Document:

gden-ex1016_538.htm

 

Exhibit 10.16

 

EMPLOYMENT AGREEMENT

This Agreement (the "Agreement") is made and entered into effective as of the 26th day of October, 2017 (the "Effective Date"), by and between Edward W. Martin III (the "Executive"), and Golden Entertainment, Inc., a Minnesota corporation, including its subsidiaries and Affiliates (as defined below) (collectively, the "Company").

RECITALS

WHEREAS, the Executive will become employed at-will by the Company.

WHEREAS, the Board of Directors of the Company (including any duly authorized Committee thereof, the "Board") has determined that it is in the best interests of the Company to offer employment to the Executive; and

WHEREAS, the Board and the Executive wish to enter into this Agreement to document the terms of the Executive's employment with the Company.

NOW, THEREFORE, in consideration of the mutual promises and covenants and the respective undertakings of the Company and the Executive set forth below the Company and Executive agree as follows:

AGREEMENT

1.Employment. The Company hereby employs the Executive, and the Executive accepts such employment and agrees to perform services for the Company, for the period and upon the other terms and conditions set forth in this Agreement.  

2.Base Salary. The Company shall pay the Executive an annual base salary in the amount of Four Hundred Thousand Dollars ($400,000) or such amount as may from time-to-time be determined by the Company as appropriate in its sole discretion ("Base Salary"). Such salary shall be paid in equal installments in the manner and at the times as other employees of the Company are paid.

3.Incentive Compensation; Initial Stock Option Grant. 

a.Commencing in calendar year 2018, the Executive shall participate in the Company's incentive compensation program from time-to-time established and approved by the Compensation Committee of the Company's Board of Directors, such participation to be on the same terms and conditions as from time-to-time apply to executive officers of the Company. Commencing in calendar year 2018, the Executive's target bonus under the Company's annual incentive compensation plan shall be eighty percent (80%) of the Executive's Base Salary. 

b.In addition to the aforementioned compensation and benefits contained herein, upon the Effective Date, Executive shall receive non-qualified options to purchase 146,972 shares of the Company’s common stock, with an exercise price equal to the closing price per 

1

 

US-DOCS\92602672.8

 

share of the Company’s common stock on the Effective Date and with 25% of such options vesting on the first anniversary of the Effective Date (assuming Executive is employed with the Company at that time) and 1/48th of such options vesting on the last day of each one-month period thereafter (assuming Executive is employed with the Company at that time).  The exercise of any stock options shall be subject to the terms and conditions of the Stock Option Grant Notice and Stock Option Agreement between Company and Executive (the “Option Agreement”) and the terms and conditions of the Company’s 2015 Incentive Award Plan, as the same may be amended or amended and restated from time to time.

 

4.Benefits. The Company shall provide to the Executive such benefits as are provided by the Company to other similarly-situated executive officers of the Company. The Executive shall pay for the portion of the cost of such benefits as is from time-to-time established by the Company as the portion of such cost to be paid by executive officers of the Company. The Company shall have the right to amend or delete any such benefit plan or arrangement made available by the Company to its executive officers and not otherwise specifically provided for herein. The Executive shall be entitled to such periods of paid time off ("PTO") each year as provided from time to time under the Company's PTO policy and as otherwise provided for executive officers.  In addition, the Executive shall be entitled to receive the additional benefits described on Exhibit A attached hereto.

5.Costs and Expenses. The Company shall reimburse the Executive for reasonable out-of-pocket business expenses incurred in connection with the performance of his duties hereunder, subject to such policies as the Company may from time to time establish, and the Executive furnishing the Company with evidence in the form of receipts satisfactory to the Company substantiating the claimed expenditures.

