Document:

EX-10.11 DIECTOR'S DEFERRED COMPENSATION AGREEMENT

Exhibit 10.11

SECOND AMENDMENT

OF

DIRECTOR’S COMPENSATION AGREEMENT

     THIS AGREEMENT is entered into as of the 18th day of June, 2003, by and between Athens Federal
Community Bank, a federally chartered savings institution organized under the laws of the United
States of America (sometimes hereinafter referred to as “Bank”) and James L. Carter, Jr. of
Athens, Tennessee, (sometimes hereinafter referred to as “Director”);

WITNESSETH:

     WHEREAS, the parties hereto entered into an original Director’s Compensation Agreement dated
March 31, 1991, and amended the referenced Agreement on February 23, 1998; and

     WHEREAS, the parties hereto desire to further amend the original Agreement and First Amendment
thereto as set forth herein; and

     WHEREAS, this restated contract and Second Amendment shall supersede and shall replace any
conflicting terms in the original Agreement and First Amendment thereto.

     NOW, THEREFORE, for and in consideration of the premises set forth herein, and other valuable
considerations, the receipt and sufficiency of which are herby acknowledged, the parties hereto
restate and amend the Original Agreement and First Amendment thereto as follows:

     (1) The Director may elect on or before March 31, 1991, to defer receipt of all or a specific
portion of any annual fees to be earned after March 31, 1991, for the remaining calendar year of
1991. Pursuant to the action of the Board of Directors, the Bank has placed all proceeds credited
to each Director as a result of the dismantling of Plan No. 2 of the Director’s Deferred
Compensation at Athens Federal into a general ledger account at the Bank for the purpose of
ensuring that the dismantling of the Director’s Deferred Compensation Plan No. 2 is a nontaxable
event pursuant to the Internal Revenue Code. The sum credited to each Director’s general ledger
account shall be equal to the sum of all monthly fees deferred and accumulated interest thereon at
the same rates of interest paid to those Directors who were deferring all Director’s fees and
having the same paid into an account nominated as “the general ledger deferred account for
Directors” at the Bank. The total amount of deferred Director’s fees and accumulated interest as
of April 30, 2003, is $238,918.47.

     (2) Thereafter, the Director may elect on or before December 31st of any year to
defer receipt of all or a specific part of his annual fees for the succeeding calendar years. Any
person elected to fill a vacancy on the Board and who was not a Director on the preceding December
31 may elect, before his term begins, to defer all or a specific part of his annual fees for the
balance of the calendar year following such election and for succeeding calendar years. Such
election shall remain in full force and effect until rescinded in writing by the Director.

 

 

     (3) The Bank will maintain a separate memorandum account of the fees deferred by each Director
and will credit the account with interest at a rate, which rate shall be the highest interest
allowed to be credited on savings or certificate accounts as of December 31 of the succeeding
calendar year after such election. The interest rates for each year thereafter shall be the
highest interest allowed to be credited on savings or certificate accounts as of December 31 of
each year.

     (4) On or before the ninetieth (90th) day following the date on which the
Director’s service on the Board terminates for any reason, the Director shall in writing elect one
of the following forms of distribution:

	 	•	 	Amounts deferred under the plan, together with accumulated interest thereon
shall be paid in a single lump sum.
	 
	 	•	 	Amounts deferred under the plan, together with accumulated interest thereon
shall be paid in equal monthly installments. Director may select the number of
monthly installments but in no case may the number of monthly installments be
less than 60 nor more than 180.

     Should the Director elect to receive distributions in monthly installments, the Director’s
account will continue to be credited interested as provided in Paragraph 3 above. The amount of
the equal monthly installments shall be estimated based on the interest rate in effect number
Paragraph 3 for the year preceding the year in which payments begin. The final payment shall be
increased for any underestimate of future interest or payments will end when the total balance is
paid if future interest is overstated. Should the Director fail to elect in writing a form of
distribution, amounts deferred under the plan, together with accumulated interest thereon shall be
paid in 180 equal monthly installments. Such election shall become irrevocable on the ninetieth
(90th) day following the date on which the Director’s service on the Board terminates
for any reason. However, in the event of financial hardship of the Director, as hereinafter
defined, the Director may apply to the Bank for the distribution of all or any part of said
Director’s account. The Bank shall consider the circumstances of the Director and his or her
family and shall have the right in its sole discretion to make such hardship distribution or to
refuse to make such hardship distribution. Financial hardship means

	 	•	 	A severe financial hardship to the Director resulting from a sudden or
unexpected illness or accident of the Director or of a dependent of the
Director,
	 
	 	•	 	Loss of Director’s property due to casualty, or
	 
	 	•	 	Other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Director, each as determined to
exist by the Bank.

