EXHIBIT 10.1


Employment
Agreement 


This Employment Agreement
(the “Agreement”) dated and effective as of September 27, 2006 (the “Effective
Date”) is by and between Treaty  Oak Bancorp, Inc., a Texas corporation (the “Company”),
and Jeffrey L. Nash (“Banker”). In
consideration of the mutual covenants and promises contained herein, the
parties agree as follows:


Whereas, Banker has been
employed by the Company for 2 years, and the services of Banker, his managerial
and financial experience, and his knowledge of the affairs of the Company are
of great value to the Company; and


Whereas, the Company deems
it essential that it have the advantage of the services of Banker for a period
extending beyond his present employment agreement, and desires to enter into a
continuing agreement of employment with him, and to provide Banker with
compensation for past contributions to the Company; and Banker desires to enter
into such an agreement with the Company upon the terms and conditions stated
hereunder.


Article 1


General Provisions



Section 1.1             Employment.
The Company hereby employs Banker, and Banker accepts such employment by the
Company upon the terms and conditions hereof.


Section 1.2             Term. Subject to earlier termination as specifically set forth herein, the
initial term of this Agreement shall be two (2) years (the “Term”) commencing
on the Effective Date. The Term shall be extended automatically without further
action by either party for successive one (1) year terms, unless either party
shall have served ninety (90) days prior written notice upon the other party
that this Agreement shall terminate.


Section 1.3             Termination.
Banker’s employment and this Agreement shall terminate upon the earliest to
occur of any of the following events (the actual date of such termination being
referred to herein as the “Termination Date”):


(a)                                  Pursuant to
written notice, given as provided in Section 1.2.


(b)                                 In the event of
Banker’s death or disability as set forth in Section 3.7.


(c)                                  Termination of
Banker’s employment by the Company for cause without any prior notice (except
as specifically set forth below), upon the occurrence of any of the following
events (each of which shall constitute “Cause”):


(i)                         any
embezzlement or wrongful diversion of funds of the Company or any affiliate of
the Company by Banker;









 



(ii)                      gross
malfeasance by Banker in the conduct of Banker’s duties;


(iii)                   breach of this Agreement
and, if such breach is capable of being cured, as determined by the Board of
Directors of the Company (the “Board of Directors”), failure of Banker to cure
such breach after written notice and reasonable opportunity to cure such
breach;


(iv)                  gross neglect by Banker in
carrying out Banker’s duties;


(v)                     Willful violation by Banker
of state or federal statutes, banking regulations or SEC regulations; or


(vi)                  Willful violation by Banker
of the Company’s code of conduct.


(d)                                 Termination of
Banker’s employment by the Company at any time without Cause.


(e)                                  Termination by
Banker of his employment at any time.


Section 1.4             Termination
Obligations: Return of Company Property. Upon termination of
this Agreement, Banker shall promptly return all Company property.


Article 2


Position and Duties; Other
Business Activities


Section 2.1             Position.
Banker shall be employed as President and Chief Executive Officer of the
Company and report to the Board of Directors. Banker holds a voting seat on the
Board of Directors and shall continue to serve at the pleasure of the Board of
Directors and the stockholders. Such employees as Banker may determine, subject
to the approval of the Board of Directors, shall report to Banker.


Section 2.2             Duties:
Full Attention to Business; Locale for Performance of Duties.  Banker shall perform such services for the
Company, that reasonably serve the purpose of this Agreement and/or meet the
needs of the Company, as may be reasonably assigned to him by the Board of
Directors and that are consistent with the position Banker holds. Banker shall
devote his full business time, energies, interest, abilities and productive
efforts to the business of the Company. Without the Company’s written consent,
Banker shall not render any kind of employee-type or consulting services to
others for compensation without the consent of the Board of Directors, and, in
addition, shall not engage in any activity which conflicts or interferes with
his performance of duties hereunder.(1) Banker shall be employed at the Company’s
Austin, 






(1)             Banker
has served for several years (preceding his employment by Bank), and continues
to serve, as a paid director for a very small company (which is not a bank or
bank-related business); an activity that requires no time from Banker during
normal business hours except for a lunch meeting once every six months, and
that requires minimal other time of Banker — all outside of normal
business hours; and by signing below Bank has acknowledged Banker’s disclosure
of such activities and consented to Banker’s continued participation in such
activities.


