SUPPLEMENTAL RETIREMENT AGREEMENT AMENDED AND RESTATED AS OF JANUARY 1, 2005

Exhibit 10.3

SUPPLEMENTAL RETIREMENT AGREEMENT
AMENDED AND RESTATED AS OF JANUARY 1, 2005

          THIS SUPPLEMENTAL RETIREMENT AGREEMENT is amended and restated as of January 1, 2005 by and between ATLANTIC COAST FEDERAL (the “Bank”), its successors and assigns and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. (the “Executive”).

WITNESSETH:

          WHEREAS, the Executive and the Bank entered into a Supplemental Retirement Agreement dated as of the 1st day of November, 2002 (the “Original Agreement”); and

          WHEREAS, the American Jobs Creation Act of 2004 enacted new section 409A of the Internal Revenue Code (the “Code”), which affects the Original Agreement, and the Executive and the Bank now wish to amend and restate the Original Agreement solely in order to comply with Code section 409A.

          NOW, THEREFORE, in consideration of the premises and covenants contained herein, the Executive and the Bank hereby amend and restate the Original Agreement in its entirety as follows, effective as of January 1, 2005:

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, 2.5% for each full calendar quarter of the Executive’s employment with the Bank since January 1, 2002, calculated through the last day of the calendar quarter in which the Executive (i) experiences a Separation from Service or (ii) attains the Normal Retirement Date, whichever shall first occur; 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 monetary compensation earned by the Executive from the Bank and its affiliates and subsidiaries (or any successors thereto by merger or purchase) during the three annual periods in the ten year period prior to his Separation from Service that results in the largest total, including but not limited to salary, bonuses and incentive compensation (but excluding specifically stock-based compensation, such

			as restricted stock, stock options and stock appreciation rights). An annual period shall consist of any twelve (12) month consecutive period not including any portion of another twelve (12) month period.
	(d)		Benefit Commencement 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 that arises from the Executive’s gross negligence, 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.
	(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 Proposed Treasury Regulations section 1.409A-3(g)(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 Proposed Treasury Regulations section 1.409A-3(g)(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 35% 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 Proposed Treasury Regulations section 1.409A-3(g)(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 Proposed Treasury Regulations section 1.409A-3(g)(5), except to the extent that such proposed 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) 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 without the Executive’s express written consent, and shall include a material diminution of or interference with the Executive’s duties, responsibilities and benefits as President and Chief Executive 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 Bank’s main office 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. 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 Commencement Date.

	(j)		Normal Retirement Date shall mean the date the Executive attains age 55 (i.e., February 9, 2012).
	(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 Proposed 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 Proposed Treasury Regulations Section 1.409A-1(i).

2.

Payment of Benefits.

	(a)		Normal Benefit.
			If the Executive is living on the Benefit Commencement Date, the Bank shall pay the Monthly Benefit to him on such 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 comply with 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 During or After Service. If the Executive dies prior to the Normal Retirement Date, 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 what would have been 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 55th birthday.
	(ii)		Death During Benefit Period. If the Executive dies on or after the Benefit Commencement Date, the Bank shall continue to make the 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, 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)		Involuntary Termination Benefit. In the event the Executive incurs a Separation from Service due to an Involuntary Termination before the Normal Retirement Date, the Bank shall pay the Monthly Benefit to the Executive, using an Accrued Benefit Percentage of not less than 60%, commencing on the first business day of the month following the Separation from Service and on the first business day of each calendar month thereafter for a total of 180 months; (i) provided, however, that in the event of Involuntary Termination due to Cause, except as may be prohibited by federal law, the Executive shall only be entitled to the Monthly Benefit calculated at the time of his Separation from Service with payment commencing on the first business day of the month following the Separation from Service and on the first business date of each calendar month thereafter for a total of 180 months; and (ii) provided, further, that, to the extent necessary to comply with 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.
	(e)		Change in Control Benefit. Subject to Section 5, if a Change in Control occurs before the Normal Retirement Date, then, within 30 calendar days of a Change in Control, the Bank shall pay the Executive a lump sum equal to the present value of the Monthly Benefit that would otherwise be paid to the Executive hereunder, using an Accrued Benefit Percentage of not less than 60%, 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 comply with Code Section 409A and the regulations thereunder, such payments shall not be made 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.

