EXHIBIT 10.2
OFFICER EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of May 28, 2009 by and between MOUNTAIN
NATIONAL BANK and MOUNTAIN NATIONAL BANCSHARES, INC. (The “Bank”), Sevierville,
Tennessee; and Michael L. Brown (the “Executive”).
WHEREAS, the Bank wishes to assure itself of the services of Executive for the
period provided in the Agreement; and
WHEREAS, the Executive is willing to serve in the employment of the Bank on a
fulltime basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

  1.  
POSITION AND RESPONSIBILITIES
       
During the period of his employment hereunder, Executive agrees to serve as
Executive Vice President/Chief Operating Officer of the Bank.
    2.  
TERMS AND DUTIES

  (a)  
The term of this Agreement shall be deemed to have commenced as of the date
first above written and shall continue for a period of thirty-six (36) full
calendar months thereafter.
    (b)  
During the period of his employment hereunder, except for periods of absence
occasioned by illness, vacation periods, and leaves of absence, Executive shall
devote substantially all of his business time, attention, skill, and efforts to
the faithful performance of his duties hereunder including activities and
services related to the organization, operation and management of the Bank;
provided, however; that, subject to the terms of this Agreement, from time to
time, Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or organizations, which
will not materially affect the performance of Executive’s duties pursuant to
this Agreement.

  3.  
COMPENSATION AND REIMBURSEMENT

  (a)  
The compensation specified under this Agreement shall constitute the salary and
benefits paid for the duties described in Sections 1 and 2. The Bank shall pay
Executive as compensation a salary of One Hundred Fifty Five Thousand Dollars
($155,000.00) per year of service (“Base Salary”). Such Base Salary shall be
payable in accordance with the customary payroll practices of the Bank. During
the period of this Agreement, Officer’s Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by the President/Chief
Executive Officer of the Bank.

 

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  (b)  
Executive will be entitled to participate in or receive benefits under any
employee benefit plans including, but not limited to, stock options, retirement
plans, supplemental retirement plans, pension plans, profit-sharing plans,
health and accident plans, medical coverage or any other employee benefit plan
or arrangement made available by the Bank in the future to its key management
executives, subject to, and on a basis consistent with, the terms, conditions
and overall administration of such plans and arrangements. Executive will be
entitled to incentive compensation and bonuses as provided in any plan, or
pursuant to any arrangement of the Bank, in which Executive is eligible to
participate. Nothing paid to the Executive under any such plan or arrangement
will be deemed to be in lieu of other compensation to which the Executive is
entitled under this Agreement, except as provided under Section 4 (e).
    (c)  
Executive will be reimbursed for reasonable travel and entertainment expenses.

  4.  
CHANGE IN CONTROL

  (a)  
No benefit shall be paid under this Section 4 unless there shall have occurred a
Change in Control of the Bank. For purposes of this Agreement, a “Change in
Control” of the Bank shall be deemed to occur if and when:

  (i)  
there occurs an acquisition in one or more transactions of at least 15 percent
but less than 25 percent of the Common Stock by any Person, or by two or more
Persons acting as a group (excluding officers and directors of the Bank), and
the adoption by the Board of Directors of a resolution declaring that a change
in control of the Bank has occurred; or
    (ii)  
there occurs a merger, consolidation, reorganization, recapitalization or
similar transaction involving the securities of the Bank upon the consummation
of which more than 50 percent in voting power of the voting securities of the
surviving corporation(s) is held by Persons other than former shareholders of
the Bank; or
    (iii)  
25 percent or more of the directors elected by shareholders of the Bank to the
Board of Directors are persons who were not listed as nominees in the Bank’s
then most recent proxy statement.

 

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  (b)  
If any of the events described in Section 4 (a) hereof constituting a Change in
Control have occurred or the Board Directors of the Bank has determined that a
Change in Control has occurred, Executive shall be entitled to the benefits
provided in paragraphs (c), (d) and (e) of this Section 4, upon his subsequent
involuntary termination of employment at any time during the term of this
Agreement (other than for Cause, following a Change in Control following any
demotion, loss of title, office or significant authority, reduction in his
annual compensation or benefits, or relocation of his principal place of
employment by more than 50 miles from its location immediately prior to the
Change in Control).
    (c)  
Upon the occurrence of a Change in Control followed by the termination of
Executive’s employment in the manner set forth in Section 4 (b), the Bank shall
pay Executive, or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to 2.99 times the Executive’s “base amount,”
within the meaning of 280G(b)(3) of the Internal Revenue Code of 1986 (“Code”),
as amended. Such payment shall be made in thirty-six equal monthly installments
beginning on the first day of the month following the month in which the
Executive is terminated and thereafter payable on the first day of each month
thereafter until paid in full.
    (d)  
Upon the occurrence of a Change in Control followed by the termination of
Executive’s employment in the manner set forth in Section 4(b), the Bank will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Bank for Executive
prior to his severance for a period of three years from such Date of
Termination; provided, however, that Executive shall no longer be entitled to
receive such benefits if Executive competes with the Bank or the surviving
financial institution in the manner prohibited by Section 10 during such
three-year period. In addition, Executive shall be entitled to receive the value
of employer contributions that would have been made on the Executive’s behalf
over the remaining term of the agreement to any tax-qualified retirement plan
sponsored by the Bank as of the Date of Termination.
    (e)  
Upon the occurrence of a Change in Control, the Executive shall be entitled to
receive benefits due to him under, or contributed by the Bank on his behalf,
pursuant to any retirement, incentive, profit sharing, bonus, performance,
disability or other employee benefit plan maintained by the Bank on the
Executive’s behalf to the extent that such benefits are not otherwise paid to
the Executive upon a Change in Control.

