Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) dated as of May 4, 2009, is made by
and between Independence Bancshares, a South Carolina corporation (the
“Company”), Independence National Bank (the “Bank”), a national bank and wholly
owned subsidiary of the Company (the Company and the Bank collectively referred
to herein as the “Employer”), and Katie N. Tuttle, an individual resident of
South Carolina (the “Executive”).

 

The Employer presently employs the Executive as its Chief Financial Officer. 
The Employer recognizes that the Executive’s contribution to the growth and
success of the Employer is substantial.  The Employer desires to provide for the
continued employment of the Executive and to reinforce and encourage the
dedication of the Executive to the Employer and promote the best interests of
the Employer’s shareholders.  The Executive is willing to serve the Employer on
the terms and conditions herein provided.  Certain terms used in this Agreement
are defined in Section 16 hereof.

 

In consideration of the foregoing, the mutual covenants contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:

 

1.                                       Employment.  The Employer shall
continue to employ the Executive, and the Executive shall continue to serve the
Employer, as Chief Financial Officer of the Bank and the Company upon the terms
and conditions set forth herein.  The Executive shall have such authority and
responsibilities consistent with her position as are set forth in the Company’s
or the Bank’s Bylaws or assigned by the Company’s or the Bank’s Chief Executive
Officer or Board of Directors (collectively, the “Board”) from time to time. 
The Executive shall devote her full business time, attention, skill and efforts
to the performance of her duties hereunder, except during periods of illness or
periods of vacation and leaves of absence consistent with Bank policy.  The
Executive may devote reasonable periods to service as a director or advisor to
other organizations, to charitable and community activities, and to managing her
personal investments, provided that such activities do not materially interfere
with the performance of her duties hereunder and are not in conflict or
competitive with, or adverse to, the interests of the Company or the Bank.

 

2.                                       Term.  Unless earlier terminated as
provided herein, the Executive’s employment under this Agreement shall commence
on the date hereof and be for a term of one (1) year (“Initial Term”) and shall
be extended for additional terms of one year each (“Additional Term”) unless a
Notice of Termination shall be delivered by the Employer to Executive not less
than six (6) months prior to the end of the Initial Term or six (6) months prior
to the end of any Additional Term, if applicable.  Notwithstanding the
foregoing, the term of employment hereunder will end on the date that the
Executive attains the retirement age, if any, specified in the Company’s or
Bank’s Bylaws or by the Board.

 

3.               Compensation and Benefits.

 

(a)          As of January 1, 2009, the Employer shall pay the Executive an
annual base salary of $100,000, which shall be paid in accordance with the
Employer’s standard payroll procedures.  The Board (or an appropriate committee
of the Board) shall review the Executive’s performance and salary at least
annually and may increase the Executive’s base salary if it determines in its
sole discretion that an additional increase is appropriate.

 

(b)         The Executive shall be eligible each year to receive a cash bonus if
the Bank achieves certain performance levels established from time to time by
the Board and based on the previous year’s financial performance.  For purposes
of this Agreement, a bonus shall not be deemed to be earned prior to the date it
is actually paid to the Executive except to the extent that the Employer
specifically provides otherwise in a writing delivered to the Executive.  Any
bonus payment made pursuant to this Section 3(b) shall be made the earlier of
(i) seventy days after the previous year end for which the bonus was earned by
the Executive and became a payable of the Employer or (ii) the first pay period
following the Employer’s press release announcing its previous year’s financial
performance.

 

(c)          The Executive shall participate in the Employer’s long-term equity
incentive program and be eligible for the grant of stock options, restricted
stock, and other awards thereunder or under any similar plan adopted by the
Company.  Any options or similar awards shall be issued to Executive at an
exercise price of not less than the stock’s current fair market value (as
determined in compliance with Treasury Regulation § 1.409A-1(b)(5)(iv)) as of
the date of grant, and the number of shares subject to such grant shall be fixed
on the date of grant.

 

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(d)         The Executive shall participate in all retirement, welfare, health,
and other benefit plans or programs of the Employer now or hereafter applicable
generally to employees of the Employer or to a class of employees that includes
senior executives of the Employer.

 

(e)          The Employer shall reimburse the Executive for reasonable travel
and other expenses related to the Executive’s duties, including cell phone
expenses, which reimbursements shall be made within sixty days of the
Executive’s incurring such expense.

 

(f)            The Employer shall provide the Executive with four weeks’ paid
vacation per year, which shall be taken in accordance with any banking rules or
regulations governing vacation leave.  Any payments made by the Employer to the
Executive as compensation for paid vacation leave shall be paid in accordance
with the Employer’s standard payroll procedures.

 

4.               Termination.

 

(a)          The Executive’s employment under this Agreement may be terminated
prior to the end of the Initial Term and any Additional Term, if applicable,
only as provided in this Section 4.