     A hardship distribution may be made only with the consent of the Bank’s Board of Directors.

 

 

     (5) Should the Director die while serving on the Board or within the ninety (90) day period
described in Paragraph 4, the designated Beneficiary of the Director may elect in writing one of
the following forms of distribution during the ninety (90) day period following the death of the
Director:

	 	•	 	Amounts deferred under the plan, together with accumulated interest thereon
shall be paid in a single lump sum within ninety (90) days
following the death of the Director.
	 
	 	•	 	Amounts deferred under the plan, together with accumulated interest thereon
shall be paid in equal monthly installments. Beneficiary may select the number
of monthly installments but in no case may the number of monthly installments
be less than 60 nor more than 180.

     Should said Beneficiary elect to receive distributions in monthly installments, the Director’s
account will continue to be credited interest as provided in Paragraph 3. The amount of the equal
monthly installments shall be estimated based on the interest rate in effect under Paragraph 3 for
the year preceding the year in which payments begin. The final payment shall be increased for any
underestimate of future interest or payments will end when the total balance is paid if future
interest is overstated. Should the beneficiary fail to elect in writing a form of distribution,
amounts deferred under the plan, together with accumulated interest thereon shall be paid in 180
equal monthly installments. Should the Director die following the date that is ninety (90) days
after the date on which the Director’s service to the Board terminates, payments to the beneficiary
will be made in the same amount and in the same manner as if the Director were still living.
Should the Director fail to designate a beneficiary in writing, the balance in the Director’s
account shall be paid to the Estate of the Director within ninety (90) days following his or her
death.

     (6) The Director will forfeit all rights to such deferred compensation if he engages in
competition with the Bank, without the prior written consent of the Bank, within a radius of 50
miles of the main office of the Bank for a period of 10 years, subsequent to the Director’s service
on the Board.

     (7) This Agreement shall be binding upon the parties hereto and upon the successors and
assigns of the Bank, and upon the heirs and legal representatives of the Director.

     (8) The service of the Director shall not be deemed to have been terminated or interrupted due
to his absence from active service on account of illness, disability, during any authorized
vacation or during temporary leaves of absence granted by the Bank for reasons of professional
advancement, education, health, or government service, or during military leave for any period if
the director is elected to serve on the Board following such interruption.

     (9) None of the rights to compensation under this Agreement are assignable by the Director or
any beneficiary or designee of the Director and any attempt to anticipate, sell, transfer, assign,
pledge, encumber or change Director’s right to receive compensation, shall be void.

 

 

     (10) This Agreement may be amended only by a written Agreement signed by the parties.

     (11) This Agreement shall be construed under and governed by the laws of the State of
Tennessee.

     (12) Wherever appropriate in this Agreement, words used in the singular shall include the
plural and the masculine shall include the feminine gender.

     (13) Notwithstanding any other provisions set forth herein, the Board may at its sole
discretion, direct that any Director may receive any or all of the funds and interest thereon which
have been deferred in his or her favor in case of serious illness, undue hardship or if the
Director’s service on the Board ends for any reason.

     IN WITNESS WHEREOF, the parties have signed this Agreement this 26th day of June,
2003.

	 	 	 	 	 	 	 
	 	 	 	 	ATHENS FEDERAL COMMUNITY BANK
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Jeffrey L. Cunningham
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Jeffrey L. Cunningham, President
	 
	 	 	 	 	 	 
	Attest:

	/s/ Amy Goodin	 	 	 	 
	 

	 	 	 	 	 
	 

	Amy Goodin, Secretary	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 
	 	/s/ James L. Carter, Jr.
	 

