Document:

EXHIBIT 10.4

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made as of the 24th of May 2004, by and between FIRSTBANK OF HENRY COUNTY (the “Bank”), and William M. Waller, a resident of
the State of Georgia (the “Executive”).

RECITALS:

The Bank desires to employ the Executive as Vice
President of the Bank and the Executive desires to accept such employment.

In consideration of the above premise and the mutual
agreements hereinafter set forth, the parties hereby agree as follows:

1.             Definitions:          Whenever used in this Agreement, the following terms and
their variant forms together with any amendments hereto made in the manner
described in this Agreement.

1.1           “Agreement” shall mean this Agreement and
any exhibits incorporated herein together with any amendments hereto made in
the manner described in this Agreement.

1.2           “Area” shall mean the geographic area
within the boundaries of Henry County, Georgia. It is the express intent of the
parties that the Area as defined herein is the area where the Executive
performs or performed services on behalf of the Bank under this agreement as
of, or within a reasonable time prior to, the termination of the Executive’s
employment hereunder.

1.3           “Bank Information” means Confidential
Information and Trade Secrets.

1.4           “Business of the Bank” shall mean the
business conducted by the Bank, which is the business of commercial banking.

1.5           “Cause” shall mean:

1.5.1        With
respect to termination by the Bank:

(a)           A material breach of the terms of
this Agreement by the Executive, including, without limitations, failure by the
Executive to perform his/her duties and responsibilities in the manner and to
the extent required under this Agreement, which remains uncured after the
expiration of thirty (30) days following the deliver of written notice of such
breach to the Executive by the Bank. Such notice shall (i) specifically
identify the duties that the Board of Directors of the Bank believes the
Executive has failed to perform, (ii) state the facts upon which such Board of
Directors made such determination, and (iii) be approved by a resolution passed
by two-thirds (2/3) of the directors then in office;

(b)           Conduct by the Executive that amounts
to fraud, dishonesty of willful misconduct in the performance of his/her duties
and responsibilities hereunder;

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(c)           Arrest for, charged in relation to
(by criminal information, indictment or otherwise), or conviction of the
Executive during the Term of this Agreement of a crime involving breach of
trust of moral turpitude or any felony;

(d)           Conduct by the Executive that amounts
to gross and willful insubordination or inattention to his/her duties and
responsibilities hereunder; or

(e)           Conduct by the Executive that results
in removal from his/her position as an officer or executive of the Bank
pursuant to a written order by any regulatory agency with authority or
jurisdiction over the Bank.

1.5.2        With
respect to termination by the Executive, a material diminution in the powers,
responsibilities or duties of the Executive hereunder or a material breach of
the terms of this Agreement by the Bank, which remains uncured after the
expiration of thirty (30) days following the delivery of written notice of such
breach to the Bank by the Executive.

1.5.3        “Change
in Duties or Salary” of Executive shall mean any of (i) a change in duties and
responsibilities of Executive from those duties and responsibilities of
Executive of the Bank in effect at the time a Change in Control occurs, which
change results in the assignment of duties and responsibilities inferior to
those duties and responsibilities of Bank at the time such Chang in Control
occurs; (ii) a reduction in rate of annual salary from such rate in effect at
the time of Change of Control; or (iii) a change in the place of assignment of
Bank from McDonough, Georgia, to any other city or geographical location that
is located further than 30 miles from the principle office of the Bank in
McDonough, Georgia..

1.6          “Change
in Control” means any one
of the following events:

(a)           the acquisition by any person or
persons acting in concert of the then outstanding voting securities of the
Bank, if, after the transaction, the acquiring person (or persons) owns,
controls or holds, with power to vote forty percent (40%) or more of any class
of voting securities of the Bank:

(b)           within any twelve-month period
(beginning on or after the Effective Date) the persons who were directors of
the Bank immediately before the beginning of such twelve-month period (the “Incumbent
Directors”) shall cease to constitute at least a majority of the Board of
Directors; provided that any director who was not a director as of the
Effective Date shall be deemed to be an Incumbent Director if that director
were elected to the Board of Directors by, or on the recommendation of on with
the approval of, at least two-thirds of the directors who then qualify as
Incumbent Directors; and provided further that no director whose initial
assumption of office is in connection with an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act of 1934) relating to the election of
directors shall be deemed to be an Incumbent Director;

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(c)           a reorganization,
merger or consolidation, with respect to which persons who where the
stockholders of the Bank immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than fifty percent (50%)
of the combined voting power entitled to vote in the election of directors of
the reorganized, merged or consolidated company’s then outstanding voting
securities; or

(d)
the sale, transfer or assignment of all substantially all of the assets of the
Bank to any third party.

1.7          “Confidential
information” means data
and information relating to the business of the Bank (which does not rise to
the status of a Trade Secret) which is or has been disclosed to the Executive
or of which the Executive became aware as a consequence of or through the
Executive’s relationship to the Bank and which has value to the Bank and is not
generally known to its competitors. Confidential Information shall not include
any data or information that has been voluntarily disclosed to the public by
the Bank (except where such public disclosure has been made by the Executive
without authorization) or that has been independently developed and disclosed
by others, or that otherwise enters the public domain through lawful means.