 

(b)         The Agreement will be terminated upon the death of the Executive. 
In this event, the Employer shall pay the Executive’s estate any sums due her as
base salary and/or reimbursement of expenses through the end of the month during
which death occurred in accordance with the Employer’s standard payroll
procedures.  The Employer shall also pay the Executive’s estate any bonus earned
or accrued through the date of death.  Any bonus for previous years which was
not yet paid will be paid pursuant to the terms as set forth in Section 3(b). 
Any bonus that is earned in the year of death will be paid on the earlier of
(i) seventy days after the year end in which the Executive died or (ii) the
first pay period following the Employer’s press release announcing its financial
performance for the year in which the Executive died.  To the extent that the
bonus is performance-based, the amount of the bonus will be calculated by taking
into account the performance of the Company for the entire year and prorated
through the date of the Executive’s death.

 

(c)          The Employer may terminate this Agreement upon the Disability of
the Executive for a period of 180 days.  During the period of any Disability
leading up to the termination of the Executive’s employment under this
provision, the Employer shall continue to pay the Executive her full base salary
at the rate then in effect and all perquisites and other benefits (other than
any bonus) in accordance with the Employer’s standard payroll procedures (and in
no event less frequently than monthly) until the Executive becomes eligible for
benefits under any long-term disability plan or insurance program maintained by
the Employer; provided that, the amount of any such payments to the Executive
shall be reduced by the sum of the amounts, if any, payable to the Executive for
the same period under any other disability benefit or pension plan covering the
Executive.  Furthermore, the Employer shall pay the Executive any bonus earned
or accrued through the date of Disability.  Any bonus for previous years which
was not yet paid will be paid pursuant to the terms as set forth in
Section 3(b).  Any bonus that is earned in the year of Disability will be paid
on the earlier of (i) seventy days after the year end in which the Executive
became Disabled or (ii) the first pay period following the Employer’s press
release announcing its financial performance for the year in which the Executive
became Disabled.

 

(d)         The Employer may terminate this Agreement for Cause upon delivery of
a Notice of Termination to the Executive.  If the Executive’s employment is
terminated for Cause under this provision, the Executive shall receive only any
sums due her as base salary and/or reimbursement of expenses through the date of
such termination, which shall be paid in accordance with the Employer’s standard
payroll procedures.

 

(e)          The Employer may terminate this Agreement without Cause upon
delivery of a Notice of Termination to the Executive.  If the Executive’s
employment is terminated without Cause under this provision, subject to the
possibility of a six-month delay described below in this Section 4(e), beginning
on the first day of the month following date of the Executive’s termination, and
continuing on the first day of the month for the next 5 months, the Employer
shall pay to the Executive severance compensation in an amount equal to 100% of
her then current monthly base salary, plus any bonus earned or accrued through
the date of termination (including any amounts awarded for previous years but
which were not yet vested).  Any bonus for previous years which was not yet paid
will be paid pursuant to the terms as set forth in Section 3(b) above.  Any
bonus that is earned in the year of the Executive’s termination will be paid on
the earlier of (i) 70 days after the year end in which the Executive was
terminated or (ii) the first pay period following the Employer’s press release
announcing its previous year’s financial performance.  If when the Executive’s
employment terminates she is a specified employee within the meaning of
Section 409A of the Internal Revenue Code, and if the benefits under this
Section 4(e) would be considered deferred compensation under Section 409A, and
finally if an exemption from the six-month delay requirement of
Section 409A(a)(2)(B)(i) is not available, the following benefits under this
Section 4(e) shall be paid to the Executive as follows:

 

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severance compensation in an amount equal to six times her then current monthly
base salary, any bonus for previous years which was not yet paid, and any bonus
that is earned in the year of the Executive’s termination will be paid in a
single lump sum on the date that is six months and one day following date of
Executive’s termination.

 

(f)            The Executive may terminate this Agreement at any time by
delivering a Notice of Termination.  If the Executive resigns under this
provision, the Executive shall receive any sums due her as base salary and/or
reimbursement of expenses through the date of such termination, which shall be
paid in accordance with the Employer’s standard payroll procedures.

 

(g)         The Executive may terminate this Agreement for Good Reason upon
delivery of a Notice of Termination to the Employer within a 90-day period
beginning on the 30th day after the occurrence of a Change in Control or within
a 90-day period beginning on the one year anniversary of the occurrence of a
Change in Control.  If the Executive’s employment is terminated by the Executive
pursuant to this provision, in addition to other rights and remedies available
in law or equity, the Executive shall be entitled to the following:

 

(i)                                     the Employer shall pay the Executive in
cash within fifteen days of the date of termination severance compensation in an
amount equal to her then current monthly base salary multiplied by 12, plus any
bonus earned or accrued through the date of termination (including any amounts
awarded for previous years but which were not yet vested);

 

(ii)                                  for a period of 12 months, the Employer
shall at its expense continue on behalf of the Executive (but not the
Executive’s family) the medical benefits provided (x) to the Executive at any
time during the 90-day period prior to the Change in Control or at any time
thereafter or (y) to other similarly situated executives who continue in the
employ of the Employer.  Such coverage and benefits (including deductibles and
costs) shall be no less favorable to the Executive than the most favorable of
such coverages and benefits referred to above.  The Employer’s obligation
hereunder with respect to the foregoing benefits shall be limited to the extent
that the Executive obtains any such benefits pursuant to a subsequent employer’s
benefit plans, in which case the Employer may reduce the coverage of any
benefits it is required to provide the Executive hereunder as long as the
aggregate coverages and benefits of the combined benefit plans is no less
favorable to the Executive than the coverages and benefits required to be
provided hereunder.  This subsection (ii) shall not be interpreted so as to
limit any benefits to which the Executive may be entitled under any of the
Employer’s employee benefit plans, programs, or practices following the
Executive’s termination of employment, including, without limitation, retiree
medical and life insurance benefits; and

