Document:

ex10-2.htm

    EXHIBIT
10.2

      
 

      
        EMPLOYMENT
AGREEMENT

        THIS
EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of May 22, 2009,
by and between Cadiz Inc., a Delaware corporation (the "Company") and Timothy J.
Shaheen, an individual ("Shaheen").

        

        WHEREAS, Shaheen has served as the
Company's Chief Financial Officer effective as of November 19, 2008;
and

        

        WHEREAS, the Company and Shaheen desire
to enter into this Agreement in order to set forth all of the terms and
conditions pursuant to which Shaheen shall continue to provide services to the
Company;

        

        NOW, THEREFORE, the parties agree as
follows:

        

        1.           TERM OF
EMPLOYMENT.  The terms and conditions of Shaheen's employment
under this Agreement shall be effective as of the date hereof and shall continue
until terminated in accordance with the termination provisions of Section 6
below.

        

        2.           DUTIES.  Shaheen
shall be employed as the Chief Financial Officer of the
Company.  Shaheen's duties and responsibilities shall relate,
generally, to those ordinarily performed by the chief financial officer of a
publicly traded corporation and shall include, without limitation, direct
responsibility for (i) the Company’s accounting systems, cash management and
financial reporting; (ii) supervision and direction of the Company’s financial
staff; (iii) preparation and coordination with outside professional
advisors of all regulatory filings, including those required by the rules
and regulations of the U.S. Securities and Exchange Commission and by the
NASDAQ; (iv) coordination of the Company’s compliance with all of the
requirements of the Sarbanes-Oxley Act of 2002; and (v) the administrative and
financial management of the Company's real estate holdings.  In
addition as a member of the Company’s senior management group Shaheen shall be
involved on a daily basis with discussion and analysis of the development of the
Company’s water resource programs.  Shaheen shall also perform such
other duties as would reasonably be performed by a senior executive of the
Company as the Board may from time to time direct.  Shaheen shall
report to, and take direction from, the Chief Executive Officer of the
Company.  Shaheen further consents to serve in further capacities as
an officer and/or director of the Company or any subsidiary or affiliate of the
Company without any additional salary or compensation.  Shaheen's base
of operations shall be at the corporate headquarters office of the Company in
Los Angeles, California, unless changed by mutual agreement.  However,
Shaheen shall also render services at such other sites as necessary from time to
time to properly perform his duties.

        

        3.           NECESSARY
SERVICES.

        

        a.           Performance of
Duties.  Shaheen agrees that he will at all times faithfully,
industriously and to the best of his ability, experience and talents, perform to
the reasonable satisfaction of the Company all of the duties that may be
assigned to him hereunder and shall devote such time to the performance of these
duties as may be necessary therefor.

        

        b.           Full-Time
Service.  During the term of the Agreement, Shaheen shall be
available on a full-time basis to perform the duties assigned him in accordance
with paragraph 2 hereof; provided, however, that nothing herein shall
preclude Shaheen from spending a reasonable amount of time in the management of
his personal investments or with any charitable or civic venture with which
Shaheen may be involved as of the date hereof; and provided, further, that such
involvement shall not detract from the performance of Shaheen's duties
hereunder.

        

        c.           Exclusive
Services.  Shaheen agrees that during the period of his
employment, Shaheen shall provide services exclusively pursuant to this
Agreement, and Shaheen will not, without the prior written consent of the
Company (which consent may not be unreasonably withheld), directly or
indirectly:

        

        (i)  engage in the business
of, or own or control any interest in (except as a passive investor owning less
than 10% of the equity securities of a publicly held company), or act as
director, officer of employee of, or consultant to, any individual, partnership,
joint venture, corporation or other business entity, directly or indirectly
engaged anywhere in the United States, its possessions or territories, in any
business competitive with the business then being carried on by the Company or
any affiliate;

        

        (ii)  plan or organize any
business activity competitive with the business or planned business of the
Company or its affiliates, or combine, participate, or conspire with other
employees of the Company or its affiliates or other persons or entities for the
purpose of organizing any such competitive business activity; or

        

        (iii)  divert or take away,
or attempt to divert or take away, any of the customers or potential customers
of the Company or its affiliates, either for himself or for any other person,
firm, partnership, corporation or other business entity.

        

        4.           BASE
COMPENSATION.  Subject to such deductions as the Company may
from time to time be required to make pursuant to law, governmental regulation
or order, the Company agrees to pay to Shaheen a base salary of $300,000 per
annum.  Payments of base salary shall be made in accordance with the
normal payroll practices of the Company.

