**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 Carolinacorporation (the “Company”), Independence National Bank (the “Bank”), anational bank and wholly owned subsidiary of the Company (the Company and theBank 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 FinancialOfficer.  The Employer recognizes thatthe Executive’s contribution to the growth and success of the Employer issubstantial.  The Employer desires toprovide for the continued employment of the Executive and to reinforce andencourage the dedication of the Executive to the Employer and promote the bestinterests of the Employer’s shareholders. The Executive is willing to serve the Employer on the terms andconditions herein provided.  Certainterms used in this Agreement are defined in Section 16 hereof.

 

In consideration of the foregoing, the mutual covenants containedherein, and other good and valuable consideration, the receipt and sufficiencyof which are hereby acknowledged, the parties hereto, intending to be legallybound, hereby agree as follows:

 

1.                                       Employment.  The Employer shall continue to employ theExecutive, and the Executive shall continue to serve the Employer, as ChiefFinancial Officer of the Bank and the Company upon the terms and conditions setforth herein.  The Executive shall havesuch authority and responsibilities consistent with her position as are setforth in the Company’s or the Bank’s Bylaws or assigned by the Company’s or theBank’s Chief Executive Officer or Board of Directors (collectively, the “Board”)from time to time.  The Executive shalldevote her full business time, attention, skill and efforts to the performanceof her duties hereunder, except during periods of illness or periods ofvacation and leaves of absence consistent with Bank policy.  The Executive may devote reasonable periodsto service as a director or advisor to other organizations, to charitable andcommunity activities, and to managing her personal investments, providedthat such activities do not materially interfere with the performance of herduties 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 datehereof and be for a term of one (1) year (“Initial Term”) and shall beextended for additional terms of one year each (“Additional Term”) unless aNotice of Termination shall be delivered by the Employer to Executive not lessthan six (6) months prior to the end of the Initial Term or six (6) monthsprior to the end of any Additional Term, if applicable.  Notwithstanding the foregoing, the term ofemployment hereunder will end on the date that the Executive attains theretirement age, if any, specified in the Company’s or Bank’s Bylaws or by theBoard.

 

3.               Compensationand Benefits.

 

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

 

(b)         The Executive shall beeligible each year to receive a cash bonus if the Bank achieves certainperformance levels established from time to time by the Board and based on theprevious year’s financial performance. For purposes of this Agreement, a bonus shall not be deemed to be earnedprior to the date it is actually paid to the Executive except to the extentthat the Employer specifically provides otherwise in a writing delivered to theExecutive.  Any bonus payment madepursuant to this Section 3(b) shall be made the earlier of (i) seventydays after the previous year end for which the bonus was earned by theExecutive and became a payable of the Employer or (ii) the first payperiod following the Employer’s press release announcing its previous year’sfinancial performance.

 

(c)          The Executive shallparticipate in the Employer’s long-term equity incentive program and beeligible for the grant of stock options, restricted stock, and other awardsthereunder or under any similar plan adopted by the Company.  Any options or similar awards shall be issuedto Executive at an exercise price of not less than the stock’s current fairmarket 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 subjectto such grant shall be fixed on the date of grant.

 

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

 

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

 

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

 

4.               Termination.

 

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

 

(b)         The Agreement will beterminated upon the death of the Executive. In this event, the Employer shall pay the Executive’s estate any sumsdue her as base salary and/or reimbursement of expenses through the end of themonth during which death occurred in accordance with the Employer’s standardpayroll procedures.  The Employer shallalso pay the Executive’s estate any bonus earned or accrued through the date ofdeath.  Any bonus for previous yearswhich 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 deathwill be paid on the earlier of (i) seventy days after the year end inwhich the Executive died or (ii) the first pay period following theEmployer’s press release announcing its financial performance for the year inwhich the Executive died.  To the extentthat the bonus is performance-based, the amount of the bonus will be calculatedby taking into account the performance of the Company for the entire year andprorated through the date of the Executive’s death.

 

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

 

(d)         The Employer may terminatethis Agreement for Cause upon delivery of a Notice of Termination to theExecutive.  If the Executive’s employmentis terminated for Cause under this provision, the Executive shall receive onlyany sums due her as base salary and/or reimbursement of expenses through thedate of such termination, which shall be paid in accordance with the Employer’sstandard payroll procedures.

