FORM OF EMPLOYMENT AGREEMENT

Exhibit 10.7

FORM OF
EMPLOYMENT AGREEMENT

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

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

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

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

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

ARTICLE 1
EMPLOYMENT

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

      1.2 Responsibilities and Duties .

     (a) As [title] , the Executive shall report to the Chief Executive Officer and will perform all duties and will have all powers associated with these positions, as set forth in any job description provided to the Executive by the Employer or as may be set forth in the bylaws of the Corporation or the Bank.

     (b) During the period of his employment hereunder, except for reasonable periods of absence occasioned by illness, reasonable vacation periods, and other reasonable leaves of absence approved by the boards of directors of the Corporation and the Bank, the Executive will devote all of his business time, attention, skill and efforts to the faithful performance of his duties under this Agreement, including activities and duties directed by the boards of directors. Notwithstanding the preceding sentence, subject to the approval of the boards of directors, the Executive may serve as a member of the board of directors of business, community and charitable organizations, provided that in each case the service shall not materially interfere with the performance of his duties under this Agreement, adversely affect the reputation of the Employer or any other affiliates of the Employer, or present any conflict of interest. Nothing in this Section 1.2 shall prevent the Executive from managing personal investments and affairs, provided that doing so also does not interfere with the proper performance of the Executive’s duties and responsibilities under this Agreement.

      1.3 Term .

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

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

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

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

ARTICLE 2
COMPENSATION AND BENEFITS

      2.1 Base Salary and Bonus .

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

     (b) The Executive shall be eligible for a discretionary annual bonus, as determined by the Board of Directors of the Bank.

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

     (a)  Reimbursement of business expenses . The Executive shall be entitled to reimbursement for all reasonable business expenses incurred while performing his obligations under this Agreement,

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

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

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

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

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

ARTICLE 3
EMPLOYMENT TERMINATION

      3.1 Termination of Employment .

     (a)  Death . The Executive’s employment shall terminate automatically at the Executive’s death. If the Executive dies in active service to the Employer, the Executive’s estate shall receive any sums that would have otherwise been due to the Executive as Base Salary and reimbursement of expenses through the end of the then remaining term of the Agreement, payable in a single lump sum no later than nine (9) months from the date of the Executive’s death.

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

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

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

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

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

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

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

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

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

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

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

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

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

               (1) a failure to reelect or reappoint the Executive as [title] of the Company and the Bank (provided, however, that a change in the Executive’s position consented to in writing by the Executive, shall not be deemed a Good Reason);

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

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

               (4) a material reduction in Executive’s Base Salary or benefits required to be provided hereunder (other than a reduction that is generally applicable to the Employer’s executive employees or a reduction or elimination of the Executive’s benefits under one or more benefit plans maintained by the Bank as part of a good faith, overall reduction or elimination of such plans or benefits applicable to all participants in a manner that does not discriminate against the Executive (except as such discrimination may be necessary to comply with applicable law));

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

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

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

ARTICLE 4
SEVERANCE COMPENSATION

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

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

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

      4.2 Post-Termination Insurance