 

(iii)                               the restrictions on any outstanding
incentive awards (including restricted stock) granted to the Executive under the
Company’s or the Bank’s long-term equity incentive program or any other
incentive plan or arrangement shall lapse and such awards shall become 100%
vested, all stock options and stock appreciation rights granted to the Executive
shall become immediately exercisable and shall become 100% vested, all
performance units granted to the Executive shall become 100% vested, and the
restrictive covenants contained in Section 9 shall not apply to the Executive.

 

(h)         With the exceptions of the provisions of this Section 4, and the
express terms of any benefit plan under which the Executive is a participant, it
is agreed that, upon termination of the Executive’s employment, the Employer
shall have no obligation to the Executive for, and the Executive waives and
relinquishes, any further compensation or benefits (exclusive of COBRA
benefits).  Unless otherwise stated in this Section 4, the effect of termination
on any outstanding incentive awards, stock options, stock appreciation rights,
performance units, or other incentives shall be governed by the terms of the
applicable benefit or incentive plan and/or the agreements governing such
incentives.  At the time of termination of employment, and as a condition to the
Employer’s obligation to pay any severance hereunder, the Employer and the
Executive shall enter into a release substantially in the form attached hereto
as Exhibit A acknowledging such remaining obligations and discharging both
parties, as well as the Employer’s officers, directors and employees with
respect to their actions for or on behalf of the Employer, from any other claims
or obligations arising out of or in connection with the Executive’s employment
by the Employer, including the circumstances of such termination.

 

(i)             The parties intend that the severance payments and other
compensation provided for herein are reasonable compensation for the Executive’s
services to the Employer and shall not constitute “excess parachute payments”
within the meaning of Section 280G of the Internal Revenue Code of 1986 and any
regulations thereunder.  In the event that the Employer’s independent
accountants acting as auditors for the Employer on the date of a Change in
Control determine that the payments provided for herein constitute “excess
parachute payments,” then the compensation payable hereunder shall be reduced to
an

 

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amount the value of which is $1.00 less than the maximum amount that could be
paid to the Executive without the compensation being treated as “excess
parachute payments” under Section 280G.  The allocations of the reduction
required hereby among the termination benefits payable to the Executive shall be
determined by the Executive.  In the event that the Bank becomes in troubled
condition, any severance payment will be in conformance with federal and state
regulating guidelines.

 

(j)             Notwithstanding any other provision in this Agreement, if the
Executive is determined by the Board, as of the date of termination of
employment with the Employer, to be a “specified employee,” as such term is
defined in Treasury Regulation § 1.409A-1(i), then all severance payments and
other payment, except for other payments of base salary at the Employer’s
standard payroll procedures, reimbursement of expenses, and other than as a
result of death, that would normally be paid within six months and one day from
the date of termination of employment shall be paid on the first day of the
seventh month following termination of employment.

 

5.                                       Ownership of Work Product.  The
Employer shall own all Work Product arising during the course of the Executive’s
employment (prior, present or future).  For purposes hereof, “Work Product”
shall mean all intellectual property rights, including all Trade Secrets, U.S.
and international copyrights, patentable inventions, and other intellectual
property rights in any programming, documentation, technology or other work
product that relates to the Employer, its business or its customers and that the
Executive conceives, develops, or delivers to the Employer at any time during
her employment, during or outside normal working hours, in or away from the
facilities of the Employer, and whether or not requested by the Employer.  If
the Work Product contains any materials, programming or intellectual property
rights that the Executive conceived or developed prior to, and independent of,
the Executive’s work for the Employer, the Executive agrees to point out the
pre-existing items to the Employer and the Executive grants the Employer a
worldwide, unrestricted, royalty-free right, including the right to sublicense
such items.  The Executive agrees to take such actions and execute such further
acknowledgments and assignments as the Employer may reasonably request to give
effect to this provision.

 

6.                                       Protection of Trade Secrets.  The
Executive agrees to maintain in strict confidence and, except as necessary to
perform her duties for the Employer, the Executive agrees not to use or disclose
any Trade Secrets of the Employer during or after her employment.  “Trade
Secret” means information, including a formula, pattern, compilation, program,
device, method, technique, process, drawing, cost data or customer list, that:
(i) derives economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons who
can obtain economic value from its disclosure or use; and (ii) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.

