Exhibit 10.4





Exhibit 10.4




ATHENS FEDERAL COMMUNITY BANK

EMPLOYMENT AGREEMENT




THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as April 1, 2010, by and among
ATHENS FEDERAL COMMUNITY BANK, a federally-chartered savings bank (the “Bank”), and MICHAEL R.
HUTSELL (the “Executive”), and ATHENS BANCSHARES CORPORATION (the “Corporation”), the holding
company of the Bank, solely as guarantor.




WHEREAS, the Executive serves in a position of substantial responsibility with the Bank; and



WHEREAS, the Bank wishes to set forth the terms of the Executive’s continued employment in
this position; and




WHEREAS, the Executive is willing and desires to serve in this position with the Bank.



NOW THEREFORE, in consideration of these premises, the mutual covenants contained herein, and
other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows.



ARTICLE 1

EMPLOYMENT




1.1 Employment. The Bank hereby employs the Executive to serve as Chief Operating
Officer and Chief Financial Officer of the Bank according to the terms and conditions of this
Agreement and for the period stated in Section 1.3 of this Agreement. The Executive hereby accepts
employment according to the terms and conditions of this Agreement and for the period stated in
Section 1.3 of this Agreement.




1.2 Responsibilities and Duties.



(a) As Chief Operating Officer and Chief Credit Officer, the Executive shall report to the
Chief Executive Officer and will perform all duties and will have all powers associated with these
positions, as set forth in any job description provided to the Executive by the Bank or as may be
set forth in the bylaws of the Bank.



(b) During the period of his employment hereunder, except for reasonable periods of absence
occasioned by illness, reasonable vacation periods, and other reasonable leaves of absence approved
by the board of directors of the Bank, the Executive will devote all of his business time,
attention, skill and efforts to the faithful performance of his duties under this Agreement,
including activities and duties directed by the Chief Executive Officer and the board of directors
of the Bank. Notwithstanding the preceding sentence, subject to the approval of the board of
directors of the Bank, the Executive may serve as a member of the board of directors of business,
community and charitable organizations, provided that in each case the service shall not materially
interfere with the performance of his duties under this Agreement, adversely affect the reputation
of the Bank or any other affiliates of the Bank, or present any conflict of interest. Nothing in
this Section 1.2 shall prevent the Executive from managing personal investments and affairs,
provided that doing so also does not interfere with the proper performance of the Executive’s
duties and responsibilities under this Agreement.


 


 









 






1.3 Term.



(a) The term of this Agreement shall include: (i) the initial term, consisting of the period
commencing on the date of this Agreement (the “Effective Date”) and continuing for thirty-six (36)
full months thereafter, plus (ii) any and all extensions of the initial term made pursuant to this
Section 1.3.



(b) Commencing as of the first anniversary of the Effective Date and continuing as of each
anniversary of the Effective Date thereafter, the disinterested members of the board of directors
of the Bank may extend the Agreement term for an additional year, so that the remaining term of the
Agreement again becomes thirty-six (36) full months from the applicable anniversary of the
Effective Date, unless the Executive elects not to extend the term of this Agreement by giving
written notice at least thirty (30) days prior to the applicable anniversary date.



(c) The disinterested members of the board of directors of the Bank will review the Agreement
and the Executive’s performance annually for purposes of determining whether to extend the
Agreement term and will include the rationale and results of its review in the minutes of the
meetings. The board of directors will notify the Executive no earlier than sixty (60) days and no
later than thirty (30) days prior to the applicable anniversary date whether it has determined to
extend the Agreement.



(d) Nothing in this Agreement shall mandate or prohibit a continuation of the Executive’s
employment following the expiration of the term of this Agreement, upon such terms and conditions
as the Bank and the Executive may mutually agree.



ARTICLE 2

COMPENSATION AND BENEFITS





2.1 Base Salary and Bonus.



(a) In consideration of the Executive’s performance of the obligations under this Agreement,
the Bank shall pay or cause to be paid to the Executive a salary at the annual rate of not less
than One Hundred Seventy Five Thousand Dollars ($175,000.00), payable according to the regular
payroll practices of the Bank. During the period of this Agreement, the Executive’s Base Salary
shall be reviewed at least annually by the compensation committee designated by the board of
directors of the Bank. Any increase in Base Salary will become the “Base Salary” for purposes of
this Agreement.



(b) The Executive shall be eligible for a discretionary annual bonus, as determined by the
board of directors of the Bank.