 

(e)          The Employer may terminatethis Agreement without Cause upon delivery of a Notice of Termination to theExecutive.  If the Executive’s employmentis terminated without Cause under this provision, subject to the possibility ofa six-month delay described below in this Section 4(e), beginning on thefirst day of the month following date of the Executive’s termination, andcontinuing on the first day of the month for the next 5 months, the Employershall pay to the Executive severance compensation in an amount equal to 100% ofher then current monthly base salary, plus any bonus earned or accrued throughthe date of termination (including any amounts awarded for previous years butwhich were not yet vested).  Any bonusfor previous years which was not yet paid will be paid pursuant to the terms asset forth in Section 3(b) above. Any bonus that is earned in the year of the Executive’s termination willbe paid on the earlier of (i) 70 days after the year end in which theExecutive was terminated or (ii) the first pay period following theEmployer’s press release announcing its previous year’s financialperformance.  If when the Executive’semployment terminates she is a specified employee within the meaning of Section 409Aof the Internal Revenue Code, and if the benefits under this Section 4(e) wouldbe considered deferred compensation under Section 409A, and finally if anexemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) isnot available, the following benefits under this Section 4(e) shallbe paid to the Executive as follows: 

 

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

 

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

 

(g)         The Executive may terminatethis Agreement for Good Reason upon delivery of a Notice of Termination to theEmployer within a 90-day period beginning on the 30th day after the occurrenceof a Change in Control or within a 90-day period beginning on the one yearanniversary of the occurrence of a Change in Control.  If the Executive’s employment is terminatedby the Executive pursuant to this provision, in addition to other rights andremedies available in law or equity, the Executive shall be entitled to thefollowing:

 

(i)                                     the Employershall pay the Executive in cash within fifteen days of the date of terminationseverance compensation in an amount equal to her then current monthly basesalary multiplied by 12, plus any bonus earned or accrued through the date oftermination (including any amounts awarded for previous years but which werenot yet vested);

 

(ii)                                  for a period of12 months, the Employer shall at its expense continue on behalf of theExecutive (but not the Executive’s family) the medical benefits provided (x) tothe Executive at any time during the 90-day period prior to the Change inControl or at any time thereafter or (y) to other similarly situatedexecutives who continue in the employ of the Employer.  Such coverage and benefits (includingdeductibles and costs) shall be no less favorable to the Executive than the mostfavorable of such coverages and benefits referred to above.  The Employer’s obligation hereunder withrespect to the foregoing benefits shall be limited to the extent that theExecutive obtains any such benefits pursuant to a subsequent employer’s benefitplans, in which case the Employer may reduce the coverage of any benefits it isrequired to provide the Executive hereunder as long as the aggregate coveragesand benefits of the combined benefit plans is no less favorable to theExecutive than the coverages and benefits required to be providedhereunder.  This subsection (ii) shallnot be interpreted so as to limit any benefits to which the Executive may beentitled under any of the Employer’s employee benefit plans, programs, orpractices following the Executive’s termination of employment, including,without limitation, retiree medical and life insurance benefits; and

 

(iii)                               therestrictions on any outstanding incentive awards (including restricted stock)granted to the Executive under the Company’s or the Bank’s long-term equityincentive program or any other incentive plan or arrangement shall lapse andsuch awards shall become 100% vested, all stock options and stock appreciationrights granted to the Executive shall become immediately exercisable and shallbecome 100% vested, all performance units granted to the Executive shall become100% vested, and the restrictive covenants contained in Section 9 shallnot apply to the Executive.

 

(h)         With the exceptions of theprovisions of this Section 4, and the express terms of any benefit planunder which the Executive is a participant, it is agreed that, upon terminationof the Executive’s employment, the Employer shall have no obligation to theExecutive for, and the Executive waives and relinquishes, any furthercompensation 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 begoverned by the terms of the applicable benefit or incentive plan and/or theagreements governing such incentives.  Atthe time of termination of employment, and as a condition to the Employer’sobligation to pay any severance hereunder, the Employer and the Executive shallenter into a release substantially in the form attached hereto as Exhibit Aacknowledging such remaining obligations and discharging both parties, as wellas the Employer’s officers, directors and employees with respect to their actionsfor or on behalf of the Employer, from any other claims or obligations arisingout of or in connection with the Executive’s employment by the Employer,including the circumstances of such termination.