 

7.                                       Protection of Other Confidential
Information.  In addition, the Executive agrees to maintain in strict confidence
and, except as necessary to perform her duties for the Employer, not to use or
disclose any Confidential Business Information of the Employer during her
employment and for a period of 24 months following termination of the
Executive’s employment.  “Confidential Business Information” shall mean any
internal, non-public information (other than Trade Secrets already addressed
above) concerning the Employer’s financial position and results of operations
(including revenues, assets, net income, etc.); annual and long-range business
plans; product or service plans; marketing plans and methods; training,
educational and administrative manuals; customer and supplier information and
purchase histories; and employee lists.  The provisions of Sections 6 and 7
shall also apply to protect Trade Secrets and Confidential Business Information
of third parties provided to the Employer under an obligation of secrecy.

 

8.                                       Return of Materials.  The Executive
shall surrender to the Employer, promptly upon its request and in any event upon
termination of the Executive’s employment, all media, documents, notebooks,
computer programs, handbooks, data files, models, samples, price lists,
drawings, customer lists, prospect data, or other material of any nature
whatsoever (in tangible or electronic form) in the Executive’s possession or
control, including all copies thereof, relating to the Employer, its business,
or its customers.  Upon the request of the Employer, the Executive shall certify
in writing compliance with the foregoing requirement.

 

9.                                       Restrictive Covenants; No Recruitment
of Personnel.  During the Executive’s employment with the Employer and for a
period of 12 months thereafter, the Executive shall not, either directly or
indirectly, on the Executive’s own behalf or in the service or on behalf of
others, (A) solicit, divert, or hire away, or (B) attempt to solicit, divert, or
hire away, to any Competing Business located in the Territory, any employee of
or consultant to the Employer or any of its Affiliates, regardless of whether
the employee or consultant is full-time or temporary, the employment or
engagement is pursuant to written agreement, or the employment is for a
determined period or is at will.

 

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10.                                 Successors; Binding Agreement. The rights
and obligations of this Agreement shall bind and inure to the benefit of the
surviving corporation in any merger or consolidation in which the Employer is a
party, or any assignee of all or substantially all of the Employer’s business
and properties.  The Executive’s rights and obligations under this Agreement may
not be assigned by her, except that her right to receive accrued but unpaid
compensation, unreimbursed expenses and other rights, if any, provided under
this Agreement which survive termination of this Agreement shall pass after
death to the personal representatives of her estate.

 

11.                                 Notice.  For the purposes of this Agreement,
notices and all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered or
sent by certified mail, return receipt requested, postage prepaid, addressed to
the respective addresses last given by each party to the other; provided,
however, that all notices to the Employer shall be directed to the attention of
the Employer with a copy to the Secretary of the Employer.  All notices and
communications shall be deemed to have been received on the date of delivery
thereof.

 

12.                                 Governing Law.  This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of South Carolina without giving effect to the conflict of laws principles
thereof.  Any action brought by any party to this Agreement shall be brought and
maintained in a court of competent jurisdiction in State of South Carolina.

 

13.                                 Non-Waiver.  Failure of the Employer to
enforce any of the provisions of this Agreement or any rights with respect
thereto shall in no way be considered to be a waiver of such provisions or
rights, or in any way affect the validity of this Agreement.

 

14.                                 Enforcement.  The Executive agrees that in
the event of any breach or threatened breach by the Executive of any covenant
contained in Section 9 hereof, the resulting injuries to the Employer would be
difficult or impossible to estimate accurately, even though irreparable injury
or damages would certainly result.  Accordingly, an award of legal damages, if
without other relief, would be inadequate to protect the Employer.  The
Executive, therefore, agrees that in the event of any such breach, the Employer
shall be entitled to obtain from a court of competent jurisdiction an injunction
to restrain the breach or anticipated breach of any such covenant, and to obtain
any other available legal, equitable, statutory, or contractual relief.  Should
the Employer have cause to seek such relief, no bond shall be required from the
Employer, and the Executive shall pay all attorney’s fees and court costs which
the Employer may incur to the extent the Employer prevails in its enforcement
action.

 

15.                                 Saving Clause.  The provisions of this
Agreement shall be deemed severable and the invalidity or unenforceability of
any provision shall not affect the validity or enforceability of the other
provisions hereof.  If any provision or clause of this Agreement, or portion
thereof, shall be held by any court or other tribunal of competent jurisdiction
to be illegal, void, or unenforceable in such jurisdiction, the remainder of
such provision shall not be thereby affected and shall be given full effect,
without regard to the invalid portion.  It is the intention of the parties that,
if any court construes any provision or clause of this Agreement, or any portion
thereof, to be illegal, void, or unenforceable because of the duration of such
provision or the area or matter covered thereby, such court shall reduce the
duration, area, or matter of such provision, and, in its reduced form, such
provision shall then be enforceable and shall be enforced. The Executive and the
Employer hereby agree that they will negotiate in good faith to amend this
Agreement from time to time to modify the terms of Section 9 the definition of
the term “Territory,” and the definition of the term “Business,” to reflect
changes in the Employer’s business and affairs so that the scope of the
limitations placed on the Executive’s activities by Section 9 accomplishes the
parties’ intent in relation to the then current facts and circumstances.  Any
such amendment shall be effective only when completed in writing and signed by
the Executive and the Employer.

 

16.                                 Certain Definitions.

 

(a)                                  “Affiliate” shall mean any business entity
controlled by, controlling or under common control with the Employer.