 

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  (f)  
Notwithstanding the preceding paragraphs of this Section 4, in the event that
the aggregate payments or benefits to be made or afforded to the Executive under
this Section would be deemed to include an “excess parachute payment” under 280G
of the Code, such payments or benefits shall be payable or provided to Executive
in equal monthly installments over the minimum period necessary to reduce the
present value of such payments or benefits to an amount which is one
dollar($1.00) less than three (3) times the Officer’s “base amount” under
280G(b)(3) of the Code.
    (g)  
Upon the occurrence of a Change in Control followed by the termination of
Executive’s employment for any reason other than cause, the Executive agrees
that he will not compete with the Bank or the successor or surviving financial
institution for the period of time during which the Executive is accepting
benefits pursuant to Section 4 (d) hereof, in each case, in any city or town in
which the Bank operates a branch or main office. For purposes of this paragraph,
the term “compete” shall have the same meaning as more fully defined in
Section 10, Non-Competition.

  5.  
TERMINATION FOR DISABILITY

  (a)  
If the Executive shall become disabled as defined in the Bank’s then current
disability plan (or, if no such plan is then in effect, if the Executive is
disabled within the meaning of Section 409(A)(a)(2)(c) of the Code as determined
by a physician designated by the Board), the Bank may terminate Executive’s
employment for “Disability.”
    (b)  
Upon the Executive’s termination of employment for Disability, the Bank will pay
Executive, as disability pay, a bi-weekly payment equal to two-thirds (2/3) of
Executive’s biweekly rate of Base Salary on the effective date of such
termination. These disability payments shall commence on the effective date of
Executive’s termination and will end on the earlier of (i) the date Executive
returns to the full-time employment of the Bank in the same capacity as he was
employed prior to his termination for Disability and pursuant to an employment
agreement between Executive and the Bank; (ii) Executive’s full-time employment
by another employer; (iii) Executive attaining the normal expected retirement
age or age 65 if the Executive so elects; or (iv) Executive’s death. The
disability pay shall be reduced by the amount, if any, paid to the Executive
under any plan of the Bank providing disability benefits to the Executive.
    (c)  
The Bank will cause to be continued life, medical, dental and disability
coverage substantially identical to the coverage maintained by the Bank for
Executive prior to his termination for Disability. This coverage and payments
shall cease upon the earlier of (i) the date Executive returns to the full-time
employment of the Bank, in the same capacity as he was employed prior to his
termination for Disability and pursuant to an employment agreement between
Executive and the Bank; (ii) Executive’s full-time employment by another
employer; (iii) Executive’s attaining normal retirement age or age 65 if the
Executive so elects; or (iv) the Executive’s death.

 

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  (d)  
Notwithstanding the foregoing, there will be no reduction in the compensation
otherwise payable to Executive during any period during which Executive is
incapable of performing his duties hereunder by reason of temporary disability.
    (e)  
Executive agrees that he will not compete with the Bank in any city or town in
which the Bank operates a branch or main office for a period of twelve
(12) months following his termination for “Disability” from his employment by
the Bank. For purposes of this paragraph, the term “compete” shall have the same
meaning as more fully defined in Section 10, Non-Competition

  6.  
TERMINATION UPON RETIREMENT OR DEATH OF EXECUTIVE
       
Termination by the Bank of Executive based on “Retirement” shall mean
termination at age 65 or such other age determined in accordance with any
retirement arrangement established with Executive’s consent with respect to him.
Upon termination of Executive upon Retirement, Executive shall be entitled to
all benefits under any retirement plan of the Bank and other plans to which
Executive is a party. Upon the death of the Executive during the term of this
Agreement, the Bank shall pay to Executive’s estate, within ten (10) days of the
end of such month, the compensation due to the Executive through the last day of
the calendar month in which his death occurred.
    7.  
TERMINATION FOR CAUSE.
       