6.Duties.

a.The Executive shall serve as the Executive Vice President and Chief Administrative Officer of the Company, and shall be the executive principally responsible for the Human Resources, Information Technology, and Security Surveillance departments of the Company.  In the performance of such duties, the Executive shall report directly to the Chief Executive Officer of the Company (the "CEO") and shall be subject to the direction of the CEO and to such limits upon the Executive's authority as the CEO may from time to time impose. In the event of the CEO's incapacity or unavailability, the Executive shall be subject to the direction of the Board. The Executive hereby consents to serve as an officer and/or director of the Company or any subsidiary or Affiliate thereof without any additional salary or compensation, if so requested by the CEO. The Executive shall be employed by the Company on a full time basis. The Executive's primary place of work shall be the Company's offices in Las Vegas, Nevada, or, with the Company's consent, at any other place at which the Company maintains an office; provided, however, that the Company may from time to time require the Executive to travel temporarily to other locations in connection with the Company's business. The Executive shall be subject to and comply with the policies and procedures generally applicable to executive officers of the Company to the extent the same are not inconsistent with any term of this Agreement.

2

 

US-DOCS\92602672.8

 

b.The Executive shall at all times faithfully, industriously and to the best of his ability, experience and talent perform to the satisfaction of the Board and the CEO all of the duties that may be assigned to the Executive hereunder.

7.Termination.

a.At-Will Employment; Termination. The Company and the Executive acknowledge that the Executive's employment is and shall continue to be at-will, as defined under applicable law, and that the Executive's employment with the Company may be terminated by either party at any time for any or no reason, with or without notice. If the Executive's employment terminates for any reason, the Executive shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided in this Agreement.

b.Automatic Termination Due to Death or Disability.

(i)Termination Due to Disability.  If the Executive suffers any "Disability" (as defined below), this Agreement and the Executive's employment hereunder will automatically terminate. "Disability" means the inability of the Executive to perform the essential functions of his position, with or without reasonable accommodation, because of physical or mental illness or incapacity, for a period of ninety (90) consecutive calendar days or for one hundred twenty (120) calendar days in any one hundred eighty (180) calendar day period. The existence of the Executive's Disability shall be determined by the Company on the advice of a physician chosen by the Company and reasonably acceptable to the Executive.

(ii)Termination Due to Death. This Agreement will automatically terminate on the date of the Executive's death.

(iii)Accrued Obligations and Stock Award Acceleration and Extended Exercisability. In the event of the Executive's termination of employment by reason of his Disability or death, the Company will have no further obligation to the Executive under this Agreement, except the Company shall pay to the Executive his fully earned but unpaid Base Salary, when due, through the date of the Executive's termination at the rate then in effect, accrued and unused PTO, plus all other benefits, if any, under any Company group retirement plan, nonqualified deferred compensation plan, equity award plan or agreement, health benefits plan or other Company group benefit plan to which the Executive may be entitled pursuant to the terms of such plans or agreements at the time of the Executive's termination (the "Accrued Obligations"), and the vesting of any outstanding unvested portion of each of the Executive's Stock Awards shall be automatically accelerated on the date of termination (provided that the exercise of such Stock Awards shall be subject to the terms and conditions of the equity plan and any Stock Award agreement pursuant to which the Executive's Stock Awards were granted). In addition, such Stock Awards may be exercised by the Executive or the Executive's legal representative until the latest of (A) the date that is one (1) year after the date of the Executive's termination of employment or (B) such longer period as may be specified in the applicable Stock Award agreement; provided, however, that in no event shall any Stock Award remain exercisable beyond the original outside expiration date of such Stock Award.

3

 

US-DOCS\92602672.8

 

c.Termination Without Cause or Constructive Termination.

The provisions of this Section 7(c) shall apply following any termination of the Executive which is either (i) without "Cause" (as defined below); or (ii) a "Constructive Termination" (as defined below). Notwithstanding anything to the contrary in this Section 7(c), and subject to Sections 7(f) and 21 and the Executive's continued compliance with Sections 10 and 11, except as otherwise noted below, in the event that the Executive's employment is terminated and such termination is either (i) without Cause; or (ii) a Constructive Termination:

(i)Accrued Obligations.  The Company shall pay to the Executive the Accrued Obligations through the date of termination.

(ii)Severance Payments.  

