Document:

Exhibit 10.2

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	 	 

 

10Exhibit 10.3

EXHIBIT 10.3

OFFICER EMPLOYMENT AGREEMENT

THIS AGREEMENT is made effective as of May 18, 2009 by and between MOUNTAIN NATIONAL BANK and
MOUNTAIN NATIONAL BANCSHARES, INC. (The “Bank”), Sevierville, Tennessee; and Richard A. Hubbs (the
“Officer”).

WHEREAS, the Bank wishes to assure itself of the services of Officer for the period provided
in the Agreement; and

WHEREAS, the Officer 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, Officer agrees to serve as Senior Vice
President/Chief Financial Officer.

	 
	 	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, Officer
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,
Officer 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 Officer’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 Officer as compensation a salary of Ninety Two Thousand Five Hundred
Dollars ($92,500.00) 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/CEO of the Bank.
Richard L. Hubbs 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 employees, subject to, and on a basis consistent with, the
terms, conditions and overall administration of such plans and arrangements.
Officer will be entitled to incentive compensation and bonuses as provided in any
plan, or pursuant to any arrangement of the Bank, in which Officer is eligible to
participate. Nothing paid to the Officer under any such plan or arrangement will
be deemed to be in lieu of other compensation to which the Officer is entitled
under this Agreement, except as provided under Section 4 (e).

	 
	 	b)	 	Officer 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.

	 	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, Officer 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).

 

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	 	c)	 	Upon the occurrence of a Change in Control followed by the termination of Officer’s
employment in the manner set forth in Section 4 (b), the Bank shall pay Officer, 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
Officer’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 Officer’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 Officer prior to his severance for a period of three years from
such Date of Termination; provided, however, that Officer shall no longer be entitled to
receive such benefits if Officer competes with the Bank or the surviving financial
institution in the manner prohibited by Section 9 during such three-year period. In
addition, Officer shall be entitled to receive the value of employer contributions that
would have been made on the Officer’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 Officer 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 Officer’s behalf to the extent that such
benefits are not otherwise paid to the Officer upon a Change in Control.

	 
	 	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 Officer 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 Officer 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 Officer’s
employment for any reason other than cause, the Officer agrees that he will not compete
with the Bank or the successor or surviving financial institution for the period of time
during which the Officer 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 9, Non-Competition.

	 	5.	 	TERMINATION UPON RETIREMENT, DEATH OF OFFICER.

	 
	 	 	 	Termination by the Bank of Officer based on “Retirement” shall mean termination at age 65 or
such other age determined in accordance with any retirement arrangement established with
Officer’s consent with respect to him. Upon termination of Officer upon
Retirement, Officer shall be entitled to all benefits under any retirement plan of the Bank
and other plans to which Officer is a party. Upon the death of the Officer during the term
of this Agreement, the Bank shall pay to Officer’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.

 

3

 

	 	6.	 	TERMINATION FOR CAUSE

	 
	 	 	 	For purposes of this Agreement, “Termination for Cause” shall include termination because of
the Officer’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
Officer. The Officer 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 Officer 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 Officer’s receipt
of Notice of Termination for Cause pursuant to Section 8 hereof, and shall not be
exercisable by Officer at any time subsequent to such Termination for Cause.

	 
	 	7.	 	 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 Officer 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
Officer’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.

	 
	 	8.	 	NOTICE

	 	(a)	 	Any purported termination by the Bank or by Officer 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 Officer’s employment under the provision so indicated.

	 
	 	(b)	 	“Date of Termination” shall mean the date specified in the Notice of
Termination.

 

4

 

	 	(c)	 	The Officer 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 Officer’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 8 (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 9. The Officer 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 Officer.

	 
	 	(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.

	 	9.	 	NON-COMPETITION/CONFIDENTIALITY

	 
	 	 	 	Officer 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, Officer 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,
Officer agrees that upon any termination of Officer’s employment hereunder, including a
termination for Cause, as defined in Section 6, Officer 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, or Jefferson Counties.
Officer agrees that during such period and within such counties, Officer 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. Officer also agrees that, during the term of this
Agreement and for a one (1) year period following this termination of employment, Officer
will not attempt to induce or persuade any former, current or future employee, agent,
officer or Director of Bank to terminate such employment or other relationship with Bank in
order to enter into any relationship with the Officer, any competing business organization
in which the Officer is a participant in any capacity whatsoever, or any other business
organization in competition with the Bank’s business. Officer 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 Officer’s breach

 

5

 

	 	 	 	of this Section 9, agree that, notwithstanding anything to the contrary in this Agreement,
in the event of any such breach by Officer, the Bank will be entitled, in addition to any
other remedies and damages available, to an injunction to restrain the violation hereof by
Officer, Officer’s partners, agents, servants, employers, employees and all persons acting
for or with Officer. Officer represents and admits that in the event of the termination of
his employment, Officer’s experience and capabilities are such that Officer 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 Officer 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 Officer. 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.

	 	10.	 	SOURCE OF PAYMENTS

	 
	 	 	 	All payments provided in this Agreement shall be timely paid in cash or check from the
general funds of the Bank.

	 
	 	11.	 	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 Officer,
except that this Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Officer of a kind elsewhere provided. No provision of this Agreement shall
be interpreted to mean that Officer is subject to receiving fewer benefits than those
available to him without reference to this Agreement.

	 
	 	12.	 	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,
Officer and the Bank and their respective successors, heirs, executors and
assigns.

	 	13.	 	MODIFICATION AND WAIVER

	 	a)	 	This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.

 

6

 

	 	(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.

	 	14.	 	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.

	 
	 	15.	 	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.

	 
	 	16.	 	 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.

	 
	 	17.	 	PAYMENT OF LEGAL FEES

	 
	 	 	 	All reasonable legal fees paid or incurred by the Bank or the Officer 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.

	 
	 	18.	 	INDEMNIFICATION

	 
	 	 	 	The Bank shall provide Officer with coverage under a standard directors’ and officers’
liability insurance policy at its expense, or in lieu thereof, shall indemnify Officer 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.

 

7

 

	 	19.	 	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.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and their
seal to be affixed hereunto by a duly authorized officer or director, and Executive has signed this
Agreement, all on the 18th day of May, 2009.

	 	 	 	 	 	 	 	 	 
	ATTEST:

	 	 	 MOUNTAIN NATIONAL BANK

MOUNTAIN NATIONAL BANCSHARES, INC. 
	 
	 	 	 	 	 By:	 	/s/ Dwight B. Grizzell
	 	 	 	 	 	 	 
	(SEAL)

	 	 	 	 	 	Name:
	 	Dwight B. Grizzell
	 

	 	 	 	 	 	Title:
	 	President/CEO
	 
	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	WITNESS:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	OFFICER:	 	/s/ Richard A. Hubbs	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:
	 	Richard A. Hubbs
	 	 
	 

	 	 	 	 	 	
Title:
	 	
Senior Vice President/Chief Financial Officer	 	 

 

8

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