For purposes of this Agreement, “Termination for Cause” shall include
termination because of the Executive’s personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform assigned duties, willful violation of any law,
rule, or regulation which negatively impacts the Bank (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. For purposes of this Section, the
term “willful” is defined to include any act or omission which demonstrates an
intentional or reckless disregard for the duties and responsibilities owed to
the business of the employer by Executive. The Executive shall not have the
right to receive any compensation or other benefits, including those provided
for herein, for any period after the Date of Termination for any Termination for
Cause. Any stock options granted to Executive under any stock option plan or any
unvested awards granted under any other stock benefit plan of the Bank, or any
subsidiary or affiliate thereof, shall become null and void effective upon
Executive’s receipt of Notice of Termination for Cause pursuant to Section 8
hereof, and shall not be exercisable by Executive at any time subsequent to such
Termination for Cause.

 

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  8.  
SIX MONTH DELAY OF CERTAIN PAYMENTS
       
Notwithstanding any other provision of this Agreement, in the event that the
receipt of amounts payable pursuant to Sections 4 or 5 of this Agreement within
six months of the Date of Termination would cause Executive to incur any penalty
under Section 409A of the Code then payment of such amounts shall be delayed
until the date that is six months following Executive’s Date of Termination (the
“Earliest Payment Date”). If this provision becomes applicable, it is
anticipated that payments that would have been made prior to the Earliest
Payment Date in the absence of this provision would be paid as a lump sum on the
Earliest Payment Date and the remaining severance benefits or other payments
would be paid according to the schedule otherwise applicable to the payments.
    9.  
NOTICE

  (a)  
Any purported termination by the Bank or by Executive shall be communicated by
Notice of Termination to the other party hereto. For purposes of this Agreement,
a “Notice of Termination” shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so indicated.
    (b)  
“Date of Termination” shall mean the date specified in the Notice of
Termination.
    (c)  
The Executive and the Bank shall resolve any claim, controversy or dispute
arising out of or in connection with this Agreement, or relating to or arising
out of Executive’s employment with the Bank, by compulsory, binding arbitration
in Knoxville, Tennessee. Any such arbitration shall be conducted according to
the Commercial Arbitration Rules of the AAA. Notwithstanding the provisions of
this Section 9 (c), the Bank may seek and obtain appropriate restraining orders
and temporary or permanent injunctions in a court proceeding without engaging in
arbitration with respect to any alleged violation of the covenants contained in
Section 10. The Executive shall invoke his right to arbitrate any claim,
controversy or dispute with or against the Bank only after first attempting to
resolve it in good faith through the exhaustion of the employee problem solving
mechanism contained in the Bank’s Employee Handbook without first obtaining
results reasonably satisfactory to the Executive.
    (d)  
In any dispute which is finally resolved through arbitration, the prevailing
party (as defined below) shall be entitled to reimbursement for all reasonable
attorneys’ fees, witness expenses and all fees and expenses of the arbitrators.
The “prevailing party” shall be determined by the arbitrator.

 

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  10.  
NON-COMPETITION/CONFIDENTIALITY.
       
Executive agrees and acknowledges that during the term of his employment with
Bank, he will have access to and be provided confidential and proprietary
information of Bank, including but not limited to customer lists, loan
portfolios, lending guidelines, pricing guidelines and the like. Additionally,
Executive will be provided with special training and educational opportunities
at the expense of Bank. In consideration of his employment and the mutual
premises contained herein, the receipt and sufficiency of which are hereby
acknowledged, Executive agrees that upon any termination of Executive’s
employment hereunder, including a termination for Cause, as defined in
Section 7, Executive agrees not to compete with or work for a competitor of the
Bank for a period of twelve (12) months following such Date of Termination in
any county in which the Bank operates a branch or main office, or in any county
in which the Bank conducts its banking business, determined as of the Date of
Termination, including but not limited to Sevier, Blount, Knox, Cocke, or
Jefferson Counties. Executive agrees that during such period and within such
counties, Executive shall not work for or advise, consult or otherwise serve
with, directly or indirectly, any entity whose business materially competes or
intends to compete with the depository, lending or other business activities of
the Bank. Executive also agrees that, during the term of this Agreement and for
a one (1) year period following this termination of employment, Executive will
not attempt to induce or persuade any former, current or future employee, agent,
officer, executive or Director of Bank to terminate such employment or other
relationship with Bank in order to enter into any relationship with the
Executive, any competing business organization in which the Executive is a
participant in any capacity whatsoever, or any other business organization in
competition with the Bank’s business. Executive further agrees and acknowledges
that he will not use any contracts, proprietary information, trade secrets,
confidential information, customer lists, mailing lists, goodwill, or other
intangible property used in connection with Bank’s business. The parties hereto,
recognizing that irreparable injury will result to the Bank, its business and
property in the event of Executive’s breach of this Section 10, agree that,
notwithstanding anything to the contrary in this Agreement, in the event of any
such breach by Executive, the Bank will be entitled, in addition to any other
remedies and damages available, to an injunction to restrain the violation
hereof by Executive, Executive’s partners, agents, servants, employers,
employees and all persons acting for or with Executive. Executive represents and
admits that in the event of the termination of his employment, Executive’s
experience and capabilities are such that Executive can obtain employment in a
business engaged in other lines and/or of a different nature than the Bank, and
that the enforcement of a remedy by way of injunction will not prevent Executive
from earning a livelihood. Nothing herein will be construed as prohibiting the
Bank from pursuing any other remedies available to the Bank for such breach or
threatened breach, including the recovery of damages from Executive. The parties
also agree that, should a court of competent jurisdiction determine that the
temporal and/or geographic scope of the foregoing restrictions on competition
are overbroad, the court should modify the restrictions to the minimal extend
needed to render them enforceable under applicable law.