2.2 Benefit Plans and Perquisites. For as long as the Executive is employed by the
Bank, the Executive shall be eligible (x) to participate in any and all officer or employee
compensation, incentive compensation and benefit plans in effect from time to time, including
without limitation plans providing retirement, medical, dental, disability, and group life benefits
and including stock-based compensation, incentive, or bonus plans existing on the date of this
Agreement or adopted after the date of this Agreement, provided that the Executive satisfies the
eligibility requirements for any the plans or benefits, and (y) to receive any and all other fringe
and other benefits provided from time to time, including the specific items described in (a)-(c)
below.



(a) Reimbursement of business expenses. The Executive shall be entitled to
reimbursement for all reasonable business expenses incurred while performing his obligations under
this Agreement, including but not limited to all reasonable business travel and entertainment
expenses incurred while
acting at the request of or in the service of the Bank. Expenses will be reimbursed if they
are submitted in accordance with the Bank’s policies and procedures.


 


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(b) Automobile. The Bank shall provide the Executive with vehicle reimbursement per
company policy.



(c) Facilities. The Bank will furnish the Executive with the working facilities and
staff customary for executive officers with the comparable titles and duties of the Executive as
set forth in Sections 1.1 and 1.2 of this Agreement and as are necessary for the Executive to
perform his duties. The location of such facilities and staff shall be at the principal
administrative offices of the Bank, or at such other site or sites customary for such offices.



2.3 Vacation; Leave. The Executive shall be entitled to sick leave and paid annual
vacation (of at least four weeks of vacation) in accordance with policies established from time to
time by the Bank. In addition to paid vacations and other leave, the board of directors may grant
the Executive a leave or leaves of absence, with or without pay, at such time or times and upon
such terms and conditions as the board of directors may determine.



2.4 Insurance. The Bank shall maintain or cause to be maintained, director and officer
liability insurance covering the Executive throughout the term of this Agreement.



ARTICLE 3

EMPLOYMENT TERMINATION





3.1 Termination of Employment.



(a) Death. The Executive’s employment shall terminate automatically at the Executive’s
death. If the Executive dies in active service to the Bank, the Executive’s estate or beneficiaries
designated by the Executive on a beneficiary designation form attached to this Agreement shall
receive any sums that would have otherwise been due to the Executive as Base Salary and
reimbursement of expenses through the end of the then remaining term of the Agreement, payable in a
single lump sum no later than nine (9) months from the date of the Executive’s death.



(b) Disability. By delivery of written notice thirty (30) days in advance to the
Executive, the Bank may terminate the Executive’s employment if the Executive is disabled. For
purposes of this Agreement the Executive shall be considered “disabled” if an independent physician
selected by the Bank and reasonably acceptable to the Executive or the Executive’s legal
representative determines that, because of illness or accident, the Executive is unable to perform
the Executive’s duties and will be unable to perform the Executive’s duties for a period of ninety
(90) consecutive days. The Executive shall not be considered disabled, however, if the Executive
returns to work on a full-time basis within thirty (30) days after the Bank gives notice of
termination due to disability. If the Executive is also employed by the Corporation is terminated
by the Corporation because of disability, the Executive’s employment with the Bank shall also
terminate at the same time. During the period of incapacity leading up to the termination of the
Executive’s employment under this provision, the Bank shall continue to pay the full Base Salary at
the rate then in effect and pay or provide all perquisites and other benefits (other than bonus),
provided that the amount of the payments by the Bank to the Executive under this Section 3.1(b)
shall be reduced by the sum of the amounts, if any, payable to the Executive for the same period
under any disability benefit plan covering the Executive.


 


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3.2 Involuntary Termination with Cause. The Bank may terminate the Executive’s
employment for Cause. If the Executive’s employment terminates for Cause, the Executive shall
receive
the Base Salary through the date on which the termination of employment becomes effective and
reimbursement of expenses to which the Executive is entitled when termination becomes effective.
If the Executive is employed by the Corporation and is terminated for Cause by the Corporation, the
Executive shall be deemed also to have been terminated for Cause by the Bank. The Executive shall
not be deemed to have been terminated for Cause under this Agreement unless and until there is
delivered to the Executive a copy of a resolution adopted at a meeting of the board of directors
called and held for the purpose, which resolution shall (x) contain findings that the Executive has
committed an act constituting Cause, and (y) specify the particulars thereof. The resolution of
the board of directors shall be deemed to have been duly adopted if and only if it is adopted by
the affirmative vote of a majority of the directors of the Bank then in office, excluding the
Executive. Notice of the meeting and the proposed termination for Cause shall be given to the
Executive a reasonable time before the meeting of the board of directors. The Executive and the
Executive’s counsel (if the Executive chooses to have counsel present) shall have a reasonable
opportunity to be heard by the board of directors at the meeting. For purposes of this Agreement
“Cause” means any of the following:




