Document:

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This
Employment Agreement (hereinafter sometimes the “Agreement”) is made this 8 day
of June, 2004 by and between CARROLLTON BANK, Employer, (hereinafter sometimes
the “Bank”), a body corporate of the State of Maryland, and GARY M. JEWELL of
Baltimore County, State of Maryland (hereinafter sometimes the “Employee”).

 

INTRODUCTORY STATEMENT

 

The Bank is
engaged in the business of accepting deposits of money, paying and cashing
checks, making loans, etc., all as more fully described in West’s Maryland Law
Encyclopedia, Volume 4, Section Banks and Trust Companies, and in and by the
Regulations of the Commissioner of Financial Regulation and the Federal Deposit
Insurance Corporation. The Employee has extensive experience in the field of
Electronic Banking and particularly in the field of Point of Sale transactions.
The Board of Directors (hereinafter sometimes the “Board”) of the Bank is fully
familiar with Employee’s knowledge of the business, ability to lead or assist
in leading the development and growth of that segment of the Bank’s operations
and therefore has determined that it is in the best interest of the Bank and
its stockholders to reinforce and encourage the continued attention and
dedication of the Employee to the Bank by providing for the continued
employment of the Employee with the Bank.

 

The Employee
is willing to commit himself to serve the Bank on the terms and conditions
herein provided.

 

In order to
effect the foregoing, the Bank and the Employee wish to enter into an
employment agreement on the terms and conditions set forth herein below.

 

NOW,
THEREFORE, in consideration of Ten Dollars ($10.00) paid each to the other,
receipt of which is hereby acknowledged and in consideration of the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

 

1.                                       Employment.  The Bank hereby employs the Employee as
Senior Vice President, Electronic Banking Department, and the Employee hereby
accepts such employment in accordance with the terms and conditions of this
Agreement.

 

1.1.                              Assignability.  This Agreement is purely personal to the
parties hereto, and neither party shall have the right to assign, transfer,
pledge, or otherwise affect any interest hereunder nor any of the monies called
for herein.

 

2.                                       Duties
of Employee.  Employee has, for
several years past, been engaged by Bank in the identical position herein
described. It is contemplated by this Agreement that Employee’s duties shall be
comparable to those presently undertaken by Employee, i.e. managing the ATM
network, debit card services, the internet and on-line banking services, and
Point of Sale transactions, but with particular emphasis on the development and
expansion of the Bank’s operation in the field of processing Point of Sale
transactions. The duties of employment shall include such additional executive
duties on behalf of the Bank and its operations of a character in keeping with
the Employee’s

 

 

position as may, from time to
time, be assigned to the Employee by Bank Management or by the Board of
Directors.

 

2.1.                              Best
Efforts of Employee.  Employee agrees
that he will, at all times, faithfully, industriously, and to the best of his
ability, experience, and talents perform all of the duties that may be required
of and from him pursuant to the express and implicit terms of this Agreement to
the reasonable satisfaction of Bank.

 

3.                                       Term.  The term of employment shall begin on the
date first hereinabove set forth, for a period of three years, unless this
Agreement is terminated by either party as herein provided.

 

4.                                       Compensation.

 

4.1.                              Salary.  During the period of the Employee’s
employment hereunder, the Bank shall pay to the Employee an annual base salary
at a rate of One Hundred Two Thousand Eight Hundred Thirty-One Dollars
($102,831.00) or such rate as may, from time to time, be determined by the
Board, such salary to be paid in substantially even installments, subject to
customary payroll deductions, in accordance with the normal payroll practices
of the Bank. The Employee’s salary will be reviewed by the Bank’s Compensation
Committee at least annually.

 

4.2.                              Bonus.  So long as Employee is employed under the
provisions of this Agreement by Bank, at the end of each calendar year,
Employee shall receive a bonus of Twenty-Five percent (25%) of his base salary
provided the annual Point of Sale revenue received by the Bank during the
subject calendar year exceeds One Million Dollars ($1,000,000.00).