 

(b)                                 “Business” shall mean the operation of a
depository financial institution, including, without limitation, the
solicitation and acceptance of deposits of money and commercial paper, the
solicitation and funding of loans and the provision of other banking services,
and any other related business engaged in by the Employer or any of its
Affiliates as of the date of termination.

 

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(c)                                  “Cause” shall consist of any of (A) the
commission by the Executive of a willful act (including, without limitation, a
dishonest or fraudulent act) or a grossly negligent act, or the willful or
grossly negligent omission to act by the Executive, which is intended to cause,
causes or is reasonably likely to cause material harm to the Employer (including
harm to its business reputation), (B) the indictment of the Executive for the
commission or perpetration by the Executive of any felony or any crime involving
dishonesty, moral turpitude or fraud, (C) the material breach by the Executive
of this Agreement that, if susceptible of cure, remains uncured ten days
following written notice to the Executive of such breach, (D) the receipt of any
form of notice, written or otherwise, that any regulatory agency having
jurisdiction over the Employer intends to institute any form of formal or
informal (e.g., a memorandum of understanding which relates to the Executive’s
performance) regulatory action against the Executive or the Employer or the
Employer (provided that the Board of Directors determines in good faith that the
subject matter of such action involves acts or omissions by or under the
supervision of the Executive or that termination of the Executive would
materially advance the Employer’s compliance with the purpose of the action or
would materially assist the Employer in avoiding or reducing the restrictions or
adverse effects to the Employer related to the regulatory action); (E) the
exhibition by the Executive of a standard of behavior within the scope of her
employment that is materially disruptive to the orderly conduct of the
Employer’s business operations (including, without limitation, substance abuse
or sexual misconduct) to a level which, in the Board of Directors’ good faith
and reasonable judgment, with the Executive abstaining from participating in the
consideration of and vote on the matter, is materially detrimental to the
Employer’s best interest, that, if susceptible of cure remains uncured ten days
following written notice to the Executive of such specific inappropriate
behavior; or (F) the failure of the Executive to devote her full business time
and attention to her employment as provided under this Agreement that, if
susceptible of cure, remains uncured 30 days following written notice to the
Executive of such failure.  In order for the Board of Directors to make a
determination that termination shall be for Cause, the Board must provide the
Executive with an opportunity to meet with the Board in person.

 

(d)                                 “Change in Control” shall mean shall mean as
defined by Treasury Regulation § 1.409A-3(i)(5).

 

(e)                                  “Competing Business” shall mean any
business that, in whole or in part, is the same or substantially the same as the
Business.

 

(f)                                    “Disability” or “Disabled” shall mean as
defined by Treasury Regulation § 1.409A-3(i)(4).

 

(g)                                 “Good Reason” shall mean as defined by
Treasury Regulation § 1.409A-1(n)(2).

 

(h)                                 “Notice of Termination” shall mean a written
notice of termination from the Employer or the Executive which specifies an
effective date of termination, indicates the specific termination provision in
this Agreement relied upon, and, in the case of a termination for Good Reason or
for Cause, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive’s employment under the
provision so indicated.

 

(i)                                     “Standard payroll procedures” shall mean
payment no less frequently than monthly.

 

(j)                                     “Terminate,” “terminated,”
“termination,” or “termination of employment” shall mean separation from service
as defined by Treasury Regulation § 1.409A-1(h).

 

(k)                                  “Territory” shall mean a radius of 30 miles
from (i) the main office of the Employer or (ii) any branch office of the
Employer.

 

16.                           Entire Agreement.  This Agreement constitutes the
entire agreement between the parties hereto and supersedes all prior agreements,
if any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof.

 

17.                           Counterparts.  This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed and
its seal to be affixed hereunto by its officers thereunto duly authorized, and
the Executive has signed and sealed this Agreement, effective as of the date
first above written.

 

 

 

INDEPENDENCE BANCSHARES, INC.

 

 

 

ATTEST:

 

 

 

 

 

By:

/s/ H. Neel Hipp, Jr.

 

By:

/s/ John W. Burnett, Sr.

 

 

 

 

Name:

H. Neel Hipp, Jr.

 

Name:

John W. Burnett, Sr.

 

 

 

 

 

 

Title:

Board Secretary

 

 

 

 

 

 

 

 

INDEPENDENCE NATIONAL BANK

 

 

 

ATTEST:

 

 

 

 

 

By:

/s/ H. Neel Hipp, Jr.

 

By:

/s/ Lawrence R. Miller

 

 

 

 

Name:

H. Neel Hipp, Jr.

 

Name:

Lawrence R. Miller

 

 

 

 

 

 

Title:

President and CEO

 

 

 

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

/s/ Katie N. Tuttle

 

 

Katie N. Tuttle

 

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Exhibit A

 

Form of Release of Claims

 

SEVERANCE AGREEMENT AND RELEASE

 

This Severance Agreement and Release (the “Agreement”) is made between Katie N.
Tuttle, an individual resident of South Carolina (“Employee”), and Independence
National Bank (the “Bank”).