	 	 	 	 	 	 
	 

	 	 	 	 
	 	James L. Carter, Jr.
	 
	 	 	 	 	 	 
	Witness:
	 	/s/ Gail Harris	 	 	 	 
	 

	 	 	 	 	 	 

 

 

DESIGNATION OF BENEFICIARY

DIRECTOR’S COMPENSATION AGREEMENT

     I, James L. Carter, Jr., a participant in the above referenced plan (“The Plan”), hereby
designate the person(s) listed below to receive any and all benefits payable from The Plan on
account of my death.

     I hereby make the following designation(s), and in so doing, I intend to render void any and
all previously executed designations of beneficiaries (both primary and contingent):

	 	 	 	 	 
	Primary Beneficiary:
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	(Name)

	 	(Address)
	 	(Relationship)
	 
	 	 	 	 
	Contingent Beneficiary (if primary beneficiary not living):
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	(Name)

	 	(Address)
	 	(Relationship)
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	(Name)

	 	(Address)
	 	(Relationship)

     EXECUTED
this ___ day of June, 2003.

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	James L. Carter, Jr.
	 
	 	 	 	 
	Witness:
	 	 	 	 
	 

	 	 

	 	 

 

 

DESIGNATION OF BENEFICIARY

DIRECTOR’S COMPENSATION AGREEMENT

     I, James L. Carter, Jr., a participant in the above referenced plan (the Plan),
hereby designate the person(s) listed below to receive any and all benefits payable from the Plan
on account of my death.

     I hereby make the following designation(s), and in so doing, I intend to render void any and
all previously executed designations of beneficiaries (both primary and contingent):

	 	 	 	 	 
	Primary Beneficiary:
	 
	 	 	 	 
	 
	 	 
	 

	 	 
	 	 
	(Name)

	 	(Address)
	 	(Relationship)
	 
	 	 	 	 
	Contingent Beneficiary (if primary beneficiary not living):
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	(Name)

	 	(Address)
	 	(Relationship)

     EXECUTED
this ___  day of
__________, ___  by

	 	 	 
	 

	 	 
	 

	 	(Print name of participant)
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	(Participant)
	 
	 	 
	 
	 	 
	 

(Witness)

	 	 

 

 

FIRST AMENDMENT TO

DIRECTOR’S COMPENSATION AGREEMENT

     This agreement is entered into as of the 23rd day of February, 1998, by and between
Athens Federal Savings & Loan Association, a federally chartered savings institution organized
under the laws of the United States of America (sometimes hereinafter referred to as “Association”)
and James L. Carter, Jr. of Athens, Tennessee, (sometimes hereinafter referred to as
“Director”);

WITNESSETH:

     WHEREAS, Association and Director entered into a Director’s Compensation Agreement on March
31, 1991 (hereinafter referred to as “Agreement”); and

     WHEREAS, Association and Director desire to amend the Agreement in accordance with paragraph
10 thereof.

     NOW, THEREFORE, for and in consideration of the premises set forth herein and in the
Agreement, and other valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     Paragraph 4 shall be deleted in its entirety and replaced with the following new paragraph:

(4) Amounts deferred under the plan, together with accumulated interest, and future
interest, shall be distributed in 180 equal monthly installments beginning with the
first business day of the calendar month following the later of the month during
which Director reaches age 65 or the month during which Director’s service on the
Board terminates for any reason. The amount of the installments shall be estimated
based on the interest rate in effect under paragraph 3 for the year preceding the
year in which payments begin. The final payment shall be increased for any
underestimate of future interest or payments will end when the total balance is paid
if future interest is overestimated. Notwithstanding the foregoing, Director may
elect prior to the time distributions begin to receive equal monthly installments
over a shorter period than 180 months or in a single payment. Such election may be
made only one time, is irrevocable, and must be made at least 15 days before the
first monthly distribution is scheduled. In the event Director elects monthly
installments over a shorter period the amount of the installments will be estimated
and adjusted as described above. If a single payment is elected the amount equal to
the entire account as determined under paragraph 3 plus interest computed from the
date last credited to the day of payment shall be paid to Director on the first
business day of the calendar month following the later of the month during which the
Director turns age 65 or the month during which Director’s service on the Board
terminates for any reason.