3.

Claims. In the event a claim for benefits is wholly or partially denied under this Agreement, the Executive or any other person claiming benefits under this Agreement (a “Claimant”) shall be given notice in writing within 30 calendar days after the Administrator’s receipt of the claim. For good cause shown, the Administrator may extend this period for an additional 30 calendar days. Any denial must specifically set forth the reasons for the denial and any additional information necessary to rescind such denial. The Claimant shall have the right to seek a review of the denial by filing a written request with the Administrator within 60 calendar days of receipt of the denial. Such request may be

		supported by such documentation and evidence deemed relevant by the Claimant. Following receipt of this information, the Administrator shall make a final determination and notify the Claimant in writing within 60 calendar days of the Administrator’s receipt of the request for review together with the specific reasons for the decision.
4.		General Assets and Funding. The amounts payable under this Agreement 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 Agreement or any benefits hereunder. The Administrator reserves the right to determine how the Bank will fund its obligation undertaken by this Agreement. Should the Administrator elect to purchase assets relating to this Agreement, in whole or in part, through the medium of life insurance or annuities, or both, the Bank shall be the owner and beneficiary of each such policy unless otherwise provided by this Agreement. Bank reserves the absolute right, in its sole discretion, to terminate such life insurance or annuities, as well as any other investment program, at any time, in whole or in part unless otherwise provided by this Agreement. Such termination shall in no way affect the Bank’s obligation to pay the Executive the benefits as provided in this Agreement. At no time shall the Executive be deemed to have any right, title, or interest in or to any specific asset or assets of the Bank, including but not by way of restriction, any insurance or annuity contract and contracts or the proceeds therefrom.
5.		Certain Reductions. Notwithstanding any other provision of this Agreement, if the value and amounts of benefits under this Agreement, together with any other amounts and the value of benefits received or to be received by the Executive in connection with a Change in Control would cause any amount to be nondeductible for federal income tax purposes by the Bank or the consolidated group of which the Bank is a member pursuant to Section 280G of the Code, then amounts and benefits under this Agreement shall be reduced (not less than zero) to the extent necessary so as to maximize amounts and the value of benefits to the Employee without causing any amount to become nondeductible by Bank pursuant to or by reason of such Section 280G. The Employee shall determine the allocation of such reduction among payments and benefits to the Employee.
6.		Beneficiary Designations. The Executive shall designate a beneficiary by filing with Bank a written designation of beneficiary on a form substantially similar to the form attached as Exhibit A. The Executive may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Executive and accepted by the Bank during the Executive’s lifetime. The Executive’s beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive’s surviving spouse, if any, and if none, to the Executive’s surviving children and the descendants of any deceased child by right of representation, and if no children or descendants survive, to the Executive’s estate.
		If a benefit is payable to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of his or her property, the Bank may pay such benefit

		to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person, or to a custodian selected by the Bank under the Georgia Uniform Transfers to Minors Act for the benefit of such minor. The Bank may require proof of incompetency, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Bank from all liability with respect to such benefit.
7.		Amendment and Termination.

	(a)		Amendment. The Bank may at any time amend the Agreement in whole or in part, provided, however, that no amendment shall decrease or restrict the amount accrued to the date of amendment.
	(b)		Termination. The Bank may at any time partially or completely terminate the Agreement, if, in its judgment, the tax, accounting, or other effects of the continuance of the Agreement, or potential payments thereunder, would not be in the best interests of the Bank.

     (i) Partial Termination. In the event of a partial termination, the Agreement shall continue to operate and be effective with regard to benefits accrued prior to the effective date of such partial termination, but no further benefits shall accrue after the date of such partial termination.

