Document:

EX-10.5 EMP. AGREEMENT/JEFFREY L. CUNNINGHAN

Exhibit 10.5

ATHENS FEDERAL COMMUNITY BANK

FIRST EXTENSION OF AMENDED AND RESTATED EMPLOYMENT

AGREEMENT WITH JEFFREY L. CUNNINGHAM

          WHEREAS, Athens Federal Community Bank (“Bank”) has entered into an amended and restated
employment agreement (the “Agreement”) with Jeffrey L. Cunningham (“Executive”); and

          WHEREAS, a copy of the Agreement is attached hereto; and

          WHEREAS, Section 17 of the Agreement permits the parties to amend the Agreement by mutual
consent; and

          WHEREAS, the parties have mutually agreed to extend the term of the Agreement as set forth
herein and to modify the Agreement as set forth herein.

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

	 	1)	 	The original term of the Agreement entered in to between the Bank and the Executive is
hereby extended for a period of thirty-six (36) months, beginning January 1, 2009 and
ending December 31, 2011.
	 
	 	2)	 	The base salary during the extended period shall be Two Hundred Thirty Eight Thousand
Eight Hundred Nine and 69/100 ($238,809.69) per year, plus benefits as itemized in the
original Agreement.
	 
	 	3)	 	All other provisions of the Agreement are hereby ratified and reaffirmed and shall
remain in full force and effect, subject to the changes made herein.

 

 

          WHEREFORE, the undersigned hereby execute this First Extension of Amended and Restated
Contract of Employment as of the 1st day of January, 2009.

	 	 	 	 	 
	 	ATHENS FEDERAL COMMUNITY BANK

 	 
	 	BY:  	/s/ G. Timothy Howard
 	 
	 	 	Mr. G. Timothy Howard 	 
	 	ITS:	 Chairman of the Board of Directors 	 
	 
	 	EXECUTIVE

 	 
	 	/s/ Jeffrey L. Cunningham
 	 
	 	Jeffrey L. Cunningham 	 
	 	 	 	 
	 

	 	 	 
	WITNESSED:
	 	 
	 
	 	 
	/s/ Scotty Hannah
	 	 
	 	 	 
	Scotty Hannah
	 	 
	Chairman, Personnel Committee
	 	 
	 
	 	 
	/s/ Joele A. Cardwell
	 	 
	 	 	 
	Joele A. Cardwell

	 	 
	Corporate Secretary
	 	 

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AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     PREAMBLE. This Agreement is entered into as of the 1st day of January, 2008, by
and between Athens Federal Community Bank (the “Bank”), and Jeffrey L. Cunningham (the
“Executive”).

     WHEREAS, the Bank and the Executive have previously executed an Employment Agreement effective
August 26, 1999, a First Amendment thereto dated December 20, 1999, a Second Amendment thereto
dated September 19, 2001, and a Third Amendment thereto dated December 18, 2002, and which
Employment Agreement, as amended, has been the subject of a First
Extension, a Second Extension, a
Third Extension, a Fourth Extension, a Fifth Extension, a Sixth Extension and a Seventh Extension
dated December 21, 2006; and

     WHEREAS, Section 17 of the Employment Agreement permits the parties to amend the Employment
Agreement by mutual written consent, and the parties now wish to make certain further amendments to
the terms of the Employment Agreement; and

     WHEREAS, the parties further wish to consolidate the numerous Amendments and Extensions of the
Employment Agreement into this Amended and Restated Employment Agreement (hereinafter, the
“Agreement”), which Agreement shall, except as expressly provided herein, replace and supersede the
original Employment Agreement and all Amendments and Extensions thereto.

     NOW, THEREFORE, the undersigned AGREE as follows:

     1. Defined Terms. When used anywhere in this Agreement, the following terms shall
have the meaning set forth herein.

          (a) “Board” shall mean the Board of Directors of the Bank.

          (b) [intentionally omitted]

          (c) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and as
interpreted through applicable rulings and regulations in effect from time to time.

          (d) [intentionally omitted]

          (e) “Disability” shall mean, for purposes of this Agreement, a physical or mental infirmity
which impairs the Executive’s ability to substantially perform his duties under this Agreement and
which results in the Executive becoming eligible for long-term disability benefits under the Bank’s
long-term disability plan (or, if the Bank has no such plan in effect, which impairs the
Executive’s ability to substantially perform his duties under this Agreement for a period of 180
consecutive days).

          (f) “Effective Date” shall mean August 26, 1999.

 

 

          (g)
“Expiration Date” shall mean the date on which the term of this Agreement expires
pursuant to Section 6 hereof, taking into account any and all renewals of such term.