 

4.3.                              Other
Benefits. The Employee shall be entitled to participate in all of the fringe
benefit plans and arrangements in effect on the date hereof in which employees
and Officers of the Bank participate, including group life insurance and
accident plan, medical and dental insurance plans, disability plan, and 401K
Plan; provided, however, that changes in such plans or arrangements may be
made, including termination of such plans or arrangements, if such changes
occur pursuant to a program applicable to all employees and Officers of the
Bank and do not result in a proportionately greater reduction in the rights of
or benefits to the Employee as compared with any other employee of the Bank.
The Employee agrees to cooperate in obtaining such benefits, including
submitting to physical examination and drug testing, if required to do so by
insurance carriers.

 

4.4.                              Expenses.  During the term of the Employee’s employment
hereunder, the Employee shall be entitled to receive prompt reimbursement for
all reasonable and customary expenses incurred by the Employee in performing
services hereunder, upon presentment of receipts for such expenses.

 

4.5                                 Vacations.  Employee shall be entitled to an annual
vacation time, with full pay, in keeping with Bank policy as same shall from
time to time be amended. Vacation time must be taken during the calendar year
in which it is accrued and cannot be accumulated and carried over into
succeeding calendar years except as provided in the Employee Manual. The
Employee shall take his vacation at reasonable time or times taking into
consideration the needs of the Bank.

 

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4.6.                              Sick
Leave.  Employee shall be entitled to
sick leave in keeping with Bank policy as same shall from time to time be
amended. Days awarded under said sick leave policy are not cumulative and may
not be carried over into succeeding calendars years.

 

4.7.                              Automobile
and Costs Associated Therewith.  Commencing
with the effective date of this Agreement, Employee shall receive the use of a
Bank-owned car. During the life of this Agreement, subject to Employee being
employed by Bank, on the third anniversary of the effective date hereof,
Employee shall receive the use of a new Bank-owned car. The make and model of
the Bank-owned car shall be as determined by the then Bank President. In
addition thereto, Employee shall receive a Bank-owned credit card for use in
paying for fuel and oil for the operation of the vehicle and necessary repairs
to the vehicle. While it is understood that Employee may use the subject
vehicle for his personal purposes, it is expected that Employee will reimburse
Bank for the cost of fuel consumed for personal use when such use exceeds his
normal and usual personal usage. Bank shall, at Bank’s expense, obtain and
maintain insurance covering the use of the vehicle. Should Employee determine
that, in his opinion, the amount and type of insurance obtained by the Bank is
inadequate, it shall be Employee’s responsibility to obtain, at his expense,
any additional types or amounts of insurance.

 

It shall be
the responsibility of Employee to maintain all records appropriate to Internal
Revenue rules and regulations pertaining to the use of employer-owned vehicles
and, should the use of the employer-owned vehicle result in additional tax
consequences to Employee, the tax shall be the responsibility of Employee to
pay.

 

4.8.                              Stock
Options.  During the term of this
Agreement and subject to the availability of stock for option usage and
provided that, in the year for which the grant is to be made, Bank has received
not less than One Million Dollars ($1,000,000.00) in Point of Sale revenue,
Employee shall receive option grants to purchase Five Thousand (5,000) shares
of Bank common stock upon purchase terms applicable to the purchase terms pertaining
to stock option grants made to other officers of the Bank.

 

5.                                       Termination.  The Employee’s employment hereunder may be
terminated without any breach of this Agreement under the following
circumstances:

 

5.1.                              Death.  The Employee’s employment hereunder shall
terminate upon his death.

 

5.2.                              Disability.  If, as a result of the Employee’s incapacity
due to physical or mental illness, the Employee shall have been absent from his
duties hereunder on a full-time basis for the entire period of six (6) months
and within thirty (30) days after written Notice of Termination is given (which
notice may be given before or after the end of the six month period) shall not
have returned to the performance of his duties hereunder on a full time basis,
the Bank may terminate the Employee’s employment hereunder.

 

5.3.                              Voluntary
Termination by the Employee.  The
Employee may voluntarily resign or terminate his employment

 

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hereunder by transmitting a
written Notice of Termination to the Bank at least thirty (30) days prior to
the effective date of such resignation/termination. All compensation and
benefits, to or for Employee, shall cease and terminate on the effective date
of resignation/termination.

 

5.4.                              Termination
for Cause.  The Bank may terminate
Employee’s employment with the Bank without triggering the provisions of
Section 6, upon discovery of Employee’s dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional failure
to perform stated duties as herein set out or as determined by the Board,
willful violation of any law, rule, or regulation (other than traffic
violations or similar offences) or any final cease-and-desist order.

