Document:

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

AGREEMENT made
this 1st day of October, 2004, by and between MTR Gaming Group, Inc., a
Delaware corporation having its principal office at State Route 2 South,
Chester, West Virginia 26034, together with all of its subsidiaries whether now
existing or hereafter formed or acquired (collectively, the “Company”), and
Robert A. Blatt, 25 Ocean Avenue, Larchmont, NY 10538 (“Executive”).

 

WHEREAS, the
Executive has served the Company in the capacity of Vice President, Chairman of
the Finance Committee, and Assistant Secretary; and

 

WHEREAS, has
been instrumental in the Company’s improved performance and profitability; and

 

WHEREAS, the
prior employment agreement between the Company and Executive (the “1999
Employment Agreement”) expired by its terms on February 1, 2004; and

 

WHEREAS, the
parties wish to enter into a new agreement reflecting the present status of the
Executive’s employment relationship to the Company;

 

Now,
therefore, the parties, in reliance upon the mutual promises and covenants
herein contained, do hereby agree as follows:

 

1.                                       Performance
of Prior Agreement.  The Company and
Executive acknowledge that each has fully performed its obligations under the
1999 Employment Agreement.

 

2.                                       Term.  The Company hereby agrees to employ
Executive, and Executive agrees to serve the Company, in the capacity of Vice
President, Chairman of the Company’s Finance Committee, and Assistant Secretary
for a two-year period commencing on October 1, 2004, (the “Employment Date”)
and ending on October 1, 2006 (such period, subject to earlier termination as

 

 

provided herein, being referred
to as the “Period of Employment”).  The
Company shall have three one-year options to extend the Period of
Employment.  With respect to each such
option to extend, the Company shall provide Executive written notice within
sixty (60) days prior to the expiration of the Period of Employment that would
occur absent such extension.

 

3.                                       Duties and
Services.  During the Period of
Employment, Executive agrees to serve the Company as Assistant Secretary, Vice
President, Chairman of the Finance Committee, as well as Assistant Secretary
and Vice President of Mountaineer Park, Inc., and in such other offices and
directorships of the Company and of its subsidiaries and related companies
(collectively, “Affiliates”) to which he may be elected or appointed, and to
perform such other reasonable and appropriate duties as may be requested of him
by the board of directors of the Company (the “Board of Directors”), in accordance
with the terms herein set forth. 
Executive shall manage the Company’s relationship with its financial
advisors, investment bankers, and investor relations counsel in connection with
public financing as well as merger and acquisition activity. In performance of
his duties, Executive shall be subject to the direction of the Board of
Directors.  Executive shall devote such
of his time, energy and skill during regular business hours to the business and
affairs of the Company and its affiliates and to the promotion of their
interests as is required.  The Company
acknowledges, however, that the Executive is also engaged in other businesses
that do not compete with the Company and that the executive may maintain his
office in the New York area at a place of his choosing.

 

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4.                                       Compensation.

 

(a)                                  Base Salary.  The base salary of the Executive for his
services pursuant to the terms of this Agreement shall be $225,000 per year,
payable in equal bi-monthly installments, or on such other terms as may
mutually be agreed upon by the Company and Executive.  Executive’s base salary shall be subject to
an automatic cost-of-living increase of five percent (5%) on each anniversary
of this Agreement, and shall be subject to periodic increase by the
Compensation Committee of the Board of Directors in its discretion.

 

(b)                                 Bonus.  Executive shall be entitled to a cash bonus
of up to 50% of Executive’s base salary, in the discretion of the Compensation
Committee, such discretion to be guided by the Executive’s performance related
to execution of the Company’s investor relations plan and corporate finance
plan.  Executive may receive such other
benefits, such as stock or stock option awards, as the Compensation Committee
of the Board of Directors may periodically award in its discretion based on the
Executive’s performance.

 

(c)                                  Benefit Plans and
Fringe Benefits.  Executive shall
receive such employment fringe benefits and shall be entitled to participate in
other employee benefit plans, including without limitation any pension plan,
profit-sharing plan, savings plan, deferred compensation plan, stock option
plan, life insurance made available by the Company now or in the future to its
executives as the Compensation Committee of the Board of Directors may
periodically award in its discretion based on the Executive’s performance,
subject to and on a basis consistent with the terms, conditions and overall
administration of such Benefit Plans. 
Specifically, and without limitation, the Company will provide Executive
a deferred compensation plan.

 

(d)                                 Expenses.  All travel and other expenses incident to the
rendering of services by Executive hereunder shall be paid by the Company.  If any such expenses are paid in the first

 

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instance by Executive, the
Company shall reimburse him therefor on presentation of the appropriate
documentation required by the Internal Revenue Code of 1986, as amended (the “Code”),
or Treasury Regulations promulgated thereunder, or otherwise required under the
Company’s policy with respect to such expenses.

 

(e)                                  Working Facilities.  Executive shall be reimbursed at the rate of
$2,000 per month towards his office expense.

 

(f)                                    Health Insurance.
Executive shall be entitled at his election but at the Company’s expense,
either to participate in and receive benefits under policies of health
insurance maintained by the Company for its employees or reimbursement for
premiums paid by the Executive or on behalf of the executive for comparable
health insurance.