1.8          “Disability”
shall mean the inability
of the Executive to perform each of his/hers material duties under this
Agreement for the duration of the short-term disability period under the Bank’s
policy then in effect (or, if no such policy is in effect, a period of 180
consecutive days) as certified by a physician chosen by the Bank and reasonably
acceptable to the Executive.

1.9          “Effective
Date” shall mean [Date
Contract accepted by both parties].

1.10        “Initial
Term” shall mean that
period of time commencing on [Date Contract accepted by both parties ](the “beginning
date”) and running until the earlier of the close of business on the last
business day immediately preceding the third anniversary of the Beginning Date
of any earlier termination of employment of the Executive under this Agreement
as provided for in Section 3.

1.11        “Term” shall mean the Initial Term and all subsequent
renewal periods.

1.12        “Trade
Secrets” means Bank
information including, but not limited to, technical or nontechnical data,
formulas, patterns, compilations, programs, devices methods, techniques,
drawings processes, financial date, financial plans, product plans or list of
actual or potential customers or suppliers which:

(a)           derives economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use; and

(b)           is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.

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2.             Duties.

2.1          Position:  The
Executive is employed as the Vice President, subject to the direction of the
Board of Directors of the Bank or its designee(s), shall perform and discharge
well and faithfully the duties which may be assigned to him/her from time to
time by the Bank in connection with the conduct of its business. The duties and
responsibilities of the Executive are set forth on Exhibit A attached hereto.

2.2          Full-Time
Status: In addition
to the duties and responsibilities specifically assigned to the Executive
pursuant to Section 2.1 hereof, the Executive shall:

(a)           devote substantially all of his/her
time, energy and skill during regular business hours to the performance of the
duties of his/her employment (reasonable vacations and reasonable absences due
to illness excepted) and faithfully and industriously perform such duties;

(b)           diligently follow and implement all
reasonable and lawful management policies and decisions communicated to him/her
by the Board of Directors of the Bank; and

(c)           timely prepare and forward to the
Board of Directors of the Bank all reports and accounting as may be requested
of the Executive.

2.3          Permitted
Activities.  The
Executive shall devote his/her entire business time, attention and energies to
the Business of the Bank and shall not during the Term be engaged (whether of
not during normal business hours) in any other business or professional activity,
whether or not such activity is pursuer for gain, profit or other pecuniary
advantage; but this shall not be construed as preventing the Executive from:

(a)
          investing his/her personal
assets in businesses which (subject to clause (b) below are not in competition
with the Business of the Bank and which will not require any services on the
part of the Executive in their operation or affairs and in which his
participation is solely that of an investor;

(b)           purchasing securities in any
corporation whose securities are regularly traded provided that such purchase
shall not result in him/her collectively owning beneficially at any time five
percent (5%) or more of the equity securities of any business in competition
with the Business of the Bank and;

(c)           participating in civic and
professional affairs and organizations and conferences, preparing of publishing
papers or books or teaching so long as the Board of Directors of the Bank
approves of such activities prior to the Executive’s engaging in them.

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3.             Term
and Termination:

3.1          Term: This Agreement shall remain in effect for the
Initial Term. At the end of the Initial Term and at the end of each
twelve-month extension thereof, this Agreement shall automatically be extended
for a successive twelve-month period unless either party gives written notice
to the other of its intent not to extend this Agreement with such written
notice to be given not less than sixty (60) days prior to the end of the
Initial Term or such twelve-month period. In the event such notice of
non-extension is properly given, this Agreement shall terminate at the end of
the remaining Term then in effect

3.2          Termination.
During the Term, the employment of the Executive under this Agreement may be
terminated only as follows:

3.2.1        By the Bank;

(a)           For Cause, upon written notice to the
Executive pursuant to Section 1.5.1 hereof, where the notice has been approved
by a resolution passed by two-thirds (2/3) of the directors of the Bank then in
office, in which event the Bank shall have no further obligation to the
Executive except for the payment of any amounts due and owing under Section 4
on the effective date of termination:

(b)           Without Cause at any time, provided
that the Bank shall give the Executive thirty (30) days’ prior written notice
of its intent to terminate, in which event the Bank shall be required to
continue to meet its obligations to the Executive under Section 4.1 for twelve
(12) months; or

(c)           Upon the Disability of the Executive
at any time, provided that the Bank shall give the Executive thirty (30) day’s
prior written notice of its intent to terminate, in which event, the Bank shall
be required to continue to meet its obligations under 4.1 for twelve (12)
months following the termination or until the Executive begins receiving
payments under the Bank’s long-term disability policy, whichever occurs first.