 

As used in this Agreement, the term “Employee” shall include the employee’s
heirs, executors, administrators, and assigns, and the term “Bank” shall include
the Bank, its holding company, any other related or affiliated entities, and the
current and former officers, directors, shareholders, employees, and agents of
them.

 

On May 4, 2009, the Bank and Employee entered into an Employment Agreement
governing the relationship between the parties.  Section 4 provides that the
Bank may terminate the Employment Agreement without cause.  Section 4 of the
Employment Agreement also provides that Employee shall be entitled to severance
pay if the Employment Agreement is terminated without cause, on the condition
that Employee enter into this release or a substantially similar release.

 

Employee desires to receive severance pay and the Bank is willing to provide
severance pay on the condition the Employee enter into this Agreement.

 

Now, in consideration for the mutual promises and covenants set forth herein,
and in full and complete settlement of all matters between Employee and the
Bank, the parties agree as follows:

 

1.                                      Termination Date:  The Employee agrees
that her employment with the Bank terminates as of  ______________ (the
“Termination Date”).

 

2.                                      Severance Payments:  Subsequent to her
Termination Date, the Bank shall pay Employee severance pay as noted in
Paragraph 4(e) of the Employment Agreement, dated May 4, 2009, (the “Severance
Payment”), less applicable deductions and withholdings.

 

3.                                      Legal Obligations

 

The parties acknowledge that pursuant to Section 4(h) of the Employment
Agreement, they agreed that at the time of termination and as a condition of
payment of severance, they would enter into this release acknowledging any
remaining obligations and discharging each other from any other claims or
obligations arising out of or in connection with Employee’s employment by the
Bank, including the circumstances of such termination.

 

With the exceptions of the provisions of Section 2, and the express terms of any
benefit plan under which the Employee is a participant, it is agreed that the
Bank shall have no obligation to the Employee for, and the Employee waives and
relinquishes, any further compensation or benefits (exclusive of COBRA
benefits).  Unless otherwise stated in this Section 3, the effect of termination
on any outstanding incentive awards, stock options, stock appreciation rights,
performance units, or other incentives shall be governed by the terms of the
applicable benefit or incentive plan and/or the agreements governing such
incentives.

 

Employee acknowledges that the Bank has no prior legal obligations to make the
payments described in Section 2 above which are exchanged for the promises of
Employee set forth in this Agreement.  It is specifically agreed that the
payments described in Section 2 are valuable and sufficient consideration for
each of the promises of Employee set forth in this Agreement and are payments in
addition to anything of value to which Employee is otherwise entitled.

 

4.                                      Waiver and Release:

 

a)                                      Employee unconditionally releases and
discharges the Bank and its predecessors, successors and assigns, its and their
current and former parents, affiliates, subsidiaries, divisions, and joint
ventures (individually and collectively, for purposes of this paragraph,
“Bank”)  from any and all causes of action, suits, damages, claims, proceedings,
controversies, promises, grievances, complaints, charges, liabilities, debts,
taxes, allowances, demands, and remedies of any type that the Employee has ever
had, or may now have, against the Bank, whether asserted or unasserted, whether
known or unknown, concerning any matter occurring up to and including the date
of the signing of this Agreement.

 

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b)                                     Employee acknowledges that she is waiving
and releasing, to the full extent permitted by law, all claims against the Bank,
including (but not limited to) all claims arising out of, or related in any way
to, her employment with the Bank or the termination of that employment,
including (but not limited to) any and all breach of contract claims, tort
claims, claims of wrongful discharge, claims for breach of an express or implied
employment contract, defamation claims, claims under the Civil Rights Act of
1866, which prohibits discrimination on the basis of race or color, Title VII of
the Civil Rights Act of 1964 as amended, which prohibits discrimination in
employment based on race, color, national origin, religion or sex, the Civil
Right Act of 1991, which modifies the 1964 Act by providing for the right to
trial by jury on discrimination claims, the Family and Medical Leave Act of
1993, which provides for unpaid leave for family or medical reasons, the Equal
Pay Act of 1963, which prohibits paying men and women unequal pay for equal
work, the Age Discrimination in Employment Act of 1967, which prohibits age
discrimination in employment, the Americans with Disabilities Act of 1990, which
prohibits discrimination based on disability, the Rehabilitation Act of 1973,
which prohibits discrimination on the basis of disability, the Employee
Retirement Income Security Act of 1974, which regulates employee benefit plans,
the Fair Labor Standards Act of 1938, which establishes a national minimum wage,
regulates overtime compensation, and prohibits employment of a minor, the Older
Workers Benefit Protection Act of 1990, which prohibits age discrimination
related to employee benefits, the Occupational Safety and Health Act of 1970,
which governs occupational health and safety in the workplace, the
Sarbanes-Oxley Act of 2002, which establishes standards of conduct for all U.S.
public company boards, management, and public accounting firms, the South
Carolina Human Affairs Law, any and all other applicable local, state and
federal non-discrimination statutes, the South Carolina Payment of Wages Law and
all other statutes or regulations relating to employment, the common law of the
State of South Carolina, or any other state, and any and all claims for
attorneys’ fees.

 

This General Release includes a release of all claims based on the treatment of
any payments hereunder under Section 409A of the Internal Revenue Code (the
“Code”) including specifically any penalties thereunder.