 

5.                                       Early
Termination.

 

(a)                                  Notwithstanding the
provisions of Section 2 hereof, Executive may be discharged by the Company for
Cause (as defined in Section 5(d) hereof), in which event the Period of
Employment hereunder shall cease and terminate and the Company shall have no
further obligations or duties under this Agreement, except for obligations
accrued under Section 4 at the date of termination.  In addition, the Period of Employment shall
cease and terminate upon the earliest to occur of the following events:  (i) the death of Executive or (ii) (subject
to the Americans With Disabilities Act), the inability of Executive by reason
of physical or mental disability to continue the proper performance of his
duties hereunder for a period of 180 consecutive days.  Upon termination of the Period of Employment
pursuant to the preceding sentence, the Company shall continue to pay to
Executive or his estate, as the case may be, the entire compensation and
expenses otherwise payable to him under Section 4 hereof for the longer of the
remaining term of this Agreement or eighteen (18) months.

 

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(b)                                 In the event Executive
is discharged by the Company other than for Cause (as defined in Section 5(d)
hereof) or other than pursuant to Section 5(a) hereof by reason of physical or
mental disability, Executive shall have no further obligations or duties under
this Agreement; provided, however, that Executive shall continue to be bound by
the provisions of Section 6 hereof if the Company performs its obligations
under this Section 5(b).  In the event of
termination of the Period of Employment pursuant to the preceding sentence, the
Company shall continue to pay Executive the entire compensation otherwise
payable to him under the provisions of Section 4 hereof for the otherwise
remaining Period of Employment without any duty on the part of Executive to
mitigate such payments; provided, however, that if Executive should die prior
to the end of such period, the provisions of Section 5(a) hereof shall be
applicable as though Executive’s employment hereunder had not been so
terminated.

 

(c)                                  Notwithstanding
Section 5(b) hereof, in the event that following a Change in Control (as
defined in Section 5(f) hereof) Executive is discharged by the Company other
than for Cause (as defined in Section 5(d) hereof) or other than pursuant to
Section 5(a) hereof by reason of physical or mental disability, or Executive
terminates employment with the Company for Good Reason (as defined in Section
5(e) hereof), Executive shall have no further obligations or duties under this
Agreement; provided, however, that Executive shall continue to be bound by the
provisions of Section 6 hereof if the Company performs its obligations under
this Section 5(c).  In the event of
termination of the Period of Employment pursuant to the preceding sentence, the
Company shall, in addition to paying the obligations accrued under Section 4 at
the date of termination, (i) pay Executive, within 30 days of such termination,
a cash severance payment, with no duty by Executive to mitigate such payment,
in an amount equal to 1.5 times the annual base

 

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salary payable to Executive
under Section 4(a) on the day before such termination; and (ii) pay on
Executive’s behalf the next two annual premium payments for Executive’s
deferred compensation plan referred to in Section 4(c) above.

 

(d)                                 For purposes of this
Section 5, the term “Cause” shall mean (i) conviction of a felony, (ii)
embezzlement or misappropriation of funds or property of the Company or any of
its Affiliates, (iii) Executive’s consistent refusal to substantially perform,
or willful misconduct in the substantial performance of, his duties and
obligations hereunder; or (iv) Executive’s engaging in activity that the Board
of Directors determines in its reasonable judgment would result in the
suspension or revocation of any video lottery, parimutuel, or other gaming
license or permit held by the Company or any of its subsidiaries.

 

(e)                                  For purposes of this
Section 5, the term “Good Reason” shall mean (i) the assignment to Executive of
any duties or responsibilities which in the reasonable judgment of Executive
are inconsistent in any respect with Executive’s position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 3, or any other action by the
Company which in the reasonable judgment of Executive results in a substantial
diminishment in such position, authority, duties or responsibilities (provided,
however, that the assignment of tasks or responsibilities previously performed
by Executive to Executive’s subordinates shall not constitute Good Reason);
(ii) the Company’s requiring relocation of Executive, except for travel
reasonably required in the performance of Executive’s responsibilities; or
(iii) the Company’s failure to substantially comply with the provisions of
Section 4 of this Agreement.

 

(f)                                    For purpose of this
Section 5, the term “Change in Control” shall mean: (i) a change in control of
a nature that would be required to be reported in response to Item 6(e) of

 

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Schedule 14A, as in effect on
the date hereof, under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”); (ii) any person, including a “group” as such term used in Section
13(d)(3) of the Exchange Act, becoming the beneficial owner, directly or
indirectly, of 20% or more of the combined voting power of the Company’s
outstanding voting securities other than a person who was an officer or
director of the Company on the date of this Agreement; or (iii) individuals
who, as of the date hereof, constitute the Board of Directors ceasing for any
reason to constitute at least a majority of the Board of Directors.