 

5.5.                              Any
termination of the Employee’s employment (other than termination pursuant to
Section 5.1. hereof) shall be communicated by written Notice of Termination to
the other party as provided in Section 8 hereof.

 

5.6.                              Bank’s
Right to Terminate.  Nothing in this
Section 5 or elsewhere in this Agreement shall be interpreted to limit the
Bank’s authority to discharge Employee at any time with or without cause.

 

6.                                       Compensation
Upon Termination.

 

6.1.                              Termination
Without Cause.  Should Bank terminate
Employee’s employment for any reason, other than the provisions of Section 5.4
hereof, Employee shall continue, for the next succeeding twenty-four (24)
calendar months, to receive his then current monthly salary and, at the
expiration of said twenty-four (24) months, Employee shall receive for the next
six (6) consecutive months, sixty-five percent of the monthly salary being
received at the time of his termination. Normal deductions for withholding
taxes, insurance, etc. shall continue to be withheld by Bank for Employee’s
benefit.

 

In addition, Employee
shall continue to participate in all plans in which he participated at the time
of termination on the same terms, basis, and conditions set forth in Section
4.3 hereof.

 

6.2.                              Termination
for Cause.  Should Employee’s employment
terminate pursuant to the provisions of Section 5.1, 5.2, 5.3, or 5.4 of this
Agreement, Employee shall not be entitled to any further compensation or
benefits (including, but not limited to insurance, annual bonus, or annual
stock option grant) beyond the “date of termination.” For purposes of this
section, “date of termination” shall be the date specified in the Notice of
Termination or, if no date is specified, the date on which the Notice of
Termination is given.

 

6.3.                              Termination
by a Succeeding Organization.  During the
term of this Agreement, should Employee’s employment be terminated without
cause by a succeeding organization, Employee shall receive a severance package
consisting of: (a) three years of his current base salary; and (b) continuation
of all medical and long-term disability insurance in amounts and subject to the
provisions in effect as of the date of sale. At the expiration of said three
(3) year term, Employee shall, for the next succeeding three (3) year period,
receive (a) sixty-five percent

 

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(65%) of the base salary
received at the time of sale; and (b) medical and long-term disability
insurance in amounts and subject to the provisions in effect as of the date of
sale.

 

Should the
successor Bank maintain a 401K Plan, Employee shall be eligible to participate
therein, subject to the terms of Successor’s plan, for the entire six (6) year
period contemplated by this section.

 

Should the
sale of Bank be the result of Regulatory action, state and/or Federal, the
provisions of this section shall be subject to modification by said Regulator.

 

7.                                       Compensation
During Disability.  During any period
that the Employee fails to perform his duties hereunder as a result of
incapacity due to physical or mental illness, the Employee shall continue to
receive or receive the benefits of (as the case may be), all items described in
Section 4 hereof at the rate then in effect for such period until his
employment is terminated pursuant to Section 5.2 hereof, provided that payments
so made to the Employee shall be reduced by the sum of the amounts, if any,
payable to the Employee under the Bank’s disability insurance, under worker’s
compensation insurance or under any other insurance.

 

8.                                       Notice.  Whenever notice is required to be given under
the provisions of this Agreement, it shall be given in writing by hand-delivery
or United States registered or certified mail, return receipt requested, and
shall be deemed to have been transmitted on the date such notice is so
delivered, transmitted, or mailed, if addressed as follows:

 

If to the
Bank:

 

Carrollton
Bank

P.O. Box 24129

Baltimore, MD 21227

Attention: Robert
A. Altieri, President

 

If to the
Employee:

 

Gary M. Jewell

2425 Autumn
View Way

Baltimore, MD 21234

 

or to such other address as
either of the parties hereto, by written notice to the other, may, from time to
time, designate.

 

9.                                       Confidential
Information.  Employee agrees that
any information received by the Employee during his employment with Bank which
concerns the personal, financial, or other affairs of the Bank or any of its
customers, employees or stockholders will be treated by the Employee in full
confidence and will not be revealed to any other persons, firms, or
organizations nor will Employee make personal use of any confidential
information concerning the Bank’s business or about its customers, employees,
or stockholders.

 

10.                                 Other
Employment.  Employee, during the
term of this Agreement, is prohibited from accepting or undertaking any work or
employment, with or without compensation, from another employer without Bank’s
written consent. It is Bank’s intention

 

5

 

that Employee devote all of
Employee’s work efforts toward the development and improvement of the Bank’s
business.