          (h) “Good Reason” shall mean any of the following events, which has not been consented to in
advance by the Executive in writing: (i) a material diminution in the Executive’s base
compensation, as the same may be increased from time to time; (ii) a material diminution in the
Executive’s authority, duties, or responsibilities; (iii) a material diminution in the authority,
duties, or responsibilities of the supervisor (or supervisory committee) to whom the Executive is
required to report, including a requirement that the Executive report to a corporate officer or
employee instead of reporting directly to the board of directors of the Bank; (iv) a material
diminution in the budget over which the Executive retains authority; (v) a material change in the
geographic location at which the Executive must perform the services he is required to perform
hereunder; or (vi) any other action or inaction that constitutes a material breach by the Bank of
this Agreement, the Supplemental Executive Retirement Plan by and between the parties and dated December 26, 2006 as the same may be
subsequently amended, or any other agreements related or ancillary hereto or thereto.

          (i) “Just Cause” shall mean, in the good faith determination of the Board, the Executive’s
personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform duties stated herein, willful violation of any law, rule or
regulation (other than traffic violations or similar non-criminal offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement. No act, or failure
to act, on the Executive’s part shall (1) be considered “willful” unless he has acted, or failed to
act, with an absence of good faith and without a reasonable belief that his action or failure to
act was in the best interest of the Bank, or (2) be considered to establish “Just Cause” unless the
Board has first given the Executive both a written notice detailing the conduct that is alleged to
constitute Just Cause, and a reasonable opportunity to justify or cure (if possible) such conduct.

          (j)
“Present Value” of any sum shall be computed by utilizing the applicable federal rate, as
determined pursuant to the applicable provisions of the Internal Revenue Code.

          (k) [intentionally omitted].

          (l) [intentionally omitted].

     2. Employment. The Executive is employed as the Bank’s President and Chief Operating
Officer. The Executive shall render such administrative and management services for the Bank as
are currently rendered and as are customarily performed by persons situated in similar executive
capacities. The Executive shall also promote, by entertainment or otherwise, as and to the extent
permitted by law, the business of the Bank. The Executive’s other duties shall be such as the
Board may from time to time reasonably direct, including normal duties as an officer of the Bank.

     3. Base Compensation. During the term of this Agreement, the Bank agrees to pay the
Executive, in cash not less frequently than monthly, a salary at the rate of $231,854.07 per year.

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     4. Incentive Compensation and Long-Term Compensation. On or as soon as practical
after December 31 of each year, beginning after October 31, 2001, the bank shall both pay the
Executive a cash bonus determined in accordance with subsection (a) hereof; and shall credit a
deferred compensation account in his name with an amount determined and governed by subsection (b)
hereof.

          (a) The cash bonus payable for the bank to the Executive shall be determined according to the
following schedule, based on the Bank’s net after-tax income (“NATI”) determined without regard to
the cash bonus for the year, but with regard to the credit accrued during the year pursuant to
subsection (b) hereof.

	 	 	 
	Bank’s NATI

	 	Executive’s Cash Bonus
	Less than $751,000.00

	 	                  $0
	 
	 	 
	$751,000.00 to $1.25 million

	 	1% of the Bank’s NATI
	 
	 	 
	Over $1.25 million

	 	$12,500.00 plus 2% of the Bank’s
NATI over $1.25 million

          (b) The annual credit to be made by the bank to a deferred compensation account (“The
Account”) payable to the Executive shall be 20% of his annual base compensation that is in effect
on December 31 of the year to which the credit relates. The Executive’s vested interest in each
annual credit shall be determined as follows: 1/3 shall be vested on the date of the credit, and
the other 2/3 shall vest equally on each of the next two December 31st, provided that any one of
the following conditions is satisfied for the year in question:

               (i) The Executive’s employment terminates during the calendar year due to Good Reason or his
death or disability, or

               (ii) The Executive is employed on December 31, the Bank’s NATI exceeds $750,000.00, and the
Bank’s most recent CAMELS rating is 1 or 2 (or CAMELS 3 or 4 due to circumstances which the board
determines have been beyond the Executive’s control).

     With respect to all credits to his accounts, the Executive shall be entitled to elect, on a
perspective quarterly basis using the form attached hereto as Exhibit “A” the measure for the rate
of return on his account. The bank shall pay the Executive the vested portion of the account in
three substantially equal installments beginning with the January 1st after he
terminates employment with the bank for any reason. In the event that the Executive is not living
at the time for payment of any such amounts, payment will be made to the beneficiaries designated
in a Distribution Election Form delivered to the Bank in substantially the form attached as Exhibit
“B.”

     5. Other Benefits.

          (a) Participation
in Retirement Medical and Other Plans. During the term of this Agreement,
the Executive shall be eligible to participate at no cost to himself in any of the following
benefit plans that the Bank now or hereafter maintains: group hospitalization,

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disability (at 70% or more of pay from the Effective Date forward), health, dental, sick leave, life insurance, travel
and/or accident insurance, retirement, pension, and/or other present or future qualified plans
provided by the Bank, generally, which benefits, taken as a whole, must be at least as favorable as
those in effect on the Effective Date.