(A)If such termination without Cause or Constructive Termination occurs on or prior to the first (1st) anniversary of the Effective Date, the Executive shall be entitled to receive (1) payment of that portion of his Base Salary corresponding to the period commencing on the date of Executive’s termination and continuing until the first (1st) anniversary of the Effective Date, payable in a lump sum on the sixtieth (60th) day after the date of Executive’s termination of employment, and (2) an amount equal to Three Hundred Twenty Thousand Dollars ($320,000), payable in a lump sum on the earlier of (x) the date that annual incentive bonuses are paid to the executive officers of the Company with respect to the fiscal year in which such termination occurs and (y) March 15 of the calendar year following the fiscal year in which such termination occurs.  

(B)If the Executive’s employment is terminated following the first (1st) anniversary of the Effective Date and such termination is without Cause, the Executive shall be entitled to receive an amount equal to One Hundred Fifty Thousand Dollars ($150,000), payable in a lump sum on the sixtieth (60th) day after the date of Executive’s termination of employment.

(C)If the Executive’s employment is terminated following the first (1st) anniversary of the Effective Date and such termination is a Constructive Termination, the Executive shall be entitled to receive an amount equal to Three Hundred Twenty Thousand Dollars ($320,000), payable in a lump sum on the sixtieth (60th) day after the date of Executive’s termination of employment.

(iii)Benefits. If the Executive's employment is terminated on or prior to the first (1st) anniversary of the Effective Date and such termination is either (A) without Cause or (B) a Constructive Termination, for the period commencing on the date of the Executive's termination of employment and continuing until the first (1st) anniversary of the Effective Date (or, if earlier, (I) the date on which the applicable continuation period under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") expires or (II) the date the Executive becomes eligible to receive the equivalent or increased healthcare coverage by means of subsequent employment or self-employment) (such period, the "COBRA Coverage Period"), if the Executive and/or his eligible dependents who were covered under the Company's health insurance plans as of the date of the Executive's termination of employment elect to have COBRA coverage and are eligible for such coverage, the Company shall pay for or 

4

 

US-DOCS\92602672.8

 

reimburse the Executive on a monthly basis for an amount equal to (x) the monthly premium the Executive and/or his covered dependents, as applicable, are required to pay for continuation coverage pursuant to COBRA for the Executive and/or his eligible dependents, as applicable, who were covered under the Company's health plans as of the date of the Executive's termination of employment (calculated by reference to the premium as of the date of the Executive's termination of employment) less (y) the amount the Executive would have had to pay to receive group health coverage for the Executive and/or his or her covered dependents, as applicable, based on the cost sharing levels in effect on the date of the Executive's termination of employment (the "Monthly Premium Amount"). If any of the Company's health benefits are self-funded as of the date of the Executive's termination of employment, or if the Company cannot provide the foregoing benefits in a manner that is exempt from Section 409A (as defined below) or that is otherwise compliant with applicable law (including, without limitation, Section 2716 of the Public Health Service Act), instead of providing the payments or reimbursements as set forth above, the Company shall instead pay to the Executive the foregoing monthly amount as a taxable monthly payment for the COBRA Coverage Period (or any remaining portion thereof). The Executive shall be solely responsible for all matters relating to continuation of coverage pursuant to COBRA, including, without limitation, the election of such coverage and the timely payment of premiums. The Executive shall notify the Company immediately if the Executive becomes eligible to receive the equivalent or increased healthcare coverage by means of subsequent employment or self-employment.  

(iv)Stock Award Acceleration and Extended Exercisability. The vesting of any outstanding unvested portion of each of the Executive's Stock Awards shall be automatically accelerated on the date of termination (provided that the exercise of such Stock Awards shall be subject to the terms and conditions of the equity plan and any Stock Award agreement pursuant to which the Executive's Stock Awards were granted). In addition, such Stock Awards may be exercised by the Executive or the Executive's legal representative until the latest of (A) the date that is one (1) year after the date of the Executive's termination of employment or (B) such longer period as may be specified in the applicable Stock Award agreement; provided, however, that in no event shall any Stock Award remain exercisable beyond the original outside expiration date of such Stock Award. 

 

(v)Conversion of Insurance Policies. In addition, the Company shall also use its best efforts to convert any then-existing life insurance and accidental death and disability insurance policies to individual policies in the name of the Executive.

d.Termination by the Executive.