 









 



Texas, headquarters, and shall be expected to reside
in the Austin area; and minimal travel shall be expected of Banker in the
regular performance of his duties.  In
the event the Company requests Banker to relocate his residence or primary work
location to a city other than Austin, Texas, the Company agrees to: (1) give
Banker not less than six (6) months’ advance written notice of any requested
relocation; and, (b) pay all reasonable moving expenses required to effect the
relocation of Banker and his family, including but not limited to providing
relocation assistance to facilitate the sale of Banker’s current residence and
acquisition of a comparable residence in a comparable quality neighborhood in
the new locale at no net cost to Banker; and, (c) commencing upon the first
date Banker is to effect such relocation, increase Banker’s Base Salary to
adjust for the increased costs of living, if any, at any such other city to
which Banker has relocated at the Company’s request.


Section 2.3             Covenant
Not To Compete During Term. During the Term,
Banker shall comply in all respects with the Company’s written policies with
respect to conflicts of interest. Banker shall not, without the prior written
consent of the Board of Directors, engage in or be interested, directly or
indirectly, in any business or operation competitive with the Company. For the
purpose of this paragraph, Banker shall be deemed to be interested in a
business or operation which is competitive with the Company if Banker is a
holder of 5% or more of the issued and outstanding ownership interests in such
business or operation, or serves as a director, officer, employee, agent,
partner, individual proprietor, lender, consultant, or independent contractor
of such business or operation.


Section 2.4             Non-Disclosure
of Confidential Information. Banker acknowledges that in
connection with his employment by the Company or its affiliates, he has and may
acquire or learn “Confidential Information” of the Company by virtue of a
relationship of trust and confidence between Banker and the Company. Banker
warrants and agrees that during the Term he shall not disclose to anyone (other
than to officers of the Company or to such other persons as such officers may
designate), or use, except in the course of Banker’s employment with the
Company or its affiliates, any Confidential Information acquired by him in the
course of or in connection with his employment. As used herein, the term “Confidential
Information” shall include, but not be limited to: all information of any type
or kind, whether or not reduced to a writing and whether or not conceived,
originated, discovered or developed in whole or in part by Banker, which is
directly related to the Company, its operations, policies, agreements with
third parties, its financial affairs and related matters, including business
plans, strategic planning information, product information, purchase and sales
information and terms, supplier negotiation points, styles and strategies,
contents and terms of contracts between the Company and suppliers, advertisers,
vendors, contact persons, terms of supplier and/or vendor contracts or
particular transactions, potential supplies and/or vendors, or other related
data; marketing information such as but not limited to, prior, ongoing or
proposed marketing programs, presentations, or agreements by or on behalf of
the Company, pricing information, customer bonus programs, marketing tests
and/or results of marketing efforts, computer files, lists and reports, manuals
and memos pertaining to the business of the Company, lists or compilations of
vendor and/or supplier names, addresses, phone numbers, requirements and
descriptions, contract information sheets, compensation requirements or terms,
benefits, policies, and any other financial information whether about the
Company, entities related or affiliated with the Company or other 









 



key information pertaining to the business of the
Company, including but not limited to all information which is not generally
available to or known in the information services industry (or is available
only as a result of an unauthorized disclosure) and is treated by the Company
as “Confidential Information” during the term of this Agreement, regardless of
whether or not such Information is a “trade secret” as otherwise defined by
applicable law.  “Confidential
Information” shall not include any such information that is made available to
the public generally, or is in the public domain.


Section 2.5             No Solicitation of Employees. Banker specifically
agrees that during the Term and for a period of one (1) years after his
termination of employment with the Company, Banker shall not, directly or
indirectly, either for himself or for any other person, firm, corporation or
legal entity, solicit any individual then employed by the Company to leave the
employment of the Company.