        

        5.           OTHER
COMPENSATION.

        

        a.           Equity Incentive
Grant.  The Company shall grant to Shaheen concurrently with
the execution of this Agreement 30,000 shares of common stock pursuant to the
Company's 2007 Management Equity Incentive Plan (the "2007 Plan") which shares
shall, for purposes of the 2007 Plan, be deemed to be Deferred Stock (as defined
in the 2007 Plan) subject to immediate vesting upon execution of this
Agreement.

        

        b.           Discretionary Annual
Bonus.  Following the conclusion of each fiscal year during the
term of this Agreement, the Board shall make a good faith evaluation of the
performance of Shaheen during such year, on the basis of which Shaheen shall
receive a bonus in an amount and upon such other terms and conditions as shall
be determined at the discretion of the Board.

        

        c.           Participation in Long Term
Transaction Incentive Plan.  The Company shall grant to Shaheen
concurrently with the execution of this Agreement the right to participate in
the total incentive pool made available to Company management under the
Company's Long Term Transaction Incentive Plan ( Plan Summary Attached ). 
The
participation percentage will be determined prior to June 30, 2009.

        

        d.           Other Equity Based
Compensation.  In the event that the Company, following the
execution of this Agreement, adopts a new compensation plan or program for
senior management (the “Compensation Plan”), then Shaheen shall be invited to
participate in the Compensation Plan.  Shaheen’s participation in the
Compensation Plan shall be negotiated between Shaheen and the Company in good
faith at a level consistent with that of a member of senior management with
comparable duties and responsibilities.

        

        e.           Fringe
Benefits.  In addition to the compensation set forth above,
Shaheen shall be entitled to the following benefits:

        

        i.           Four
(4) weeks paid annual vacation, provided that no more than two weeks are to be
taken consecutively;

        

        ii.           Sick
leave and personal leave with pay in accordance with the prevailing policies of
the Company;

        

        iii.           Medical
coverage under the group medical insurance plan of the Company (or COBRA
coverage, at the election of Shaheen);

        

        iv.           Participation
in any pension, profit-sharing, 401(k), or deferred compensation plan maintained
by the Company for the general benefit of its employees;

        

        v.           An
automobile allowance of $700 per month;

        

        vi.           Participation
in any other benefit plan maintained by the Company for the general benefit of
its employees; and

        

        vii.           Any
other benefits not specifically set forth herein as may be granted by the
Company in its sole and absolute discretion.

        

        f.           Deduction and
Reimbursement.  Shaheen hereby agrees that the Company may
deduct and withhold from the compensation payable to Shaheen hereunder any
amounts of money required to be deducted or withheld by the Company under the
provisions of any and all applicable local, state or federal statutes or
regulations or any amendments thereto hereafter enacted requiring the
withholding or deducting of compensation.

        

        6.           TERMINATION.  This
Agreement continue in full force and effect unless and until terminated as
provided in this Section.

        

        a.           Termination
Events.  This Agreement shall terminate:

        

        i.           At
the election of the Company, upon the death or permanent disability of Shaheen,
"permanent disability" being defined as any continuous loss of one-half (1⁄2) or
more of the time spent by Shaheen in the usual daily performance of his duties
as a result of physical or mental illness for a continuous period in excess of
ninety (90) days.

        

        ii.           At
the election of the Company, upon a Change in Control of the Company (as defined
below) or at such time, if any, as the Company ceases to conduct business for
any reason whatsoever.

        

        iii.           At
the election of the Company, upon the dismissal of Shaheen by the Company for
cause.  For purposes of this Agreement, "cause" shall include, but
shall not be limited to: (1) the breach by Shaheen of any term or condition of
this Agreement, (2) Shaheen engaging in one or more acts constituting a felony;
(3) Shaheen engaging in one or more acts involving fraud or serious moral
turpitude; (4) Shaheen misappropriating Company assets or engaging in gross
misconduct materially injurious to the Company or its affiliates or
subsidiaries; (4) the making by Shaheen of material misrepresentations to the
Company or its affiliates; or (5) Shaheen’s willful failure to comply with the
instructions of the Company’s Board of Directors or its Chief Executive
Officer.

        

        iv.           At
the election of Shaheen, upon a material breach by the Company of any term or
condition of this Agreement or upon a material change in Shaheen’s job title or
a material reduction in Shaheen’s duties and responsibilities
hereunder.