3.2.2       By
the Executive:

(a)           For Cause, in which event the Bank
shall be required to continue to meets its obligations under Section 4.1 for
twelve (12)months; or

(b)           Without Cause or upon the disability
of the Executive, provided that the Executive, provided that the Executive
shall give the Bank sixty (60) days’ prior written notice of his/her intent to
terminate, in which event the Bank shall have no further obligation to the
Executive except to future payment of any amounts due and owing under Section 4
on the effective date of the termination.

3.2.3       At
any time upon mutual, written agreement of the parties, in which event the Bank
shall have no further obligation to the Executive except for the payment of any
amounts due and owing under Section 4 of this Agreement of the effective date
of termination unless otherwise set forth in the written agreement.

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3.2.4 Notwithstanding anything in this Agreement to the
contrary, the Term shall end automatically upon the Executive’s death, in which
event the Bank shall have no further obligation to the Executive except for the
payment of any amounts due and owing under Section 4 on the effective date of
termination.

3.3          Change
of Control. If,
following a Change in Control, the Executive terminates his/her employment with
the Bank under this Agreement for Cause or the Bank terminates the Executive’s
employment without Cause within twelve (12) months, the Executive, or in the
event of his/her subsequent death, his designated beneficiaries or his/her
estate, as the case may be, shall receive as liquidated damages, in lieu of all
other claims, a severance payment equal to one (1) times the Executive’s then
current Base Salary, to be paid in full on the last day of the month following
the date of termination. In no event shall the payment(s) described in this
Section 3.3 exceed the amount permitted by section 280G of the Internal Revenue
Code, as amended (the “Code”). Therefore, if the aggregate present value
(determined as of the date of the Change of Control in accordance with the
provisions of Section 280G of the Code) of both the severance payment and all
other payments to the Executive in the nature of compensation which are
contingent on a change in ownership of effective control of the Bank or in the
ownership of a substantial portion of the assets of the Bank (the “Aggregate
Severance’) would result in a “parachute payment,” as defined under Section
280G of the Code, then the Aggregate Severance shall not be greater than an
amount equal to 2.99 multiplied by Executive’s “base amount” for the “base
period”, as those terms are defined under Section 280G. In the event the
Aggregate Severance satisfies the limit set forth in the preceding sentence.
Notwithstanding any provision in this Agreement, if the Executive may exercise
his right to terminate employment under this Section 3.3 or under section
3.2.2(a), the Executive may choose which provision shall be applicable.

4.             Compensation:
The Executive shall
receive the following salary and benefits:

4.1          Base
Salary:  During the Initial Term, the Executive shall
be compensated at an annual base rate of $108,000.00
(the “Base Salary”). The Executive’s Base Salary shall be reviewed
by the Board of Directors of the Bank at least annually, and the Executive
shall be entitled to receive annually an increase in such amount, if any, as
may be determined by the Board of Directors based on its evaluation of the
Executive’s performance. Base Salary shall be payable in accordance with the
Bank’s normal payroll practices.

4.2          Incentive
Compensation.    The Executive shall be entitled to annual
bonus compensation, if any, as determined by the Board of Directors of the Bank
pursuant to any incentive compensation programs as may be adopted from time to
time by the Bank.

4.3          Stock
Options.

(a)           The Bank will establish a stock
incentive plan and will grant to the Executive pursuant to such stock incentive
plan an incentive stock option to purchase, at a per share purchase price equal
to the fair market value at the time the options become vested, 9,000 shares of
the Bank’s common stock. The option generally will become vested and
exercisable in thirty­three percent (33%) increments, commencing on the first
anniversary of the option grant date and continuing for the next two successive

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anniversaries; provided,
however, that, subject to such restrictions as may be imposed by the Bank’s
primary regulator, the option shall be fully vested and exercisable upon a Change in Control of the Bank or a
termination of the Executive’s employment by the Executive for Cause or by the
Bank without Cause. The option shall expire generally upon the earlier of
ninety (90) days following termination of employment or upon the tenth
anniversary of the option grant date. The incentive stock option will be issued
by the Bank pursuant to its stock incentive plan and subject to the terms of a
related stock option agreement.

4.4          Health
Insurance.  The Bank shall reimburse the Executive for
the cost of premium payments paid by the Executive for the Executive’s current
health and dental insurance covering the Executive and the members of his/her
immediate family.

4.5          Business
Expenses: Memberships.  The Bank specifically agrees to reimburse the Executive for:

(a)
Reasonable and necessary business (including travel) expenses incurred by the
Executive in the performance of his/her duties as approved by the Board of
Directors of the Bank or their designee.

(b)
Reasonable dues and business related expenditures, including initiation fees,
associated with memberships, as selected by the Executive, in a single country
club and in professional associations which are commensurate with his/her
position.

Provided; however, that the Executive shall, as a condition of any
reimbursement, submit. verification of the nature and amount of such expenses
in accordance with reimbursement policies from time to time adopted by the Bank
and in sufficient detail to comply with rules and regulations promulgated by
the Internal Revenue Service.