Section 2.6             Ownership
of Work Product and Ideas. Any
discoveries, inventions, patents, materials, licenses and ideas applicable to
the industry or relating to Banker’s services for the Company or its
affiliates, whether or not patentable or copyrightable, created by Banker
during his employment by the Company or its affiliates (“Work Product”) and all
business opportunities within the industry (“Opportunities”) introduced to
Banker by the Company or its affiliates will be owned by the Company, and
Banker will have no personal interest in such, except to the extent that the
Company allows Banker to invest or participate in or have other rights to such
Work Product or Opportunities. Banker will, in such connection, promptly
disclose any such Work Product and Opportunities to the Company and, upon
request of the Company, will assign to the Company all right in such Work
Product and Opportunities.


Article 3


Compensation; Benefits 


Section 3.1             Salary. The Company shall pay Banker Eight Thousand three hundred
thirty three and 33/100 Dollars ($8333.33) on a semi-monthly basis, for an
annualized base salary (“Base Salary”) of Two hundred thousand and NO/100
Dollars ($200,000.00). Beginning with the first anniversary of the date of the
Agreement and for each subsequent year of employment (or any portion of any
such year), Banker shall be entitled to a base salary review by the Company to
determine if any increase to base salary is warranted as a result of
performance.


Section 3.2             Bonus. In addition to the Banker’s base salary, Banker shall be
eligible to receive a bonus (“Bonus”) for each fiscal year equal to fifty
percent of Banker’s annual base salary, plus (b) such additional amount based
on Banker’s performance as may be determined by the Board of Directors in its
sole discretion. Any Bonus owing to Banker shall be paid within thirty (30)
days following the filing of the Company’s annual report on Form 10-K for the
applicable fiscal year.


Section 3.3             Paid Vacation.
Banker shall be entitled to
five (5) weeks of paid vacation during each year of service, or such longer
amount of vacation time as Banker and the Compensation Committee of the Board
of Directors shall mutually agree upon.









 



Section 3.4             Stock
Options.


(a)                                  Subject to
approval of the Compensation Committee of the Board of Directors, the Company
will grant to Banker (i) an option to purchase 10,000._ shares of
common stock of the Company under the Company’s Incentive Stock Option Plan
(the “Plan”), which shall be intended to qualify as an incentive stock option
to the maximum extent permitted under Section 422 of the Internal Revenue Code
of 1986, as amended, and (ii) subject to compliance with the limitations of the
NASDAQ Stock Exchange applicable to grants of options to officers without
stockholder approval, an option to purchase an additional 5,000 shares outside
the Plan. All such options will have an exercise price per share equal to the fair market value of the Company’s common stock as of the date
of grant. Each option shall be subject to the terms and conditions of the Plan
(or substantially equivalent terms if
the option is granted outside the Plan) and an option agreement to be
entered into between the Company and Banker, in a form approved by the
Compensation Committee of the Board of Directors. Each option agreement shall
provide that the option shall have a ten year term (subject to earlier
termination in connection with termination of employment).


(b)                                 The options
shall vest and become exercisable, subject to continued employment, as follows:


(i)                         The option
described in Section 3 .4(a)(i) for 10,000 shares shall vest as to 33% of the
shares on October 25, 2006, 33% on October 25, 2007 and as to the remaining 33%
on October 25, 2008,


(ii)                      The option
described in Section 3.4(a)(ii) for 5,000 shares, to be granted following the
Effective Date, shall vest as to 33% of the shares on September 27, 2007, 33%
of the shares on September 27, 2008, and as to the remaining 33% of the shares
on September 27, 2009.


in each case to become fully
vested and exercisable upon a Change in Control as defined in the Plan.


(c)                                  Banker shall be
eligible to receive additional grants of options pursuant to the Plan in the
sole discretion of the Compensation Committee and/or the Board of Directors.


(d)                                 If the Company
is subject to a Change in Control as defined in the Plan during the Term but
prior to the grant of the option described in Section 3 .4(a)(ii) for 5,000 shares (to be granted one year following
the Effective Date), Banker shall be entitled to a cash bonus equal to the
excess of the fair market value of the shares for which such options were not
granted as of the date of the Change in Control, over the fair market value of
such - shares as of September 27,, 2006. Any 









 



                                                payments due
hereunder shall be paid within sixty (60) days of the date of the Change in
Control.


