Amended And Restated Retirement Plan

AMENDED AND RESTATED

RETIREMENT PLAN

FOR BOARD MEMBERS

OF

AF BANK


Restated Effective October 21, 2005

TABLE OF CONTENTS


Page

ARTICLE I DEFINITIONS

Section 1.1 Annual Compensation 1

Section 1.2 Bank 1

Section 1.3 Beneficiary 1

Section 1.4 Board 1

Section 1.5 Board Member 2

Section 1.6 Change of Control of the Bank 2

Section 1.7 Code 3

Section 1.8 Committee 3

Section 1.9 Disability 3

Section 1.10 Participant 3

Section 1.11 Participating Company 3

Section 1.12 Person 3

Section 1.13 Plan 3

Section 1.14 Predecessor Board 4

Section 1.15 Reorganization Date 4

Section 1.16 Restatement Date 4

Section 1.17 Retired Participant 4

Section 1.18 Section 409A 4

Section 1.19 Specified Employee 4

Section 1.20 Spouse 4

Section 1.21 Terminate or Termination 4

Section 1.22 Years of Service 4 ARTICLE II ELIGIBILITY

Section 2.1 Participation 5

Section 2.2 Termination of Participation 5

ARTICLE III


RETIREMENT BENEFITS

Section 3.1 Normal Benefits 5

Section 3.2 Payments 6

Section 3.3 Payments Upon Death 6

Section 3.4 Payments of Small Amounts 6

Section 3.5 Beneficiaries 6

Section 3.6 Payment upon Change of Control 7 ARTICLE IV ADMINISTRATION

Section 4.1 Duties of the Committee 7

Section 4.2 Liabilities of the Committee 7

Section 4.3 Expenses 8 ARTICLE V AMENDMENT AND TERMINATION

Section 5.1 Amendment and Termination 8 ARTICLE VI MISCELLANEOUS PROVISIONS

Section 6.1 Plan Documents 8

Section 6.2 Construction of Language 8

Section 6.3 Nonalienation 8

Section 6.4 Indemnification 9

Section 6.5 Severability 9

Section 6.6 Waiver 9

Section 6.7 Notices 9

Section 6.8 Operation as an Unfunded Plan 9

Section 6.9 Required Regulatory Provisions 10

Section 6.10 Governing Law 10


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AMENDED AND RESTATED

RETIREMENT PLAN FOR BOARD MEMBERS

OF

AF BANK


AF Bank (the " Bank" ) previously adopted and is the sponsor of the Retirement Plan for Board Members of Ashe Federal Bank, a nonqualified retirement plan for directors of the Bank.

The Bank is amending and restating the plan effective October 21, 2005 to clarify certain provisions in the plan to make the plan consistent with the understanding of the Bank and the Directors concerning how the plan would operate and consistent with how the Bank has accounted for the plan. This Amended and Restated Retirement Plan for Board Members of AF Bank (the " Plan" ) supercedes and replaces the original Retirement Plan for Board Members of Ashe Federal Bank adopted effective upon the Reorganization Date.

This Plan is being amended and restated shortly after Section 409A of the Internal Revenue Code was enacted, and during the period in which guidance from the Internal Revenue Service is still expected to further clarify the requirements of Section 409A. It is intended that this Plan fully comply with the requirements of Section 409A and guidance issued thereunder. The Plan will be interpreted in a manner as shall meet and comply with Section 409A.

ARTICLE I

DEFINITIONS

The following definitions shall apply for the purposes of this Plan unless a difference meaning is plainly indicated by the context:

Section 1.1 Annual Compensation means, on any date for any Board Member, the annual rate at which retainer payments are paid to such Board Member for services as a Board Member. In the case of a Board Member who is a non-employee director and who later becomes an employee-director, " Annual Compensation" means the annual rate of retainer immediately preceding service as an employee-director.

Section 1.2 Bank means AF Bank, a federal stock savings bank, and any successor thereto.

Section 1.3 Beneficiary means the Person or Persons designated by the Participant or Retired Participant pursuant to Section 3.5 to receive a survivor benefit. If more than one Person is designated, each shall have an equal share unless the Participant or Retired Participant directed otherwise.


Section 1.4 Board means the Board of Directors of the Bank.

Section 1.5 Board Member means any individual who is a voting member of the Board or a voting member of the board of directors of a Participating Company.


Section 1.6 Change of Control of the Bank means any of the following events:

(a) approval by the stockholders of the Bank of a transaction that would result in the reorganization, merger or consolidation of the Bank, respectively, with one or more other persons, other than a transaction following which:


(i) at least 51% of the equity ownership interests of the entity resulting from such transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated under the Securities Act of 1934 (" Exchange Act" )) in substantially the same relative proportions by persons who, immediately prior to such transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of the outstanding equity ownership interests in the Bank; and


(ii) at least 51% of the securities entitled to vote generally in the election of directors of the entity resulting from such transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) in substantially the same relative proportions by persons who, immediately prior to such transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of the securities entitled to vote generally in the election of directors of the Bank;


(b) the acquisition of all or substantially all of the assets of the Bank or beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the outstanding securities of the Bank entitled to vote generally in the election of directors by any person or by any persons acting in concert, or approval by the stockholders of the Bank of any transaction which would result in such an acquisition; or


(c) a complete liquidation or dissolution of the Bank, or approval by the stockholders of the Bank of a plan for such liquidation or dissolution; or


(d) the occurrence of any event if, immediately following such event, at least 50% of the members of the Board do not belong to any of the following groups:

(i) individuals who were members of the Board on the Reorganization Date; or


(ii) individuals who first became members of the Board after the Reorganization Date either:

(A) upon election to serve as a member of the Board by affirmative vote of three-quarters of the members of such board, or of a nominating committee thereof, in office at the time of such first election; or


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(B) upon election by the stockholders of the Bank to serve as a member of the Board, but only if nominated for election by affirmative vote of three-quarters of the members of the Board, or of a nominating committee thereof, in office at the time of such first nomination;


provided, however , that such individual' s election or nomination did not result from an actual or threatened election contest (within the meaning of Rule 14a-11 or Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents (within the meaning of Rule 14a-11 or Regulation 14A promulgated under the Exchange Act) other than by or on behalf of the Board.


In no event, however, shall a Change of Control be deemed to have occurred as a result of any acquisition of securities or assets of the Bank by an employee benefit plan maintained by the Bank. For purposes of this definition, the term " person" shall have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.


Section 1.7 Code means the Internal Revenue Code of 1986 (including the corresponding provisions of any succeeding law).

Section 1.8 Committee means the Salary Committee of the Board of the Bank, and any successor thereto.


Section 1.9 Disability means the Board Member 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 can be expected to last for a continuous period of not less than 12 months. The determination of whether a Board Member is disabled will be made in accordance with Section 409A of the Code.

Section 1.10 Participant means a Board Member who satisfies the eligibility requirements set forth in Section 2.1 and whose participati ...