 

(i)             The parties intend that theseverance payments and other compensation provided for herein are reasonablecompensation for the Executive’s services to the Employer and shall notconstitute “excess parachute payments” within the meaning of Section 280Gof the Internal Revenue Code of 1986 and any regulations thereunder.  In the event that the Employer’s independentaccountants acting as auditors for the Employer on the date of a Change inControl determine that the payments provided for herein constitute “excessparachute payments,” then the compensation payable hereunder shall be reducedto 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 withoutthe compensation being treated as “excess parachute payments” under Section 280G.  The allocations of the reduction requiredhereby among the termination benefits payable to the Executive shall bedetermined by the Executive.  In theevent that the Bank becomes in troubled condition, any severance payment willbe in conformance with federal and state regulating guidelines.

 

(j)             Notwithstanding any otherprovision in this Agreement, if the Executive is determined by the Board, as ofthe date of termination of employment with the Employer, to be a “specifiedemployee,” as such term is defined in Treasury Regulation § 1.409A-1(i), thenall severance payments and other payment, except for other payments of basesalary at the Employer’s standard payroll procedures, reimbursement ofexpenses, and other than as a result of death, that would normally be paidwithin six months and one day from the date of termination of employment shallbe paid on the first day of the seventh month following termination ofemployment.

 

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

 

6.                                       Protection ofTrade Secrets.  TheExecutive agrees to maintain in strict confidence and, except as necessary toperform her duties for the Employer, the Executive agrees not to use ordisclose any Trade Secrets of the Employer during or after her employment.  “Trade Secret” means information, including aformula, 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 readilyascertainable by proper means by, other persons who can obtain economic valuefrom its disclosure or use; and (ii) is the subject of efforts that arereasonable under the circumstances to maintain its secrecy.

 

7.                                       Protection ofOther Confidential Information.  In addition, the Executive agrees to maintainin strict confidence and, except as necessary to perform her duties for theEmployer, not to use or disclose any Confidential Business Information of theEmployer during her employment and for a period of 24 months followingtermination of the Executive’s employment. “Confidential Business Information” shall mean any internal, non-publicinformation (other than Trade Secrets already addressed above) concerning theEmployer’s financial position and results of operations (including revenues,assets, net income, etc.); annual and long-range business plans; product orservice plans; marketing plans and methods; training, educational andadministrative manuals; customer and supplier information and purchasehistories; and employee lists.  Theprovisions of Sections 6 and 7 shall also apply to protect Trade Secrets andConfidential Business Information of third parties provided to the Employerunder an obligation of secrecy.

 

8.                                       Return ofMaterials.  TheExecutive shall surrender to the Employer, promptly upon its request and in anyevent upon termination of the Executive’s employment, all media, documents,notebooks, computer programs, handbooks, data files, models, samples, pricelists, drawings, customer lists, prospect data, or other material of any naturewhatsoever (in tangible or electronic form) in the Executive’s possession orcontrol, including all copies thereof, relating to the Employer, its business,or its customers.  Upon the request ofthe Employer, the Executive shall certify in writing compliance with theforegoing requirement.

 

9.                                       RestrictiveCovenants; No Recruitment of Personnel.  During the Executive’s employment with theEmployer 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 serviceor on behalf of others, (A) solicit, divert, or hire away, or (B) attemptto solicit, divert, or hire away, to any Competing Business located in theTerritory, 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, theemployment or engagement is pursuant to written agreement, or the employment isfor a determined period or is at will.

 

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

 

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

 

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

 

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

 

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

 

15.                                 Saving Clause.  The provisions of this Agreement shall bedeemed severable and the invalidity or unenforceability of any provision shallnot 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 competentjurisdiction to be illegal, void, or unenforceable in such jurisdiction, theremainder of such provision shall not be thereby affected and shall be givenfull effect, without regard to the invalid portion.  It is the intention of the parties that, ifany court construes any provision or clause of this Agreement, or any portionthereof, to be illegal, void, or unenforceable because of the duration of suchprovision or the area or matter covered thereby, such court shall reduce theduration, area, or matter of such provision, and, in its reduced form, suchprovision shall then be enforceable and shall be enforced. The Executive andthe Employer hereby agree that they will negotiate in good faith to amend thisAgreement from time to time to modify the terms of Section 9 thedefinition 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 ofthe limitations placed on the Executive’s activities by Section 9accomplishes the parties’ intent in relation to the then current facts andcircumstances.  Any such amendment shallbe effective only when completed in writing and signed by the Executive and theEmployer.