Section 3.5             Reimbursement
of expenses.  The Company
shall promptly reimburse Banker for reasonable expenses incurred by him while
conducting business on behalf of the Company or in furtherance of the Company’s
interests, provided that Banker complies with reasonable expense reimbursement
policies or practices of the Company.


Section 3.6             Other
Benefits. During the
Term, Banker shall be entitled to participate in present and future employee
benefit plans which are available to the Company’s executive employees, subject
to eligibility requirements thereunder. 
In addition, the Company shall continue to pay directly (or promptly
reimburse) cell phone charges, UT Club membership fees and dues, Headliner’s
Club membership fees and dues, and such other club membership fees and dues as
the Board’s Compensation Committee shall determine are of benefit to the
Company.


Section 3.7             Disability
or Death. If the Board of Directors determines, on the basis of
professional medical advice, that Banker has become unable to substantially
perform his duties under this Agreement due to illness or mental or physical
disability, and that such failure or inability has continued or is reasonably
expected to continue for any consecutive six-month period, the Company shall have
the option to terminate this Agreement by giving written notice to Banker
thereof and the basis therefor at least 30 days prior to the effective date of
termination. This Agreement shall also terminate immediately upon Banker’s
death. If Banker’s employment with the Company is terminated pursuant to this
Section 3.7, the Company shall pay Banker the salary, bonuses and commissions
which are earned but unpaid as of the date of termination. The Board of
Directors shall have discretion to determine the amount, if any, of Bonus which
Banker has earned prior to termination of employment during a fiscal year.


Section 3.8             Severance. 


(a)                                  If the Company
terminates Banker’s employment other than for Cause pursuant to Section 1.3(d),
and other than by reason of death or Disability pursuant to Section 3.7, or if
Banker resigns within ten (10) days following (i) a material diminution in his
title, responsibilities or direct-report staff; or (ii) within six (6) months
following a Change of Control, then subject to Banker’s continuing obligations
under Sections 2.4 and 2.5 and in consideration of the execution, delivery and
effectiveness of a general release of claims in a standard form approved by the
Company, the Company shall pay to Banker a lump sum of one times Banker’s
current Base Salary in cash within fifteen (15) days after the date of
termination (or, if later, upon the effectiveness of the general release
following any applicable revocation period) and shall vest 100% of Banker’s
then remaining unvested options granted in accordance with this Agreement, in
addition to other amounts payable from qualified plans, nonqualified retirement
plans, and deferred compensation plans, which amounts shall be paid (or
otherwise vested or deposited) in accordance with the terms of such plans.









 



(b)                                 If the Company
terminates Banker’s employment for Cause, or if Banker resigns [voluntarily and
other than pursuant to Section 3.8(b) above], then Banker shall only be
entitled to be paid his accrued, unpaid Base Salary through the effective date
of his termination of employment and his entitlement to other amounts payable
from qualified plans, nonqualified retirement plans, and deferred compensation
plans shall be determined in accordance with the terms of such plans.


(c)                                  No severance
benefits shall be provided pursuant to Sections 3.8(a) or (b) if Banker’s
employment is terminated by reason of expiration or non- renewal of this
Agreement for any reason.


Section 3.9             Excess
Parachute Payments. 


(a)                                  If there is a “change
of control” of the Company within the meaning of Section 2800 of the Internal
Revenue Code of 1986, as amended (the “Code”), a portion of the benefits to
which Banker is entitled under this Agreement could be characterized as “excess
parachute payments” within the meaning of Section 2800 of the Code. The parties
hereto acknowledge that the protections set forth in this Section 3.9 are
important, and it is agreed that Banker should not have to bear the full burden
of the excise tax that might be levied under Section 4999 of the Code or any
similar provision of federal, state of local law, in the event that any portion
of the benefits payable to Banker pursuant to this Agreement or the other
incentive plans of the Company are treated as an excess parachute payment. The parties,
therefore, have agreed as set forth in this Section 3.9.