 

11.                                 Other
Regulatory Provisions.

 

11.1.                        Suspension.  If Employee is suspended and/or temporarily
prohibited from participating in the conduct of the Bank’s affairs by a notice
served under the provisions of the Federal Deposit Insurance Act, the Bank’s
obligations under this Agreement shall be suspended, as of the date of service,
unless stayed by appropriate proceedings.

 

11.2.                        Removal.  If Employee is removed and/or permanently
prohibited from participating in the conduct of Bank’s affairs by an order
issued under the provisions of the Federal Deposit Insurance Act, all
obligations of the Bank under this Agreement shall terminate as of the
effective date of the order, but vested rights of the parties hereto shall not
be affected.

 

11.3.                        Bank’s
Default.  If the Bank is in default (as
defined under the provisions of the Federal Deposit Insurance Act), all
obligations under this Agreement may be modified as of the date of default, but
this Paragraph 11.3 shall not affect any vested rights of the parties hereto.

 

11.4.                        Contractual
Obligations.  All obligations under this
Agreement may be modified, except to the extent determined that continuation of
the Agreement is necessary for the continued operation of the Bank:

 

(i)                                     by
the Federal Deposit Insurance Corporation or the Resolution Trust Corporation
or its designee at the time it enters into an agreement to provide assistance
to or on behalf of the Bank under the authority contained in the Federal
Deposit Insurance Act; or

 

(ii)                                  by
the Board of Directors of the Federal Deposit Insurance Corporation or the
Resolution Trust or its designee at the time that it approves a supervisory
merger to resolve problems related to the operation of the Bank or when the
Bank is determined to be in an unsafe or unsound condition.

 

Any rights of
the parties hereto that have already vested, however, shall not be affected by
such action.

 

12.                                 Reimbursement
to Employee.  Should this Agreement
become effective, Bank agrees to reimburse Employee up to, but not exceeding,
the sum of Five Hundred Dollars ($500.00) toward the payment of fees due to
Employee’s attorney for services rendered in the negotiation of this Agreement.
Employee is to furnish Bank a copy of his attorney’s statement for services
rendered.

 

13.                                 Non-Compete.  The parties hereto agree that the servicing
of Point of Sale transactions is not, in any way restricted to a given
location, and that Employee has received the benefits of this Agreement due to
his ability to solicit and service Point of Sale transactions; therefore,
Employee agrees that, for a period of one year, following the termination of
his employment with Bank, he will neither solicit the Point of Sale
transactions nor service or assist in servicing the Point of Sale transactions
originated by any company whose Point of Sale transactions were being handled
by Bank at the time Employee’s

 

6

 

employment terminated. However,
the terms of this paragraph shall not apply if Employee’s employment is
terminated pursuant to the provisions of paragraph 5.2.

 

14.                                 Training
of Others.  Because of the
possibility of Employee’s death or disability during the term of this
Agreement, Employee agrees to fully train those persons designated by Bank in
the “art” of soliciting and servicing Point of Sale transactions and to fully
train those persons designated by Bank in all aspects of Electronic Banking.

 

15.                                 Miscellaneous.

 

a)                                      No
provisions of this Agreement may be modified, waived, or discharged, unless
such waiver, modification, or discharge is agreed to in writing signed by the
Employee and such officer of the Bank as may be specifically designated by the
Board.

 

b)                                     No
waiver by either party hereto at any time of any breach by the other party
hereto of or compliance with any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions as the same or at any prior or subsequent time.

 

c)                                      The
validity, interpretation, construction, and performance of this Agreement shall
be governed by the laws of the State of Maryland without regard to its
conflicts of law provisions.

 

d)                                     The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement which shall remain in full force and effect.

 

e)                                      This
Agreement sets forth the entire agreement of the parties hereto in respect of
the subject matter contained herein and supersedes all prior agreements,
promises, covenants,

 

arrangements, communications,
representations or warranties, whether oral or written, by any officer,
employee or representative of any party hereto; and any prior agreement of the
parties hereto in respect of the subject matter contained herein is hereby
terminated and canceled.

 

IN WITNESS
WHEREOF, the parties have executed this Agreement under seal as of the day and
year first above written.