4.6          Vacation;  On a non
cumulative basis, the Executive shall be entitled to four (4) weeks of vacation
in each successive twelve-month period during the Term, during which his/her
compensation shall be paid in full.

4.7          Benefits:  In
addition to the benefits specifically described in this Agreement, the
Executive shall be entitled to such benefits as may be available from time to
time to executives of the Bank similarly situated to the Executive.     All such benefits shall be awarded and
administered in accordance with the Bank’s standard policies and practices.
Such benefits may include, by way of example only, profit-sharing plans,
retirement or investments funds, dental health, life and disability insurance
benefits and such other benefits as the Bank deems appropriate.

4.8          Withholding; The Bank may deduct from each payment of
compensation hereunder all amounts required to be deducted and withheld in
accordance with applicable federal and state income, FICA and other withholding
requirements.

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5.             Bank
Information

5.1          Ownership
of Bank information:
All Bank information received or developed by the Executive while employed by
the Bank will remain the sole and exclusive property of the Bank.

5.2          Obligations
of the Executive;  The Executive agrees;

(a)           to hold Bank information in strictest
confidence.

(b)           not to use, duplicate, reproduce,
distribute, disclose, or otherwise disseminate Bank information or any physical
embodiments of Bank information; and

(c)           in any event, not to take any action
causing or fail to take any action necessary in order to prevent any Bank
information from losing its character of ceasing to qualify as Confidential
Information of Trade Secret.

In the event that the Executive is required by law to disclose any Bank
Information, the Executive will not make such disclosure unless ( and then only
to the extent that) the Executive has been advised by independent legal counsel
that such disclosure is required by law and then only after prior written
notice is given the Bank when the Executive becomes aware that such disclosure
has been requested and is required by law. This Section 5 will survive for a
period of twelve (12) months following termination of this Agreement for any
reason with respect to Confidential Information, and shall survive termination
of this Agreement for any reason for so long as is permitted by applicable law,
with respect to Trade Secrets.

5.3          Delivery
Upon Request or Termination:  Upon request by the Bank, and in
any event upon termination of his/her employment with the Bank, the Executive
will promptly deliver to the Bank all property belonging to the Bank,
including, without limitation, all Bank Information then in his/her possession
or control.

6.             Non-Competition.
The Executive agrees that during his/her employment by the Bank hereunder and,
in the event of his/her termination;

·                   by the Bank for Cause pursuant to Section
3.2.1(a),

·                   by the Executive without Cause pursuant to
Section 3.2.2(b), or

·                   by the Executive in connection with a Change in
Control pursuant to Section 3.3,

for a period of twelve (12) months thereafter, he/she will not (except on
behalf of or with the prior written consent of the Bank), within the Area,
either directly or indirectly, on his/her own behalf or in the service of
others, as an executive employee or in any other capacity which involves duties
and responsibilities similar to those undertaken for the Bank (including as an
organizer or proposed executive officer of a new financial institution), engage
in any business which is the same as or essentially the same as the Business of
the Bank.

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7.             Non-Solicitation
of Customers;  The
Executive agrees that during his/her employment by the Bank hereunder and in
the event of his/her termination;

·                   by the Bank for Cause pursuant to Section 3.2.1(a),

·                   by the Executive without Cause pursuant to
Section 3.2.2(b), or

·                   by the Executive in connection with a Change of
Control pursuant to Section 3.3,

for a period of twelve (12) months thereafter, he/she will not (except of
behalf of or with the prior written consent of the Bank), within the Area, on
his/her own behalf or in the service or on behalf of others, solicit, divert or
appropriate or attempt to solicit, divert or appropriate, any business from any
of the Bank’s customers, including actively sought prospective customers, with
whom the Executive has or had material contact during the last one (1) year of
his/her employment, for purposes of providing products or services that are
competitive with those provided by the Bank.

8.             Non-Solicitation
of Employees;  The Executive agrees that during his/her
employment by the Bank hereunder and, in the event of his/her termination;

·                   by the Bank for Cause pursuant to Section
3.2.1(a),

·                   by the Executive without Cause pursuant to
Section 3.2.2(b), or

·                   by the Executive in connection with a Change of
Control pursuant to Section 3.3,

for a period of twelve (12) months thereafter, he/she will not, within
the Area, on his/her own behalf or in the service or on behalf of others,
solicit, recruit or hire away or attempt to solicit, recruit or hire away, any
employee of the Bank, whether or not:

·                   such employee is a full-time employee or a
temporary employee of the Bank.

·                   such employment is pursuant to written agreement,
or

·                   such employment is for a determined period or is
at will.

9.             Remedies;
 The Executive agrees that the covenants
contained in Sections 5 through 8 of this Agreement are of the essence of this
Agreement; that each of the covenants is reasonable and necessary to protect
the business, interests and properties of the Bank, and that irreparable loss
and damage will be suffered by the Bank should he/she breach any of the
covenants. Therefore, the Executive agrees and consents that, in addition to
all the remedies provide by law or in equity, the Bank shall be entitled to a
temporary restraining order and temporary and permanent injunctions to prevent
a breach or contemplated breach of any of the covenants. The Bank and the
Executive agree that all remedies available to the Bank of the Executive, as applicable,
shall be cumulative.

