversion.
 
(g)           “Exchange Ratio” shall mean the ratio used to determine the number
of shares of common stock in a successor corporation each share of Company Stock
will exchanged for in a Second-Step Conversion.  The Exchange Ratio will be
determined as part of the independent valuation conducted in connection with the
Second-Step Conversion.
 
2.2          Death Benefit.  In the event a Participant dies and has at least 60
full months of service with the Bank, the Company or one of their affiliates or
subsidiaries, (whether continuous or otherwise), then the Participant will
become vested in his or her Appreciation Benefit.  If a Participant dies prior
to attaining 60 full months of service, then he or she will forfeit his or her
Appreciation Benefit.  Such Appreciation Benefit shall be paid to the
Participant’s “Beneficiary” (as defined below) in a lump sum on the first
business day of the month following the Executive’s death.  “Beneficiary” means
the person(s) designated by the Participant on the form set forth at Appendix A
to receive any death benefits hereunder. If the Participant has not designated a
Beneficiary, the Participant’s spouse shall be the Beneficiary. In the absence
of any surviving Beneficiary or spouse, the benefits shall be paid to the
Participant’s estate.

 
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2.3          Unforeseeable Emergency.
 
(a)           Upon an “Unforeseeable Emergency” (as defined below), (i) a
Participant who is vested in his or her benefit hereunder but has not yet begun
to receive payments; or (ii) a Participant who is receiving either Early or
Normal Retirement Benefits, may request a lump sum payment in an amount
necessary (but not exceeding the present value of the remaining benefits) to
meet the Unforeseeable Emergency, including an amount necessary to pay any taxes
due as a result of such lump sum payment from the Plan. The present value shall
be equal to the amount accrued by the Bank in accordance with generally accepted
accounting principles.
 
(b)           “Unforeseeable Emergency” means a severe financial hardship to the
Participant or Beneficiary resulting from (i) an illness or accident of the
Participant or Beneficiary, his or her spouse, or dependent (as defined in Code
Section I52(a)); (ii) loss of the Participant’s or Beneficiary’s property due to
casualty; or (iii) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant or
Beneficiary. The term “Unforeseeable Emergency” shall be construed consistent
with Code Section 409A and the final regulations and other guidance issued
thereunder.
 
2.4          Tax Withholding. All benefits paid under this Plan shall be subject
to withholding in accordance with federal and state law.
 
ARTICLE III
ADMINISTRATION; CLAIMS PROCEDURES
 
3.1          Plan Administrator. The Board of Directors of the Bank (the
“Board”) is hereby designated the Plan Administrator.
 
3.2          Powers of Plan Administrator. As Plan Administrator, the Board
shall be responsible for the management, control, interpretation and
administration of this Plan and may allocate to others certain aspects of the
management and operational responsibilities of the Plan including the employment
of advisors and the delegation of any ministerial duties to qualified
individuals. All decisions of the Plan Administrator shall be final and binding
on all persons.
 
3.3          Claims Procedures. Claims for benefits hereunder shall be submitted
to the President of the Bank, as agent for the Plan Administrator. In the event
a claim for benefits is wholly or partially denied under this Plan, the
Participant or any other person claiming benefits under this Plan (a
“Claimant”), shall be given notice of the denial in writing within thirty (30)
calendar days after the Plan Administrator’s receipt of the claim. The Plan
Administrator may extend this period for an additional thirty (30) calendar
days. Any denial must specifically set forth the reasons for the denial and any
additional information necessary to perfect the claim for benefits. The Claimant
shall have the right to seek a review of the denial by filing a written request
with the Plan Administrator within sixty (60) calendar days after receipt of the
initial denial. Such request may be supported by such documentation and evidence
deemed relevant by the Claimant. Following receipt of this information, the Plan
Administrator shall make a final determination and notify the Claimant within
sixty (60) calendar days of the Plan Administrator’s receipt of the request for
review together with the specific reasons for the decision.
 
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ARTICLE IV
AMENDMENT AND TERMINATION
 
4.1          Amendments. The Board may amend this Plan any time, but no such
amendment shall affect the rights of, or reduce the benefits to, any Participant
without their written consent.
 