        

        v.           At
the election of either party, without cause.

        

        b.           Payments Following
Termination.  Following termination of this Agreement, whether
for any of the reasons specifically set forth above or for any other reason, the
Company shall have no obligation to make payments to or bestow benefits upon
Shaheen after the date of termination except as may be required by law and as
follows, and references under this Agreement to Shaheen’s termination of
employment or the termination of this Agreement shall be deemed to refer to the
date upon which Shaheen has experienced a “separation from service” within the
meaning of Code Section 409A, as defined below:

        

        i.           In
the event of termination by the Company pursuant to Section (a)(i) as the result
of Shaheen’s death or permanent disability, payment of the base compensation
otherwise payable to Shaheen pursuant to Section 4 hereof shall continue to be
paid to Shaheen or his estate for a period of 180 days following Shaheen’s death
or permanent disability.  Such payment shall be in addition to, and
not in lieu of, any payments made pursuant to any Company provided death or
disability benefit plans.

        

        ii.           In
the event of termination of this Agreement by the Company following a Change in
Control pursuant to Section (a)(ii) above, Shaheen shall be entitled to receive
for a period of twelve (12) months following the effective date of termination,
as though Shaheen were continuing to provide services to the Company under this
Agreement (i) base compensation as set forth in Section 4 above and (ii) all
fringe benefits as described in Section 5(e) above to the extent that such
benefits can then lawfully be made available by the Company (or the Company’s
successor in interest) to Shaheen.

        

        iii.           In
the event of termination of this Agreement by the Company for cause pursuant to
Section (a)(iii) above, or in the event of termination of this Agreement by
Shaheen without cause pursuant to Section a(v) above, the Company shall have no
further liability or obligation to Shaheen under this Agreement other than the
Company's obligation to pay base compensation as set forth in Section 4 above
and fringe benefits as described in Section 5(e) above to the extent that such
base compensation and fringe benefits are accrued but unpaid as of the effective
date of termination.

        

        iv.           In
the event of termination of this Agreement by Shaheen pursuant to Section
(a)(iv) above or by the Company without cause pursuant to Section (a)(v) above,
or in the event of termination of this Agreement by the Company for any reason
not specifically set forth above, Shaheen shall be entitled to receive for a
period of one hundred eighty (180) days following the effective date of
termination (i.e. the date upon which Shaheen ceases to provide services as
Chief Financial Officer of the Company), as though Shaheen were continuing to
provide services to the Company under this Agreement (i) base compensation as
set forth in Section 4 above and (ii) all fringe benefits as described in
Section 5(e) above to the extent that such benefits can then lawfully be made
available by the Company to Shaheen.

        

        v.           The
termination of this Agreement shall not affect the right of Shaheen to exercise
any stock option, to purchase securities of the Company, or to receive payments
under any incentive plans in which Shaheen participates, which rights may have
vested under the terms of the applicable equity grant or incentive plan prior to
the date of termination.

        

        c.           Change in Control -
Definition.  For purposes of this Agreement, a Change in
Control shall be deemed to occur if, and only if, the transaction or event also
constitutes a change in the ownership
or effective control of the Company, or in the ownership of a substantial
portion of the assets of the Company, within the meaning of Code Section
409A.  Without limitation of the foregoing, Change in Control shall
include the occurrence of any of the following events (subject to the full
definition of such events as set forth in Code Section 409A); provided, however,
that in the event of any conflict between the description of the following
events as set forth below and the provisions of Code Section 409A, the
provisions of Code Section 409A shall control:

        

        i.           a
change in the ownership of the Company (generally, arising from the acquisition
by a person or group of stock of the Company that, together with stock
previously held by such person or group, constitutes more than 50% or the total
fair market value or total voting power of the Company's stock);

        

        ii.           a
change in the effective control of the Company (generally, arising from either
(a) the acquisition by a person or group of ownership of stock of the Company
possessing 30 percent or more of the total voting power of the stock of the
Company or (b) the replacement during any 12 month period of a majority of the
Company's Board of Directors by directors whose appointment or election is not
endorsed by a majority of the members of the Board before the date of
appointment or election); or

        

        iii.           a
change in the ownership of a substantial portion of the Company's assets
(generally, arising from the acquisition by any person or group of assets from
the Company that have a total gross fair market value equal to or more than 40
percent of the total gross fair market value of all of the assets of the Company
immediately before such acquisition).