The Executive may terminate this Agreement and his employment hereunder at any time by providing the Company written notice of his intent to terminate at least sixty (60) days prior to the effective date of his termination. During this sixty-day period, the Executive must execute his duties and responsibilities in accordance with the terms of this Agreement. If the Executive resigns his employment other than in a Constructive Termination, the Executive will be entitled to receive:

(i)Accrued Obligations.  The Company shall pay to the Executive the Accrued Obligations through the date of termination.

5

 

US-DOCS\92602672.8

 

(ii)Severance Payments.  Subject to Sections 7(f) and 21 and the Executive's continued compliance with Sections 10 and 11, except as otherwise noted below, if such voluntary termination occurs after the first (1st) anniversary of the Effective Date and such termination is not a Constructive Termination, the Company may, at its option in its sole discretion, provide written notice to the Executive not later than ten (10) days after the Executive has provided written notice to the Company of his resignation, that it has elected to pay the Executive an amount equal to eighty percent (80%) of Executive's Base Salary (at the rate in effect on the date of the Executive’s written notification to the Company of his resignation), payable in a lump sum on the sixtieth (60th) day after the Executive's termination of employment.

(iii)Conversion of Insurance Policies.  In addition, the Company shall also use its best efforts to convert any then-existing life insurance and accidental death and disability insurance policies to individual policies in the name of the Executive.

e.Termination by the Company for Cause.

The Company will have the right to immediately terminate this Agreement and the Executive's employment hereunder for "Cause" (as defined below). In the event of such termination for Cause, the Executive will only be entitled to receive the Accrued Obligations through the date of termination.

f.Waiver of Claims.

The Company's obligations to provide severance benefits in Sections 7(c)(ii), (iii) and (iv) and Section 7(d)(ii) above are conditioned on the Executive signing and not revoking a general release of legal claims and covenant not to sue (the "Release") in form and content satisfactory to the Company. In the event the Release does not become effective within the fifty-five (55) day period following the date of the Executive's termination of employment, the Executive shall not be entitled to the aforesaid severance benefits.

g.Exclusive Remedy.

 

Except as otherwise expressly required by law (e.g., COBRA) or as specifically provided herein, all of the Executive's rights to salary, severance, benefits, bonuses and other amounts hereunder (if any) accruing after the termination of the Executive's employment shall cease upon such termination. In the event of the Executive's termination of employment with the Company, the Executive's sole remedy shall be to receive the payments and benefits described in this Section 7. In addition, the Executive acknowledges and agrees that he or she is not entitled to any reimbursement by the Company for any taxes payable by the Executive as a result of the payments and benefits received by the Executive pursuant to this Section 7, including, without limitation, any excise tax imposed by Section 4999 of the Code. Any payments made to the Executive under this Section 7 shall be inclusive of any amounts or benefits to which the Executive may be entitled pursuant to the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Sections 2101 et seq., and the Department of Labor regulations thereunder, or any similar state statute.  For the avoidance of doubt, following the Executive's termination of employment for any reason, the Company will have no further obligation to provide to the Executive the additional benefits described on Exhibit A attached hereto.

6

 

US-DOCS\92602672.8

 

 

h.Return of the Company's Property.

 

In the event of the Executive's termination of employment for any reason, the Company shall have the right, at its option, to require the Executive to vacate his offices prior to or on the effective date of separation and to cease all activities on the Company's behalf. Upon the Executive's termination of employment in any manner, as a condition to the Executive's receipt of any severance benefits described in this Agreement, the Executive shall immediately surrender to the Company all lists, books and records of, or in connection with, the Company's business, and all other property belonging to the Company, it being distinctly understood that all such lists, books and records, and other documents, are the property of the Company. The Executive shall deliver to the Company a signed statement certifying compliance with this Section 7(h) prior to the receipt of any severance benefits described in this Agreement. 

i.Deemed Resignation.

Upon termination of the Executive's employment for any reason, the Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any of its Affiliates, and, at the Company's request, the Executive shall execute such documents as are necessary or desirable to effectuate such resignations.