 

6.                                       Confidentiality
and Non-Competition:

 

(a)                                  The Company and
Executive acknowledge that the services to be performed by Executive under this
Agreement are unique and extraordinary and, as a result of such employment,
Executive will be in possession of confidential information and trade secrets
(collectively, “Confidential Material”) relating to the business practices of
the Company and its affiliates. 
Executive agrees that he will not, directly or indirectly, (i) disclose
to any other person or entity either during or after his employment by the
Company or (ii) use, except during his employment by the Company in the
business and for the benefit of the Company or any of its affiliates, any
Confidential Material acquired by Executive during his employment by the
Company, without the prior written consent of the Company or otherwise than as
required by law or any rule or regulation of any federal or state authority.  Upon termination of his employment with the
Company for any reason, Executive agrees to return to the Company all tangible
manifestations of Confidential Materials and all copies thereof.  All programs, ideas, strategies approaches,
practices or inventions created, developed, obtained or conceived of by
Executive prior to or during the term hereof by reason of his engagement by the
Company, shall be owned by and belong exclusively to the Company, provided that
they are related in any manner to its business or that of any of its

 

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Affiliates.  Executive shall (i) promptly disclose all
such programs, ideas, strategies, approaches, practices, inventions or business
opportunities to the Company, and (ii) execute and deliver to the Company,
without additional compensation, such instruments as the Company may require
from time to time to evidence its ownership of any such items.

 

(b)                                 Executive agrees that
during the term hereof, and for any period during which or for which Executive
is receiving compensation pursuant to Section 4(a) hereof, he will not become a
stockholder, director, officer, employee or agent of or consultant to any
corporation (other than an Affiliate), or member of or consultant to any
partnership or other entity, or engage in any business as a sole proprietor or
act as a consultant to any such entity, or otherwise engage, directly or
indirectly, in any enterprise, in each case which competes with any business or
activity engaged in, or known by Executive to be contemplated to be engaged in,
by the Company or any of its Affiliates within ninety miles (5 miles with
respect to operations in the State of Nevada) of any location in which the
company or any Affiliate does business or in which Executive has knowledge that
the Company or any of its Affiliates contemplates doing business; provided,
however, that competition shall not include the ownership (solely as an
investor and without any other participation in or contact with the management
of the business) of less than five percent (5%) of the outstanding shares of
stock of any corporation engaged in any such business, which shares are
regularly traded on a national securities exchange or in an over-the-counter
market.  Executive agrees that during the
non-compete period referred to in this Section 6, neither Executive nor any
person or enterprise controlled by Executive will solicit for employment any
person employed by the Company or any of its Affiliates at, or at any time
within three months prior to, the time of the solicitation.

 

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(c)                                  Executive agrees that
the remedy at law for any breach by him of this Section 6 will be inadequate
and that the Company shall be entitled to injunctive relief.

 

7.                                       General.  This Agreement is further governed by the
following provisions:

 

(a)                                  Notices.  Any notice or other communication required or
permitted to be given hereunder shall be made in writing and shall be delivered
in person, by facsimile transmission or mailed by prepaid registered or
certified mail, return receipt requested, addressed to the parties at the
address stated above or to such other address as either party shall have
furnished in writing in accordance with this Section.  Such notices or communications shall be
effective upon delivery if delivered in person or by facsimile and either upon
actual receipt or three (3) days after mailing, whichever is earlier, if
delivered by mail.

 

(b)                                 Parties In Interest.  This Agreement shall be binding upon and
inure to the benefit of Executive, and it shall be binding upon and inure to
the benefit of the Company and any corporation succeeding to all or
substantially all of the business and assets of the Company by merger,
consolidation, purchase of assets or otherwise.

 

(c)                                  Arbitration.  Any disputes arising under the terms of this
Agreement shall be settled by binding arbitration between the parties in
Hancock County, West Virginia in a proceeding held under the rules of the
American Arbitration Association.  In
such proceeding, each party shall choose one arbitrator and the two so chosen
shall choose a third arbitrator.  The
vote of two of the arbitrators shall be sufficient to determine an award.

 

(d)                                 Entire Agreement.  This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Executive by the Company and contains all of the covenants
and agreements between the parties

 

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with respect to such employment
in any manner whatsoever.  Any
modification of this Agreement will be effective only if it is in writing
signed by the party to be charged.

 

(e)                                  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the choice of law or conflicts of law rules and laws of such
jurisdiction.

 

(f)                                    Severability.  In the event that any term or condition
contained in this Agreement shall for any reason be held by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other term
or condition of this Agreement, but this Agreement shall be construed as if
such invalid or illegal or unenforceable term or condition had never been
contained herein.

 

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

 

	
   

  	
   

  	
  MTR GAMING GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Robert
  A. Blatt

  	
   

  	
  /s/ Edson R.
  Arneault

  
	
  Robert A. Blatt

  	
   

  	
  Edson R. Arneault,

  
	
   

  	
   

  	
  President, Chairman & Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Donald
  J. Duffy

  
	
   

  	
   

  	
  Donald J. Duffy,

  
	
   

  	
   

  	
  Chairman of the Compensation Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ LC
  Greenwood

  
	
   

  	
   

  	
  LC Greenwood,

  
	
   

  	
   

  	
  Member of the Compensation Committee

  
	
   

  	
   

  	
  [signed on December 22, 2004]

  
				

 

10Exhibit 10.1

 

EXECUTION COPY

 

EMPLOYMENT
AGREEMENT

 

 

                This Employment
Agreement (“Agreement”) is made effective the 21st day of December, 2004,
between American Bank Holdings, Inc., a Delaware corporation (“Employer”), and JAMES E. PLACK (“Executive”).