Paragraph 5 shall be deleted in its entirety and replaced with the following new paragraph:

 

 

(5) Upon the death of Director, the balance of deferred fees and interest in his
account shall be paid to his designated beneficiary within 90 days following his
death. Such payment shall include interest computed to the date of payment.
Director must designate a beneficiary in writing; otherwise the payment will be made
to the estate of Director.

     IN WITNESS HEREOF, the parties have signed this Agreement the 23rd day of February,
1998.

	 	 	 	 	 	 	 
	 	 	 	 	ATHENS FEDERAL SAVINGS & LOAN ASSOCIATION
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	SIGNATURE NOT LEGIBLE
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	President
	 
	 	 	 	 	 	 
	Attest:

	SIGNATURE NOT LEGIBLE	 	 	 	 
	 

	 	 	 	 	 
	 

	Secretary	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	/s/ James L. Carter, Jr.
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Director
	 
	 	 	 	 	 	 
	Witness:
	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Gail Harris	 	 	 	 
	 	 	 	 	 

 

 

DIRECTOR’S COMPENSATION AGREEMENT

     This Agreement is entered into as of the 31st day of March, 1991, by and between Athens
Federal Savings & Loan Association, a federally chartered savings institution organized under the
laws of the United States of America (sometimes hereinafter referred to as “Association”) and
James L. Carter, Jr. of Athens, Tennessee, (sometimes hereinafter referred to as
“Director”);

W I T N E S S E T H:

     WHEREAS, the Association recognizes the competent and faithful efforts of the Director on
behalf of the Association have contributed significantly to the success, growth and development of
the Association; and

     WHEREAS, the Association places great value on the efforts and contributions of the Director
and recognizes that his/her services are vital to the continuing success, growth and development of
the Association in the future; and

     WHEREAS, the Association desires to compensate the Director as herein set forth and retain his
or her services for the term of his or her election to the Board of Directors of the Association.

     NOW, THEREFORE, for and in consideration of the premises set forth herein, and other valuable
considerations, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

     (1) The Director may elect on or before March 31, 1991, to defer receipt of all or a specific
portion of any of his annual fees to be earned after March 31, 1991, for the remaining calendar
year of 1991. Pursuant to the action of the Board of Directors, the Association has placed all
proceeds credited to each Director as a result of the dismantling of plan No. two (2) of the
Director’s Deferred Compensation at Athens Federal into a general ledger account at the Association
for the purpose of ensuring that the dismantling of the Director’s Deferred Compensation Plan No.
Two (2) is a non-taxable event pursuant to the Internal Revenue Code. The sum credited to each
Director’s general ledger account shall be equal to the sum of all monthly fees deferred and
accumulated interest thereon at the same rates of interest paid to those Directors who were
deferring all Director’s fees and having the same paid into an account nominated as “the general
ledger deferred account for Directors” at the Association. The total amount of deferred Director’s
fees and accumulated interest as of March 31, 1991, is $28,318.75.

     (2) Thereafter, the Director may elect on or before December 31 of any year to defer receipt
of all or a specific part of his annual fees for the succeeding calendar years. Any person elected
to fill a vacancy on the Board and who was not a Director on the preceding December 31st may elect,
before his term begins, to defer all or a specific part of his annual fees for the balance of the
calendar year following such election and for succeeding calendar years. Such election shall
remain in full force and effect until rescinded in writing by the Director.

     (3) The Association will maintain a separate memorandum account of the fees deferred by each
Director and will credit the account with interest at a rate, which rate shall be

 

 

the highest interest allowed to be credited on savings or certificate accounts as of January
1st of the succeeding calendar year after such election. The interest rates for each year
thereafter shall be the highest interest allowed to be credited on savings or certificate accounts
as of January 1st of each year.

     (4) Amounts deferred under the plan, together with accumulated interest, and future interest,
shall be distributed as each Director shall elect beginning with the first day of the first
calendar month after such Director reaches 65 years of age, but in no case shall such distribution
occur over a period of more than ten years from the beginning date as defined herein.