(1) a material act of dishonesty in performing Executive’s duties on behalf of the Bank;



(2) a willful misconduct that in the judgment of the board of directors will likely cause
economic damage to the Bank or its affiliates or injury to the business reputation of the Bank or
its affiliates;



(3) incompetence (in determining incompetence, the acts or omissions shall be measured against
standards generally prevailing in the savings institutions industry);




(4) a breach of fiduciary duty involving personal profit;



(5) the intentional failure to perform stated duties under this Agreement after written notice
thereof from the board of directors;



(6) a willful violation of any law, rule or regulation (other than minor or routine traffic
violations or similar offenses) that reflects adversely on the reputation of the Bank, any felony
conviction, any violation of law involving moral turpitude, or any violation of a final
cease-and-desist order; or




(7) a material breach by the Executive of any provision of this Agreement.


No act, or failure to act, on the Executive’s part shall be considered “willful” unless he has
acted, or failed to act, with an absence of good faith and without reasonable belief that his
action or failure to act was in the best interest of the Bank.




3.3 Voluntary Termination by the Executive Without Good Reason. In addition to his
other rights to terminate his employment under this Agreement, Executive may voluntarily terminate
employment during the term of this Agreement upon at least ninety (90) days prior written notice to
the board of directors of the Bank. Upon Executive’s voluntary termination, he will receive only
his compensation and vested rights and benefits to the date of his termination of employment.
Following his voluntary termination of employment under this Section 3.3, the Executive will be
subject to the restrictions set forth in Article 7.


 


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3.4 Involuntary Termination Without Cause and Voluntary Termination with Good Reason.
With written notice to the Executive at least thirty (30) days in advance, the Bank may terminate
the Executive’s employment without Cause. Termination shall take effect at the end of the
notice period. With advance written notice to the Bank as provided in clause (y), the Executive
may terminate employment for Good Reason. If the Executive’s employment terminates involuntarily
without Cause or voluntarily but with Good Reason, the Executive shall be entitled to the benefits
specified in Article 4 of this Agreement. For purposes of this Agreement, a voluntary termination
by the Executive shall be considered a voluntary termination with Good Reason if the conditions
stated in both clauses (x) and (y) of this Section 3.4 are satisfied:



(x) a voluntary termination by the Executive shall be considered a voluntary termination with
Good Reason if any of the following occur without the Executive’s written consent, and the term
Good Reason shall mean the occurrence of any of the following without the Executive’s written
consent:



(1) a failure to reelect or reappoint the Executive as Chief Operating Officer or Chief
Financial Officer of the Bank (provided, however, that a change in the Executive’s position
consented to in writing by the Executive, shall not be deemed a Good Reason);



(2) a material change in Executive’s position to become one of lesser responsibility,
importance, or scope from the position and attributes thereof described in Sections 1.1 and 1.2 of
this Agreement (provided, however, that a reduction in duties and responsibilities consented to in
writing by the Executive in connection with succession planning of the Bank, shall not be deemed a
Good Reason);



(3) a liquidation or dissolution of the Bank, other than liquidations or dissolutions that are
caused by reorganizations that do not affect the status of the Executive;



(4) a material reduction in Executive’s Base Salary or benefits required to be provided
hereunder (other than a reduction that is generally applicable to the Bank’s executive employees or
a reduction or elimination of the Executive’s benefits under one or more benefit plans maintained
by the Bank as part of a good faith, overall reduction or elimination of such plans or benefits
applicable to all participants in a manner that does not discriminate against the Executive (except
as such discrimination may be necessary to comply with applicable law));



(5) a relocation of the Executive’s principal place of employment by more than twenty-five
(25) miles from its location as of the date of this Agreement; or




(6) a material breach of this Agreement by the Bank.



(y) the Executive must give notice to the Bank of the existence of one or more of the
conditions described in clause (x) within sixty (60) days after the initial existence of the
condition, and the Bank shall have thirty (30) days thereafter to remedy the condition. In
addition, the Executive’s voluntary termination because of the existence of one or more of the
conditions described in clause (x) must occur within six (6) months after the initial existence of
the condition.



ARTICLE 4

SEVERANCE COMPENSATION





4.1 Cash Severance after Termination Without Cause or Termination for Good Reason.



(a) Subject to the possibility that cash severance after employment termination might be
delayed under Section 4.1(b), if the Executive’s employment terminates involuntarily but without
Cause or if the Executive voluntarily terminates employment with Good Reason, the Executive shall
for the


 


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unexpired term of this Agreement, plus an additional twelve (12) months, and in accordance
with the Bank’s regular pay practices, continue to receive the Base Salary in effect at the
Executive’s termination of employment. However, the Bank and the Executive acknowledge and agree
that the severance benefits under this Section 4.1 shall not be payable if severance benefits are
payable or shall have been paid to the Executive under Article 5 of this Agreement.