 

Recitals

 

                A.            Employer is the holding company for
American Bank, a federally chartered savings bank (the “Bank”), which is
engaged in the business of providing certain banking services including, but
not limited to, making loans, providing mortgage financing, and maintaining
depository accounts, to its customers. Employer’s principal office is located
in Montgomery County, Maryland.

 

                B.            Employer desires to employ Executive
as its President, as Chief Operating Officer of the Bank and in such other
capacities as the Board of Directors of the Employer shall direct. Executive
desires to accept such employment.

 

                D.            This Agreement entirely supersedes
and replaces any previous employment agreement or understanding, if any, that
may have existed between the parties.

 

                E.             In consideration of the mutual
promises contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties, intending to be legally bound, state and agree as provided below.

 

Agreements

 

                1.             Term. The
term of this Agreement shall commence on January 17, 2005 and continue until
December 31, 2007, unless it is sooner terminated as provided in Section 5
below. Thereafter, if still in effect, this Agreement shall be automatically renewed
pursuant to the terms herein on a year-to-year basis, unless either party
should terminate it by written notice to the other at least thirty (30)
days  prior to the completion of the
then-current term or as provided in Section 5. In the event of such notice,
this Agreement shall terminate either at the conclusion of said term or
pursuant to Section 5, as appropriate.

 

                2.             Duties.
Executive shall serve as the President of Employer and Chief Operating Officer
of the Bank, and be responsible for such duties as Employer may assign to him
from time-to-time. Executive’s duties with Employer and the Bank shall be set
forth in more detail in the resolutions of the Board of Directors of the
Employer adopting and approving this Agreement and in other resolutions which
shall be adopted from time to time.  Employer
shall have the authority to determine the means and manner by which those
duties may be performed.  All work
performed by Executive shall be subject to review by Employer. All fees
generated by Executive’s services shall belong to Employer. Executive shall
devote his full working time and attention to, and work exclusively for,
Employer. Executive shall comply with all policies, standards, and regulations
of Employer now or subsequently in effect.

 

 

                3.             Compensation.
Subject to periodic review by Employer and modification at its sole
discretion, Employer shall pay to Executive the following compensation for his
services:

 

A.            Salary. A base salary at the rate of two hundred sixty-five
thousand dollars ($265,000) per year, less applicable taxes and other
withholding. Said salary shall be payable on a semi-monthly basis commencing on
the first payroll date for which Executive is eligible after the effective date
of this Agreement.  The amount of this
salary to be paid by the Employer and the amount to be paid by the Bank shall
be determined by the Employer’s Board of Directors.

 

B.            Incentive Compensation.

 

i.              First Year - Stock Option Bonus. An option to purchase
15,000 shares of Employer’s outstanding common stock (“Option Interest”) shall
be granted in accordance with the terms of Employer’s 1998 Stock Option Plan.

 

ii.             Second and Third Years — Cash Bonuses. Following the
completion of calendar year 2005, a cash bonus of up to one hundred thirty-five
thousand dollars ($135,000) shall be paid if Employer’s net income after tax is
$3,000,000 or greater. Following the completion of calendar year 2006, a cash
bonus of up to one hundred thirty-five thousand dollars ($135,000) shall be
paid if Employer’s net income after tax is $4,000,000 or greater. No partial
year bonus(es) shall be paid. Employer shall pay any earned bonus, if any, by
no later than two (2) weeks after receipt of audited financial statements for
the applicable period.

 

4.             Benefits.

 

                              A.              Executive
shall be entitled to participate in any health or disability insurance plans,
life insurance plans, pension or profit sharing plans (including 401(k)),
salary continuation, or any other welfare or employee benefit plans or programs
offered to Employer’s and/or the Bank’s employees, if any, provided Executive
satisfies the eligibility and participation requirements applicable with
respect to each such plan or program.

 

                              B.              Employer
agrees to provide Executive with a car allowance of $400 per month.

 

                              C.              Employer
further agrees to pay an aggregate $135,000 to Executive which will be to both
pay relocation costs and serve as a combination signing bonus (“Special Payment”).

 

                              D.              Executive
agrees to repay Employer the full amount of the Special Payment if he is no
longer employed with the Employer on January 17, 2007 under this Agreement, as
it may be amended from time-to-time, unless this Agreement has been terminated
by the Employer following the Executive’s death or permanent disability as
defined herein.

 

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5.             Termination.

 

A.            Employer. Employer may terminate Executive’s employment
under this Agreement at any time during Executive’s employment with Employer as
follows:

 

                i.              For Cause. Termination
“for cause,” for the purposes of this Agreement, shall mean, as determined by
Employer, Employer’s termination of Executive’s employment with Employer
because of Executive’s personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, failure to perform his employment related duties in a
reasonably satisfactory manner, willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses) or final cease-and-desist
order, or material breach of any provisions of this Agreement. Employer may
terminate Executive’s employment for cause immediately on written notice to
Executive.

 

On termination for cause, Employer shall pay Executive
all accrued salary, any pension or other benefits to the extent vested and
fully earned, any accrued, but unused vacation, and any appropriate business
expenses Executive incurred in connection with his employment duties through
his employment termination date. In no event, however, shall Executive be paid
any other compensation or reimbursement including, without limitation,
severance compensation.