(b)                                 Anything in
this Agreement to the contrary notwithstanding, Whenever it shall be determined
that any payment or distribution (including income recognized by Banker upon
the early vesting of restricted property or upon the exercise of options whose
exercise date has been accelerated) by the Company or any other Person to or
for the benefit of Banker (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 3.9 (a “Payment”) would be subject to the excise tax imposed by Section
4999 of the Code or any similar provision of any federal, state or local law or
any interest or penalties are incurred by Banker with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax”), then the Company
shall pay an additional payment, not to exceed the amount of Banker’s then
current Base Salary in the aggregate (a “Gross-Up Payment”), in an amount such
that after payment by Banker of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed on the Gross-Up Payment, Banker retains an amount of the Gross-Up
Payment equal to fifty percent (50%) of
the Excise Tax imposed on the Payments. Banker will bear the cost of the 









 



                                                remaining fifty
percent (50%) until the aggregate Gross-Up Payments from the Company have
reached the amount of Banker’s then current Base Salary, and will thereafter
bear all additional taxes, interest or penalties.


(c)                                  In the event of
any dispute as to the applicability or amount of any Gross- Up Payment, all
determinations required to be made under this Section 9, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the independent public accounting firm regularly employed by the Company
(the “Accounting Firm”) which shall provide detailed supporting calculations
both to the Company and to Banker within 15 business days after the receipt of
notice from Banker that there has been a Payment, or such earlier time as is
requested by the Company. All fees and expenses of the Accounting Firm will be
borne by the Company. If the Accounting Firm determines that no Excise Tax is
payable by Banker, it shall furnish Banker with a written statement that
failure to report the Excise Tax on Banker’s applicable federal income tax
return would not result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm shall be binding on the Company and
Banker unless and until a final determination is received from the Internal
Revenue Service indicating a contrary result. As a result of uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments may not have been made by the Company that should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. If Banker
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Banker, consistent with the maximum limitation stated in this Section 3.9. In
the event it is determined by the Accounting Firm that the Gross Payments
previously made by the Company exceeded the limitations stated in this Section
3.9, upon written notice from the Company, accompanied by a copy of the
Accounting Firm’s calculation of same, the amount of such overpayment shall be
promptly paid by Banker to the Company.


Article 4


Miscellaneous Provisions


Section 4.1             Entire Agreement.
This Agreement contains the entire Agreement between the Parties and
supersedes all prior oral and written Agreements, understandings, commitments,
or practices between the Parties with respect to the subject matter hereof.
Other than as expressly set forth herein, Banker and the Company acknowledge
and represent that there are no other promises, terms, conditions or
representations (verbal or written) regarding the subject matter of this
Agreement [save and except other possible stock option grant agreements between
the parties which are not affected by this Agreement, except as their vesting
dates may be accelerated pursuant to Section 3.8(a) hereof].  No supplement, modification, or amendment 









 



of any term, provision or condition of this
Agreement shall be binding or enforceable unless evidenced in writing and
executed by the parties. The provisions of Sections 2.3, 2.4, 2.5 and 2.6 shall
survive termination of this Agreement.


Section 4.2             Applicable Law.
This Agreement shall be governed exclusively by and construed in accordance
with the laws of the State of Texas, notwithstanding choice of law provisions
thereof; and the venue of any litigation commenced hereunder shall be Austin,
Texas.


Section 4.3             Injunctive
Relief. Banker acknowledges that his services are of a special,
unique, unusual, extraordinary and intellectual character, which gives them a
peculiar value, the loss of which cannot be reasonably or adequately
compensated in damages in an action at law. 
If he should breach this Agreement, in addition to its rights and
remedies under general law, the Company shall be entitled to seek equitable
relief by way of injunction or otherwise.


Section 4.4             Partial Invalidity. If the
application of any provision of this Agreement, or any section, subsection,
subdivision, sentence, clause, phrase, word or portion of this Agreement should
be held invalid or unenforceable, the remaining provisions thereof shall not be
affected thereby, but shall continue to be given full force and effect as if
the invalid or unenforceable provision had not been included herein.


