Unassociated Document


     

    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.


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    (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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