          (b) Post-Retirement Medical Insurance. If the Executive’s employment with the Bank
terminates voluntarily or involuntarily at or after age 55 for a reason other than Just Cause, the
Bank shall provide the Executive and his legal dependents with medical insurance coverage that is
not less favorable than the coverage that the Bank provides for its
officers. The Bank shall pay all
premiums for this coverage, shall provide it until the Executive first becomes eligible for
Medicare, and agrees that this obligation shall survive expiration of this Agreement.

          (c) Employee Benefits: Expenses. The Executive shall be eligible to participate in
any fringe benefits which are or may become available to the Bank’s Senior Management employees,
including for example: any stock option or incentive compensation plans, and any other benefits
which are commensurate with the responsibilities and functions to be performed by the Executive
under this Agreement. The Executive shall be reimbursed for his annual dues for membership in the
Tennessee Bar, for associated continuing education and for all reasonable out-of-pocket business
expenses which he shall incur in connection with his services under this agreement (which shall
cover his attendance at no less than two banking conferences per annum) upon substantiation of such
expenses in accordance with the policies of the Bank. In addition, the Executive shall be provided
a vehicle allowance equal to the lease or purchase cost of a vehicle amortized or leased over a
three-year period plus the cost of fuel, insurance and maintenance. The Executive shall be provided
an allowance for dues at the Springbrook Golf and Country Club.

     NATI as set forth in Section 4 of the agreement shall be equal to the adjusted net income of
the Bank as set forth in the employee bonus formula as approved by the Board of Directors and
amended from time to time.

     6. Term. The Bank hereby employs the Executive, and the Executive hereby accepts such
employment under this Agreement, for the period commencing on January 1, 2008 and ending 36 months
thereafter (or such earlier date as is determined in accordance with Section 10). Additionally, on
each annual anniversary date of the Effective Date, the Executive’s term of employment shall be
extended for an additional one-year period beyond the then effective expiration date, provided the
Board determines in a duly adopted resolution that the performance of the Executive has met the
Board’s requirements and standards, and that this Agreement shall be extended. Only those members
of the Board who have no personal interest in this Employment Agreement shall discuss and vote on
the approval and subsequent review of this Agreement.

     In the event the Executive serves the full term of this Agreement (including any extension
hereof), and the Bank does not offer to renew this Agreement upon substantially the same terms and
conditions for an additional three- year term, the Executive shall be entitled to a severance
benefit equal to twelve months of his then current base monthly salary, such benefit to be paid to
the Executive in twelve equal monthly installments at the same time and in the same manner as his
base monthly salary payments were made.

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     7. Loyalty; Noncompetition.

          (a) During the period of his employment hereunder and except for illnesses, reasonable
vacation periods, and reasonable leaves of absence, the Executive shall devote all his full
business time, attention, skill, and efforts to the faithful performance of his duties hereunder;
provided, however, from time to time, the Executive may serve on the
boards of directors of, and
hold any other offices or positions in, companies or organizations, which will not present any
conflict of interest with the Bank or any of its subsidiaries or affiliates, or unfavorably affect
the performance of the Executive’s duties pursuant to this Agreement, or will not violate any
applicable statute or regulation. “Full business time” is hereby defined as that amount of time
usually devoted to like companies by similarly situated executive officers. During the term of his
employment under this Agreement, the Executive shall not engage in any business or activity
contrary to the business affairs or interests of the Bank, or be gainfully employed in any other
position or job other than as provided above. However, notwithstanding any other provision of this
Agreement, the Executive shall be entitled to attend to the wind-up affairs of his existing
businesses.

          (b) Nothing contained in this Section shall be deemed to prevent or limit the Executive’s
right to invest in the capital stock or other ownership interest of any business dissimilar from
that of the Bank, or, solely as a passive or minority investor, in any business.

     8. Standards. The Executive shall perform his duties under this Agreement in
accordance with such reasonable standards as the Board may establish from time to time. The Bank
will provide the Executive with the working facilities and staff customary for similar executives
and necessary for him to perform his duties.

     9. Vacation and Sick Leave. At such reasonable times as the Board shall in its
discretion permit, the Executive shall be entitled, without loss of pay, to absent himself
voluntarily from the performance of his employment under this Agreement, all such voluntary
absences to count as vacation time, provided that:

          (a) The Executive shall be entitled to an annual vacation, of at least four weeks, in
accordance with the policies that the Board periodically establishes for senior management
employees of the Bank.

          (b) The Executive shall not receive any additional compensation from the Bank on account of
his failure to take a vacation or sick leave, and the Executive shall not accumulate unused
vacation or sick leave from one fiscal year to the next, except in either case to the extent
authorized by the Board.

          (c) In addition to the aforesaid paid vacations, the Executive shall be entitled without loss
of pay, to absent himself voluntarily from the performance of his employment with the Bank for such
additional periods of time and for such valid and legitimate reasons as the Board may in its
discretion determine. Further, the Board may grant to the Executive a leave or leaves of absence,
with or without pay, at such time or times and upon such terms and conditions as such Board in its
discretion may determine.

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          (d) In addition, the Executive shall be entitled to an annual sick leave benefit as
established by the Board.