     (5) Upon the death of the Director, the balance of deferred fees and interest in his account
shall be payable to his estate in full on the first day of the first calendar month following the
date of death.

     (6) The Director will forfeit all rights to such deferred compensation if he engages in
competition with the Association, without the prior written consent of the Association, within a
radius of 50 miles of the main office of the Association for a period of 10 years, subsequent to
the Director’s service on the Board.

     (7) This Agreement shall be binding upon the parties hereto and upon the successors and
assigns of the Association, and upon the heirs and legal representatives of the Director.

     (8) The service of the Director shall not be deemed to have been terminated or interrupted due
to his absence from active service on account of illness, disability, during any authorized
vacation or during temporary leaves of absence granted by the Association for reasons of
professional advancement, education, health or government service, or during military leave for any
period if the Director is elected to serve on the Board following such interruption.

     (9) None of the right to compensation under this Agreement are assignable by the Director or
any beneficiary or designee of the Director and any attempt to anticipate, sell, transfer, assign,
pledge, encumber or change Director’s right to receive compensation, shall be void.

     (10) This Agreement may be amended only by a written Agreement signed by the parties.

     (11) This
Agreement shall be construed under and governed by the laws of the State of
Tennessee.

     (12) Wherever appropriate in this Agreement, words used in the singular shall include the
plural and the masculine shall include the feminine gender.

     (13) Notwithstanding any other provisions set forth herein, the Board may, at its sole
discretion, direct that any Director may receive any or all of the funds and interest thereon which
have been deferred in his or her favor in case of serious illness, undue hardship or if the
Director’s service on the Board ends for any reason.

 

 

     IN WITNESS WHEREOF, the parties have signed this Agreement the 31st day of March,
1991.

	 	 	 	 	 	 	 
	 	 	 	 	ATHENS FEDERAL SAVINGS & LOAN ASSOCIATION
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	SIGNATURE NOT LEGIBLE
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	President
	 
	 	 	 	 	 	 
	Attest:

	 	/s/ Jean Wilson	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Secretary	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	/s/ James L. Carter, Jr.
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Director
	 
	 	 	 	 	 	 
	Witness:	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Denise FarmerEX-10.12 FORM OF SEVERANCE COMPENSATION PLAN

Exhibit 10.12

FORM OF

ATHENS FEDERAL COMMUNITY BANK

EMPLOYEE SEVERANCE COMPENSATION PLAN

A. Purpose.

The primary purpose of the Athens Federal Community Bank Employee Severance Compensation Plan is to
ensure the successful continuation of the business of Athens Federal Community Bank and the fair
and equitable treatment of the employees of Athens Federal Community Bank following a Change in
Control.

B. Definitions.

In this Plan, whenever the context so indicates, the singular or the plural number and the
masculine or feminine gender shall be deemed to include the other, the terms “he,” “his,” and
“him,” shall refer to an employee and, except as otherwise provided, or unless the context
otherwise requires, the capitalized terms shall have the following meanings:

“Bank” means Athens Federal Community Bank and its successors.

“Base Compensation” means

     (a) For salaried employees, the employee’s annual base salary at the rate in effect on his
termination date or, if greater, the rate in effect on the date immediately preceding the Change in
Control.

     (b) For employees whose compensation is determined in whole or in part on the basis of
commission income, the employee’s base salary at his termination date (or, if greater, the
employee’s base salary on the date immediately preceding the effective date of the Change in
Control), if any, plus the commissions earned by the employee in the twelve (12) full calendar
months preceding his termination of employment (or, if greater, the commissions earned in the
twelve (12) full calendar months immediately preceding the effective date of the Change in
Control).

     (c) For hourly employees, the employee’s total hourly wages for the twelve (12) full calendar
months preceding his termination of employment or, if greater, the twelve (12) full calendar months
preceding the effective date of the Change in Control.

“Board of Directors” means the Board of Directors of the Bank.

“Cause” means grounds for termination of employment due to the employee’s personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or regulation (other than
traffic violations or similar offenses) or final cease-and-desist order.

“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.

“Change in Control Severance Benefit” means the benefit provided for in Paragraph D of the Plan.

“Code” means the Internal Revenue Code of 1986, as amended.