(b) If when employment termination occurs the Executive is a “specified employee” within the
meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), if the cash
severance payment under Section 4.1(a) would be considered deferred compensation under Section 409A
of the Code, and finally if an exemption from the six-month delay requirement of Section
409A(a)(2)(B)(i) of the Code is not available, the Executive’s continued Base Salary under Section
4.1(a) for the first six months after employment termination shall be paid to the Executive in a
single lump sum without interest on the first day of the seventh (7th) month after the
month in which the Executive’s employment terminates and all remaining payments shall be made as
originally scheduled. References in this Agreement to Section 409A of the Code include rules,
regulations, and guidance of general application issued by the Department of the Treasury under
Section 409A of the Code.



4.2 Post-Termination Insurance Coverage.



(a) If the Executive’s employment terminates involuntarily but without Cause or voluntarily
but with Good Reason, or because of disability, the Bank shall continue or cause to be continued at
the Bank’s expense medical and life insurance benefits for the Executive and any of his dependents
covered at the time of his termination. The medical insurance benefits shall continue until the
first to occur of (w) the Executive’s return to employment with the Bank or another employer, (x)
the Executive’s attainment of age 65, (y) the Executive’s death, or (z) the end of the term
remaining under this Agreement when the Executive’s employment terminates. Notwithstanding the
foregoing, if the Executive’s employment terminate for any reason, other than for Cause, after the
Executive has attained age 55, the Bank shall provide the Executive and his dependents with medical
insurance coverage that is not less favorable than the Bank provides for other executive officers,
at no cost to the Executive, until the Executive first becomes eligible for Medicare. This last
sentence shall survive the expiration of this Agreement.



(b) If (x) under the terms of the applicable policy or policies for the insurance benefits
specified in Section 4.2(a) it is not possible to continue coverage for the Executive and his
dependents, or (y) when employment termination occurs the Executive is a “specified employee”
within the meaning of Section 409A of the Code, if any of the continued insurance coverage benefits
specified in Section 4.2(a) would be considered deferred compensation under Section 409A of the
Code, and finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i)
of the Code is not available for that particular insurance benefit, the Bank shall pay to the
Executive in a single lump sum an amount in cash equal to the present value of the Bank’s projected
cost to maintain that particular insurance benefit (and associated income tax gross-up benefit, if
applicable) had the Executive’s employment not terminated, assuming continued coverage for 36
months. The lump-sum payment shall be made thirty (30) days after employment termination or, if
Section 4.1(b) applies, on the first day of the seventh (7th) month after the month in
which the Executive’s employment terminates.



ARTICLE 5

CHANGE IN CONTROL BENEFITS




5.1 Change in Control Benefits. If a Change in Control occurs during the term of this
Agreement and, thereafter, the Executive’s employment terminates involuntarily but without Cause or
if the Executive voluntarily terminates employment with Good Reason, the Bank shall make or cause
to be made a lump-sum payment to the Executive in an amount in cash equal to three (3) times the
Executive’s



 


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average annual compensation. For this purpose, average annual compensation means the
Executive’s taxable income reported by the Bank (or any affiliate of the Bank) for the five (5)
calendar years immediately preceding the calendar year in which the Change in Control occurs. The
payment required under this paragraph is payable no later than five (5) business days after the
Executive’s termination of employment. If the Executive receives payment under Section 5.1, the
Executive shall not be entitled to any additional severance benefits under Section 4.1 of this
Agreement. In addition to the cash severance benefit provided for under this Section 5.1, the Bank
shall provide the Executive with the post-termination insurance coverage described in Section
4.2(a) of this Agreement, subject to the provisions of Section 4.2(b) of this Agreement.



5.2 Change in Control Defined. For purposes of this Agreement “Change in Control”
means a change in control as defined in Section 409A of the Code and rules, regulations, and
guidance of general application thereunder issued by the Department of the Treasury, including:



(a) Change in ownership: a change in ownership of the Corporation occurs on the date
any one person or group accumulates ownership of Corporation stock constituting more than 50% of
the total fair market value or total voting power of Corporation stock;



(b) Change in effective control: (x) any one person or more than one person acting as
a group acquires within a 12-month period ownership of Corporation stock possessing 30% or more of
the total voting power of Corporation stock, or (y) a majority of the Corporation’s board of
directors is replaced during any 12-month period by directors whose appointment or election is not
endorsed in advance by a majority of the Corporation’s board of directors; or



(c) Change in ownership of a substantial portion of assets: a change in ownership of a
substantial portion of the Corporation’s assets occurs if in a 12-month period any one person or
more than one person acting as a group acquires from the Corporation assets having a total gross
fair market value equal to or exceeding 40% of the total gross fair market value of all of the
Corporation’s assets immediately before the acquisition or acquisitions. For this purpose, gross
fair market value means the value of the Corporation’s assets, or the value of the assets being
disposed of, determined without regard to any liabilities associated with the assets.