10.          Severability;
 The parties agree that each of the provisions
included in this Agreement is separate, distinct and severable from the other
provisions of this Agreement and that the invalidity or unenforceability of any
Agreement provision shall not affect the validity or enforceability of any
other provision of this Agreement.  Further,
if any provision of this

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Agreement is ruled invalid or unenforceable by a court of competent
jurisdiction because of conflict between the provision and any applicable law
or public policy, the provision shall be

redrawn to make the provision consistent with and valid and enforceable
under the law or public policy.

11.          No
Set-Off, by the Executive; The existence of any claim, demand, action or cause of action by the
Executive against the Bank whether predicated upon this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Bank of any of its
rights hereunder.

12.          Notice: All notices and other communications required or
permitted under this Agreement shall be in writing and, if mailed by prepaid
first-class mail or certified mail, return receipt requested, shall be deemed
to have been received on the earlier of the date shown on the receipt or three
(3) business days after the postmarked date thereof. In addition, notices
hereunder may be delivered by hand or overnight courier, in which event the
notice shall be deemed effective when delivered. All notices and other
communications under this Agreement shall be given to the parties hereto at the
following addresses:

	
  

  	
  (i)

  	
  If to the Bank, to it at:

  
	
   

  	
   

  	
  FirstBank of Henry County

  
	
   

  	
   

  	
  120 Keys Ferry Street

  
	
   

  	
   

  	
  McDonough, Georgia 30253

  
	
   

  	
   

  	
  Attention: J. Randall Dixon, President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  If to the Executive, to
  his/her at:

  
	
   

  	
   

  	
  Their Current place of
  Residence;

  

 

13.          Assignment:
Neither party hereto may
assign or delegate this Agreement or any of its rights and obligations
hereunder without the written consent of the other party to this Agreement.

14.          Waiver: A waiver by one party to this Agreement of any
breach of this Agreement by the other party to this Agreement shall not be
effective unless in writing, and no waiver shall operate or be construed as a
waiver of the same or another breach on a subsequent occasion.

15.          Arbitration. Any controversy or claim arising out of or
relaxing to this contract, or the breach thereof, shall be settled by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Judgment upon the award rendered by the arbitrator may
be entered only in a state court of Henry County of the federal court for the
Northern District of Georgia. The Bank and the Executive agree to share equally
the fees and expenses associated with the arbitration proceedings.

16.          Attorney’s
Fees. In the event
that the parties have complied with this Agreement with respect to arbitration
of disputes and litigation ensues between the parties concerning the
enforcement of an arbitration award, the party prevailing in such litigation
shall be entitled to receive from the other party all reasonable cost and
expenses, including without limitation attorney’s fees, incurred by the
prevailing party in connection with such litigation, and the other

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party shall pay such cost and expenses to the prevailing party promptly
upon demand by the prevailing party.

17.          Applicable
Law. This Agreement
shall be construed and enforced under and in accordance with the laws of the
State of Georgia.

18.          Interpretation. Words importing any gender include all genders.
Words importing the singular form shall include the plural and vice versa. The
terms “herein”, “hereunder”, “hereby”, “hereto”, “hereof’ and any similar terms
refer to this Agreement. Any captions, titles or headings preceding the text of
any article, section or subsection herein are solely for convenience of
reference and shall not constitute part of this Agreement of affect its
meaning, construction or effect.

19.          Entire
Agreement. This
Agreement embodies the entire and final agreement of the parties on the subject
matter stated in this Agreement. No amendment or modification of this Agreement
shall be valid or binding upon the Bank or the Executive unless made in writing
and signed by both parties. All prior understandings and agreements relating to
the subject matter of this Agreement are hereby expressly terminated.

20.          Rights of Third
Parties. Nothing
herein expressed is intended to or shall be construed to confer upon or give to
any person, firm or other entity, other that the parties hereto and their
permitted assigns, any rights or remedies under or by reason of this Agreement.