“Comparable Position” means a position that would (i) provide the employee with base compensation
and benefits that are comparable in the aggregate to those provided to the employee prior to the
Change in Control; (ii) provide the employee with an opportunity for variable bonus compensation
that is comparable to the opportunity provided to the employee prior to the Change in Control;
(iii) be in a location that would not require the employee to increase his daily one-way commuting
distance by more than thirty-five (35) miles as compared to the employee’s commuting distance
immediately prior to the Change in Control; and (iv) have job skill requirements and duties that
are comparable to the requirements and duties of the position held by the employee immediately
prior to the Change in Control.

“Corporation” means Athens Bancshares Corporation and its successors.

“Plan” means this Athens Federal Community Bank Employee Severance Compensation Plan, as may be
amended from time to time.

“Year of Service” means each 12-month period of service following an employee’s date of hire during
which the employee completes at least one hour service each month. The taking of a leave of
absence shall not eliminate a period of time from being a Year of Service if the period of time
otherwise qualifies as a year of service. A “leave of absence” means (i) the taking of an
authorized or approved leave of absence under the provisions of the federal Family and Medical
Leave Act (“FMLA”), (ii) any state law providing qualitatively similar benefits as the FMLA, or
(iii) a leave of absence authorized under the policies of the Bank.

C. Covered Employees.

     (a) Any employee of the Bank with at least one Year of Service as of the date of his
termination of employment shall receive a Change in Control Severance Benefit if, within the period
beginning on the effective date of a Change in Control and ending on the first anniversary of the
effective date of the Change in Control, (i) the Bank terminates the employee’s employment without
Cause or (ii) the employee terminates employment with the Bank voluntarily after being offered
continued employment in a position that is not a Comparable Position.

     (b) Notwithstanding the foregoing, no employee shall be eligible for a Change in Control
Severance Benefit if, at the time of his termination of employment, the employee is a party to an

2

 

individual employment agreement or change in control agreement with the Bank and/or the Corporation
pursuant to which he is entitled to severance benefits.

D. Determination and Payment of the Change in Control Severance Benefit.

     (a) The Change in Control Severance Benefit payable to an eligible employee under this Plan
shall be determined under as follows:

	 	(1)	 	An eligible employee who does not receive a benefit pursuant to section (a)(2)
of this Paragraph D shall receive a Change in Control Severance Benefit equal to the
product of (i) the employee’s Years of Service from his hire date (including partial
years and years prior to the adoption of this Plan) through the date of the termination
of his employment and (ii) an amount equal to two (2) weeks of the employee’s Base
Compensation. The minimum payment to an eligible employee under this provision shall
be an amount equal to two (2) weeks of Base Compensation and the maximum payment to an
eligible employee shall be an amount equal to twenty-six (26) weeks of Base
Compensation.

     (2) The Change in Control Severance Benefit shall be paid in a lump sum not later than five
(5) business days after the date of the eligible employee’s termination of employment.

     (3) All payments under this Plan will be subject to required withholding for federal, state
and local tax purposes.

E. Parachute Payment.

Notwithstanding anything in this Plan to the contrary, if a Change in Control Severance Benefit
that is otherwise payable to an employee who is a “disqualified individual” would constitute an
“excess parachute payment,” taking into account payments under this Plan and otherwise, then the
benefit payable under this Plan shall be reduced to the maximum amount which does not include an
excess parachute payment. The terms “disqualified individual” and “excess parachute payment” shall
have the same meanings as under Section 280G of the Code.

F. Adoption by Affiliates.

Upon approval by the Board of Directors, this Plan may be adopted by any “subsidiary” or “parent”
of the Bank. Upon such adoption, the provisions of the Plan shall be fully applicable to the
employees of that subsidiary or parent. The term “subsidiary” means any corporation in which the
Bank, directly or indirectly, holds a majority of the voting power of its outstanding shares of
capital stock. The term “parent” means any corporation which holds a majority of the voting power
of the outstanding shares of capital stock of the Bank.