     10. Termination and Termination Pay. The Executive’s employment hereunder may be
terminated under the following circumstances:

          (a) Death. The Executive’s employment under this Agreement shall terminate upon his death
during the term of this Agreement, in which event the Executive’s estate shall be entitled to
receive the compensation due the Executive through the
Agreement’s Expiration Date. Such compensation shall
be paid to the Executive’s estate no later than nine months after the Executive’s death in a single
lump sum, discounted to Present Value.

          (b) Disability. The Bank may terminate the Executive’s employment after having established
the Executive’s Disability. The Executive shall be entitled to the compensation and benefits
provided for under this Agreement for (i) any period during the term of this Agreement and prior to
the establishment of the Executive’s Disability during which the Executive is unable to work due to
the physical or mental infirmity, or (ii) any period of Disability which is prior to the
Executive’s termination of employment pursuant to this Section; provided that any benefits paid
pursuant to the Bank’s long term disability plan will continue as provided in such plan. During
any period that the Executive shall receive disability benefits and to the extent that the
Executive shall be physically and mentally able to do so, he shall furnish such information,
assistance and documents so as to assist in the continued ongoing business of the Bank and, if
able, shall make himself available to the Bank to undertake reasonable assignments consistent with
his prior position and his physical and mental health. The Bank shall pay all reasonable expenses
incident to the performance of any assignment given to the Executive during the disability period.

          (c) Just Cause. The Board may, by written notice to the Executive, immediately terminate his
employment at any time, for Just Cause. The Executive shall have no right to receive compensation or
other benefits for any period after termination for Just Cause.

          (d) Without Just Cause. The Board may, by written notice to the Executive, immediately
terminate his employment at any time for a reason other than Just Cause, in which event the
Executive shall be entitled to receive the following compensation and benefits: (i) the salary
provided pursuant to Section 3 hereof, up to the Expiration Date, plus said salary for an
additional 12-month period, and (ii) at the Executive’s election either (A) cash in an amount equal
to the Present Value of the cost to the Executive of obtaining all health, life, disability and
other benefits which the Executive would have been eligible to participate in through the
Expiration Date based upon the benefit levels substantially equal to those that the Bank provided
for the Executive at the date of termination of employment, or (B) continued participation under
such Bank benefit plans through the Expiration Date, but only to the extent the Executive continues
to qualify for participation therein; provided that in no event shall the total value of the
payments due under (i) and (ii) hereof exceed three years’ total compensation. All amounts payable
to the Executive shall be paid in 12 equal monthly installments, the first of which shall commence
30 days after the executive’s termination, and which shall, in the event that such payments will be
received sooner than they would otherwise, be discounted to Present Value.

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          (e) Good Reason. The Executive shall be entitled to receive the compensation and benefits
payable under subsection 10(d) hereof in the event that he voluntarily terminates employment within
150 days of an event that constitutes Good Reason; provided, however, that the Executive must,
prior to such voluntary termination, provide the Bank with notice of the existence of the condition
which he deems to be Good Reason within 90 days of the date the Executive first becomes aware of
the existence of such condition, and the Bank must have failed to remedy the condition within 30
days of the Bank’s receipt of such Notice.

          (f) Voluntary Termination by Executive. The Executive may voluntarily terminate employment
with the Bank during the term of this Agreement, upon at least 90 days’ prior written notice to the
Board, in which case the Executive shall receive only his compensation, vested rights (including
but not limited to deferred compensation to which the Executive is entitled under Section 4(b)
hereof; and post—retirement medical insurance to which the Executive is entitled under Section
5(b) hereof), and employee benefits up to the date of his termination (unless such termination
occurs pursuant to Section 10(e) hereof, in which event the benefits and compensation provided for
in Sections 10(d) shall apply).

     11. No Mitigation. The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise and no such payment
shall be offset or reduced by the amount of any compensation or benefits provided to the Executive
in any subsequent employment.

     12. [intentionally omitted]

     13. Indemnification. The Bank agrees that its Bylaws shall continue to provide for
indemnification of directors, officers, employees and agents of the Bank, including the Executive,
during the full term of this Agreement, and to at all times provide adequate insurance for such
purposes.

     14. Reimbursement of Executive for Enforcement Proceedings. In the event that any
dispute arises between the Executive and the Bank as to the terms or interpretation of this
Agreement, whether instituted by formal legal proceedings or otherwise, including any action that
the Executive takes to defend against any action taken by the Bank, the Executive shall be
reimbursed for all costs and expenses, including reasonable attorneys’ fees, arising from such
dispute, proceedings or actions, provided that the Executive obtains either a written settlement or
a final judgment by a court of competent jurisdiction substantially
in his favor. Such
reimbursement shall be paid within ten days of the Executive’s furnishing to the Bank written
evidence, which may be in the form, among other things, of a cancelled check or receipt, of any
costs or expenses incurred by the Executive.

     15. Federal Income Tax Withholding. The Bank may withhold all federal and state
income or other taxes from any benefit payable under this Agreement as shall be required pursuant
to any law or government regulation or ruling.