 

	
   

  	
   

  	
  CARROLLTON
  BANK

  
	
   

  	
   

  	
   

  
	
    /S/ Kimberly John

  	
   

  	
  By:

  	
    /S/ Robert A. Altieri

  
	
  Witness/Attest

  	
   

  	
  ROBERT A.
  ALTIERI,

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
    /S/ Mary L. Jewell

  	
   

  	
    /S/ Gary M. Jewell

  
	
  Witness

  	
   

  	
  GARY M.
  JEWELL

  

 

7

 

	
  STATE OF
  MARYLAND,

  	
  , TO WIT:

  

 

I HEREBY
CERTIFY that, on this 8th day of June, 2004, the subscriber, a Notary Public of
the State of Maryland aforesaid, personally appeared ROBERT A. ALTIERI, who
acknowledged himself to be the President of CARROLLTON BANK, a corporation, and
that he, as such President, being authorized so to do, executed the aforegoing
instrument for the purposes therein contained, by signing, in my presence, the
name of the corporation by himself as such President.

 

IN WITNESS
WHEREOF, I hereunto set my hand and Notarial Seal.

 

 

	
   

  	
    /S/ Kyran Ross

  
	
   

  	
  Notary
  Public

  

 

	
  My
  commission expires:

  	
    01-01-07

  	
   

  
	
   

  
	
  STATE OF MARYLAND,

  	
  TO WIT:

  

 

I HEREBY
CERTIFY that, on this 2nd day of June, 2004, before me, the subscriber, a
Notary Public of the State aforesaid, personally appeared GARY M. JEWELL, known
to me (or satisfactorily proven) to be the person whose name is subscribed to
the within instrument, and he acknowledged that he executed the same for the
purposes therein contained, and, in my presence, signed and sealed the same.

 

IN WITNESS, I
hereunto set my Hand and Notarial Seal.

 

	
   

  	
    /S/ Barbara L. Sivers

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
  My
  commission expires:

  	
    6/1/05

  	
   

  
				

 

8EXHIBIT 10.1

 

WAIVER OF LIQUIDATED DAMAGES

 

This Waiver of Liquidated
Damages, dated as of July 23, 2004 (this “Waiver”), is being executed and delivered by
and among Intrusion Inc., a Delaware corporation (the “Company”), and each
of the undersigned holders of the Company’s 5% Convertible Preferred Stock, par
value $0.01 per share (the “Preferred Stock”), pursuant to that certain Registration
Rights Agreement dated as of March 25, 2004, by and among the Company and the
purchasers listed on Exhibit A thereto (the “Agreement”).  Capitalized terms used but not otherwise
defined herein shall have the meaning ascribed to them in the Agreement

 

RECITALS

 

A.    Pursuant to the Agreement, the Company has agreed to register for
resale certain Registrable Securities on behalf of the undersigned.

 

B.    Section 8(d) of the Agreement provides that the Company must pay
Liquidated Damages to the undersigned if the Registration Statement covering
the Registrable Securities is not effective by July 23, 2004.

 

C.    The undersigned serve as directors of the Company and have agreed
to forgo any right to receive Liquidated Damages pursuant to the Agreement.

 

CONSENT AND WAIVER

 

1.                                       Each of the undersigned hereby
irrevocably waive (i) any right to receive Liquidated Damages under Section 8(d)
of the Agreement and (ii) any breach related to the Company’s failure of the
Company to pay Liquidated Damages to the undersigned if and when due
thereunder.

 

2.                                       This Waiver is specific as to content and
shall not be deemed to waive or modify any provisions of the Purchase Agreement
or the Investors’ Rights Agreement by the Company or any of the undersigned,
other than as specifically provided herein.

 

3.                                       This Waiver may be executed in any number
of counterparts, each of which when so executed shall be deemed an original,
and all of which taken together shall constitute one and the same
instrument.  In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.

 

4.                                       This Waiver shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of law thereof.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Waiver of
Liquidated Damages as of the date first written above.

 

	
   

  	
  INTRUSION INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael L. Paxton

  	
   

  
	
   

  	
   

  	
  Michael Paxton

  
	
   

  	
   

  	
  Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  G. Ward Paxton

  	
   

  
	
   

  	
   

  	
  G. Ward Paxton

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ James F. Gero

  	
   

  
	
   

  	
   

  	
  James F. Gero

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