        

        d.           Return of Company's
Property.  If this Agreement is terminated for any reason, the
Company may, at its option, require Shaheen to vacate his offices prior to the
effective date of a termination and to cease all activities on the Company’s
behalf.  Shaheen agrees that on the termination of this Agreement in
any manner, he will immediately deliver to the Company all notebooks, brochures,
documents, memoranda, reports, files, books, correspondence, customer lists, or
other written or graphical records, and the like, relating to the business or
work of the Company, which are or have been in his possession or under his
control and which have not been returned to the Company.  Shaheen
hereby expressly acknowledges that all such materials referenced above are the
property of the Company.

        

        e.           Public
Identification.  If this Agreement is terminated for any
reason, Shaheen shall immediately and forever thereafter cease to hold himself
out to any person, firm, partnership, corporation or other entity as an
employee, agent, independent contractor or representative of the Company or of
any entity owned by, or affiliated with, the Company.

        

        f.           Timing of Payments Under
Certain Circumstances.  With respect to any amount that becomes
payable to or for the benefit of Shaheen under this Agreement upon Shaheen’s
Separation from Service (as defined below) for any reason, the provisions of
this subsection (f) will apply, notwithstanding any other provision of this
Agreement to the contrary.  If the Company determines in good faith
that Shaheen is a “specified employee” within the meaning of Section 409A of the
Internal Revenue Code, any Treasury regulations promulgated thereunder and any
guidance issued by the Internal Revenue Service relating thereto (collectively,
“Code Section 409A”), then to the extent required under Code Section 409A,
payment of any amount of deferred compensation that becomes payable to or for
the benefit of Shaheen upon Separation from Service (other than by reason of the
death of Shaheen) and that otherwise would be payable during the six-month
period following Shaheen’s Separation from Service shall be suspended until the
lapse of such six-month period (or, if earlier, the date of Shaheen’s
death).  A “Separation from Service” of Shaheen means Shaheen’s
separation from service, as defined in Code Section 409A, with the Company and
all other entities with which the Company would be considered a single employer
under Internal Revenue Code Section 414(b) or (c), applying the 80% threshold
used in such Internal Revenue Code Sections or any Treasury regulations
promulgated thereunder.  Any payment suspended as provided in this
subsection (f), unadjusted for interest on such suspended payment, shall be paid
to Shaheen in a single payment on the first business day following the end of
such six-month period or within 30 days following the death of Shaheen, as
applicable, provided that the death of Shaheen during such six-month period
shall not cause the acceleration of any amount that otherwise would be payable
on any date during such six-month period following the date of Shaheen’s
death.

        

        7.           EXPENSES.  The
Company shall reimburse Shaheen for all out-of-pocket expenses incurred by
Shaheen in the performance of his duties hereunder, including, but not limited
to, telephone, travel, and office expenses, all subject to such written
guidelines and/or requirements for verification as the Company may, in its sole
and absolute discretion, establish.

        

        8.           CONFIDENTIALITY AND TRADE
SECRETS.  For purposes of this Section 8, the term "Company"
shall collectively refer to the Company and any affiliate thereof.

        

        a.           Confidential
Information.  Shaheen shall keep in strictest confidence all
information relating to the business, affairs, products, customers and suppliers
of the Company (collectively hereinafter referred to as "Trade Secrets"), which
Shaheen has obtained or may acquire in the course of his employment by the
Company and which is not otherwise generally known to the
public.  Shaheen acknowledges that such Trade Secrets are of great
value, and have been developed and/or acquired at great expense to the Company,
and the Company would not enter into this contract of employment and such
information would not be made available to Shaheen in Shaheen's fiduciary
capacity unless the Company were assured that all such information will be used
for the exclusive benefit of the Company.  Accordingly, during the
term of this Agreement, and at all times thereafter, Shaheen shall not publish,
communicate, divulge, disclose or use, whether or not for his own benefit, any
such information without the prior written consent of the Company.

        

        b.           Non-Competition.  Shaheen
agrees that during the period of his employment, Shaheen will not, directly or
indirectly, engage in the business of, or own or control any interest in (except
as a passive investor owning less than 10% of the equity securities of a
publicly held company), or act as a director, officer of employee of, or
consultant to, any individual, partnership, joint venture, corporation or other
business entity, directly or indirectly engaged in any country in which the
Company conducts business (including, without limitation, the United States, its
possessions and territories), in any business competitive with the business then
being carried on by the Company.