     (ii) Complete Termination. Subject to the requirements of Code Section 409A, in the event of complete termination, the Agreement shall cease to operate and the Bank shall pay the Executive his Account as if he had terminated service as of the effective date of the complete termination. Such complete termination of the Agreement shall occur only under the following circumstances and conditions.

     (A) The Bank may terminate the Agreement 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 accrued under the Agreement are included in the Executive’s gross income in the latest of (i) the calendar year in which the Agreement 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 Bank may terminate the Agreement within the 30 days preceding a Change in Control (but not following a Change in Control), provided that the Agreement shall only be treated as terminated if all substantially similar arrangements sponsored by the Bank are terminated so that the Executive 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 Bank may terminate the Agreement provided that (i) all arrangements sponsored by the Bank that would be aggregated with this Agreement under Proposed Treasury regulations section 1.409A-1(c) if any individual; covered by this Agreement was also covered by any of those other arrangements are also terminated; (ii) 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; (iii) all payments are made within 24 months of the termination of the arrangements; and (iv) the Bank does not adopt a new arrangement that would be aggregated with any terminated arrangement under Proposed Treasury regulations section 1.409A-1(c) if the same individual participated in both arrangements, at any time within five years following the date of termination of the arrangement.

     (D) The Bank may terminate the Agreement pursuant to such other terms and conditions as the Internal Revenue Service may permit from time to time.

8.

Miscellaneous.

	(a)		Withholding. To the extent amounts payable under this Agreement are determined by the Administrator, in good faith, to be subject to federal, state or local income tax, the Bank may withhold from each such payment an amount necessary to meet the Bank’s obligation to withhold amounts under the applicable federal, state or local law.
	(b)		Governing Law. This Agreement shall be construed under the laws of the State of Georgia, except to the extent that federal law applies.
	(c)		Future Employment. This Agreement shall not be construed as providing the Executive the right to be continued in the employ of the Bank or its affiliates or subsidiaries.
	(d)		No Pledge or Attachment. No benefit which is or may become payable under this Agreement shall be subject to any anticipation, alienation, sale, transfer, pledge, encumbrance or hypothecation or subject to any attachment, levy or similar process and any attempt to effect any such action shall be null and void.
	(e)		Successors and Assigns. This Agreement and the obligations of the Bank herein shall be binding upon the successors and assigns of the Bank. This Agreement may not be assigned by the Bank without the prior written consent of the Executive or any other beneficiary receiving payments under this Agreement.
	(f)		Participation in Plans. Nothing contained in this Agreement shall be construed to alter, abridge, or in any manner affect the rights and privileges of the Executive to participate in and be covered by any pension, profit sharing, group insurance, bonus, incentive, or other employee plans which the Bank or its affiliates or subsidiaries may now or hereafter have.

	(g)		Notices. Any notices under this Agreement shall be provided to the Executive at his last address on file with the Administrator and shall be provided to the Administrator in care of President, Atlantic Coast Federal, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
	(h)		Headings. Headings of sections herein are inserted for convenience of reference. They are not to be considered in the construction of this Agreement.
	(i)		Savings Clause. If any provision of this Agreement shall be for any reason invalid or unenforceable, the remaining provisions shall be carried into effect.
	(j)		Entire Agreement. This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive be virtue of this Agreement other than as specifically set forth herein.
	(k)		Suicide. No benefits shall be payable if the Executive commits suicide within two (2) years after the date of this Agreement, or if the Executive has made any material misstatement of fact on any application for life insurance purchased by the Bank
	(l)		Top Hat Agreement. For purposes of the Internal Revenue Code, the Bank intends this Agreement to be an unfunded, unsecured promise to pay on the part of the Bank. For purposes of ERISA, The Bank intends this Agreement to be an unfunded obligation solely for the benefit of the Executive for the purpose of qualifying this Agreement for the “top hat” exception under sections 201(2), 301(a)(3) and 401(a) of ERISA.

     The parties have caused this Agreement to be executed and delivered as of the date first above written.

				ATLANTIC COAST FEDERAL
		By:		/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
				Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
				Title: Comp. Committee Chairman
				EXECUTIVE
				/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
				▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.