 

                ii.             Other than
for Cause. (a)  Termination “other
than for cause,” for the purposes of this Agreement, shall mean, as determined
by Employer, Employer’s termination of Executive’s employment for any reason
other than for cause, permanent disability, or death. Employer may terminate
Executive’s employment other than for cause immediately on written notice to
Executive.

 

(b)           Termination
“other than for cause,” for purposes of this Agreement shall also include the
termination of Executive’s employment within sixty (60) days after at least
eighty-five (85) percent of Employer’s outstanding common stock is sold to an
entity(ies) or person(s) not currently “affiliated” with Employer, as that term
is defined by the applicable rules and regulations of the Office of Thrift
Supervision.

 

                (c)           On
termination other than for cause, Employer shall pay Executive all accrued
salary, any bonuses to the extent fully earned, any pension or other benefits
to the extent vested and fully earned, any accrued, but unused vacation, and
any appropriate business expenses Executive incurred in connection with his
employment duties through his employment termination date. In no event, except
as provided in the following subsection (d), shall Executive be paid any other
compensation or reimbursement, except for severance compensation provided for
in Section 6 below.

 

                (d)           Upon termination after a change of
control as set forth in Section 5.A.ii(b), in lieu of any payment under Section
6, Employer shall pay Executive an amount equal to two (2) years of Executive’s
base salary at the time of the termination of his employment with Employer.
Said payment shall be paid in semi-monthly installments pursuant to Employer’s
regular payroll procedure, less applicable taxes and other withholding, during
the severance 

 

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period. Such payment shall be reduced by any compensation Executive
receives from employment or for other related services performed after
termination of his employment with Employer. Executive shall have an
affirmative obligation to exercise best efforts in pursuing other employment,
to keep Employer informed of such efforts to obtain other employment, and to
notify Employer immediately on obtaining other employment.

 

                Any
payments made to the Executive pursuant to this Agreement, or otherwise, are
subject to and conditioned upon their compliance with 12 USC Section 1825(k)
and any regulation promulgated thereunder.

 

                iii.            Permanent Disability. Termination
for “permanent disability,” for the purposes of this Agreement, shall mean, as
determined by Employer, Employer’s termination of Executive’s employment with
Employer because Executive is unable to perform his essential job functions on
a full-time basis for a period of ninety (90) calendar days in any one (1)-year
period due to Executive’s sickness or disability. Employer may terminate
Executive’s employment for permanent disability immediately on written notice
to Executive following the expiration of said ninety-day period.

 

On termination for permanent disability, Employer
shall pay Executive all accrued salary, any bonuses to the extent fully earned,
any pension or other benefits to the extent vested and fully earned, any
accrued, but unused vacation, and any appropriate business expenses Executive
incurred in connection with his employment duties through his employment
termination date. In no event, however, shall Executive be paid any other
compensation or reimbursement including, without limitation, severance
compensation.

 

                iv.            Death. Employer
may terminate Executive’s employment at any time during Executive’s employment
with Employer due to Executive’s death.

 

On termination due to death, Employer shall pay
Executive’s estate all accrued salary, any bonuses to the extent fully earned,
any pension or other benefits to the extent vested and fully earned, any
accrued, but unused vacation, and any appropriate business expenses Executive
incurred in connection with his employment duties through his employment
termination date. In no event, however, shall Executive’s estate be paid any
other compensation or reimbursement including, without limitation, severance
compensation.

 

B.            Executive. Executive may terminate his employment under this
Agreement prior to the expiration of its term for good reason on thirty (30)
days’ written notice to Employer. “Good reason,” for the purposes of this
Agreement, shall mean, as determined by Employer, (i) a material reduction in
Executive’s duties, or (ii) a failure to pay Executive compensation he is owed
under Section 3 above. In the event of good reason, Executive may terminate his
employment under this Agreement only after he has provided Employer with ten
(10) days’ written notice and Employer has failed to cure such good reason.

 

On termination for good reason, Employer shall pay
Executive all accrued salary, any bonuses to the extent fully earned, any
pension or other benefits to the extent vested and fully earned, any accrued,
but unused vacation, and any appropriate business expenses Executive 

 

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incurred in connection with his employment duties through his
employment termination date. In no event, however, shall Executive be paid any
other compensation or reimbursement including, without limitation, severance
compensation.

 

In the event, Executive terminates this agreement
prior to commencing employment on January 15,  2005, Executive shall
pay Employer liquidated damages in the amount of $85,000.  In the event of Executive’s death or
permanent disability prior to January 15, 2005, this obligation on the part of
Executive shall be null and void.

 

C. Mutual Consent. The
parties may terminate this Agreement at any time by mutual written consent.

 

On termination by mutual consent, Employer shall pay
Executive all accrued salary, any bonuses to the extent fully earned, any
pension or other benefits to the extent vested and fully earned, any accrued,
but unused vacation, and any appropriate business expenses Executive incurred
in connection with his employment duties through his employment termination
date. In no event, however, shall Executive be paid any other compensation or
reimbursement including, without limitation, severance compensation.