        

        c.           Client
Information.  Shaheen hereby specifically agrees that he will
not utilize any information concerning the customers, licensees or other
clients, partners or affiliates of the Company which Shaheen acquires during the
term of this Agreement, whether or not the same originated through Shaheen's
efforts, for any purpose detrimental to the business of the
Company.  Without limitation of the foregoing, Shaheen agrees that he
shall not at any time interfere with any existing contracts of the Company, and
further agrees that he shall not engage in business discussions with any person
or entity with whom he or the Company are in negotiations at the time he ceases
to be an employee of the Company until after such negotiations have been
concluded.

        

        d.           Solicitation of
Employees.  Shaheen acknowledges that important factors in the
Company's business and operations are the loyalty and good will of its employees
and its customers.  Accordingly, Shaheen agrees that both during the
term of this Agreement and after the expiration or termination of this Agreement
he will not enter into, and will not participate in, any plan or arrangement to
cause any of the Company's employees to terminate his employment with the
Company or hire any of such employees in connection with business initiated by
Shaheen or any other person, firm or corporation.  Shaheen further
agrees that information as to the capabilities of the Company's employees, their
salaries and benefits, and the other terms of their employment is confidential
and proprietary to the Company and constitutes its valuable trade
secrets.

        

        e.           Ongoing
Obligation.  The provisions in this Section 8 shall be
binding during Shaheen's employment and at all times thereafter, regardless of
the circumstances or reasons for termination of this Agreement.  In
the event the provisions in this Section 8 are more restrictive than
permitted by the laws of the jurisdiction in which enforcement of this provision
is sought, such provisions shall be interpreted to extend only over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable.

        

        9.           REMEDY FOR
BREACH.  Shaheen acknowledges that the services to be rendered
by him hereunder are of a special, unique and extraordinary character, which
gives this Agreement a peculiar value to the Company, the loss of which cannot
be reasonably or adequately compensated in damages in an action at law, and a
breach by Shaheen of the provisions of this Agreement will cause the Company
irreparable injury.  It is, therefore, expressly acknowledged that
this Agreement may be enforced by injunction and other equitable remedies,
without bond.  Such relief shall not be exclusive, but shall be in
addition to any other rights or remedies Company may have for such breach, and
Company shall be entitled to recover all costs and expenses, including
reasonably attorneys' fees, incurred by reason of any breach of the covenants of
this Agreement.  Similarly, the provisions of this Section 9 shall not
it any way limit any rights or remedies to which Shaheen may be entitled in the
event of a breach by the Company of any obligations of the Company arising under
this Agreement.

        

        10.             LITIGATION AND ATTORNEYS
FEES.  In the event of any litigation or arbitration between
the parties hereto in connection with this Agreement or to enforce any provision
or right hereunder, each party to such litigation or arbitration shall pay its
own costs and expenses.

        

        11.             BOARD
ACTIONS.  Any actions required to be taken or determinations to
be made by the Board under this Agreement may, at the discretion of the Board,
be taken or made by the Compensation Committee or any other duly authorized
committee of the Board.

        

        12.             ADDITIONAL
ACKNOWLEDGMENTS.

        

        a.           Shaheen
understands that the terms of this Agreement may be required to be disclosed in,
or filed as an exhibit to, the Company’s annual proxy statement or other reports
filed publicly with the U.S. Securities and Exchange Commission.

        

        b.           Shaheen
acknowledges and agrees that he has fully read and understands this Agreement,
has been advised to and has been given the opportunity to consult with his
attorney concerning this Agreement, has been advised that the Company's attorney
as not acted as his attorney concerning this Agreement, has had any questions
regarding its effect or the meaning of its terms answered to his satisfaction
and, intending to be legally bound hereby, has freely and voluntarily executed
this Agreement.

        

        13.             GENERAL
PROVISIONS.

        

        a.           The
failure of the Company at any time to enforce performance by Shaheen of any
provisions of this Agreement shall in no way affect the Company's rights
thereafter to enforce the same, nor shall the waiver by the Company of any
breach of any provision hereof be held to be a waiver of any other breach of the
same or any other provision.

        

        b.           This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and the successors and assigns of the Company; provided, however, it is
understood and agreed that the services to be rendered and the duties to be
performed by Shaheen hereunder are of a special, unique and personal nature and
that it would be difficult or impossible to replace such services; by reason
thereof, Shaheen may not assign either the benefits or the obligations of this
Agreement.

        

        c.           Shaheen
shall be considered an employee of the Company within the meaning of all
federal, state and local laws and regulations governing unemployment insurance,
workers' compensation, industrial accident, labor and taxes.