 

This General Release also includes a release of all compensation and benefit
claims, including, without limitation, claims concerning salary, bonus, and any
award(s), grant(s), or purchase(s) under any equity and incentive compensation
plan or program, and separation pay under any Bank severance plan.

 

c)                                      This Waiver and Release provision
((a) through (c) of this paragraph) shall be construed to release all claims to
the full extent allowed by law.  If any term of this paragraph shall be declared
unenforceable by a court or other tribunal of competent jurisdiction, it shall
not adversely affect the enforceability of the remainder of this paragraph.

 

d)                                     The Bank unconditionally releases and
discharges Employee from any and all causes of action, suits, damages, claims,
proceedings, and demands that the Bank has ever had, or may now have, against
Employee, whether asserted or unasserted, whether known or unknown, concerning
any matter occurring up to and including the date of the signing of this
Agreement with the exception of any claims for breach of trust, or any act which
constitutes a felony or crime involving dishonesty, theft, or fraud.

 

5.                                      Restrictive Covenants and Other
Obligations

 

The parties agree that Section 5 — “Ownership of Work Product,” Section 6 —
“Protection of Trade Secret,” Section 7 — “Protection of Confidential
Information,” Section 8 — “Return of Materials,” Section 9 — “Restrictive
Covenants; No Recruitment of Personnel,” Section 14 — “Enforcement,” and
Section 15 — “Saving Clause,” of the Employment Agreement shall remain in full
force and effect and that Employee will perform her obligations under those
sections and those sections of the Employment Agreement are incorporated by
reference as if set forth fully herein.  In the event Employee breaches any
obligation under this Section 5, the Bank’s obligation to make severance
payments to Employee shall terminate immediately and the Bank shall have no
further obligations to Employee.

 

6.                                      Duty of Loyalty/Nondisparagement

 

The parties shall not (except as required by law) communicate to anyone, whether
by word or deed, whether directly or through any intermediary, and whether
expressly or by suggestion or innuendo, any statement, whether characterized as
one of fact or of opinion, that is intended to cause or that reasonably would be
expected to cause any person to whom it is communicated to have a lowered
opinion of the other party.

 

7.                                      Confidentiality Of The Terms Of This
Agreement

 

Employee agrees not to publicize or disclose the contents of this Agreement,
including the amount of the monetary payments, except (i) to her immediate
family; (ii) to her attorney(s), accountant(s), and/or tax preparer(s); (iii) as
may be required by law; or (iv) as necessary to enforce the terms of this
Agreement.  Employee further agrees that she will inform

 

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anyone to whom the terms of this Agreement are disclosed of the confidentiality
requirements contained herein.  Notwithstanding the foregoing, the parties agree
that where business needs dictate, Employee may disclose to a third party that
she has entered into an agreement with the Bank, which agreement contains
restrictive covenants including noncompetition and nondisclosure provisions, one
or more of which prohibit her from performing the requested service.

 

Employee recognizes that the disclosure of any information regarding this
Agreement by she, her family, her attorneys, her accountants or financial
advisors, could cause the Bank irreparable injury and damage, the amount of
which would be difficult to determine.  In the event the Bank establishes a
violation of this paragraph of the Agreement by Employee, her attorneys,
immediate family, accountants, or financial advisors, or others to whom Employee
disclosed information in violation of the terms of this Agreement.  The Bank
shall be entitled to injunctive relief without the need for posting a bond and
shall also be entitled to recover from Employee the amount of attorneys’ fees
and costs incurred by the Bank in enforcing the provisions of this paragraph.

 

8.                                      Continued Cooperation

 

Employee agrees that she will cooperate fully with the Bank in the future
regarding any matters in which she was involved during the course of her
employment, and in the defense or prosecution of any claims or actions now in
existence or which may be brought or threatened in the future against or on
behalf of the Bank.  Employee’s cooperation in connection with such matters,
actions and claims shall include, without limitation, being available to meet
with the Bank’s officials regarding personnel or commercial matters in which she
was involved; to prepare for any proceeding (including, without limitation,
depositions, consultation, discovery or trial); to provide affidavits; to assist
with any audit, inspection, proceeding or other inquiry; and to act as a witness
in connection with any litigation or other legal proceeding affecting the Bank. 
Employee further agrees that should she be contacted (directly or indirectly) by
any person or entity adverse to the Bank, she shall within 48 hours notify the
then-current Chairman of the Board of the Bank.  Employee shall be reimbursed
for any reasonable costs and expenses incurred in connection with providing such
cooperation.

 

9.                                      Entire Agreement; Modification of
Agreement

 

Except as otherwise expressly noted herein, this Agreement constitutes the
entire understanding of the parties and supersedes all prior discussions,
understandings, and agreements of every nature between them relating to the
matters addressed herein.  Accordingly, no representation, promise, or
inducement not included or incorporated by reference in this Agreement shall be
binding upon the parties.  Employee affirms that the only consideration for the
signing of this Agreement are the terms set forth above and that no other
promises or assurances of any kind have been made to her by the Bank or any
other entity or person as an inducement for her to sign this Agreement.  This
Agreement may not be changed orally, but only by an agreement in writing signed
by the parties or their respective heirs, legal representatives, successors, and
assigns.

