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.


 

















 


(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: 


 

















 


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 


 

















 


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.


 

















 


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.


 

















 


(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.


 

















 


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

  



 

















 


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.


 

















 


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 


 

















 


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.


 

















 


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.


 

















 


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