     16. Successors and Assigns

          (a) Bank. This Agreement shall not be assignable by the Bank, provided that this Agreement
shall inure to the benefit of and be binding upon any corporate or other successor

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of the Bank which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all
or substantially all of the assets or stock of the Bank, as the case may be.

          (b) Executive. Since the Bank is contracting for the unique and personal skills of the
Executive, the Executive shall be precluded from assigning or delegating his rights or duties
hereunder without first obtaining the written consent of the Bank; provided, however, that nothing
in this paragraph shall preclude (i) the Executive from designating a beneficiary to receive any
benefit payable hereunder upon his death, or (ii) the executors, administrators, or other legal
representatives of the Executive or his estate from assigning any rights hereunder to the person or
persons entitled thereunto.

          (c) Attachment. Except as required by law, no right of the Executive to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation or to exclusion, attachment, levy or similar process
or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such
action shall be null, void and of no effect.

     17. Amendments. No amendments or additions to this Agreement shall be binding unless made in
writing and signed by all of the parties, except as herein otherwise specifically provided.

     18. Applicable Law. Except to the extent preempted by Federal law, the laws of the State of
Tennessee shall govern this Agreement in all respects, whether as to its validity, construction,
capacity, performance or otherwise.

     19. Severability. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof.

     20. Entire Agreement. This Agreement shall constitute the entire agreement between the
parties hereto and shall supersede any prior agreement between the parties.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first
hereinabove written.

	 	 	 	 	 
	 	ATHENS FEDERAL COMMUNITY BANK

 	 
	 	By:  	/s/ Darrell Murray
 	 
	 	 	Its Chairman of the Board 	 
	 	 	 	 
	 

	 	 	 
	Witnessed by:
	 	 
	 
	 	 
	/s/ Linda Morrow
	 	 
	 	 	 
	Secretary
	 	 

[signatures continued on next page]

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	 	EXECUTIVE

 	 
	 	/s/ Jeffrey L. Cunningham
 	 
	 	Jeffrey L. Cunningham 	 
	 	 	 	 
	 

	 	 	 
	Witnessed by:
	 	 
	 
	 	 
	/s/ Linda Morrow
	 	 
	 	 	 
	Secretary
	 	 

9EX-10.6 FORM OF EMP AGRMT/JEFFREY L. CUNNINGHAM

Exhibit 10.6

FORM OF

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as [date], by and among ATHENS
BANCSHARES CORPORATION, a Tennessee corporation (the “Corporation”), ATHENS FEDERAL COMMUNITY BANK,
a federally-chartered savings bank and a wholly-owned subsidiary of the Corporation (the “Bank”),
and JEFFREY L. CUNNINGHAM (the “Executive”). The Corporation and the Bank are sometimes referred
to in this Agreement individually and together as the “Employer.”

     WHEREAS, the Bank and the Executive were parties to an employment agreement entered into as of
January 1, 2008, and

     WHEREAS, the Executive serves in positions of substantial responsibility with the Corporation
and the Bank; and

     WHEREAS, the Corporation and the Bank wish to set forth the terms of the Executive’s continued
employment in these positions; and

     WHEREAS, the Executive is willing and desires to serve in these positions with the Corporation
and the Bank.

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

ARTICLE 1

EMPLOYMENT

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

     1.2 Responsibilities and Duties.

     (a) As President and Chief Executive Officer, the Executive shall serve under the boards of
directors and will perform all duties and will have all powers associated with these positions, as
set forth in any job description provided to the Executive by the Employer or as may be set forth
in the bylaws of the Corporation or the Bank. In addition, the Executive shall be responsible for
establishing the business objectives, policies and strategic plans of the Employer. The Executive
shall report directly to the boards of directors.

     (b) During the period of his employment hereunder, except for reasonable periods of absence
occasioned by illness, reasonable vacation periods, and other reasonable leaves of absence approved
by the boards of directors of the Corporation and the Bank, the Executive will devote all of his
business time, attention, skill and efforts to the faithful performance of his duties under this
Agreement, including activities and duties directed by the boards of directors. Notwithstanding the
preceding sentence, subject

 

 

to the approval of the boards of directors, the Executive may serve as a member of the board of
directors of business, community and charitable organizations, provided that in each case the
service shall not materially interfere with the performance of his duties under this Agreement,
adversely affect the reputation of the Employer or any other affiliates of the Employer, or present
any conflict of interest. Nothing in this Section 1.2 shall prevent the Executive from managing
personal investments and affairs, provided that doing so also does not interfere with the proper
performance of the Executive’s duties and responsibilities under this Agreement.

     1.3 Term.

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

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

     (c) The disinterested members of the boards of directors will review the Agreement and the
Executive’s performance annually for purposes of determining whether to extend the Agreement term
and will include the rationale and results of its review in the minutes of the meetings. The
boards of directors will notify the Executive no earlier than sixty (60) days and nor later than
thirty (30) days prior to the applicable anniversary date whether it has determined to extend the
Agreement.