5.3 Potential Limitation of Benefits Under Certain Circumstances. Notwithstanding any
other provisions of this Agreement, in the event that (x) the aggregate payments or benefits to be
made or afforded to the Executive under this Agreement or otherwise, which are deemed to be
parachute payments as defined in Section 280G of the Code or any successor thereof (the
“Termination Benefits”) would be deemed to include an “excess parachute payment” under Section 280G
of the Code; and (y) if such Termination Benefits were reduced to an amount (the “Non-Triggering
Amount”), the value of which is one dollar ($1.00) less than an amount equal to three (3) times the
Executive’s “base amount,” as determined in accordance with Section 280G of the Code and the
Non-Triggering Amount less the product of the marginal rate of any applicable state and federal
income tax and the Non-Triggering Amount would be greater than the aggregate value of the
Termination Benefits (without such reduction) minus (1) the amount of tax required to be paid by
the Executive thereon by Section 4999 of the Code and further minus (2) the product of the
Termination Benefits and the marginal rate of any applicable state and federal income tax, then the
Termination Benefits shall be reduced to the Non-Triggering Amount. The allocation of the
reduction required hereby among the Termination Benefits shall be determined by the Executive.
Notwithstanding the foregoing, the Bank shall not pay the Executive Termination Benefits in excess
of three (3) times his average annual compensation (or such other amount that may be permitted by
the Office of Thrift Supervision pursuant to regulation or regulatory guidance). The Bank’s
independent public accountants will determine the value of any reduction in the payments and
benefits; the Bank will pay for the accountants’ opinion. The Bank may request, and the Executive
has the right to



 


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demand that, a ruling from the IRS as to whether any disputed payments and benefits have
adverse tax consequences. The Bank will promptly prepare and file the request for a ruling from
the IRS, but in no event will the Bank make this filing later than thirty (30) days from the date
of the accountant’s opinion referred to above. The request will be subject to the Executive’s
approval prior to filing; the Executive shall not unreasonably withhold his approval. The Bank and
the Executive agree to be bound by any ruling received from the IRS and to make appropriate
payments to each other to reflect any IRS rulings, together with interest at the applicable federal
rate provided for in Section 7872(f)(2) of the Code. Nothing contained in this Agreement shall
result in a reduction of any payments or benefits to which the Executive may be entitled upon
termination of employment other than pursuant to Sections 4 and 5 hereof, or a reduction in the
payments and benefits specified, below zero.



ARTICLE 6

CONFIDENTIALITY AND CREATIVE WORK




6.1 Non-disclosure. The Executive covenants and agrees not to reveal to any person,
firm, or corporation any confidential information of any nature concerning the Bank or its
business, or anything connected therewith. As used in this Article 6 the term “confidential
information” means all of the Bank and the Bank’s affiliates’ confidential and proprietary
information and trade secrets in existence on the date hereof or existing at any time during the
term of this Agreement, including but not limited to:



(a) the whole or any portion or phase of any business plans, financial information, purchasing
data, supplier data, accounting data, or other financial information;



(b) the whole or any portion or phase of any research and development information, design
procedures, algorithms or processes, or other technical information;



(c) the whole or any portion or phase of any marketing or sales information, sales records,
customer lists, prices, sales projections, or other sales information; and




(d) trade secrets, as defined from time to time by the laws of Tennessee.



This Section 6.1 does not prohibit disclosure required by an order of a court having
jurisdiction or a subpoena from an appropriate governmental agency or disclosure made by the
Executive in the ordinary course of business and within the scope of the Executive’s authority.



6.2 Return of Materials. The Executive agrees to immediately deliver or return to the
Bank upon termination, upon expiration of this Agreement, or as soon thereafter as possible, all
written information and any other similar items furnished by the Bank or prepared by the Executive
in connection with the Executive’s services hereunder and to immediately delete all electronically
stored data of the Bank maintained on the Executive’s personal computers and to return all
Bank-provided computers or communication devices (i.e., laptop, Blackberry, PDA, etc.). The
Executive will retain no copies thereof after termination of this Agreement or termination of the
Executive’s employment.