 

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  11.  
SOURCE OF PAYMENTS.
       
All payments provided in this Agreement shall be timely paid in cash or check
from the general funds of the Bank.
    12.  
EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
       
This agreement contains the entire understanding between the parties hereto and
supersedes any prior employment agreement between the Bank or any predecessor of
the Bank and Executive, except that this Agreement shall not affect or operate
to reduce any benefit or compensation inuring to the Executive of a kind
elsewhere provided. No provision of this Agreement shall be interpreted to mean
that Executive is subject to receiving fewer benefits than those available to
his without reference to this Agreement.
    13.  
NO ATTACHMENT; SUCCESSORS AND ASSIGNS.

  (a)  
Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to affect any such action shall be null, void, and of
no effect.
    (b)  
This Agreement shall be binding upon, and inure to the benefit of, Executive and
the Bank and their respective successors, heirs, executors and assigns.

  14.  
MODIFICATION AND WAIVER

  (a)  
This Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto.
    (b)  
No term or condition of this Agreement shall be deemed to have been waived, nor
shall there by any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term
or condition for the future as to any act other than that specifically waived.

 

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  15.  
SEVERABILITY
       
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
the law continue in full force and effect.
    16.  
HEADINGS FOR REFERENCE ONLY
       
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
    17.  
GOVERNING LAW.
       
This Agreement shall be governed by the substantive laws and procedural
provisions of the State of Tennessee, unless otherwise specified herein;
provided, however, that in the event of a conflict between the terms of this
Agreement and any applicable federal or state law or regulation, the provisions
of such law or regulation shall prevail.
    18.  
PAYMENT OF LEGAL FEES.
       
All reasonable legal fees paid or incurred by the Bank or the Executive pursuant
to any dispute or question of interpretation relating to this Agreement shall be
paid or reimbursed by the prevailing party in such judgment, arbitration or
settlement.
    19.  
INDEMNIFICATION.
       
The Bank shall provide Executive with coverage under a standard directors’ and
officers’ liability insurance policy at its expense, or in lieu thereof, shall
indemnify Executive to the fullest extent permitted under applicable Tennessee
and Federal law and the Bank’s Articles of the Association against all expenses
and liabilities reasonably incurred by him in connection with or arising out of
any action, suit or proceeding in which he may be involved by reason of him
having been a director or officer of the Bank (whether or not he continues to be
a director or officer at the time of incurring such expenses or liabilities),
such expenses and liabilities to include, but not be limited to, judgment, court
costs and attorneys’ fees and the cost of reasonable settlements.
    20.  
SUCCESSOR TO THE BANK.
       
The Bank shall require any successor or assignee, whether direct or indirect, by
purchase, merger, consolidation or otherwise, to all or substantially all the
business or assets of the Bank, expressly and unconditionally to assume and
agree to perform the Bank’s obligations under this Agreement, in the same manner
and to the same extent that the Bank would be required to perform if no such
succession or assignment had taken place.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and their seal to be affixed hereunto by a duly authorized Director, and
Executive has signed this Agreement, all on the 28th day of May, 2009.

                 
ATTEST:
    MOUNTAIN NATIONAL BANK
MOUNTAIN NATIONAL BANCSHARES, INC.    /s/ Beverly J. Brosch       By:   /s/
Dwight B. Grizzell              
(SEAL)
          Name:   Dwight B. Grizzell
 
          Title:   President/Chief Executive Officer
 
               

                     
WITNESS:
                   
 
                    /s/ Amy Reagan        EXECUTIVE:   /s/ Michael L. Brown    
                 
 
          Name:   Michael L. Brown    
 
          Title:   Executive Vice President/Chief Operating Officer    

 

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