Section 4.5             Notices.
Notices given under this Agreement shall be given by registered or certified
mail, postage prepaid, return receipt requested, or by personal delivery to the
respective addresses of the parties. Notices to Banker shall be sent to 8200
Bell Mountain Drive,  Austin, Texas 78730. Notices to the Company shall
be sent to 101 Westlake Drive, Austin, Texas 78746, Attn: Board of Directors;
or to such other address as either party shall have designated by proper
written notice to the other party.  A
mailed first-class notice shall be deemed given two (2) business days after
deposit with U.S. Postal Service.


Section 4.6             Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which shall constitute one and the same
instrument.  After this Agreement is duly
executed by all parties, a true, legible copy, image, or facsimile of a fully
executed original shall be just as valid and enforceable as an original.


Section 4.7             Assignment.
This Agreement may not be assigned or encumbered in any way by Banker. The
Company may assign this Agreement to any successor (whether by merger,
consolidation, or purchase of the Company’s stock) to all or a controlling
interest in the Company’s business, in which case this Agreement shall be
binding upon and inure to the benefit of such successor(s) and assign(s).


Section 4.8             Limitation on Waiver.
A waiver of any term, provision, or condition of this Agreement shall not be
deemed to be, or constitute a waiver of any other term, provision or condition
herein, whether or not similar. No waiver shall be binding unless in writing
and signed by the waiving party.









 



Section 4.9             Attorney’s
Fees. In the event that any proceeding is commenced involving
the interpretation or enforcement of the provisions of this Agreement, the
Party prevailing in such proceeding shall be entitled to recover its reasonable
costs, expert witness fees, and attorneys’ fees.


Section 4.10           Arbitration.
If a dispute or claim shall arise with respect to any of the terms or
provisions of this Agreement, or with respect to the performance by either of
the parties under this Agreement, other than in connection with the Company’s
enforcement of the provisions of Sections 2.3, 2.4, 2.5, and 2.6 or pursuant to Section 4.3, then either party may,
by notice as herein provided, require that the dispute be submitted under the
Commercial Arbitration Rules of the American Arbitration Association to an
arbitrator in good standing with the American Arbitration Association within
fifteen (15) days after such notice is given. 
Any dispute as to the arbitrability of any issue shall be submitted to
the arbitrator for decision.  The written
decision of the single arbitrator ultimately appointed by and for both parties
shall be binding and conclusive on the parties, including with respect to any
award of attorneys’ fees, expert witness fees, or costs.  In the event either party does not promptly
comply with the arbitrator’s award, then a judgment may be entered to enforce
the arbitrator’s award in any court having jurisdiction; and the parties
consent to the jurisdiction of the courts of the State of Texas for this
purpose.  Any arbitration undertaken
pursuant to the terms of this section shall occur in the State of Texas.  If a party does not promptly cooperate with
the arbitration process or does not promptly comply with the award of the
arbitrator, the other party may seek relief from a court of proper jurisdiction
and venue to obtain an order compelling the noncompliant party to cooperate
immediately with the arbitration process or to comply immediately with the
award of the arbitrator; and the prevailing party in any such court proceeding
shall be entitled to recover reasonable costs, attorneys’ fees, and expert
witness fees.


Section 4.11           Taxes. All
payments made pursuant to the provisions of this Agreement shall be subject to
the withholding of applicable taxes.


Section 4.12           Not for the Benefit of Creditors or Third Parties. The provisions of this Agreement are intended only for the
regulation of relations among the parties. This Agreement is not intended for
the benefit of creditors of the parties or other third parties and no rights
are wanted to creditors of the parties or other third parties under this
Agreement.


In Witness Whereof, this Agreement is executed as of
the Effective Date.


	
  

  	
  /s/ Jeffrey L. Nash

  
	
   

  	
  Jeffrey L. Nash

  
	
   

  	
   

  	
   

  
	
   

  	
  Treaty Oak Bancorp, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Charles
  T. Meeks

  
	
   

  	
   

  	
  Name: Charles T. Meeks

  
	
   

  	
   

  	
  Title: Chairman of the Board