 

6.             Severance.  Executive
shall be entitled to a severance payment if Employer should terminate him other
than for cause under Section 5.A.ii(a) above. In that event, Employer shall pay
Executive a severance equal to one (1) year of Executive’s base salary at the
time of the termination of his employment with Employer,

 

Severance payments due to Executive under this Section
6, if any, shall be reduced by any compensation Executive receives from employment
or for other related services performed after termination of his employment
with Employer. Executive shall have an affirmative obligation to exercise best
efforts in pursuing other employment, to keep Employer informed of such efforts
to obtain other employment, and to notify Employer immediately on obtaining
other employment.

 

7.             Covenant Not to Disclose Confidential Information.  Executive acknowledges that all
software, other computer information systems, and hardware developed or used by
or for Employer, any related proposals, white papers, sketches, plans,
drawings, manufacturing processes, software applications, notes, methods,
formulae, and tapes, any financial records of Employer including, but not
limited to, any invoices, note  rates and
terms, and employee salary information, and any other proprietary information
including, but not limited to, any customer lists, call or contact lists,
sources of supply, and any marketing, production, and merchandising plans or
systems (“Confidential Information”) are confidential trade secrets and shall
remain the sole and exclusive property of Employer.

 

                During his
employment, Executive shall not use or disclose any Confidential Information to
anyone other than Employer except as is necessary for the performance of his
duties under this Agreement. In the event of the termination of his employment,
Executive shall promptly return any Confidential Information in his possession
or control, including copies, to Employer. 

 

5

Thereafter, Executive shall not use or disclose such Confidential
Information to anyone without the prior written approval of Employer.

 

8.             Covenant Not to Compete.
Executive agrees that during his employment with Employer and for a period of one
(1) year immediately following the termination thereof, whether voluntary or
involuntary, he shall not, for any reason, own, control, or become employed by
or otherwise work for, whether on a full-time, part-time, or contractor basis
as a chief executive officer or in a management capacity similar to his
position with Employer, any bank or other employer, including himself, that
provides competitive banking services within the market area below.

 

Executive expressly
acknowledges Employer has customers throughout the Washington, D.C.
metropolitan area and that its market area is region-wide. This
covenant not to compete, however, shall prevent Executive only from owning,
controlling, or becoming employed by or otherwise working in a chief executive
officer or other management position for another employer that provides banking
services that are competitive with Employer within fifty (50)-miles of the
boarders of Montgomery County, Maryland.

 

9.             Covenant Not to Solicit
Customers. Executive agrees that during the term his employment with
Employer and for a period of two (2) years immediately following the
termination thereof, he shall not contact or solicit by any means whatsoever,
whether directly or indirectly, personally, by agent, or representative, or become
employed by or otherwise work for, any current or prospective customer of
Employer for the purpose of providing banking services that are competitive
with those provided by Employer.

 

“Customer,” as used in
this Agreement, shall include any entity or individual for whom Employer has
provided banking services at any time during Executive’s employment with
Employer. “Prospective customer,” as used in this Agreement, shall include any
entity or individual with whom Employer has had any discussions or negotiations
concerning Employer’s provision of banking services within one (1) year prior
to the termination of Executive’s employment with Employer. If Executive should
be employed by Employer for less than one (1) year, then “prospective customer,”
as used in this Agreement, shall include any entity or individual with whom
Employer has had any discussions or negotiations concerning Employer’s
provision of banking services at any time during Executive’s employment with
Employer.

 

10.           Covenant Not to Solicit Employees
and Consultants. Executive agrees that during his employment with
Employer and for a period of two (2) years immediately following the
termination thereof, he shall not contact or solicit by any means whatsoever,
whether directly or indirectly, personally, by agent or representative, any
employee or consultant of Employer for the purpose of offering or providing
employment, or otherwise inducing any employee or consultant to discontinue his
or her employment or other working relationship with Employer. For the purposes
of this Section 10, employee and consultant shall include any employee or
consultant who has performed any services or other work for Employer at any
time within six (6) months prior to the termination of Executive’s employment
with Employer.

 

6

                11.           Breach of Executive’s
Covenants.  Executive
acknowledges Employer has invested considerable time and resources in
developing his skills and has given him access to certain trade secrets and other
proprietary information, and that the use of such information by him on behalf
of himself or some other competing employer or entity would cause irreparable
harm to Employer. Executive also acknowledges Employer has invested
considerable time and resources in developing its relationships with its
customers and prospective customers, the loss of which similarly would cause
irreparable harm to Employer. Without limitation, Executive agrees that if he
should breach any of the restrictive covenants contained in Sections 7-10,
inclusive, of this Agreement, Employer may apply for arbitration pursuant to
Section 15 below or to any court of competent jurisdiction, at its discretion,
for the immediate entry of an order for injunction restraining any actual or threatened
breaches or violations of said provisions or terms by Executive. In the event
of such injunction, Employer shall not be required to post or pay any bond.

If, for any reason, any
of the restrictive covenants or related provisions contained in Sections 7-10,
inclusive, of this Agreement should be held invalid or otherwise unenforceable,
it is agreed that the arbitrator or court, as appropriate, shall construe the
pertinent section(s) or provision(s) so as to allow its enforcement to the
maximum extent permitted by applicable law.