        

        d.           This
Agreement is the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior oral and written agreements and
negotiations between the parties.

        

        e.           The
headings of the several paragraphs in this Agreement are inserted solely for the
convenience of the parties and are not a part of and are not intended to govern,
limit or aid in the construction of any term or provision hereof.

        

        f.           This
Agreement may not be modified except by a written instrument signed by all
parties hereto.

        

        g.           All
clauses and covenants contained in this Agreement are severable, and in the
event any of them shall be held to be invalid by any court, such clauses or
covenants shall be limited as permitted under applicable law, or, if the same
are not susceptible to such limitation, this Agreement shall be interpreted as
if such invalid clauses or covenants were not contained herein.

        

        h.           This
Agreement is made with reference to the laws of the State of California and
shall be governed by and construed in accordance therewith.  Any
litigation concerning or to enforce the provisions of this Agreement shall be
brought in the courts of the State of California.

        

        i.           Any
controversy or claim arising out of or relating to this Agreement, or breach
thereof, may, with the prior consent of both the Company and Shaheen, be settled
by binding arbitration in Los Angeles, California in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association.

        

        14.             SECTION
409A.

        

        a.           It
is the intention of Company and Shaheen that this Agreement shall comply with
the requirements of Code Section 409A. All payments under this Agreement are
intended to be excluded from the requirements of Code Section 409A or be payable
on a fixed date or schedule under Code Section 409A. All payments made under
this Agreement shall be strictly paid in accordance with the terms of this
Agreement. Notwithstanding any other provision of this Agreement to the
contrary, if Company or Shaheen determines that any compensation or benefit
payable under this Agreement may be subject to Code Section 409A(a)(1), Company
and Shaheen, at the request of either but with the written consent of the other,
which consent shall not be unreasonably withheld, shall adopt such amendments to
this Agreement or adopt other policies and procedures (including amendments,
policies and procedures with retroactive effect), or take any other actions
necessary or appropriate to cause the compensation and benefits payable under
this Agreement not to be subject to Code Section 409A(a)(1) and to preserve the
intended tax treatment of such compensation and benefits. Each payment of
compensation under this Agreement shall be treated as a separate payment of
compensation for purposes of Code Section 409A.

        

        b.           Any
reimbursements or in-kind benefits provided under this Agreement that are
subject to Code Section 409A shall be made or provided in accordance with the
requirements of Code Section 409A, including, where applicable, the requirement
that (A) any reimbursement is for expenses incurred during the period of time
specified in the Agreement, (B) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year, (C) the reimbursement of an eligible
expense will be made no later than the last day of the calendar year following
the year in which the expense is incurred, and (D) the right to reimbursement or
in-kind benefits is not subject to liquidation or exchange for another
benefit.

        

        c.           Company
shall not make any deductions for money or property that Shaheen owes to
Company, or offset or otherwise reduce any sums that may be due or become
payable to or for the account of Shaheen, from amounts that constitute deferred
compensation for purposes of Code Section 409A.

        

        d.           Shaheen’s
right to any deferred compensation, as defined under Code Section 409A, shall
not be subject to borrowing, anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors, to the
extent necessary to avoid tax, penalties and/or interest under Code Section 409A
or otherwise.

        IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as of the date first above
written.

      

       

      SHAHEEN:

       

       

      /s/ Timothy J.
Shaheen

      Timothy
J. Shaheen

       

       

      THE
COMPANY

      Cadiz
Inc.

       

       

      By: /s/ Keith
Brackpool

      Keith
Brackpool

      Chief
Executive Officer

       

      By: /s/ Murray
Hutchison

      Murray
Hutchison

      Chair,
Compensation Committeeseverance_agmt-wtraynham.htm

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 (12th) 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 (12th)
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 (12th) 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 (12th) 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 or a misdemeanor involving mortal turpitude or (iii) is guilty of a material breach of any employment agreement between the Parent and the Executive of the Company and the Executive.