 

16.                                 CertainDefinitions.

 

(a)                                  “Affiliate”shall mean any business entity controlled by, controlling or under commoncontrol 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 andcommercial paper, the solicitation and funding of loans and the provision ofother banking services, and any other related business engaged in by theEmployer 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 willfulact (including, without limitation, a dishonest or fraudulent act) or a grosslynegligent act, or the willful or grossly negligent omission to act by theExecutive, which is intended to cause, causes or is reasonably likely to causematerial harm to the Employer (including harm to its business reputation), (B) theindictment of the Executive for the commission or perpetration by the Executiveof any felony or any crime involving dishonesty, moral turpitude or fraud, (C) thematerial breach by the Executive of this Agreement that, if susceptible ofcure, remains uncured ten days following written notice to the Executive ofsuch breach, (D) the receipt of any form of notice, written or otherwise,that any regulatory agency having jurisdiction over the Employer intends toinstitute any form of formal or informal (e.g., a memorandum ofunderstanding which relates to the Executive’s performance) regulatory actionagainst the Executive or the Employer or the Employer (provided that theBoard of Directors determines in good faith that the subject matter of suchaction involves acts or omissions by or under the supervision of the Executiveor that termination of the Executive would materially advance the Employer’scompliance with the purpose of the action or would materially assist theEmployer in avoiding or reducing the restrictions or adverse effects to theEmployer related to the regulatory action); (E) the exhibition by theExecutive of a standard of behavior within the scope of her employment that ismaterially disruptive to the orderly conduct of the Employer’s businessoperations (including, without limitation, substance abuse or sexualmisconduct) to a level which, in the Board of Directors’ good faith andreasonable judgment, with the Executive abstaining from participating in theconsideration of and vote on the matter, is materially detrimental to theEmployer’s best interest, that, if susceptible of cure remains uncured ten daysfollowing written notice to the Executive of such specific inappropriatebehavior; or (F) the failure of the Executive to devote her full businesstime and attention to her employment as provided under this Agreement that, ifsusceptible of cure, remains uncured 30 days following written notice to theExecutive of such failure.  In order forthe 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 Boardin person.

 

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

 

(e)                                  “CompetingBusiness” shall mean any business that, in whole or in part, is the same orsubstantially 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 Executivewhich specifies an effective date of termination, indicates the specifictermination provision in this Agreement relied upon, and, in the case of atermination for Good Reason or for Cause, sets forth in reasonable detail thefacts and circumstances claimed to provide a basis for termination of theExecutive’s employment under the provision so indicated.

 

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

 

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

 

(k)                                  “Territory” shallmean a radius of 30 miles from (i) the main office of the Employer or (ii) anybranch office of the Employer.

 

16.                           Entire Agreement.  This Agreement constitutes the entireagreement between the parties hereto and supersedes all prior agreements, ifany, understandings and arrangements, oral or written, between the partieshereto with respect to the subject matter hereof.

 

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

 

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INWITNESS WHEREOF, the Employer has caused this Agreement to be executed and itsseal to be affixed hereunto by its officers thereunto duly authorized, and theExecutive has signed and sealed this Agreement, effective as of the date firstabove 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**

 

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

 

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

 

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

 

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

 

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

 

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

 

**2.****                                     ****SeverancePayments****: **Subsequent toher Termination Date, the Bank shall pay Employee severance pay as noted inParagraph 4(e) of the Employment Agreement, dated May 4, 2009, (the “SeverancePayment”), less applicable deductions and withholdings.

 

**3.****                                     ****LegalObligations**

 

Theparties acknowledge that pursuant to Section 4(h) of the EmploymentAgreement, they agreed that at the time of termination and as a condition ofpayment of severance, they would enter into this release acknowledging anyremaining obligations and discharging each other from any other claims orobligations arising out of or in connection with Employee’s employment by theBank, including the circumstances of such termination.

 

Withthe exceptions of the provisions of Section 2, and the express terms ofany benefit plan under which the Employee is a participant, it is agreed thatthe Bank shall have no obligation to the Employee for, and the Employee waivesand relinquishes, any further compensation or benefits (exclusive of COBRAbenefits).  Unless otherwise stated inthis Section 3, the effect of termination on any outstanding incentiveawards, stock options, stock appreciation rights, performance units, or otherincentives shall be governed by the terms of the applicable benefit orincentive plan and/or the agreements governing such incentives.

 

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

 

**4.****                                     ****Waiverand Release****:**

 

a)                                      Employeeunconditionally 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, forpurposes of this paragraph, “Bank”)  fromany 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 everhad, or may now have, against the Bank, whether asserted or unasserted, whetherknown or unknown, concerning any matter occurring up to and including the dateof the signing of this Agreement.

