EXECUTIVE SEVERANCE
AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT is between
AMERICAN NATIONAL BANKSHARES INC., a Virginia corporation (the
“Parent”), AMERICAN NATIONAL BANK AND TRUST COMPANY, a
national banking association, (the “Company”) and
WILLIAM W. TRAYNHAM (“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;
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 April
21, 2009.
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
amount payable to the Executive if the Parent and the Company
terminates 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 th ) 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 similar offenses),
unethical business practices in connection with the Parent’s
or the Company’s business, misappropriation of the
Parent’s or the Company’s assets (determined on a
reasonable basis), or is subject to a final cease-and-desist order,
or has been convicted of a felony