 

If Executive should bring
an action for interpretation of any of the restrictive covenants contained in
Sections 8-10, inclusive, of this Agreement, if Executive should violate any of
these restrictive covenants, or if the operation of these restrictive covenants
should be otherwise stayed, the restrictive covenant(s) shall be extended by
the time equivalent to the duration of the violation or stay, whichever is
greater, so that the restrictive covenant(s) shall be cumulatively in force for
the full one (1)-year period above. It is the intention of the parties that
these restrictive covenants, including the restrictive covenant contained in
Section 7 of this Agreement, shall not be stayed during any such action.

 

Executive shall be
responsible for all legal expenses and other costs actually incurred by
Employer in enforcing any of the restrictive covenants in this Agreement.  For the Employer to be entitled to the
recovery set forth in the previous sentence it need only obtain a portion of
any injunctive relief or money damages, including nominal damages, it pursues
in order to recover its actual attorneys’ fees and costs in full. The parties
intend that the provisions in Sections 7-10, inclusive, of this Agreement shall
survive any termination of this Agreement.

 

12.           Representations of
Executive.  Executive
represents that the restrictions on his business provided in this Agreement
including, but not limited to, those pertaining to Employer’s prospective
customers, are fair and protect legitimate business interests of Employer.
Executive represents further that the consideration for this Agreement is fair
and adequate, and that even if the restrictions in this Agreement are applied
to him, he shall still be able to earn a good and reasonable living from those
activities, areas, and opportunities not restricted by this Agreement.

 

                13.           Intellectual Property. In consideration of Employer’s
employment of Executive and the related compensation to be paid to Executive,
Executive assigns and transfers to Employer, and agrees Employer shall be the
owner of, all inventions, discoveries, computer hardware, computer software,
algorithms, improvements, unpublished articles, notes, and related items (“Proprietary
Materials”) conceived, developed, or made by Executive, either alone or with 

 

7

others, in whole or in part, during Executive’s employment with
Employer that are useful in, or directly or indirectly related to, Employer’s
business or that relate to, or are conceived, developed, or made in the course
of Executive’s employment, or that are developed or made from, or by knowledge
gained from, such employment. Employer shall have the right to use all such
Proprietary Materials, whether original or derivative, in any manner
whatsoever, and Executive acknowledges that all such Proprietary Materials
shall be considered as “work made for hire” belonging exclusively to Employer.

 

                Executive agrees
to disclose promptly in writing to Employer any Proprietary Materials conceived
or made by him alone or with others during Executive’s employment, and agrees
not to disclose such Proprietary Materials to others, except as required by his
employment, without the prior written consent of Employer. Executive further
agrees that during his employment with Employer, and at any time thereafter, he
shall, on the request of Employer, execute proper assignments to Employer of
any and all Proprietary Materials to which Employer is entitled under this
Agreement.

 

                Executive shall
execute all papers and perform all other lawful acts that Employer may deem
necessary or advisable for the preparation, prosecution, procurement, and
maintenance of trademark, copyright, and patent applications and trademarks,
copyrights, and patents of the United States of America and foreign countries
for Proprietary Materials to which Employer is entitled. He shall execute any
and all documents that may be required or necessary to vest title in Employer
to such Proprietary Materials and related trademarks, copyrights, and patents
and applications. It is understood that all expenses in connection with such
trademarks, copyrights, patents, and all related applications shall be paid by
Employer, but Employer shall have no obligation to protect by trademark,
copyright, patent, or otherwise any such Proprietary Materials except at its
own discretion and to such extent as Employer may deem desirable. Executive
shall not be entitled to any additional compensation, other than his
compensation herein, for any services rendered by Executive during the term of
his employment.

 

                Notwithstanding
the foregoing, the provisions of this Section 13 shall not apply to an
invention or other intellectual property for which no equipment, supplies,
facilities, or trade secret information of Employer is used and which is
developed entirely on Executive’s own time (“Excepted Materials”), unless, as
determined by Employer, (a) the invention relates to Employer’s actual or
anticipated business, research, or development, or (b) the invention results
from any work performed by Executive for Employer. Employer, at its sole
discretion, shall determine whether such invention or other intellectual
property qualifies as Excepted Materials under this Agreement on Executive’s
prompt disclosure of such invention or other intellectual property in writing
to Employer as required above. Inventions and other intellectual property
qualifying as Excepted Materials shall be indicated in attached Schedule A.

 

                14.           No Prior Obligations. Executive
represents he is not subject to any contractual or other obligation that would
preclude him from entering into this Agreement or would in any way restrict his
work activities as required under this Agreement. In the event the Employer
discovers any contractual or other obligation that would preclude Executive
from entering into this Agreement or would in any way restrict his work
activities as required under this Agreement, Employer can terminate for Cause
per Paragraph 5.A.i.  Additionally, in
the event that a civil or 

 

8

 

other action should be filed against Employer in relation to this
Section 14, Executive agrees to indemnify Employer in full for any resulting
liability including, but not limited to, Employer’s actual attorneys’ fees and
costs.

 

                15.           Arbitration. If
the parties are unable to resolve any dispute arising under this Agreement or
their underlying employment relationship including, but not limited to, the
termination of Executive’s employment with Employer, the enforcement of a
restrictive covenant, or any related contract, tort, or statutory claim, then
such dispute shall be submitted to binding arbitration with JAMS in accordance
with JAMS’ commercial arbitration rules then in effect at the JAMS office
nearest to Employer’s principal office in Montgomery County, Maryland. The only
exception shall be for any matter involving injunctive relief which, at
Employer’s discretion, may be alternatively submitted to a court of competent
jurisdiction.