6.3 Creative Work. The Executive agrees that all creative work and work product,
including but not limited to all technology, business management tools, processes, software,
patents, trademarks, and copyrights developed by the Executive during the term of this Agreement,
regardless of when or where such work or work product was produced, constitutes work made for hire,
all rights of which are owned by the Bank. The Executive hereby assigns to the Bank all rights,
title, and interest, whether by way of copyrights, trade secret, trademark, patent, or otherwise,
in all such work or work product, regardless of whether the same is subject to protection by
patent, trademark, or copyright laws.


 


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6.4 Affiliates’ Confidential Information is Covered; Confidentiality Obligation Survives
Termination. For purposes of this Agreement, the term “affiliate” of the Bank includes any
entity that directly, or indirectly through one or more intermediaries, controls, is controlled by,
or is under common control of the Bank. The rights and obligations set forth in this Article 6
shall survive termination of this Agreement.



6.5 Injunctive Relief. The Executive acknowledges that it is impossible to measure in
money the damages that will accrue to the Bank if the Executive fails to observe the obligations
imposed by this Article 6. Accordingly, if the Bank institutes an action to enforce the provisions
hereof, the Executive hereby waives the claim or defense that an adequate remedy at law is
available to the Bank, and the Executive agrees not to urge in any such action the claim or defense
that an adequate remedy at law exists. The confidentiality and remedies provisions of this Article
6 shall be in addition to and shall not be deemed to supersede or restrict, limit, or impair the
Bank’s rights under applicable state or federal statute or regulation dealing with or providing a
remedy for the wrongful disclosure, misuse, or misappropriation of trade secrets or proprietary or
confidential information.



ARTICLE 7

COMPETITION AFTER EMPLOYMENT TERMINATION




7.1 Covenant Not to Solicit Employees. The Executive agrees not to, directly or
indirectly, solicit or employ the services of any officer or employee of the Bank (including an
individual who was an officer or employee of the Bank during the one year period following the
Executive’s termination) for two years after the Executive’s employment termination.




7.2 Covenant Not to Compete.



(a) The Executive covenants and agrees not to compete directly or indirectly with the Bank for
one year after employment termination. For purposes of this Section 7.2:




	 	(1)	 	the term compete means:







	 	(i)	 	providing financial products or services on
behalf of any financial institution for any person residing in the
territory,

	 
	 	(ii)	 	assisting (other than through the performance
of ministerial or clerical duties) any financial institution in
providing financial products or services to any person residing in the
territory, or

	 
	 	(iii)	 	inducing or attempting to induce any person
who was a customer of the Bank at the date of the Executive’s
employment termination to seek financial products or services from
another financial institution.







	 	(2)	 	the words directly or indirectly mean:







	 	(i)	 	acting as a consultant, officer, director,
independent contractor, or employee of any financial institution in
competition with the Bank in the territory, or

	 
	 	(ii)	 	communicating to such financial institution the
names or addresses or any financial information concerning any person
who was a customer of the Bank when the Executive’s employment
terminated.





 


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	 	(3)	 	the term customer means any person to whom the Bank is
providing financial products or services on the date of the Executive’s
employment termination or within one year thereafter.

	 
	 	(4)	 	the term financial institution means any bank, savings
association, or bank or savings association holding company, or any other
institution, the business of which is engaging in activities that are financial
in nature or incidental to such financial activities as described in Section
4(k) of the Bank Holding Company Act of 1956, other than the Bank or any of its
affiliated corporations.

	 
	 	(5)	 	financial product or service means any product or service that
a financial institution or a financial holding company could offer by engaging
in any activity that is financial in nature or incidental to such a financial
activity under Section 4(k) of the Bank Holding Company Act of 1956 and that is
offered by the Bank or an affiliate on the date of the Executive’s employment
termination, including but not limited to banking activities and activities
that are closely related and a proper incident to banking.

	 
	 	(6)	 	the term person means any individual or individuals,
corporation, partnership, fiduciary or association.

	 
	 	(7)	 	the term territory means the area within a 30-mile radius of
any office of the Bank at the date of the Executive’s employment termination.






(b) If any provision of this Article 7 or any word, phrase, clause, sentence or other portion
thereof (including, without limitation, the geographical and temporal restrictions contained
therein) is held to be unenforceable or invalid for any reason, the unenforceable or invalid
provision or portion shall be modified or deleted so that the provisions hereof, as modified, are
legal and enforceable to the fullest extent permitted under applicable law.