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

     1.4 Service on the Boards of Directors. The Executive serves as a member of the board
of directors each of the Corporation and the Bank. The board of directors of each of the
Corporation and the Bank shall undertake every lawful effort to ensure that the Executive continues
throughout the term of his employment to be elected or reelected as a director of the Corporation
and the Bank. Notwithstanding anything in this Agreement to the contrary, unless otherwise agreed
to by the parties, the Executive shall be deemed to have resigned as a director of each of the
Corporation and the Bank effective immediately after termination of the Executive’s employment
under Article 3 of this Agreement, regardless of whether the Executive submits a formal, written
resignation as director.

ARTICLE 2

COMPENSATION AND BENEFITS

     2.1 Base Salary and Bonus and Long-Term Compensation.

     (a) In consideration of the Executive’s performance of the obligations under this Agreement,
the Employer shall pay or cause to be paid to the Executive a salary at the annual rate of not less
than $[amount], payable according to the regular payroll practices of the Employer. The Corporation
and the Bank shall apportion between them the Base Salary, based upon the services rendered by the
Executive to the Corporation and the Bank. During the period of this Agreement, the Executive’s
Base Salary shall be reviewed at least annually by the compensation committee designated by the
boards of directors. Any

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increase in Base Salary will become the “Base Salary” for purposes of this Agreement.

     (b) The Executive shall be entitled to an annual bonus and short-term incentive compensation
in accordance with the provisions of Appendix A to this Agreement.

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

     (a) Reimbursement of business expenses. The Executive shall be entitled to
reimbursement for all reasonable business expenses incurred while performing his obligations under
this Agreement, including but not limited to all reasonable business travel and entertainment
expenses incurred while acting at the request of or in the service of the Employer and reasonable
expenses for attendance at annual and other periodic meetings of trade associations (at least two
such events per year) and payment of dues for membership in the Tennessee Bar and associated
continuing legal education. Expenses will be reimbursed if they are submitted in accordance with
the Employer’s policies and procedures.

     (b) Automobile. The Employer shall provide the Executive with a vehicle allowance as
set forth in Appendix B. The Employer shall increase the automobile allowance each year to reflect
any appropriate cost of living adjustments.

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

     (d) Club Membership. The Employer shall provide the Executive with an allowance
sufficient to cover dues at the Springbrook Golf and Country Club.

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

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

ARTICLE 3

EMPLOYMENT TERMINATION

     3.1 Termination of Employment.

     (a) Death. The Executive’s employment shall terminate automatically at the Executive’s
death. If the Executive dies in active service to the Employer, the Executive’s estate shall
receive any

3

 

sums that would have otherwise been due to the Executive as Base Salary and reimbursement of
expenses through the end of the then remaining term of the Agreement, payable in a single lump sum
no later than nine (9) months from the date of the Executive’s death.

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

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

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

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

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

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

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

4

 

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

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

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

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

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

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

               (1) a failure to reelect or reappoint the Executive as President and Chief Executive Officer
of the Company and the Bank (provided, however, that a change in the Executive’s position consented
to in writing by the Executive in connection with succession planning of the Employer, shall not be
deemed a Good Reason);

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

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

               (4) a material reduction in Executive’s Base Salary or benefits required to be provided
hereunder (other than a reduction that is generally applicable to the Employer’s executive

5

 

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

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

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

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

ARTICLE 4

SEVERANCE COMPENSATION

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

     (a) Subject to the possibility that cash severance after employment termination might be
delayed under Section 4.1(b), if the Executive’s employment terminates involuntarily but without
Cause or if the Executive voluntarily terminates employment with Good Reason, the Executive shall
for the unexpired term of this Agreement, plus an additional twelve (12) months, and in accordance
with the Employer’s regular pay practices, continue to receive the Base Salary in effect at the
Executive’s termination of employment. However, the Employer and the Executive acknowledge and
agree that the severance benefits under this Section 4.1 shall not be payable if severance benefits
are payable or shall have been paid to the Executive under Article 5 of this Agreement.

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

     4.2 Post-Termination Insurance Coverage.

     (a) If the Executive’s employment terminates involuntarily but without Cause or voluntarily
but with Good Reason, or because of disability, the Employer shall continue or cause to be
continued at the Employer’s expense medical and life insurance benefits for the Executive and any
of his dependents covered at the time of his termination. The medical insurance benefits shall
continue until the first to occur of (w) the Executive’s return to employment with the Employer or
another employer, (x) the Executive’s attainment of age 65, (y) the Executive’s death, or (z) the
end of the term remaining under this Agreement when the Executive’s employment terminates.
Notwithstanding the foregoing, if the Executive’s employment terminate for any reason, other than
for Cause, after the Executive has attained

6

 

age 55, the Employer shall provide the Executive and his dependents with medical insurance
coverage that is not less favorable than the Employer provides for other executive officers, at no
cost to the Executive, until the Executive first becomes eligible for Medicare. This last sentence
shall survive the expiration of this Agreement.