 

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b)                                     Employeeacknowledges that she is waiving and releasing, to the full extent permitted bylaw, all claims against the Bank, including (but not limited to) all claimsarising out of, or related in any way to, her employment with the Bank or thetermination of that employment, including (but not limited to) any and allbreach of contract claims, tort claims, claims of wrongful discharge, claimsfor breach of an express or implied employment contract, defamation claims,claims under the Civil Rights Act of 1866, which prohibits discrimination onthe basis of race or color, Title VII of the Civil Rights Act of 1964 asamended, which prohibits discrimination in employment based on race, color,national origin, religion or sex, the Civil Right Act of 1991, which modifiesthe 1964 Act by providing for the right totrial by jury on discrimination claims, the Family and MedicalLeave Act of 1993, which provides for unpaid leave for family or medicalreasons, the Equal Pay Act of 1963, which prohibits paying men and womenunequal pay for equal work, the Age Discrimination in Employment Act of 1967,which prohibits age discrimination in employment, the Americans withDisabilities Act of 1990, which prohibits discrimination based on disability,the Rehabilitation Act of 1973, which prohibits discrimination on the basis ofdisability, the Employee Retirement Income Security Act of 1974, whichregulates employee benefit plans, the Fair Labor Standards Act of 1938, whichestablishes a national minimum wage, regulates overtime compensation, andprohibits employment of a minor, the Older Workers Benefit Protection Act of1990, which prohibits age discrimination related to employee benefits, theOccupational Safety and Health Act of 1970, which governs occupational healthand safety in the workplace, the Sarbanes-Oxley Act of 2002, which establishes standards of conduct for all U.S. publiccompany boards, management, and publicaccounting firms, the South Carolina Human Affairs Law, any and allother applicable local, state and federal non-discrimination statutes, theSouth Carolina Payment of Wages Law and all other statutes or regulationsrelating to employment, the common law of the State of South Carolina, or anyother state, and any and all claims for attorneys’ fees.

 

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

 

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

 

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

 

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

 

**5.****                                     ****RestrictiveCovenants and Other Obligations**

 

Theparties agree that Section 5 — “Ownership of Work Product,” Section 6— “Protection of Trade Secret,” Section 7 — “Protection of ConfidentialInformation,” Section 8 — “Return of Materials,” Section 9 — “RestrictiveCovenants; No Recruitment of Personnel,” Section 14 — “Enforcement,” and Section 15— “Saving Clause,” of the Employment Agreement shall remain in full force andeffect and that Employee will perform her obligations under those sections andthose sections of the Employment Agreement are incorporated by reference as ifset forth fully herein.  In the eventEmployee breaches any obligation under this Section 5, the Bank’sobligation to make severance payments to Employee shall terminate immediatelyand the Bank shall have no further obligations to Employee.

 

**6.****                                     ****Dutyof Loyalty/Nondisparagement**

 

Theparties shall not (except as required by law) communicate to anyone, whether byword or deed, whether directly or through any intermediary, and whetherexpressly or by suggestion or innuendo, any statement, whether characterized asone of fact or of opinion, that is intended to cause or that reasonably wouldbe expected to cause any person to whom it is communicated to have a loweredopinion of the other party.

 

**7.****                                     ****ConfidentialityOf The Terms Of This Agreement**

 

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

 

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anyoneto whom the terms of this Agreement are disclosed of the confidentialityrequirements contained herein. Notwithstanding the foregoing, the parties agree that where businessneeds dictate, Employee may disclose to a third party that she has entered intoan agreement with the Bank, which agreement contains restrictive covenantsincluding noncompetition and nondisclosure provisions, one or more of whichprohibit her from performing the requested service.

 

Employeerecognizes that the disclosure of any information regarding this Agreement byshe, her family, her attorneys, her accountants or financial advisors, couldcause the Bank irreparable injury and damage, the amount of which would bedifficult to determine.  In the event theBank establishes a violation of this paragraph of the Agreement by Employee,her attorneys, immediate family, accountants, or financial advisors, or othersto whom Employee disclosed information in violation of the terms of thisAgreement.  The Bank shall be entitled toinjunctive relief without the need for posting a bond and shall also beentitled to recover from Employee the amount of attorneys’ fees and costsincurred by the Bank in enforcing the provisions of this paragraph.