(c) The Executive acknowledges that the Bank’s willingness to enter into this Agreement and to
make the payments contemplated by Articles 3 and 4 of this Agreement is conditioned on the
Executive’s acceptance of the covenants set forth in Articles 6 and 7 of this Agreement and that
the Bank would not have entered into this Agreement without such covenants in force.



7.3 Injunctive and Other Relief. Because of the unique character of the services to be
rendered by the Executive hereunder, the Executive understands that the Bank would not have an
adequate remedy at law for the material breach or threatened breach by the Executive of any one or
more of the Executive’s covenants in this Article 7. Accordingly, the Executive agrees that the
Bank’s remedies for a breach of this Article 7 include, but are not limited to, (x) forfeiture of
any money representing accrued salary, contingent payments, or other fringe benefits (including any
amount payable pursuant to Article 4) due and payable to the Executive during the period of any
breach by the Executive, and (y) a suit in equity by the Bank to enjoin the Executive from the
breach or threatened breach of such covenants. The Executive hereby waives the claim or defense
that an adequate remedy at law is available to the Bank and the Executive agrees not to urge in any
such action the claim or defense that an adequate remedy at law exists. Nothing herein shall be
construed to prohibit the Bank from pursuing any other or additional remedies for the breach or
threatened breach.


 


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7.4 Article 7 Survives Termination But Is Void After a Change in Control. The rights
and obligations set forth in this Article 7 shall survive termination of this Agreement. However,
Article 7 shall become null and void effective immediately upon a Change in Control.



ARTICLE 8

MISCELLANEOUS





8.1 Successors and Assigns.



(a) This Agreement shall be binding upon the Bank and any successor to the Bank, including any
persons acquiring directly or indirectly all or substantially all of the business or assets of the
Bank by purchase, merger, consolidation, reorganization, or otherwise, but this Agreement and the
Bank’s obligations under this Agreement are not otherwise assignable, transferable, or delegable by
the Bank. By agreement in form and substance satisfactory to the Executive, the Bank shall require
any successor to all or substantially all of the business or assets of the Bank expressly to assume
and agree to perform this Agreement in the same manner and to the same extent the Bank would be
required to perform had no succession occurred.



(b) This Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal or legal representatives, executors, administrators, successors, heirs, distributees, and
legatees.



(c) Without written consent of the other parties, no party shall assign, transfer, or delegate
this Agreement or any rights or obligations under this Agreement, except as expressly provided
herein. Without limiting the generality or effect of the foregoing, the Executive’s right to
receive payments hereunder is not assignable or transferable, whether by pledge, creation of a
security interest, or otherwise, except for a transfer by the Executive’s will or by the laws of
descent and distribution. If the Executive attempts an assignment or transfer that is contrary to
this Section 8.1, the Bank shall have no liability to pay any amount to the assignee or transferee.



8.2 Governing Law, Jurisdiction and Forum. This Agreement shall be construed under and
governed by the internal laws of the State of Tennessee, without giving effect to any conflict of
laws provision or rule that would cause the application of the laws of any jurisdiction other than
Tennessee. By entering into this Agreement, the Executive acknowledges that the Executive is
subject to the jurisdiction of both the federal and state courts in Tennessee.



8.3 Entire Agreement. This Agreement sets forth the entire agreement of the parties
concerning the employment of the Executive by the Bank. Any oral or written statements,
representations, agreements, or understandings made or entered into prior to or contemporaneously
with the execution of this Agreement are hereby rescinded, revoked, and rendered null and void by
the parties.



8.4 Notices. All notices, requests, demands, and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified
or registered mail, return receipt requested, with postage prepaid. Unless otherwise changed by
notice, notice shall be properly addressed to the Executive if addressed to the address of the
Executive on the books and records of the Bank at the time of the delivery of such notice, and
properly addressed to the Bank if addressed to the board of directors of the Bank at the Bank’s
executive offices.



8.5 Severability. If there is a conflict between any provision of this Agreement and
any statute, regulation, or judicial precedent, the latter shall prevail, but the affected
provisions of this Agreement shall be curtailed and limited solely to the extent necessary to bring
them within the requirements of law. If any provisions of this Agreement is held by a court of
competent jurisdiction to
be indefinite, invalid, void or voidable, or otherwise unenforceable, the remainder of this
Agreement shall continue in full force and effect unless that would clearly be contrary to the
intentions of the parties or would result in an injustice.


 


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8.6 Captions and Counterparts. The captions in this Agreement are solely for
convenience. The captions do not define, limit, or describe the scope or intent of this Agreement.
This Agreement may be executed in several counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the same instrument.