 

8. Change in Control.  A “Change in Control” of the Parent or the Company occurs if:

 

(a) Any person, including a “group” (as defined in section 13(d)(3) of the Securities Exchange Act of 1934, as amended, as in effect on the Effective Date (the “Exchange Act”) is or becomes, directly or indirectly,
the owner or beneficial owner of Parent or Company securities (other than as a result of an issuance of securities initiated by the Parent or the Company, a tender offer initiated by the Parent or the Company or open market purchases approved by the Parent’s or the Company’s Board of Directors (the “Board”), as long as the majority of the Parent’s or the Company’s Board approving the purchases are directors at the time the purchases are made), having more than fifty percent
(50%) of the combined voting power of the then outstanding Parent or Company securities that may be cast for the election of the Parent’s or the Company’s directors; or

 

(b) During any period of twenty-four (24) consecutive months (not including any period prior to April 21, 2009), individuals who at the beginning of such period constitute the Parent’s or the Company’s Board and any new director
(other than a director designated by a person who has entered into an agreement with the Parent or the Company to effect a transaction described in subparagraphs 8(a), 8(c) or 8(d) or any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act or other actual or threatened solicitation of proxies or consents) whose election by the Parent or the Board or nomination
for election by the Parent’s or the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Parent’s or the Company Board; or

 

(c) There is consummated a reorganization, merger, or consolidation involving the Parent or the Company that requires the approval of the Parent’s or the Company’s shareholders, other than a reorganization, merger or consolidation
with respect to which all or substantially all of the individuals and entities who were beneficial owners, immediately prior to such reorganization, merger or consolidation, of the combined voting power of the Parent’s or the Company’s then outstanding securities beneficially owned, directly or indirectly, immediately after such reorganization, merger or consolidation, more than fifty percent (50%) of the combined voting power of the securities of the corporation resulting from such reorganization,
merger or consolidation in substantially the same proportions as their respective ownership, immediately prior to such reorganizations, merger or consolidation, of the combined voting power of the Parent’s or the Company’s securities; or

 

(d) The Parent’s or the Company’s shareholders approve (i) the sale or disposition by the Parent or the Company (other than to a subsidiary of the Parent or the Company) of more than fifty percent (50%) of the assets of the
Parent or the Company (including a sale or disposition that is effected through condemnation proceedings) or (ii) a complete liquidation or dissolution of the Parent or the Company.

 

9. Control Change Date.  A “Control Change Date” is the date on which a Change in Control of the Parent or the Company occurs.  If a Change
in Control of the Parent or the Company occurs as the result of a series of transactions or events, the Control Change Date is the date of the last of the transactions or events in the series.

 

10. Separation from Service.  For purposes of this Agreement, the term “Separation from Service” has the same meaning as set forth in Treas. Reg. § 1.409A-1(h).

 

11. Specified Employee.  For purposes of this Agreement, the term “Specified Employee” has the same meaning as set forth in Treas. Reg. § 1.409A-1(i).

 

12. Termination Benefits.  The “Termination Benefits” payable in accordance with paragraphs 4 and 5 are the following payments and benefits:

 

(a) Continued payment of the Executive’s base salary for the applicable period specified in paragraph 4 or 5 at the rate in effect on the date of the Executive’s termination of employment (but not less than the rate of base
salary required under paragraph 3).  The benefit payable under this paragraph 12(a) shall be paid in accordance with the Company’s regular payroll procedure commencing with the Executive’s Separation from Service; provided, however, that if the Executive is a Specified Employee, the first payment under this paragraph 12(a) shall be paid on the first day of the seventh month beginning after the Executive’s Separation from Service
and the first payment shall include the payments of base salary that would have been payable (had the Executive continued employment) in accordance with the Company’s regular payroll procedure from the date of the Executive’s termination of employment until the date of the first payment.  The remaining payments under this paragraph 12(a) shall be paid in accordance with the Company’s regular payroll procedure.

 

(b) Payment each month during the applicable period specified in paragraph 4 or 5 of a pro rata amount of the annualized “profit sharing” bonus in the amount required
under paragraph 3.  The first payment shall be made in the month following the Executive’s Separation from Service and shall include the pro rata amount of annualized “profit sharing” bonus for the months following the Executive’s termination of employment until the date of the first payment.  The preceding sentence to the contrary notwithstanding, if the Executive is a Specified Employee, the first payment under
this paragraph 12(b) shall be paid on the first day of the seventh month beginning after the Executive’s Separation from Service and the first payment shall include the pro rata amount of annualized “profit sharing” bonus for the months following the Executive’s termination of employment until the date of the first payment.