 

**8.****                                     ****ContinuedCooperation**

 

Employeeagrees that she will cooperate fully with the Bank in the future regarding anymatters in which she was involved during the course of her employment, and inthe defense or prosecution of any claims or actions now in existence or whichmay be brought or threatened in the future against or on behalf of theBank.  Employee’s cooperation inconnection with such matters, actions and claims shall include, withoutlimitation, being available to meet with the Bank’s officials regardingpersonnel or commercial matters in which she was involved; to prepare for anyproceeding (including, without limitation, depositions, consultation, discoveryor trial); to provide affidavits; to assist with any audit, inspection,proceeding or other inquiry; and to act as a witness in connection with anylitigation or other legal proceeding affecting the Bank.  Employee further agrees that should she becontacted (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 theBank.  Employee shall be reimbursed forany reasonable costs and expenses incurred in connection with providing suchcooperation.

 

**9.**                                      **EntireAgreement; Modification of Agreement**

 

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

 

**10.****                              ****PartialInvalidity**

 

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

 

**11.****                              ****Waiver**

 

Thewaiver of the breach of any term or provision of this Agreement shall notoperate as or be construed to be a waiver of any other subsequent breach ofthis Agreement.

 

**12.****                              ****Successorsand Assigns**

 

ThisAgreement shall inure to and be binding upon the Bank and Employee, theirrespective heirs, legal representatives, successors, and assigns.

 

**13.****                              ****GoverningLaw**

 

This Agreement shall be construed inaccordance with the laws of the state of South Carolina and any applicablefederal laws.

 

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**14.****                              ****Headings**

 

Theheadings or titles of sections and subsections of this Agreement are forconvenience and reference only and do not constitute a part of this Agreement.

 

**15.****                              ****Notice**

 

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

 

Ifto Employee:

 

[INSERT]

 

Ifto the Bank:

 

[INSERT]

 

**16.****                              ****TaxMatters**

 

Thepayment of any amount pursuant to this Agreement shall be subject to allapplicable withholding and payroll taxes and other applicable deductions.Notwithstanding any provision to the contrary in this Agreement or in any ofthe Bank’s equity plans (each, a “Plan”), any payment otherwise required to bemade to Employee under any Bank plan on account of Employee’s “separation fromservice,” within the meaning of the Section 409A Rules (as definedbelow), to the extent such payment (after taking into account all exclusionsapplicable to such payment under the Section 409A Rules) is properlytreated as deferred compensation subject to the Section 409A Rules, shallnot be made until the first business day after (i) the expiration of six (6) monthsfrom the date of Employee’s separation from service, or (ii) if earlier,the date of Employee’s death (the “Delayed Payment Date”). On the DelayedPayment 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 aggregateamount of the payments delayed pursuant to the preceding sentence. In the caseof each Plan under which Employee is entitled to receive amounts treated asdeferred compensation subject to the Section 409A Rules and whichprovides for payment of such amounts in the form of “a series of installmentpayments”, as defined in Treas. Reg. §1.409A-2(b)(iii), (A) Employee’sright to receive such payments shall be treated as a right to receive a seriesof separate payments under Treas. Reg. §1.409A-2(b)(iii), and (B) to theextent such Plan does not already so provide, it is hereby amended to soprovide, with respect to amounts payable to Employee thereunder. For purposesof this subparagraph, the “Section 409A Rules” shall mean Section 409Aof the Code, the regulations issued thereunder, and all notices, rulings, andother guidance issued by the Internal Revenue Service interpreting same.Notwithstanding the foregoing, Employee shall be solely responsible, and theBank shall have no liability, for any taxes, acceleration of taxes, interest,or penalties arising under the Section 409A Rules.

 

**17.****                              ****Construction**

 

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

 

**18.****                              ****Representations****: **Employee acknowledges that:

 

a)                                      She has readthis Agreement and understands its meaning and effect.

 

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

 

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

 

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d)                                     She would nototherwise be entitled to the consideration described in this Agreement, andthat the Bank is providing such consideration in return for Employee’sagreement to be bound by the terms of this Agreement.

 

e)                                      She has beengiven 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, thenotice of revocation must be received no later than 5:00 p.m. on theseventh day after the signed Agreement is received by the Bank.  This Agreement shall not become effective orenforceable until the revocation period has expired.

 

g)                                     She is notwaiving or releasing any rights or claims that may arise after the date theEmployee signs this Agreement.

 

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

 

Asto Employee:

 
|             |   |                   |
|------------------|--------|------------------------|
| Date             |   | Katie  N. Tuttle       |
|             |   |                   |
| As  to the Bank: |   |                   |
|             |   |                   |
|             |   |                   |
| Date             |   | Chairman  of the Board |

 

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