21.          Survival.  The
obligations of the Executive pursuant to Sections 5,6,7,8, and 9 shall survive
the termination of the employment of the Executive hereunder for the period
designated under each of those respective sections.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the Bank and the Executive have executed and
delivered this Agreement as of the first shown above,

	
  

  	
   

  	
  THE BANK:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FirstBank of Henry County

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ J. Randall Dixon

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name: 

  	
  J. Randall Dixon

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  President/CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE EXECUTIVE;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  William M. Waller

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ William M. Waller

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Donna G. Ross

  	
   

  	
   

  	
   

  
	
  Witness / Notary Public

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Notary Public, Henry
  County, Georgia

  	
   

  	
   

  
	
  My Commission Expires
  December 3, 2005

  	
   

  	
   

  
								

 

 12Exhibit 10.17

THIRD AMENDMENT AND
MODIFICATION

TO LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDMENT AND
MODIFICATION TO LOAN AND SECURITY AGREEMENT   (the
“Amendment”) is made effective as of
the 23rd day of March, 2007, by and among INFOLOGIX SYSTEMS CORPORATION (formerly known as Info Logix Inc.),
a Delaware corporation (“Infologix”), OPT ACQUISITION LLC, a Pennsylvania limited liability
company (“Optasia”), EMBEDDED
TECHNOLOGIES, LLC, a Delaware limited liability company (“Embedded” and together with Infologix and Optasia, jointly,
severally and collectively “Borrowers” and
each a “Borrower”) and SOVEREIGN BANK (the “Bank”).

BACKGROUND

A.    Pursuant to
that certain Loan and Security Agreement dated March 16, 2006 by and among
Borrowers and Bank (as amended by that certain First Amendment and Modification
to Loan and Security Agreement dated August 25, 2006, that Second
Amendment and Modification to Loan and Security Agreement dated
October 31, 2006 and as the same may hereafter be amended, modified,
supplemented or restated from time to time, being referred to herein as the “Loan Agreement”), Bank agreed, inter alia,
to extend to Borrowers the following credit facilities:  (i) a line of credit in the maximum
principal amount of Eight Million Five Hundred Thousand Dollars
($8,500,000.00), (ii) a term loan in the original principal amount of One
Million Five Hundred Thousand Dollars ($1,500,000.00) and (iii) a term
loan in the original principal amount of One Million Dollars ($1,000,000.00).

B.     Borrowers
have requested and Bank has agreed to amend the Loan Agreement in accordance
with the terms and conditions contained herein.

C.     All
capitalized terms contained herein and not otherwise defined herein shall have
the meanings set forth in the Loan Agreement.

NOW, THEREFORE, intending
to be legally bound hereby, the parties hereto agree as follows:

1.     Waiver of Covenant Defaults.

(a)    Bank
hereby waives any Default or Event of Default that exists or may arise under
the Loan Agreement solely as a result of the following events (collectively,
the “Specified Defaults”):

(i)    failure by
Borrowers to maintain the Fixed Charge Coverage Ratio set forth in Section 8.3 of the Loan
Agreement as of Borrowers’ fiscal quarter ended December 31, 2006; and

(ii)   failure by
Borrowers to maintain the Minimum Annual Net Income set forth in Section 8.1 of the Loan
Agreement as of Borrowers’ fiscal year ended December 31, 2006.

(b)   The waivers
set forth in Section 1(a) above are given solely in connection with the
Specified Defaults and solely for the periods described therein and shall not
be deemed to be an agreement, obligation or commitment by Bank to waive
Borrower’s compliance with any of the other terms or conditions in any of the
Loan Documents or any other Events of Default, whether now existing or
hereafter arising, including, without limitation, Borrowers’ failure to comply
with the covenants set forth in Sections 8.1 and 8.3
of the Loan Agreement as of any other date after the date hereof.

2.     Financial Covenants.

(a)         Sections 8.2 of the Loan
Agreement is hereby deleted and replaced with the following:

“8.2       Minimum Quarterly Net Income.
Borrowers shall have Net Income of at least $0 as of June 30, 2007 and as
of the end of the first three (3) fiscal quarters thereafter of Borrowers
measured on a year-to-date basis.”

(b)         Sections 8.3 of the Loan Agreement
is hereby deleted and replaced with the following:

“8.3       Fixed Charge Coverage Ratio.
Borrowers shall maintain a Fixed Charge Coverage Ratio of not less than
(i) 1.0 to 1.0 as of Borrowers’ fiscal quarter ending December 31,
2007 and (ii) 1.2 to 1.0 as of the end of each fiscal quarter of Borrowers
ending thereafter.”

3.     Quarterly Net Income. For the
purposes of calculating Borrowers’ Minimum Quarterly Net Income set forth in Section 8.2 of the Loan
Agreement, for Borrowers’ fiscal quarters ending June 30, 2007 and
September 30, 2007 only, the definition of Net Income shall not include
(i) non-cash adjustments required pursuant to FAS 123R expenses related to
options and warrants and other non-cash expenses and (ii) acquisition
related transactional expenses.

4.     Annual Net Income. For the purposes
of calculating Borrowers’ Minimum Annual 
Net Income, set forth in Section 8.1 of the Loan
Agreement, for Borrowers’ fiscal year ending December 31, 2007
only, the definition of Net Income shall not include non-cash adjustments
required pursuant to FAS 123R expenses related to options and warrants and
other non-cash expenses.