 

(c) Payment each month during the applicable period specified in paragraph 4 or 5 of a pro rata amount of the annualized “incentive compensation” bonus in the amount
required under paragraph 3.  The first payment shall be made in the month following the Executive’s Separation from Service and shall include the pro rata amount of annualized “incentive compensation” bonus for the months following the Executive’s termination of employment until the date of the first payment.  The preceding sentence to the contrary notwithstanding, if the Executive is a Specified Employee, the
first payment under this paragraph 12(c) shall be paid on the first day of the seventh month beginning after the Executive’s Separation from Service and the first payment shall include the pro rata amount of annualized “incentive compensation” bonus for the months following the Executive’s termination of employment until the date of the first payment.

 

(d) A single sum payment equal to the sum of the amounts described in (i), (ii) and (iii) below:

 

(i) The product of (x) the lesser of eighteen or the number of months during the applicable period specified in paragraph 4 or 5 times (y) the
excess of the premium for continued health, dental and vision coverage under Section 4980B of the Code for the Executive and the Executive’s “qualified beneficiaries” (as defined in Section 4980B of the Code) (the “COBRA Premium”) over the amount that the Executive paid for such coverage immediately before his termination of employment.

 

(ii) The product of (x) the COBRA Premium and (y) the number of months during the applicable period specified in paragraph
4 or 5 in excess of eighteen months.

 

(iii) The product of (x) the monthly premium that the Executive would pay for long-term disability and life insurance coverage upon conversion to individual policies upon termination
of employment times (y) the number of months during the applicable period specified in paragraph 4 or 5.

 

The benefit payable under this paragraph 12(d) shall be paid on the first day of the third month beginning after the Executive’s Separation from Service; provided, however, that if the Executive is a Specified Employee, the payment shall be made on the first day of the seventh
month beginning after the Executive’s Separation from Service.

 

(e) A single sum payment equal to the difference between (i) the present value of the benefits that the Executive would have accrued under the Parent’s or the Company’s defined benefit pension plan based on his actual service
and assuming continued service during the applicable period specified in paragraph 4 or 5 and (ii) the present value of the benefit payable to the Executive under the Parent’s or the Company’s defined benefit pension plan.  The amount of the payment required under the preceding sentence shall be calculated by the actuary of the Parent’s or the Company’s defined benefit pension plan using the actuarial assumptions and methods in effect for purposes of determining the funded status
of such plan and shall assume that amounts payable under this Agreement are recognized as compensation for purposes of such plan.  The benefit payable under this paragraph 12(e) shall be paid on the first day of the third month beginning after the Executive’s Separation from Service; provided, however, that if the Executive is a Specified Employee, the payment shall be made on the first day of the seventh month beginning after the Executive’s
Separation from Service.

 

13. Successors.  This Agreement shall inure to the benefit of, and be enforceable by, the Executive’s legal representatives and heirs.  This Agreement
shall inure to the benefit of, and be binding upon, the Parent and the Company and their successors and assigns.  The Parent and the Company shall require any successor to the Parent or the Company (whether direct or indirect, by merger, purchase, consolidation or otherwise) to all or substantially all of the business or assets of the Parent or the Company to assume expressly and agree to perform the Parent or the Company’s obligations under this Agreement.  References in this Agreement
to the “Parent” and to the “Company” include the Parent and the Company as defined above and any successor to their business or assets that is obligated to perform this Agreement by operation or law or otherwise.

 

14. Entire Agreement.  This Agreement sets forth the entire agreement of the parties with respect to the termination of the Executive’s employment on or
after a Control Change Date and supersedes all prior agreements, arrangements and understandings with respect thereto between the Parent, the Company and the Executive.  No modification, amendment or termination of this Agreement, nor any waiver of its provisions, shall be valid or enforceable unless in writing and signed by both parties.

 

15. Counterparts.  This Agreement may be executed in any number of counterparts, each of which will be deemed an original and all of which constitute an instrument.

 

16. Headings.  The headings herein are for convenience only and will not affect the interpretation of this Agreement.

 

17. Governing Law.  This Agreement will be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia (other than its choice of law
provisions to the extent that they would require the application of the laws of another State).

 

WITNESS, the following signatures as of the indicated dates.

 

AMERICAN NATIONAL BANKSHARES INC.

 

Dated: ____6/24/09                                             
By: _____/s/ Charles H. Majors_________

 

Title: _President & Chief Executive Officer                                                                           

 

	
  
	
AMERICAN NATIONAL BANK AND TRUST COMPANY

 

Dated: ____6/24/09                              By: _____/s/
Charles H. Majors__________

 

Title: _President & Chief Executive Officer                                                                           

 

Dated: ____6/25/09                              By: __/s/
William W. Traynham                                                                               

   

	 	 WILLIAM W. TRAYNHAM

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