 

                A petition for
arbitration may be brought at any time within the applicable statute of
limitation. Judgment on an award rendered by an arbitrator may be entered in
any court having competent jurisdiction for enforcement. Except for the
enforcement of a restrictive covenant, which shall be assessed as provided in
Section 11 above, each party shall be responsible for its own costs, including
attorneys’ fees (other than the arbitrator’s fees, which the parties shall
share equally). This provision is intended to be liberally construed in favor
of requiring arbitration.

 

                16.           Notice. In the
event that any notice is to be given to any party under this Agreement, it
shall be given, by certified mail, return receipt requested, and addressed to
the party as follows:

 

 

	
  To Employer:

  	
   

  	
  Chairman of the Board
  of Directors

  
	
   

  	
   

  	
  American Bank Holdings,
  Inc.

  
	
   

  	
   

  	
  12211 Plum Orchard Drive, Suite 300

  
	
   

  	
   

  	
  Silver Spring, Maryland 20904

  
	
   

  	
   

  	
   

  
	
  Copy to:

  	
   

  	
  Stuart G. Stein, Esq.

  
	
   

  	
   

  	
  Hogan & Hartson L.L.P.

  
	
   

  	
   

  	
  555 Thirteenth Street, N.W.

  
	
   

  	
   

  	
  Washington, DC 20004-1109

  
	
   

  	
   

  	
   

  
	
  To Executive:

  	
   

  	
  Mr. James E. Plack

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9401 Culross Court

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dublin, OH 43017

  

 

 

                In the event that
any party should subsequently move or change its address, the new address shall
become the effective address for the purpose of providing notice under this
Section 16 on receipt of notification of the new or changed address by the
other party.

 

 

9

                17.           Choice of Law. This
Agreement including, but not limited to, its interpretation, performance, or
claimed breach, shall be governed by, and construed in accordance with, the
laws of the State of Maryland without giving any force or effect to the
provisions of any conflict of law rule thereof.

 

                18.           Revocation and
Modification. This Agreement, or any provision hereof, may not be
revoked or modified unless agreed to in writing by each of the parties.

 

                19.           Waiver. No
waiver of a breach or default of this Agreement shall be deemed a waiver of any
subsequent breach or default.

 

                20.           Severability. In
the event that, for any reason, a section or provision of this Agreement should
be held invalid or otherwise unenforceable, it is agreed that the same shall
not affect any other section or provision of this Agreement, and the remaining
provisions of this Agreement shall remain in full force and effect.

 

                21.           Binding Agreement. This
Agreement shall be binding on, and inure to the benefit of, the parties hereto,
their successors, heirs, personal representatives, and permitted assigns. This
Agreement may be assigned only by Employer; it may not be assigned by
Executive.

 

                22.           Regulatory Matters.

 

A.           If Executive is suspended and/or temporarily prohibited
from participating in the conduct of the Bank’s affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (the “FDIA”) (12 U.S.C. 1818(e)(3) and
(g)(1)), the Bank’s obligations under the 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 Executive all of the compensation
withheld while its obligations hereunder were suspended and (ii) reinstate
any of its obligations which were suspended.

 

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

 

C.            If the Bank is in default (as defined in Section 3(x)(1)
of the FDIA), all obligations of the Bank under this Agreement shall terminate
as of the date of default, but this Section 22 shall not affect any vested
rights of the contracting parties.

 

D.            All obligations of the Bank under this Agreement shall be
terminated, except to the extent it is determined that continuation of this
Agreement is necessary for the continued operation of the Bank:  (i) by the Director of the Office of Thrift
Supervision (“OTS”), or his or
her designee, at the time that the Federal Deposit Insurance Corporation  enters into an agreement to provide
assistance to or on behalf of the Bank under the authority contained in Section
13(c) of FDIA; or (ii) by the Director of the OTS, or his or her designee, at
the time that the Director of the OTS, or his or her designee, approves a
supervisory merger to resolve 

 

10

problems related to operation 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 parties
that have already vested, however, shall not be affected by such action.

 

23.           Entire Agreement. This Agreement contains the entire
agreement concerning Executive’s employment with Employer.

 

24.           Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same agreement.

 

 

	
   

  	
  EMPLOYER:

  
	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN BANK HOLDINGS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J.R. Schuble, Jr.

  
	
   

  	
   

  	
  J.R. Schuble, Jr.

  
	
   

  	
   

  	
  Chairman of the Board of Directors

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  /s/ James E. Plack

  
	
   

  	
  James E. Plack

  

 

 

11

                                                                                                                                                                Schedule
A

 

 

EXCEPTED
MATERIALS

 

 

	
   

  	
   

  
	
  1.

  	
   

  
	
   

  	
   

  
	
  2.

  	
   

  
	
   

  	
   

  
	
  3.

  	
   

  
	
   

  	
   

  
	
  4.

  	
   

  
	
   

  	
   

  
	
  5.

  	
   

  

 

12

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