5.     Pledged Account.  Contemporaneously
with the execution of this Amendment, Borrowers shall grant Bank, as additional
security for the Bank Indebtedness, a security interest in certain investment
property owned by Borrowers and maintained with Bank in Account
No. INF05268 (the “Pledged Account”).
If, at any time and from time to time, the value of the Pledged Account, as
determined by Bank in its reasonable discretion, is less than Two Million
Dollars ($2,000,000.00) (the amount by which the value of the Pledged Account
is less than Two Million Dollars ($2,000,000.00) being referred to herein as a “Deficiency”), and the Borrowers do not deposit sufficient
investment property to reduce the Deficiency to $0 within three
(3) Business Days of written notice from the Bank that such Deficiency
exists, the Bank shall have the right to institute a reserve (a “Deficiency Reserve”) against the Borrowing Base Amount in
an amount equal to the Deficiency. Upon receipt of evidence, in form and
content reasonably satisfactory to Bank, that Borrowers have complied with the
financial covenants set forth in Section 8
of the Loan Agreement for Borrowers’ fiscal year ending December 31, 2007,
and provided that no Event of Default shall have occurred and be continuing,
Bank shall, at the request of Borrowers, release its lien on the Pledged
Account and shall no longer have the right to institute a Deficiency Reserve
(provided that Bank shall continue to have the right to institute such other
reserves from time to time as provided for in the Loan Agreement).

6.     Pledge Agreement. This Amendment
shall not be deemed effective until receipt by Bank of (a) a Securities
Account Pledge Agreement (the “Pledge Agreement”),
in form and content satisfactory to Bank, granting Bank a security interest in
the Pledged Account and (b) all other additional instruments, documents or
information as the Bank may reasonably deem necessary or advisable to perfect,
protect and maintain the security interests in the Pledged Account.

7.     Amendment/References. The
Loan Agreement and the Loan Documents are hereby amended to be consistent with
the terms of this Amendment. All references in the Loan Agreement and the Loan
Documents to (a) the “Loan Agreement”
shall mean the Loan Agreement as amended hereby; and (b) the “Loan Documents” shall include this Amendment, the Pledge
Agreement and all other instruments or agreements executed pursuant to or in
connection with the terms hereof.

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8.     Release. Each Borrower and
Guarantor acknowledges and agrees that it has no claims, suits or causes of
action against Bank and hereby remises, releases and forever discharges Bank,
their officers, directors, shareholders, employees, agents, successors and
assigns, and any of them, from any claims, suits or causes of action
whatsoever, in law or at equity, which any Borrower or Guarantor has or may
have arising from any act, omission or otherwise, at any time up to and
including the date of this Amendment.

9.     Additional Documents; Further Assurances.
Each Borrower covenants and agrees to execute and deliver to Bank, or to
cause to be executed and delivered to Bank contemporaneously herewith, at the
sole cost and expense of such Borrower, the Amendment and any and all
documents, agreements, statements, resolutions, searches, insurance policies,
consents, certificates, legal opinions and information as Bank may require in
connection with the execution and delivery of this Amendment or any documents
in connection herewith, or to further evidence, effect, enforce or protect any
of the terms hereof or the rights or remedies granted or intended to be granted
to Bank herein or in any of the Loan Documents, or to enforce or to protect
Bank’s interest in the Collateral. All such documents, agreements, statements,
etc., shall be in form and content acceptable to Bank in its sole discretion.
Each Borrower hereby authorizes Bank to file, at such Borrower’s cost and
expense, financing statements, amendments thereto and other items as Bank may
require to evidence or perfect Bank’s continuing security interest and liens in
and against the Collateral. Each Borrower agrees to join with Bank in notifying
any third party with possession of any Collateral of Bank’s security interest
therein and in obtaining an acknowledgment from the third party that it is
holding the Collateral for the benefit of Bank. Each Borrower will cooperate with
Bank in obtaining control with respect to Collateral consisting of deposit
accounts, investment property, letter-of-credit rights and electronic chattel
paper.

10.   Further Agreements and Representations.
Each Borrower does hereby:

(a)    ratify,
confirm and acknowledge that the statements contained in the foregoing
Background and in Section 1 hereof are
true and complete and that, as amended hereby, the Loan Agreement and the other
Loan Documents are in full force and effect and are valid, binding and enforceable
against each Borrower and its assets and properties, all in accordance with the
terms thereof, as amended;

(b)   covenant
and agree to perform all of such Borrower’s obligations under the Loan
Agreement and the other Loan Documents, as amended;

(c)    acknowledge
and agree that as of the date hereof, no Borrower has any defense, set-off,
counterclaim or challenge against the payment of any Bank Indebtedness or the
enforcement of any of the terms of the Loan Agreement or of the other Loan
Documents, as amended;

(d)   acknowledge
and agree that all representations and warranties of each Borrower contained in
the Loan Agreement and/or the other Loan Documents, as amended, are true,
accurate and correct in all material respects on and as of the date hereof as if
made on and as of the date hereof;

(e)    represent
and warrant that no Default or Event of Default exists, except as provided for in Section 1(a) herein;