G. Administration.

The Plan shall be administered by the Board of Directors, which shall have the discretion to
interpret the terms of the Plan and to make all determinations about eligibility and payment of
benefits. All decisions of the Board of Directors, any action taken by the Board of Directors with
respect to the Plan and within the powers granted to the Board of Directors under the Plan, and any
interpretation by the Board of Directors of any term or condition of the Plan, shall be conclusive
and binding on all persons, and will be given the maximum possible deference allowed by law. The
Board of Directors may delegate and reallocate any authority and responsibility with respect to the
Plan.

3

 

H. Source of Payments.

Unless otherwise determined by the Board of Directors, all payments and benefits provided under
this Agreement shall be paid solely by the Bank or, if applicable, any affiliate that adopts the
Plan.

I. Inalienability.

In no event may any employee sell, transfer, anticipate, assign or otherwise dispose of any right
or interest under the Plan. At no time will any such right or interest be subject to the claims of
creditors, nor liable to attachment, execution or other legal process.

J. Governing Law.

The provisions of the Plan will be construed, administered and enforced in accordance with the laws
of the State of Tennessee, except to the extent that federal law applies.

K. Severability.

If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability
will not affect any other provision of the Plan, and the Plan will be construed and enforced as if
such provision had not been included.

L. No Employment Rights.

Neither the establishment nor the terms of this Plan shall be held or construed to confer upon any
employee the right to a continuation of employment, nor constitute a contract of employment,
express or implied. The Bank and, if applicable, any affiliate that adopts the Plan, reserves the
right to dismiss or otherwise deal with any employee to the same extent and on the same basis as
though this Plan had not been adopted. Nothing in this Plan is intended to alter the at-will status
of an employee’s employment status, it being understood that, except to the extent otherwise
expressly set forth to the contrary in an individual employment-related agreement, the employment
of any employee may be terminated at any time by the Bank or, if applicable, any affiliate that
adopts the Plan.

M. Amendment and Termination.

The Board of Directors may terminate or amend the Plan in any respect, unless a Change in Control
has previously occurred. If a Change in Control occurs, the Plan no longer shall be subject to
amendment, change, substitution, deletion, revocation or termination in any respect whatsoever.
The form of any proper amendment or termination of the Plan shall be a written instrument signed by
a duly authorized officer or officers of the Bank, certifying that the amendment or termination has
been approved by the Board of Directors. A proper amendment of the Plan automatically shall effect
a corresponding amendment to each Participant’s rights hereunder. A proper termination of the Plan
automatically shall effect a termination of all employees’ rights and benefits hereunder.

N. Required Provisions.

     (1) In the event any of the provisions of this Paragraph N are in conflict with the terms of
this Plan, this Paragraph N shall prevail.

     (2) The Bank may terminate an employee’s employment at any time, but any termination by the
Bank, other than termination for Cause, shall not prejudice an employee’s right to compensation or

4

 

other benefits under this Plan. An employee shall not have the right to receive compensation
or other benefits for any period after termination for Cause.

     (3) If an employee 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. §1818(e)(3) or (g)(1); the Bank’s obligations under this
Plan 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 employee all
or part of the compensation withheld while their contract obligations were suspended; and (ii)
reinstate (in whole or in part) any of the obligations which were suspended.

     (4) If an employee 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. §1818(e)(4) or (g)(1), all obligations of the Bank under this Plan shall
terminate as of the effective date of the order, but vested rights of the contracting parties shall
not be affected.

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

     (6) All obligations under this Plan shall be terminated, except to the extent determined that
continuation of the Plan is necessary for the continued operation of the Bank: (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.
§1823(c); or (ii) by the Director of the OTS (or his designee) at the time the Director (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 to be in an unsafe or unsound condition. Any rights
of the parties that have already vested, however, shall not be affected by such action.

     (7) Any payments made to employees pursuant to this Plan, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359,
Golden Parachute and Indemnification Payments.

[Signature Page to Follow]

5

 

This plan has been approved and adopted by the Board of Directors of the Bank and is effective as
of [date].

	 	 	 	 	 	 
	 	 	 	ATHENS FEDERAL COMMUNITY BANK
	 
	 	 	 	 	 
	Attest:

	 	 	By:	 	 
	 	 	 	 	 
	 	 

	 	 	For the Entire Board of Directors

6

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