8.Insurance; Indemnification.

a.The Company shall have the right to take out life, health, accident, "key-man" or other insurance covering the Executive, in the name of the Company and at the Company's expense in any amount deemed appropriate by the Company. The Executive shall assist the Company in obtaining such insurance, including, without limitation, submitting to any required examinations and providing information and data required by insurance companies.

b.The Executive will be provided with indemnification against third party claims related to his or her work for the Company as required by Minnesota law. The Company shall provide the Executive with directors and officers liability insurance coverage at least as favorable as that which the Company may maintain from time to time for members of the Board and other executive officers.

c.Following a Change in Control and for a period of not less than the later to occur of three years after the effective date of the resignation or termination of the Executive, or for the period granted to other executive officers of the Company, the Executive shall be entitled to indemnification and, to the extent available on commercially reasonable terms, insurance coverage therefor, with respect to the various liabilities as to which the Executive has been customarily indemnified prior to the Change in Control. In the event of any discrepancies between the provisions of this paragraph and the terms of any Company insurance policy covering executive or any indemnification contract by and between the Company and the Executive, such insurance policy or indemnification contract shall control.

 

7

 

US-DOCS\92602672.8

 

9.Certain Definitions.

 

a.Affiliate.

For purposes of this Agreement, "Affiliate" shall mean a person or entity controlling, controlled by or under common control with the Company.

b.Change in Control.

For the purposes of this Agreement, a "Change in Control" shall have the meaning given to such term in the Company's 2015 Incentive Award Plan, as in effect on the date of this Agreement.

c.Cause.

For the purposes of this Agreement, "Cause" shall mean termination of the Executive by the Company for any of the following reasons:

(i)the commission of a felony;

(ii)the theft or embezzlement of property of the Company or the commission of any similar act involving moral turpitude;

(iii)the failure of the Executive to substantially perform his material duties and responsibilities under this Agreement for any reason other than the Executive's death or Disability, which failure if, in the opinion of the Company such failure is curable, is not cured within thirty (30) days after written notice of such failure from the Board specifying such failure;

(iv)the Executive's material violation of a significant Company policy, which violation the Executive fails to cure within thirty (30) days after written notice of such violation from the Company specifying such failure, or which violation the Company, in its opinion, deems noncurable, and which violation has a material adverse effect on the Company or its subsidiaries or Affiliates;

(v)the failure of the Executive to qualify (or having so qualified being thereafter disqualified) under any regulatory or licensing requirement of any jurisdiction or regulatory authority to which the Executive may be subject by reason of his position with the Company or its subsidiaries or Affiliates, unless waived by the Board or the Compensation Committee in its sole discretion; or

(vi)the revocation of any gaming license issued by any governmental entity to the Company, as a result of any act or omission by the Executive, which revocation has an adverse effect on the Company or its subsidiaries or Affiliates.

 

d.Constructive Termination.

 

(i)For the purposes of this Agreement, "Constructive Termination" shall mean:

8

 

US-DOCS\92602672.8

 

(A)a material, adverse change of the Executive's responsibilities, authority, status, position, offices, titles, duties or reporting requirements;

(B)a reduction in the Executive's Base Salary or a material adverse change in the Executive's annual compensation or benefits;

(C)a requirement to relocate in excess of fifty (50) miles from the Executive's then current place of employment without the Executive's consent; or

(D)the breach by the Company of any material provision of this Agreement or failure to fulfill any other contractual duties owed to the Executive.

For the purposes of this definition, the Executive's responsibilities, authority, status, position, offices, titles, duties and reporting requirements are to be determined as of the date of this Agreement.

(ii)Notwithstanding the provisions of subsection (i) above, no termination by the Executive will constitute a Constructive Termination unless the Executive shall have provided written notice to the Company of his intention to so terminate this Agreement within ninety (90) days following the initial occurrence of the event or circumstances that the Executive believes to be the basis for the Constructive Termination, which notice sets forth in reasonable detail the conduct that the Executive believes to be the basis for the Constructive Termination, and the Company will thereafter have failed to correct such conduct (or commence action to correct such conduct and diligently pursue such correction to completion) within thirty (30) days following the Company's receipt of such notice. The Executive's resignation by reason of Constructive Termination must occur within six (6) months following the initial occurrence of the event or circumstances that the Executive believes to be the basis for the Constructive Termination.