8.7 No Duty to Mitigate. The Executive shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment. Moreover, provided the
Executive is not in breach of any obligation under Articles 6 and 7 of this Agreement, the amount
of any payment provided for in this Agreement shall not be reduced by any compensation earned or
benefits provided as the result of employment of the Executive or as a result of the Executive
being self-employed after employment termination.



8.8 Amendment and Waiver. This Agreement may not be amended, released, discharged,
abandoned, changed, or modified in any manner, except by an instrument in writing signed by each of
the parties hereto. The failure of any party hereto to enforce at any time any of the provisions
of this Agreement shall not be construed to be a waiver of any such provision, nor affect the
validity of this Agreement or any part thereof or the right of any party thereafter to enforce each
and every such provision. No waiver or any breach of this Agreement shall be held to be a waiver
of any other or subsequent breach.



8.9 Compliance with Internal Revenue Code Section 409A. The Bank and the Executive
intend that their exercise of authority or discretion under this Agreement shall comply with
Section 409A of the Code. If any provision of this Agreement does not satisfy the requirements of
Section 409A of the Code, the provision shall nevertheless be applied in a manner consistent with
those requirements. If any provision of this Agreement would subject the Executive to additional
tax or interest under Section 409A of the Code, the Bank shall reform the provision. However, the
Bank shall maintain to the maximum extent practicable the original intent of the applicable
provision without subjecting the Executive to additional tax or interest, and the Bank shall not be
required to incur any additional compensation expense as a result of the reformed provision.



8.10 Required Provisions. In the event any of the foregoing provisions of this
Agreement conflict with the terms of this Section 8.10, this Section 8.10 shall prevail.



(a) The Bank’s board of directors may terminate the Executive’s employment at any time, but
any termination by the Bank, other than termination for Cause, shall not prejudice the Executive’s
right to compensation or other benefits under this Agreement. The Executive shall not have the
right to receive compensation or other benefits for any period after termination for Cause as
defined in Section 3.2 of this Agreement.



(b) If the Executive is suspended from office and/or temporarily prohibited from participating
in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1818(e)(3) or (g)(1), the Bank’s obligations under
this Agreement shall be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may, in its discretion: (i) pay
the Executive all or part of the compensation withheld while its contract obligations were
suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.


 


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(c) If the Executive is removed and/or permanently prohibited from participating in the
conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal
Deposit Insurance Act, 12 U.S.C. Section 1818(e)(4) or (g)(1), all obligations of the Bank under
this Agreement shall terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.



(d) If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance
Act, 12 U.S.C. Section 1813(x)(1), all of the Bank’s obligations under this Agreement shall
terminate as of the date of default, but this paragraph shall not affect any vested rights of the
contracting parties.



(e) All obligations under this Agreement shall terminate, except to the extent determined that
continuation of the Agreement is necessary for the continued operation of the institution: (i) by
the Director of the Office of Thrift Supervision (OTS), or his designee, at the time the Federal
Deposit Insurance Corporation (FDIC) enters into an agreement to provide assistance to or on behalf
of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act, 12
U.S.C. Section 1823(c), or (ii) by the Director of the OTS (or his designee) at the time the
Director of the OTS (or his designee) approves a supervisory merger to resolve problems related to
the operations of the Bank or when the Bank is determined by the Director of the OTS to be in an
unsafe or unsound condition. Any rights of the Executive that have already vested, however, shall
not be affected by such action.



(f) Any payments made to the Executive pursuant to this Agreement, or otherwise, are subject
to, and conditioned upon, their compliance with 12 U.S.C. Section 1828(k) and FDIC Regulation 12
C.F.R. Part 359, Golden Parachute and Indemnification Payments.



8.11 Source of Payments. All payments provided for under this Agreement shall be
timely paid in cash or check from the general funds of the Bank. The Corporation, however,
unconditionally guarantees payment and provision of all amounts and benefits due under this
Agreement. In the event the Bank does not pay such amounts or provide such benefits, they shall be
paid or provided by the Corporation.



[signature page to follow]




 


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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first
written above.



	 	 	 	 	 
	 	ATHENS FEDERAL COMMUNITY BANK

 	 
	 	/s/ G. Scott Hannah
 	 
	 	G. Scott Hannah 	 
	 	For the Board of Directors 	 
	 



	 	 	 	 	 
	 	ATHENS BANCSHARES CORPORATION

 	 
	 	/s/ G. Scott Hannah
 	 
	 	G. Scott Hannah 	 
	 	For the Board of Directors 	 
	 
	 	 	 
	 	     /s/ Michael R. Hutsell
 	 
	 	Michael R. Hutsell 	 
	 	 	 
	 




 


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