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

ARTICLE 5

CHANGE IN CONTROL BENEFITS

     5.1 Change in Control Benefits. If a Change in Control occurs during the term of this
Agreement and, thereafter, the Executive’s employment terminates involuntarily but without Cause or
if the Executive voluntarily terminates employment with Good Reason, the Employer shall make or
cause to be made a lump-sum payment to the Executive in an amount in cash equal to three (3) times
the Executive’s average annual compensation. For this purpose, average annual compensation means
the Executive’s taxable income reported by the Employer (or any affiliate of the Employer) for the
five (5) calendar years immediately preceding the calendar year in which the Change in Control
occurs. The payment required under this paragraph is payable no later than five (5) business days
after the Executive’s termination of employment. If the Executive receives payment under Section
5.1, the Executive shall not be entitled to any additional severance benefits under Section 4.1 of
this Agreement. In addition to the cash severance benefit provided for under this Section 5.1, the
Employer shall provide the Executive with the post-termination insurance coverage described in
Section 4.2(a) of this Agreement, subject to the provisions of Section 4.2(b) of this Agreement.

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

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

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

     (c) Change in ownership of a substantial portion of assets: a change in ownership of a
substantial portion of the Corporation’s assets occurs if in a 12-month period any one person or
more than

7

 

one person acting as a group acquires from the Corporation assets having a total gross fair
market value equal to or exceeding 40% of the total gross fair market value of all of the
Corporation’s assets immediately before the acquisition or acquisitions. For this purpose, gross
fair market value means the value of the Corporation’s assets, or the value of the assets being
disposed of, determined without regard to any liabilities associated with the assets.

     5.3 Potential Limitation of Benefits Under Certain Circumstances. Notwithstanding any
other provisions of this Agreement, in the event that (x) the aggregate payments or benefits to be
made or afforded to the Executive under this Agreement or otherwise, which are deemed to be
parachute payments as defined in Section 280G of the Code or any successor thereof (the
“Termination Benefits”) would be deemed to include an “excess parachute payment” under Section 280G
of the Code; and (y) if such Termination Benefits were reduced to an amount (the “Non-Triggering
Amount”), the value of which is one dollar ($1.00) less than an amount equal to three (3) times the
Executive’s “base amount,” as determined in accordance with Section 280G of the Code and the
Non-Triggering Amount less the product of the marginal rate of any applicable state and federal
income tax and the Non-Triggering Amount would be greater than the aggregate value of the
Termination Benefits (without such reduction) minus (1) the amount of tax required to be paid by
the Executive thereon by Section 4999 of the Code and further minus (2) the product of the
Termination Benefits and the marginal rate of any applicable state and federal income tax, then the
Termination Benefits shall be reduced to the Non-Triggering Amount. The allocation of the
reduction required hereby among the Termination Benefits shall be determined by the Executive.
Notwithstanding the foregoing, the Bank shall not pay the Executive Termination Benefits in excess
of three (3) times his average annual compensation (or such other amount that may be permitted by
the Office of Thrift Supervision pursuant to regulation or regulatory guidance). Any payment of
Termination Benefits in excess of three (3) times the Executive average annual compensation shall
be made by the Corporation. The Corporation’s independent public accountants will determine the
value of any reduction in the payments and benefits; the Employer will pay for the accountants’
opinion. The Employer may request, and the Executive has the right to demand that, a ruling from
the IRS as to whether any disputed payments and benefits have adverse tax consequences. The
Employer will promptly prepare and file the request for a ruling from the IRS, but in no event will
the Employer make this filing later than thirty (30) days from the date of the accountant’s opinion
referred to above. The request will be subject to the Executive’s approval prior to filing; the
Executive shall not unreasonably withhold his approval. The Employer and the Executive agree to be
bound by any ruling received from the IRS and to make appropriate payments to each other to reflect
any IRS rulings, together with interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code. Nothing contained in this Agreement shall result in a reduction of any
payments or benefits to which the Executive may be entitled upon termination of employment other
than pursuant to Sections 4 and 5 hereof, or a reduction in the payments and benefits specified,
below zero.

ARTICLE 6

CONFIDENTIALITY AND CREATIVE WORK

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

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

8

 

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

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

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

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

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

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

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

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

ARTICLE 7

COMPETITION AFTER EMPLOYMENT TERMINATION

     7.1 Covenant Not to Solicit Employees. The Executive agrees not to, directly or
indirectly, solicit or employ the services of any officer or employee of the Employer (including an
individual who

9

 

was an officer or employee of the Employer during the one year period following the
Executive’s termination) for two years after the Executive’s employment termination.

     7.2 Covenant Not to Compete.

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

          (1) the term compete means:

	 	(i)	 	providing financial products or services on
behalf of any financial institution for any person residing in the
territory,
	 
	 	(ii)	 	assisting (other than through the performance
of ministerial or clerical duties) any financial institution in
providing financial products or services to any person residing in the
territory, or
	 
	 	(iii)	 	inducing or attempting to induce any person
who was a customer of the Employer at the date of the Executive’s
employment termination to seek financial products or services from
another financial institution.