(f)    covenant
and agree that such Borrower’s failure to comply with any of the terms of this
Amendment or any other instrument or agreement executed or delivered in
connection herewith, shall constitute an Event of Default under the Loan
Agreement and each of the other Loan Documents subject to any applicable notice
and cure periods provided for therein; and

(g)    acknowledge
and agree that nothing contained herein, and no actions taken pursuant to the
terms hereof, are intended to constitute a novation of any of the Notes, the
Loan Agreement or of any of the other Loan Documents and, except as
specifically set forth in Section 1  hereof, Section 1
of the First Amendment and Modification to Loan and Security Agreement among
Borrowers and the Bank and Section 1
of the Second Amendment and Modification to Loan and Security Agreement among 

 3
 

Borrowers and Bank, does
not constitute a release, termination or waiver of any existing Event of
Default or of any of the liens, security interests, rights or remedies granted
to the Bank in any of the Loan Documents, which liens, security interests,
rights and remedies are hereby expressly ratified, confirmed, extended and
continued as security for all Bank Indebtedness.

Each Borrower
acknowledges and agrees that Bank is relying on the foregoing agreements,
confirmations, representations and warranties of each Borrower and the other
agreements, representations and warranties of each Borrower contained herein in
agreeing to the amendments contained in this Amendment.

11.   Fees, Cost, Expenses and Expenditures. Borrowers
will pay all of Bank’s reasonable expenses in connection with the review,
preparation, negotiation, documentation and closing of this Amendment and the
consummation of the transactions contemplated hereunder, including without
limitation, fees, disbursements, expenses and disbursements of counsel retained
by Bank and all fees related to filings, recording of documents, searches,
environmental assessments and appraisal reports, whether or not the
transactions contemplated hereunder are consummated.

12.   No Waiver. Nothing contained herein
constitutes an agreement or obligation by Bank to grant any further amendments
to the Loan Agreement or any of the other Loan Documents. Except as
specifically set forth in Section 1  hereof, Section 1
of the First Amendment and Modification to Loan and Security Agreement among
Borrowers and the Bank and Section 1
of the Second Amendment and Modification to Loan and Security Agreement among
Borrowers and Bank, nothing contained herein constitutes a waiver or release by
Bank of any Event of Default or of any rights or remedies available to Bank
under the Loan Documents or at law or in equity.

13.   Inconsistencies. To the extent of
any inconsistencies between the terms and conditions of this Amendment and the
terms and conditions of the Loan Agreement or the other Loan Documents, the
terms and conditions of this Amendment shall prevail. All terms and conditions
of the Loan Agreement and other Loan Documents not inconsistent herewith shall
remain in full force and effect and are hereby ratified and confirmed by
Borrowers.

14.   Binding Effect. This Amendment, upon
due execution hereof, shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.

15.   Governing Law. This Amendment shall
be governed and construed in accordance with the laws of the Commonwealth of
Pennsylvania without regard to conflict of law principles.

16.   Severability. The provisions
of this Amendment and all other Loan Documents are deemed to be severable, and
the invalidity or unenforceability of any provision shall not affect or impair
the remaining provisions which shall continue in full force and effect.

17.   Modifications. No
modification of this Amendment or any of the Loan Documents shall be binding or
enforceable unless in writing and signed by or on behalf of the party against
whom enforcement is sought.

18.   Headings. The headings of the
Articles, Sections, paragraphs and clauses of this Amendment are inserted for
convenience only and shall not be deemed to constitute a part of this
Amendment.

19.   Counterparts. This
Amendment may be executed in multiple counterparts, each of which shall
constitute an original and all of which together shall constitute the same
agreement.

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INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Amendment to be executed the day and year first above
written.

	
  

  	
   

  	
  INFOLOGIX SYSTEMS CORPORATION

  
	
   

  	
   

  	
  (formerly known as Info Logix Inc.)

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ David T. Gulian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  	
  OPT ACQUISITION LLC

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ David T. Gulian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  	
  EMBEDDED TECHNOLOGIES, LLC

  
	
   

  	
   

  	
  By: INFO LOGIX INC., its sole Member

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ David T. Gulian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  David Gulian, President

  
	
   

  	
   

  	
  SOVEREIGN BANK

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Steven Fahringer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Steven Fahringer, Vice President

  
							

 

The undersigned, intending
to be legally bound hereby, consents and agrees to the foregoing Third Amendment and Modification to
Loan and Security Agreement dated of even date herewith (the “Agreement”), and all terms thereof and
further agrees that (a) such Agreement shall in no way affect or impair
the undersigned’s obligations under that certain Surety Agreement from the undersigned to Bank dated
November 29, 2006 (the “Surety”),
or under any other documents executed or delivered pursuant thereto or in
connection therewith and (b) the terms of the Surety are hereby ratified
and confirmed, all as of the date hereof.

	
  

  	
   

  	
  NEW AGE TRANSLATION, INC.

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ David T. Gulian

  	
   

  
	
   

  	
   

  	
  Name/Title: David T. Gulian, President

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