ATLANTIC COAST FEDERAL CORPORATION AMENDED AND RESTATED 2007 DIRECTOR DEFERRED COMPENSATION PLAN FOR EQUITY

WHEREAS, Atlantic Coast Federal Corporation (the “Company”) desires to ensure the continued service on the Board of Directors (the “Board”) by its non-employee members (“Directors”);

WHEREAS , the Company wishes to establish a plan (the “Plan”) of nonqualified deferred compensation for the benefit of its Directors that will enable such Directors to share in the growth and success of the Company in a tax deferred manner through investments in Company common stock; and

WHEREAS, Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), requires that certain types of deferred compensation arrangements comply with its terms or subject the recipients of such compensation to current taxes and penalties; and

WHEREAS , the Plan was adopted effective as of January 1, 2007, in a manner intended to comply with Code Section 409A; and

WHEREAS , final Treasury Regulations under Code Section 409A, that were issued on April 17, 2007, require that nonqualified deferred compensation arrangements must be amended to comply with such final Treasury Regulations not later than December 31, 2008; and

WHEREAS , the Company now wishes to amend and restate the Plan in the manner set forth herein in order to conform to the final Treasury Regulations under Code Section 409A.

NOW, THEREFORE, the Plan is hereby amended and restated as follows:

The purposes of this Plan are to (i) provide current tax planning opportunities as well as supplemental funds for retirement or death for Directors of the Company, and (ii) permit Directors to acquire an equity interest in the Company through a plan of nonqualified deferred compensation.  Both the original Plan and the amended and restated Plan shall be effective January 1, 2007.  The Plan is not intended to be a tax-qualified retirement plan under Code Section 401(a).  The Plan is intended to comply with Code Section 409A and any regulatory or other guidance issued under such Section.  Any terms of the Plan that conflict with Code Section 409A shall be null and void as of the effective date of the Plan.

The following terms have the meanings indicated, unless the context clearly indicates otherwise:

2.1              Account .   “Account” means the Account as maintained by the Company in accordance with Article IV with respect to any deferral of Compensation pursuant to the Plan.  A Director’s Account shall be utilized solely as a device for the determination and measurement of the amounts to be paid to the Director pursuant to the Plan.  A Director’s Account shall not constitute or be treated as a trust fund of any kind.

2.2              Beneficiary .  “Beneficiary”  means the person or persons (and their heirs) designated as Beneficiary by the Director (Exhibit A hereto) to whom the deceased Director’s benefits are payable.  If no Beneficiary is so designated, then the Director’s spouse, if living, will be deemed the Beneficiary.  If the Director’s spouse is not living, then the children of the Director will be deemed the Beneficiaries and will take on a per stirpes basis.  If there are no living children, then the estate of the Director will be deemed the Beneficiary.

2.3              Board .   “Board” means the Board of Directors of the Company.

2.4              Change in Control .  (a)           “Change in Control” shall mean (i) a change in the ownership of the Company, (ii) a change in the effective control of the Company, or (iii) a change in the ownership of a substantial portion of the assets of the Company, as described below.  Notwithstanding anything herein to the contrary, the reorganization of the Company by way of a second step conversion shall not be deemed to be a Change in Control.

(b)           A change in the ownership of a corporation 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 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.  For these purposes, a change in ownership will not be deemed to have occurred if no stock of the Company is outstanding.

(c)           A change in the effective control of the 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)(v)(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 Company possessing 30 percent or more of the total voting power of the stock of such Company, or (ii) a majority of the members of the 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 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 Company is another corporation.

(d)           A change in a substantial portion of the 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 Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of (i) all of the assets of the 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 proposed regulations are superseded by subsequent guidance.

2.5              Code .   “Code” means the Internal Revenue Code of 1986, as amended.

2.6              Committee .   “Committee” means the Committee appointed to administer the Plan pursuant to Article VI.

2.7              Compensation .   “Compensation” means fees and/or annual cash incentives to which the Director becomes entitled as a member of the Board during the Deferral Period.

2.8              Deferral Agreement .   “Deferral Agreement” means the agreement, attached as Exhibit B hereto, filed by a Director in which the Director elects to defer the receipt of Compensation during a Deferral Period.  The Deferral Agreement must be filed with the Committee prior to the beginning of the Deferral Period.  A new Deferral Agreement or Notice of Adjustment of Deferral may be submitted by the Director for each Deferral Commitment.   If the Director fails to submit a new Deferral Agreement or Notice of Adjustment of Deferral prior to the beginning of a Deferral Period, deferrals for such period shall be made in accordance with the last submitted Deferral Agreement.