4.2          Termination. The Board may completely terminate the Plan. Subject
to the requirements of Code Section 409A, in the event of complete termination
with respect to such benefits, the Plan shall cease to operate and the Bank
shall payout to each Participant his or her account as if that Participant had
terminated service as of the effective date of the complete termination. Such
complete termination of the Plan shall occur only under the following
circumstances and conditions:
 
(a)           The Board may terminate the Plan 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. §503(b)(1 )(A), provided that the amounts deferred under
the Plan are included in each Participant’s gross income in the latest of (i)
the calendar year in which the Plan 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 Board may terminate the Plan within the 30 days preceding a
“Change in Control” (as defined in Code Section 409A and the regulations
thereunder), but not following a Change in Control, provided that the Plan shall
only be treated as terminated if all substantially similar arrangements
sponsored by the Bank are terminated so that the Participants 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 Board may terminate the Plan provided that (i) the termination
and liquidation does not occur proximate to a downturn in the financial health
of the Bank or Company, (ii) all arrangements sponsored by the Bank that would
be aggregated with this Plan under Final Regulations Section 1.409A-l(c) if the
Participant covered by this Plan was also covered by any of those other
arrangements are also terminated; (iii) 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; (iv)
all payments are made within 24 months of the termination of the arrangements;
and (v) the Bank does not adopt a new arrangement that would be aggregated with
any terminated arrangement under Final Regulations Section 1.409A-1(c) if the
Participant participated in both arrangements, at any time within three years
following the date of termination of the arrangement.

 
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(d)           The Board may terminate the Plan pursuant to such other terms and
conditions as the Internal Revenue Service may permit from time to time.
 
ARTICLE V
UNFUNDED ARRANGEMENT
 
5.1          Unsecured General Creditors. The Participant and Beneficiaries are
general unsecured creditors of the Bank for the payment of benefits under this
Plan. The benefits represent the mere promise by the Bank to pay such benefits.
The benefits payable under this Plan 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 Plan or any benefits hereunder.
 
5.2          Rabbi Trust. The Bank shall be responsible for the payment of all
benefits provided under the Plan. At its discretion, the Bank may establish one
or more trusts, with such trustees as the Board may approve, for the purpose of
providing for the payment of such benefits.  Such trust or trusts may be
irrevocable, but the assets thereof shall be subject to the claims of the Bank’s
creditors. To the extent any benefits provided under the Plan are actually paid
from any such trust, the Bank shall have no further obligation with respect
thereto, but to the extent not so paid, such benefits shall remain the
obligation of, and shall be paid by, the Bank. Under no circumstances shall a
Participant serve as trustee or co-trustee of any trust established by the Bank
pursuant to this Plan.
 
ARTICLE VI
MISCELLANEOUS
 
6.1          No Employment Contract.  This Plan does not constitute a contract
of employment for any Participant, nor shall any provision of this Plan be
construed as giving the Participant the right to continued service as an
employee of the Bank.
 
6.2          Binding Effect.  This Plan shall be binding upon the Bank, the
Company and their successors and assigns, and upon the Participants and the
Beneficiaries and legal representatives of the Participant.
 
6.3          No Assignment.  Neither the Participant nor any Beneficiary or
personal representative of the Participant can assign any of the rights to
benefits under this Plan. Any attempt to anticipate, sell, transfer, assign,
pledge, encumber or change the Participant’s right to receive benefits shall be
void. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors.
 
6.4          Choice of Law.  This Plan shall be construed under and governed by
the laws of the State of Georgia, except to the extent preempted by the laws of
the United States of America.

 
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6.5          Payment to Guardians.  If a Participant’s benefit is payable to a
minor or a person declared incompetent or to a person incapable of handling the
disposition of his property, the Plan Administrator may direct payment of such
Plan benefit to the guardian, legal representative or person having the care and
custody of such minor, incompetent or person. The Plan Administrator may require
proof of incompetency, minority, incapacity or guardianship as it may deem
appropriate prior to distribution of the Plan benefit. Such distribution shall
completely discharge the Plan Administrator and the Bank from all liability with
respect to such benefit.
 
IN WITNESS WHEREOF, the Bank has caused this amended and restated Plan to be
executed by its duly authorized officer.

 
ATLANTIC COAST BANK
     
December 11, 2009
By: 
/s/ Robert J. Larison, Jr.
Date
 
Robert J. Larison, Jr., President and
   
Chief Executive Officer

 
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