 

10.                               Partial Invalidity

 

The parties agree that the provisions of this Agreement and any paragraphs,
subsections, sentences, or provisions thereof shall be deemed severable and that
the invalidity or unenforceability of any paragraph, subsection, sentence, or
provision shall not affect the validity or enforceability of the remainder of
the Agreement.

 

11.                               Waiver

 

The waiver of the breach of any term or provision of this Agreement shall not
operate as or be construed to be a waiver of any other subsequent breach of this
Agreement.

 

12.                               Successors and Assigns

 

This Agreement shall inure to and be binding upon the Bank and Employee, their
respective heirs, legal representatives, successors, and assigns.

 

13.                               Governing Law

 

This Agreement shall be construed in accordance with the laws of the state of
South Carolina and any applicable federal laws.

 

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14.                               Headings

 

The headings or titles of sections and subsections of this Agreement are for
convenience and reference only and do not constitute a part of this Agreement.

 

15.                               Notice

 

Any notice or communication required or permitted under this Agreement shall be
made in writing and sent by overnight courier (confirmation of receipt required)
or certified mail (postage prepaid and return receipt requested) addressed as
follows:

 

If to Employee:

 

[INSERT]

 

If to the Bank:

 

[INSERT]

 

16.                               Tax Matters

 

The payment of any amount pursuant to this Agreement shall be subject to all
applicable withholding and payroll taxes and other applicable deductions.
Notwithstanding any provision to the contrary in this Agreement or in any of the
Bank’s equity plans (each, a “Plan”), any payment otherwise required to be made
to Employee under any Bank plan on account of Employee’s “separation from
service,” within the meaning of the Section 409A Rules (as defined below), to
the extent such payment (after taking into account all exclusions applicable to
such payment under the Section 409A Rules) is properly treated as deferred
compensation subject to the Section 409A Rules, shall not be made until the
first business day after (i) the expiration of six (6) months from the date of
Employee’s separation from service, or (ii) if earlier, the date of Employee’s
death (the “Delayed Payment Date”). On the Delayed Payment Date, there shall be
paid to Employee or, if Employee has died, Employee’s estate, in a single cash
lump sum, an amount equal to aggregate amount of the payments delayed pursuant
to the preceding sentence. In the case of each Plan under which Employee is
entitled to receive amounts treated as deferred compensation subject to the
Section 409A Rules and which provides for payment of such amounts in the form of
“a series of installment payments”, as defined in Treas. Reg. §1.409A-2(b)(iii),
(A) Employee’s right to receive such payments shall be treated as a right to
receive a series of separate payments under Treas. Reg. §1.409A-2(b)(iii), and
(B) to the extent such Plan does not already so provide, it is hereby amended to
so provide, with respect to amounts payable to Employee thereunder. For purposes
of this subparagraph, the “Section 409A Rules” shall mean Section 409A of the
Code, the regulations issued thereunder, and all notices, rulings, and other
guidance issued by the Internal Revenue Service interpreting same.
Notwithstanding the foregoing, Employee shall be solely responsible, and the
Bank shall have no liability, for any taxes, acceleration of taxes, interest, or
penalties arising under the Section 409A Rules.

 

17.                               Construction

 

Employee and the Bank have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by Employee and the Bank, and no presumption or burden of proof shall arise
favoring or disfavoring either of them by virtue of the authorship of any of the
provisions of this Agreement.

 

18.                               Representations:  Employee acknowledges that:

 

a)                                      She has read this Agreement and
understands its meaning and effect.

 

b)                                     She has knowingly and voluntarily entered
into this Agreement of her own free will.

 

c)                                      By signing this Agreement, Employee has
waived, to the full extent permitted by law, all claims against the Bank based
on any actions taken by the Bank up to the date of the signing of this
Agreement, and the Bank may plead this Agreement as a complete defense to any
claim the Employee may assert.

 

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d)                                     She would not otherwise be entitled to
the consideration described in this Agreement, and that the Bank is providing
such consideration in return for Employee’s agreement to be bound by the terms
of this Agreement.

 

e)                                      She has been given up to 21 days to
consider the terms of this Agreement.

 

f)                                        She has seven (7) days, after Employee
has signed the Agreement and it has been received by the Bank, to revoke it by
notifying the Chairman of the Board of her intent to revoke acceptance.  For
such revocation to be effective, the notice of revocation must be received no
later than 5:00 p.m. on the seventh day after the signed Agreement is received
by the Bank.  This Agreement shall not become effective or enforceable until the
revocation period has expired.

 

g)                                     She is not waiving or releasing any
rights or claims that may arise after the date the Employee signs this
Agreement.

 

h)                                     SHE HAS BEEN ADVISED TO CONSULT WITH AN
ATTORNEY BEFORE SIGNING THIS AGREEMENT.

 

As to Employee:

 

 

 

 

Date

 

Katie N. Tuttle

 

 

 

As to the Bank:

 

 

 

 

 

 

 

 

Date

 

Chairman of the Board

 

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