          (2) the words directly or indirectly mean:

	 	(i)	 	acting as a consultant, officer, director,
independent contractor, or employee of any financial institution in
competition with the Employer in the territory, or
	 
	 	(ii)	 	communicating to such financial institution the
names or addresses or any financial information concerning any person
who was a customer of the Employer when the Executive’s employment
terminated.

	 	(3)	 	the term customer means any person to whom the Employer is
providing financial products or services on the date of the Executive’s
employment termination or within one year thereafter.
	 
	 	(4)	 	the term financial institution means any bank, savings
association, or bank or savings association holding company, or any other
institution, the business of which is engaging in activities that are financial
in nature or incidental to such financial activities as described in Section
4(k) of the Bank Holding Company Act of 1956, other than the Employer or any of
its affiliated corporations.
	 
	 	(5)	 	financial product or service means any product or service that
a financial institution or a financial holding company could offer by engaging
in any activity that is financial in nature or incidental to such a financial
activity under Section 4(k) of the Bank Holding Company Act of 1956 and that is
offered by the Employer or an affiliate on the date of the Executive’s
employment termination, including but not limited to banking activities and
activities that are closely related and a proper incident to banking.
	 
	 	(6)	 	the term person means any individual or individuals,
corporation, partnership, fiduciary or association.

10

 

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

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

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

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

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

ARTICLE 8

MISCELLANEOUS

     8.1 Successors and Assigns.

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

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

11

 

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

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

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

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

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

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

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

     8.8 Amendment and Waiver. This Agreement may not be amended, released, discharged,
abandoned, changed, or modified in any manner, except by an instrument in writing signed by each of
the parties hereto. The failure of any party hereto to enforce at any time any of the provisions
of this Agreement shall not be construed to be a waiver of any such provision, nor affect the
validity of this Agreement or any part thereof or the right of any party thereafter to enforce each
and every such

12

 

provision. No waiver or any breach of this Agreement shall be held to be a waiver of any
other or subsequent breach.

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

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

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

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

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

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

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

13

 

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

	 	 	 	 	 	 	 
	[Signature

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

	 	 	 	 	 
	 	    ATHENS BANCSHARES CORPORATION

	 	 	 	 	 
	 	  	 	 
	 	 	[Name] 	 
	 	 	For the Board of Directors 	 
	 
	 	 	ATHENS FEDERAL COMMUNITY BANK	 
	 	 	 	 	 
	 	  	 	 
	 	 	[Name] 	 
	 	 	For the Board of Directors 	 
	 	 	 	 	 
	 	  	 	 
	 	 	Jeffrey L. Cunningham  	 

15

 

Appendix A

Incentive Compensation and Long-Term Compensation

On or as soon as practical after December 31 of each year, the Employer shall both (i) pay the
Executive a cash bonus determined in accordance with Paragraph A hereof and (ii) credit a deferred
compensation account in the Executive’s name with an amount determined and governed by Paragraph B
hereof.

A. The cash bonus payable by the Employer to the Executive shall be determined according to the
following schedule, based on the Bank’s net after-tax income (“NATI”) determined without regard to
the cash bonus for the year, but with regard to the credit accrued during the year pursuant to
Paragraph B hereof:

	 	 	 	 	 
	Bank’s NATI

	 	Executive’s Cash Bonus

	Less than $751,000.00

	 	$0	 	 
	 
	 	 	 	 
	$751,000.00 to $1.25 million

	 	1% of the Bank’s NATI

	 
	 	 	 	 
	Over $1.25 million

	 	$12,500.00 plus
2% of the Bank’s NATI over $1.25 million

B. The annual credit to be made by the Employer to a deferred compensation account (the “Account”)
payable to the Executive shall equal 20% of his annual base compensation that is in effect on
December 31 of the year to which the credit relates. The Executive’s vested interest in each
annual credit shall be determined as follows: 1/3 shall be vested on the date of the credit, and
the other 2/3 shall vest equally on each of the next two December 31st, provided that
any one of the following conditions is satisfied for the year in question:

     (i) The Executive’s employment terminates during the calendar year due to Good Reason or his
death or disability, or

     (ii) The Executive is employed on December 31, the Bank’s NATI exceeds $750,000.00, and the
Bank’s most recent CAMELS rating is 1 or 2 (or CAMELS 3 or 4 due to circumstances which the board
reasonably determines have been beyond the Executive’s controls).

With respect to all credits to his accounts, the Executive shall be entitled to elect, on a
perspective quarterly basis using the form attached hereto as Exhibit “A” the measure for the rate
of return on his account. The Employer shall pay the Executive the vested portion of the account
in three substantially equal installments beginning with the January 1st after he
separates from service for any reason. In the event that the Executive is deceased at the time for
payment of any such amounts, payment will be made to the beneficiaries designated in a Distribution
Election Form delivered to the Bank in substantially the form attached as Exhibit “B.”

 

 

Appendix B

Automobile Allowance

17

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