EXECUTIVE SEVERANCE
AGREEMENT
As Amended and Restated
Effective December 31, 2008
THIS EXECUTIVE
SEVERANCE AGREEMENT is between AMERICAN NATIONAL BANKSHARES INC., a
Virginia corporation (the “Parent”), AMERICAN NATIONAL
BANK AND TRUST COMPANY (the “Company”), a national
banking association, and JEFFREY V. HALEY
(“Executive”).
WHEREAS, the
Company recognizes that there is a possibility of a Change in
Control of the Parent, the Company or both; and
WHEREAS, the
Parent and the Company recognize that the mere possibility of a
Change in Control of the Parent or the Company may create
uncertainty on the part of senior management or a distraction of
senior management from its day-to-day operating responsibilities;
and
WHEREAS, the
Parent and the Company recognize that outstanding management is
essential to advancing the interests of the Parent and the Company
and their shareholders and that the Parent and the Company can
better recruit and retain outstanding management by providing
certain assurances in the event of a Change in Control;
and
WHEREAS, in the
event of a Change in Control of the Parent, the Company or both,
the best interests of the Parent and the Company and their
shareholders require a continuity of the Parent’s and the
Company’s business with a minimum of disruption;
WHEREAS, the
Parent, the Company and the Executive entered into an Executive
Severance Agreement with an effective date of December 18, 2001
(the “Prior Agreement”); and
WHEREAS, the
Parent, the Company and the Executive wish to amend and restate the
Prior Agreement as set forth herein to assure compliance with the
requirements of Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”);
NOW THEREFORE,
in consideration of the foregoing premises and the mutual covenants
contained herein, the Parent, the Company and the Executive agree
as follows:
1. Effective
Date. The Effective Date of this Agreement is
December 31, 2008.
2. Term of
Agreement. The Term of this Agreement shall begin
on a Control Change Date and end on the earlier of (i) the day
before the third anniversary of the Control Change Date and (ii)
the date that the Executive attains age sixty-five (65).
3. Minimum Cash
Compensation. During the Term of this Agreement,
the total amount payable to the Executive by the Parent and the
Company as base salary, “profit sharing” bonus and
“incentive compensation” bonus, on an annualized basis,
shall not be less than the amounts prescribed below:
(a) The
Executive’s total annual base salary from the Parent and the
Company shall not be less than the annualized rate of total base
salary payable to the Executive immediately before the Control
Change Date.
(b) The total
annualized “profit sharing” bonus from the Parent and
the Company, expressed as a percentage of the Executive’s
then total base salary, shall not be less than the “profit
sharing” bonus, expressed as a percentage of the
Executive’s then total base salary, payable to the Executive
for the four quarters immediately preceding the Control Change
Date.
(c) The total
annualized “incentive compensation” bonus from the
Parent and the Company, expressed as a percentage of the
Executive’s then total base salary, shall not be less than
the “incentive compensation” bonus, expressed as a
percentage of the Executive’s then total base salary, payable
to the Executive for the calendar year ending immediately preceding
the Control Change Date.
4. Termination
Without Cause. This paragraph 4 describes the
amounts payable to the Executive if the Parent and the Company
terminate the Executive’s employment without Cause during the
Term of this Agreement.
(a) If such
termination is effective before the first anniversary of the
Control Change Date, the Executive shall be entitled to receive the
Termination Benefits during the period beginning with the
Executive’s termination of employment and ending on the
second anniversary of the Control Change Date or the last day of
the Term of this Agreement, whichever occurs first.
(b) If such
termination is effective on or after the first anniversary of the
Control Change Date, the Executive shall be entitled to receive the
Termination Benefits during the period beginning with the
Executive’s termination of employment and ending on the last
day of the twelfth (12) month thereafter or the last day of the
Term of this Agreement, whichever occurs first.
5.
Executive’s Resignation. This paragraph 5
describes the amounts payable to the Executive upon his resignation
from the employ of the Parent and the Company during the Term of
this Agreement.
(a) During the period
beginning on the Control Change Date and ending on the last day of
the third month ending after the Control Change Date, the Executive
may resign from the employ of both the Parent and the Company if
(i) the Parent or the Company breaches the obligation set forth in
paragraph 3 or (ii) the Parent or the Company notifies the
Executive that he will be required to relocate his office more than
thirty (30) miles from Danville, Virginia. If the
Executive resigns in accordance with the preceding sentence, he
shall be entitled to receive the Termination Benefits for the
period beginning on the date of the Executive’s termination
of employment and ending on the last day of the twelfth (12
th ) month thereafter or the last day of the Term
of this Agreement, whichever occurs first.
(b) During the period
beginning on the first day of the fourth month beginning after the
Control Change Date and ending on the first anniversary of the
Control Change Date, the Executive may resign from the employ of
both the Parent and the Company, for any reason or no
reason. If the Executive resigns in accordance with the
preceding sentence, he shall be entitled to receive the Termination
Benefits for the period beginning on the date of the
Executive’s termination of employment and ending on the last
day of the twelfth (12 th )
month thereafter or the last day of the Term of this Agreement,
whichever occurs first.
(c) During the period
beginning on the day after the first anniversary of the Control
Change Date and ending on the last day of the Term of this
Agreement, the Executive may resign from the employ of both the
Parent and the Company if (i) the Parent or the Company breaches
the obligation set forth in paragraph 3, (ii) the Parent or the
Company notifies the Executive that he will be required to relocate
his office more than thirty (30) miles from Danville, Virginia or
(iii) the Executive’s duties, title or responsibilities with
respect to the Parent or the Company are reduced from the duties,
title or responsibilities assigned to the Executive as of the first
anniversary of the Control Change Date. If the Executive
resigns in accordance with the preceding sentence, he shall be
entitled to receive the Termination Benefits for the period
beginning on the date of the Executive’s termination of
employment and ending on the last day of the twelfth (12
th ) month thereafter or the last day of the Term
of this Agreement, whichever occurs first.
6. Maximum
Benefit. No amounts will be payable and no benefits
will be provided under this Agreement to the extent that such
payments or benefits, together with other payments or benefits
under other plans, agreements or arrangements, would make the
Executive liable for the payment of an excise tax under Section
4999 of the Internal Revenue Code of 1986, as amended, or any
successor provision. The amounts otherwise payable and
the benefits otherwise to be provided under this Agreement shall be
reduced to the extent necessary to avoid the imposition of such
excise tax liability; provided, however, that the Executive shall
have the right to direct which payments or benefits under this
Agreement shall be reduced in order to avoid any such excise tax
liability.
7. Cause.
The Parent and the Company shall be deemed to have
“Cause” to terminate the Executive’s employment
under this Agreement if the Parent or the Company determines that
the Executive (i) has failed or refused to perform a material duty
of his position, (ii) is guilty of personal dishonesty, gross
incompetence, willful misconduct, a breach of fiduciary duty
involving personal profit, willful violation of any law, rule or
regulation (other than traffic violations or si
