ATLANTIC COAST BANK SPLIT DOLLAR LIFE INSURANCE AGREEMENT

This Split Dollar Agreement (“Agreement”) is entered into effective January 1, 2010, between Atlantic Coast Bank (“Bank”) and Thomas B. Wagers, Sr. (“Insured”) with respect to certain life insurance policies (the “Policy” or “Policies”) issued by a duly licensed life insurance company (the “Insurer”).

The Bank is the owner of the life insurance Policy or Policies set forth on Schedule A hereto and the Insured is the Chief Financial Officer of the Bank.  The respective rights and duties of the Bank and Insured in the Policy are set forth herein and on Schedule A attached hereto.  This Agreement is intended to be a non-equity, endorsement split dollar agreement, such that it is not treated as a impermissible personal loan from the Bank to the Insured under Section 402 of the Sarbanes-Oxley Act of 2002.

1.             Policy Title and Ownership; Endorsement .

(a)           Policy title and ownership shall reside in the Bank for its use and for the use of the Insured, all in accordance with this Agreement.  The Bank has purchased each Policy on a single premium basis.  Such Policy shall be treated as “bank owned life insurance” (“BOLI”) and is held subject to the provisions and limitations set forth in the Interagency Statement on the Purchase and Risk Management of Life Insurance (OCC 2004-56).  The Bank may, to the extent of its interest, exercise the right to borrow or withdraw on the Policy cash values.  Where the Bank and the Insured (or assignee, with the consent of the Insured) mutually agree to exercise the right to increase the coverage under the Policy, then, in such event, the rights, duties and benefits of the parties to such increased coverage shall continue to be subject to the terms of this Agreement.

(b)           An endorsement on the form provided by the Insurer must be completed and filed with the Insurer for each Policy identified on Schedule A in order to implement the rights and obligations set forth in this Agreement.  The parties agree that the Policy shall be subject to the terms and conditions of this Agreement and of the endorsement filed with the Insurer.

(c)           The Bank agrees that, except as otherwise provided herein, it shall not sell, assign, transfer, surrender or cancel the policy, or change the beneficiary designation without the express written consent of the Employee.

2.             Beneficiary Designation Rights .  The Insured (or assignee) shall have the right and power to designate a beneficiary or beneficiaries to receive the Insured’s share of the Policy proceeds payable upon the death of the Insured, subject to any right or interest the Bank may have in such proceeds, as provided in this Agreement.  The Bank shall not terminate, alter or amend the Insured’s beneficiary designations without the written consent of the Insured.  The Bank shall be the beneficiary of any proceeds remaining under the Policy after the payment required under this Agreement has been made to the Insured’s designated beneficiary.

3.             Premium Payment .  The Bank shall pay an amount equal to the planned premiums and any other premium payments that might become necessary to keep the Policy in force.  Notwithstanding the foregoing, the Bank shall have the absolute and sole right to terminate and surrender any or all of the Policies that are subject to this Agreement.

4.             Taxable Benefit .  Annually, the Insured will recognize a taxable benefit equal to the assumed cost of insurance required by the Internal Revenue Service (“IRS”), as determined from time to time.  The Bank (or its administrator) will timely report to the Insured the amount of such imputed income each year on IRS Form W-2 or its equivalent.  The Bank and the Insured intend that this Agreement will be subject to taxation under the “economic benefit regime” set forth in Treasury Regulations section 1.61-22(d), such that the Insured shall have taxable income equal to the annual cost of the current life insurance coverage provided under the Policy.

5.             Division of Death Proceeds .  Upon the death of the Insured, the Bank shall cooperate with the Insured’s designated beneficiary to take whatever action is necessary to collect the death benefit provided under the Policy.  Subject to Sections 6 and 9 below, the division of the death proceeds of the Policy shall be as follows:

(a)           If the Insured is employed by the Bank at the time of his death or the Insured has retired from employment with the Bank after completion of not less than ten (10) years of service with the Bank measured from the Effective Date, then the Insured’s beneficiary(ies) designated in accordance with Section 2 shall be entitled to payment from the Policy proceeds directly from the Insurer of an amount equal to three hundred percent (300%) of:

(i)           if the Insured is employed by the Bank at the time of death, the Insured’s highest base annual salary (not including bonus, equity compensation, or any other forms of compensation) in effect at the Bank at any time during the last ten calendar years prior to the date of death of the Insured; or

(ii)          if the Insured’s death follows the Insured’s retirement from the Bank after completion of not less than ten (10) years of service with the Bank measured from the Effective Date, the Insured’s highest base annual salary (not including bonus, equity compensation or any other forms of compensation) paid by the Bank to the Insured during the last ten calendar years prior to the Insured’s retirement date.

Notwithstanding the foregoing, the maximum payment due to the Insured’s beneficiary(ies) from the Insurer under this Agreement and the Policies shall not exceed the amount set forth on Schedule A.  To the extent possible, an equal amount of each Policy’s proceeds shall be payable to the Insured’s beneficiary(ies) not to exceed such Policy proceeds.  Any amount payable in accordance with this subsection (a) in excess of a Policy’s proceeds shall thereafter be paid by any remaining Policy proceeds pro rata.

(b)           Coverage under this Agreement for the Insured who terminates employment with the Bank (for reasons other than death) prior to completion of less than ten (10) years of service with the Bank measured from the Effective Date (and prior to the occurrence of a Change in Control, as defined below) will cease on his last day of employment with the Bank.

(c)           The Bank shall be entitled to the remainder of such Policy proceeds.

6.             Ownership of the Cash Surrender Value of the Policies .

(a)           The Bank shall at all times be entitled to one hundred percent (100%) of the Policy’s cash value, as that term is defined in the Policy contract, less any policy loans and unpaid interest or cash withdrawals previously incurred by the Bank.  Such cash value shall be determined as of the date of surrender or death, as the case may be.

(b)           The Bank may pledge or assign the Policy, subject to the terms and conditions of this Agre