Exhibit 10.40








EXHIBIT No. 10.40




December 23, 2008




Via Hand Delivery




William C. Adams

100 North Main Street

Greeneville, Tennessee 37743




Dear Mr. Adams,




Green Bankshares, Inc. (the “Company”) anticipates entering into a Securities Purchase Agreement
(the “Participation Agreement”), with the United States Department of Treasury (“Treasury”) that
provides for the Company’s participation in the Treasury’s TARP Capital Purchase Program (the
"CPP”). If the Company does not participate or ceases at any time to participate in the CPP, this
letter shall be of no further force and effect.



For the Company to participate in the CPP and as a condition to the closing of the investment
contemplated by the Participation Agreement, the Company is required to establish specified
standards for incentive compensation to its senior executive officers and to make changes to its
compensation arrangements. To comply with these requirements, and in consideration of the benefits
that you will receive as a result of the Company’s participation in the CPP, you agree as follows:




	 	(1)	 	No Golden Parachute Payments. The Company is prohibiting any golden parachute
payment to you during any “CPP Covered Period”. A “CPP Covered Period” is any period
during which (A) you are a senior executive officer and (B) Treasury holds an equity or
debt position acquired from the Company in the CPP.







	 	(2)	 	Recovery of Bonus and Incentive Compensation. Any bonus and incentive
compensation paid to you during a CPP Covered Period is subject to recovery or
“clawback” by the Company if the payments were based on materially inaccurate financial
statements or any other materially inaccurate performance metric criteria.







	 	(3)	 	Compensation Program Amendments. Each of the Company’s compensation, bonus,
incentive and other benefit plans, arrangements and agreements (including golden
parachute, severance and employment agreements) (collectively, “Benefit Plans”) with
respect to you is hereby amended to the extent necessary to give effect to provisions
(1) and (2). For reference, certain affected Benefit Plans are set forth in Appendix A
to this letter.

	 
	 	 	 	In addition, the Company is required to review its Benefit Plans to ensure that they
do not encourage senior executive officers to take unnecessary and excessive risks
that threaten the value of the Company. To the extent any such review requires
revisions to any Benefit Plan with respect to you, you and the Company agree to
negotiate such changes promptly and in good faith.







	 	(4)	 	Definitions and Interpretation. This letter shall be interpreted as follows:







	 	•	 	“Senior executive officer” means the Company’s “senior executive officers”
as defined in subsection 111(b)(3) of EESA.







	 	•	 	“Golden parachute payment” is used with same meaning as in Section
111(b)(2)(C) of EESA.





 


 









 










William C. Adams

December 23, 2008

Page 2





	 	•	 	“EESA” means the Emergency Economic Stabilization Act of 2008 as implemented
by guidance or regulation issued by the Department of the Treasury and as
published in the Federal Register on October 20, 2008.







	 	•	 	The term “Company” includes any entities treated as a single employer with
the Company under 31 C.F.R. § 30.1(b) (as in effect on the Closing Date). You
are also delivering a waiver pursuant to the Participation Agreement, and, as
between the Company and you, the term “employer” in that waiver will be deemed
to mean the Company as used in this letter.







	 	•	 	The term “CPP Covered Period” shall be limited by, and interpreted in a
manner consistent with, 31 C.F.R. § 30.11 (as in effect on the Closing Date).







	 	•	 	Provisions (1) and (2) of this letter are intended to, and will be
interpreted, administered and construed to, comply with Section 111 of EESA
(and, to the maximum extent consistent with the preceding, to permit operation
of the Benefit Plans in accordance with their terms before giving effect to
this letter).







	 	(5)	 	Miscellaneous. To the extent not subject to federal law, this letter will be
governed by and construed in accordance with the laws of Tennessee. This letter may be
executed in two or more counterparts, each of which will be deemed to be an original. A
signature transmitted by facsimile will be deemed an original signature.





 


 









 










William C. Adams

December 23, 2008

Page 3




The Board appreciates the concessions you are making and looks forward to your continued leadership
during these financially turbulent times.



Yours sincerely,




Green Bankshares, Inc.




	 	 	 	 	 
	By: 



	 	/s/ Steve D. Ottinger
 

Name: Steve D. Ottinger
	 	 
	 

	 	Title:   Senior Vice President and	 	 
	 

	 	Chief Human Resources Officer
	 	 






 


 









 





William C. Adams

December 23, 2008

Page 4




Intending to be legally bound, I agree with and accept the foregoing terms on the date set forth
below.



	 	 	 
	/s/ William C. Adams
 

William C. Adams

	 	 
	Date: December 23, 2008
	 	 
	 
	 	 
	cc: William C. Adams, via Hand Delivery
	 	 






 


 









 





Appendix A




Green Bankshares, Inc. 2004 Long-Term Incentive Plan and all stock option, stock appreciation right
and restricted share awards thereunder.



Employment Agreement by and between Green Bankshares, Inc. and R. Stan Puckett dated December 31,
2007



Employment Agreement by and between Green Bankshares, Inc. and Kenneth R. Vaught dated December 31,
2007



Green County Bank (n/k/a GreenBank) Executive Deferred Compensation Agreement by and between
GreenBank and R. Stan Puckett dated March 11, 2005



Green County Bank (n/k/a GreenBank) Executive Deferred Compensation Agreement by and between
GreenBank and R. Stan Puckett dated March 11, 2005



Greene County Bancshares, Inc. (n/k/a Green Bankshares, Inc.) Change in Control Protection Plan




Greene County Bancshares, Inc. (n/k/a Green Bankshares, Inc.) Change in Control Protection Plan
Participation Agreement between Green Bankshares, Inc. and Steve Droke



Greene County Bancshares, Inc. (n/k/a Green Bankshares, Inc.) Change in Control Protection Plan
Participation Agreement between Green Bankshares, Inc. and James E. Adams