2.9              Deferral Commitment .   “Deferral Commitment” means an election to defer Compensation made by a Director pursuant to Article III and for which a separate Deferral Agreement has been submitted by the Director to the Committee.  Each Deferral Commitment during the Deferral Period shall be for a full Plan Year, provided, however that the first Deferral Commitment will be for the number of full months remaining in the Plan Year after the Deferral Commitment is initially signed (unless the Deferral Commitment is signed in December of the year before initial participation) and the final Deferral Commitment will be for the lesser of (i) 12 months or (ii) the number of full months that the Director is in the service of the Company in the year of such Director’s Separation from Service.  Notwithstanding anything herein to the contrary, no Deferral Commitments will continue following Separation from Service.

2.10            Deferral Period .   “Deferral Period” means the period of months over which a Director has elected to defer a portion of his Compensation.

2.11            Director .   “Director” means a non-employee director who has elected to become a party to the Plan by execution of a Deferral Agreement in a form provided by the Company.

2.12            Disability .   A Director shall be considered “disabled” if the Director:

(a)           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; or

(b)           is determined to be totally disabled by the Social Security Administration.

2.13            Notice of Adjustment of Deferral .   “Notice of Adjustment of Deferral” means the notice which the Director may submit for Plan Years following the initial Deferral Agreement.  The Notice of Adjustment of Deferral, attached as Exhibit C hereto, shall set forth the Director’s elections with respect to deferrals for subsequent Plan Years.

2.14            Payout Period .   “Payout Period” means the period over which certain benefits payable hereunder shall be distributed as designated in the Director’s Deferral Agreement.

2.15            Phantom Shares .  “Phantom Shares” means the measurement of a Director’s Account hereunder denominated in hypothetical shares of Company common stock from time to time.

2.16            Plan Year .   “Plan Year” means the period from January 1 to December 31.

2.17            Separation from Service .   “Separation from Service” means the Director’s death, retirement or other termination of service with the Company.  For all purposes hereunder, Separation from Service shall have the meaning set forth in Code Section 409A.

2.18            Unforeseeable Emergency .   “Unforeseeable Emergency” means a severe financial hardship to the Director resulting from (i) an illness or accident of the Director, the Director’s spouse, or the Director’s dependent (as defined in Code Section 152(a)); (ii) loss of the Director’s property due to casualty; or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Director’s control.  The term “Unforeseeable Emergency” shall be construed consistent with Code Section 409A and Treasury Regulations and other guidance issued thereunder.

2.19            Valuation Date .   “Valuation Date” means the last day of each Plan Year and such other dates as determined from time to time by the Committee.

3.1              Eligibility and Participation .

(a)     Eligibility .  Eligibility to participate in the Plan shall be limited to Directors.

(b)     Participation .  A Director may elect to participate in the Plan with respect to any Deferral Period by submitting, as to the initial Deferral Period, a Deferral Agreement (Exhibit B hereto) or, as to subsequent Deferral Periods, a Notice of Adjustment of Deferral (Exhibit C hereto).  Said Deferral Agreement or Notice of Adjustment of Deferral shall be submitted to the Committee by December 15 of the calendar year immediately preceding the Deferral Period.  If a Director fails to submit a Notice of Adjustment of Deferral for a Deferral Period, the Committee shall treat the previously submitted Deferral Agreement or Notice of Adjustment of Deferral as still in effect.  The initial Deferral Agreement must be submitted to the Committee no later than thirty (30) days after the Director first becomes eligible to participate, and such Deferral Agreement shall be effective only with regard to Compensation earned or payable following the submission of the Deferral Agreement to the Committee.

3.2              Form of Deferral .   A Director may elect in the Deferral Agreement to defer up to 100% of his Compensation for the Deferral Period following the submission of the Director’s Deferral Agreement or Notice of Adjustment of Deferral.

3.3              Irrevocability of Deferral Commitment .   A Deferral Commitment made with respect to a Plan Year shall be irrevocable for the entire Plan Year, except in the event of a distribution due to an Unforeseeable Emergency occurring during the Plan Year.

4.1              Accounts .   For recordkeeping purposes only, an Account shall be maintained for each Director.  Separate subaccounts shall be maintained to the extent necessary to properly reflect the Director’s separate year Deferral Commitments.

4.2              Elective Deferred Compensation; Investment in Company Stock .   The amount of Compensation that a Director elects to defer shall be withheld from each payment of Compensation as the non-deferred portion of the Compensation becomes or would have become payable.  Compensation deferred by Directors will immediately be credited towards the acquisition of Phantom Shares for the Director’s Account.  Phantom Shares will be deemed to be acquired at the prevailing market rate of the Company common stock in the open market.  Each period during which Phantom Shares are credited to the Directors Accounts, Phantom Shares will be credited to each Director’s Account in the form of a bookkeeping entry based on the Director’s proportionate share of the total amount of deferred Compensation applied towards the  acquisition of such Phantom Shares.  A Director’s Account will be maintained in Phantom Shares for the duration of such Director’s participation in the Plan.  To the extent that dividends are issued on the Company common stock, dividends will be credited to the Phantom shares in the same proportion as the actual dividends are credited on the Company common stock.  Cash dividends credited on the Phantom Shares, will be deemed to be applied immediately to the purchase of additional Phantom Shares at the prevailing market rates, which Phantom Shares will be credited to Directors’ Accounts proportionately based on cash dividends applied from such Director’s Account.

4.3              Determination of Accounts .   During a Director’s period of service, each Director’s Account as of each Valuation Date will consist of the balance of Phantom Shares held in the Director’s Account as of the immediately preceding Valuation Date, increased by Compensation deferred pursuant to a Deferral Commitment and dividends, if any, each of which have been denominated in Phantom Shares and credited to the Director’s Account, and decreased by distributions made since the prior Valuation Date.

4.4              Vesting of Accounts .   A Director shall be one hundred percent (100%) vested at all times in the Compensation deferred under the Plan and earnings thereon.

4.5              Statement of Accounts .   The Committee shall provide to each Director, within sixty (60) days following the end of the Plan Year, a statement setting forth the balance to the credit of the Account maintained for the Director as of the immediately preceding Valuation Date.

5.1              Benefit Payment Upon Separation from Service .   Unless the Director has designated a specified date for payments to be made, upon a Director’s Separation from Service for reasons other than death or Disability, the Director shall be entitled to a distribution of his Account payable in the manner set forth in the Director’s Deferral Agreement or Transition Year Election Form (Exhibit D hereto).  If the Director has not specified an alternative time and form of payment on his or her Deferral Agreement or Transition Year Election Form, such payment shall be made in a lump sum within thirty (30) days after the Director’s Separation from Service.

5.2              Benefit Payment on Specified Date .   A Director may elect in his Deferral Agreement or on a Transition Year Election Form to have payments from his Account commence prior to Separation from Service at a specified date set forth in the Deferral Agreement or Transition Year Election Form.  Such specified date may be before or after the Director’s Separation from Service.  However, if a Director fails to designate a specified date, payments will be made upon the earliest of Director’s Separation from Service, death or Disability.

5.3              Death Benefit .   Upon the death of a Director, the Company shall pay to the Director’s Beneficiary an amount determined as follows:

(a)           If the Director dies after Separation from Service with the Company, and after commencement of distributions, the remaining unpaid balance of the Director’s vested Account shall be paid in the same form that payments were being made prior to the Director’s death.  If the Director dies after Separation from Service but before any distributions begin, his Beneficiary shall receive a lump sum payment of the Director’s Account balance.  Such payment to the Beneficiary shall completely discharge the Company’s obligations under the Plan.

(b)           If the Director dies prior to Separation from Service with the Company, his Account shall be paid over the Payout Period in the manner selected by the Director in his Deferral Agreement or Transition Year Election Form.  If the Director fails to specify a form of payment, his Beneficiary shall receive a lump sum payment of the Director’s Account Balance.

5.4              Disability Benefit .

In the event of the Director’s Disability prior to Separation from Service, his Account shall be paid in accordance with the Director’s Deferral Agreement or Transition Year Election Form.  If the Director fails to designate a time and form of payment due to Disability, his Account shall be paid at the specified time or upon Separation from Service, as elected in the Director’s Deferral Agreement or Transition Election Form, provided, however, if the Director does not have a Deferral Agreement or Transition Election Form in effect, his Account shall be paid in a lump sum within 30 days after his Separation from Service due to Disability.

5.5            Distribution upon a Change in Control .

  In the event of a Change in Control of the Company, a Director’s Account will be paid to the Director, irrespective of whether the Director incurs a Separation from Service, in accordance with the Director’s Deferral Agreement or Transition Election Form.  If the Director fails to designate a different payment form upon Change in Control, his Account shall be paid at the specified time or upon Separation from Service as elected in the Director’s Deferral Agreement or Transition Election Form, provided, however, if the Director does not have a Deferral Agreement or Transition Election Form in effect, his Account shall be paid in a lump sum within 30 days after the Change in Control.

5.6              Distribution in Company Common Stock .   Notwithstanding any provision in this Plan to the contrary, for purposes of making any distributions under this Article V, including distributions under Section 5.7 hereof, a Director’s Account will be settled only by delivery of shares of Company common stock to the Director on the distribution date.  No cash or other assets will be distributed to a Director or his Beneficiary under the Plan.

5.7              Hardship Distributions .   Upon a finding that a Director has suffered an Unforeseeable Emergency, the Committee may make distributions from the Director’s Account prior to the time specified for payment of benefits under the Plan.  The amount of such distribution shall be limited to the amount necessary to satisfy the emergency, plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution.  The amounts necessary to satisfy the emergency will be determined after taking into account the extent to which the hardship is, or can be, relieved through reimbursement or compensation by insurance or otherwise, or by liquidation of the Director’s assets, to the extent that the asset liquidation would not itself cause a severe financial ha