 

e.Stock Awards.

For purposes of this Agreement, "Stock Awards" means all stock options, restricted stock, restricted stock units and such other awards granted pursuant to the Company's stock option and equity incentive award plans or agreements and any shares of stock issued upon exercise thereof.

10.Confidentiality.

Except to the extent required by law, the Executive shall keep confidential and shall not, without the Company's prior, express written consent, disclose to any third party, other than as reasonably necessary or appropriate in connection with the Executive's performance of his duties under this Agreement or any employment agreement, if any, the Company's "Confidential Information." "Confidential Information" means any information that the Executive learns or

 
develops during the course of employment that derives independent economic value from being not generally known or readily ascertainable by other persons who could obtain economic value from its disclosure or use, or any information that the Company reasonably believes to be Confidential Information. It includes, but is not limited to, trade secrets, customer development, operations, site selection/analysis processes, management systems and techniques, costs
9

 

US-DOCS\92602672.8

 

modeling or sales and marketing. The provisions of this Section 10 shall remain in effect after the expiration or termination of this Agreement and the Executive's employment hereunder.  Executive acknowledges that the Company has provided him with the following notice of immunity rights in compliance with the requirements of the Defend Trade Secrets Act: (i) he shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of Confidential Information that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, (ii) he shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of Confidential Information that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal and (iii) if he files a lawsuit for retaliation by the Company for reporting a suspected violation of law, he may disclose the Confidential Information to his attorney and use the Confidential Information in the court proceeding, if he files any document containing the Confidential Information under seal, and does not disclose the Confidential Information, except pursuant to court order.

11.Agreement Not to Compete.

a.The Executive acknowledges that he is a key executive employee of the Company and by virtue of his position has gained and will gain extensive knowledge of the business of the Company, and that the restrictive covenants contained herein (the "Restrictive Covenants") are necessary to protect the goodwill and other legitimate business interests of the Company, and further acknowledges that the Company would not have entered into this Agreement in the absence of the Restrictive Covenants. The Executive acknowledges and agrees that the Restrictive Covenants are reasonable in duration, geographical scope, and in all other respects, and do not, and will not, unduly impair the Executive's ability to earn a living while the Restrictive Covenants are in effect. The Restrictive Covenants shall survive the expiration or sooner termination of this Agreement.

b.The Executive covenants and agrees with the Company that during Executive's term of employment with the Company and for the six (6) months following the date of the Executive's termination of employment with the Company (the "Restricted Period"), whether such termination is voluntary or involuntary, the Executive will not, except when acting on behalf of the Company or any Affiliate, within any area in which the Company or any of its Affiliates are directly or indirectly conducting their business (the "Restricted Area"), engage in any of the following activities: (A) either directly or indirectly, solely or jointly with any person or persons, as an employee, consultant, or advisor (whether or not engaged in business for profit) or as an individual proprietor, owner, partner, stockholder, director, officer, joint venturer, investor or in any other capacity, compete with the Company; provided, however, the Executive may own up to five percent (5%) of the ownership interest of any publicly traded company which may be engaged in any gaming business; or (B) directly or indirectly recruit or hire or attempt to recruit or hire any person known by the Executive to be an employee or contractor of the Company or any Affiliate or assist any person or persons in recruiting or hiring or soliciting any person known by the Executive to be an employee or contractor of the Company or any Affiliate.  The restrictions under Section 11(b)(A) shall not apply in the event (i) the Executive’s employment is terminated without Cause or in a Constructive Termination and in either case such termination occurs after the first (1st) anniversary of the Effective Date, or (ii) the Executive 

10

 

US-DOCS\92602672.8

 

voluntarily resigns after the first (1st) anniversary of the Effective Date other than in a Constructive Termination and the Company fails to make the election to pay the Severance Payment under Section 7(d)(ii).

If the scope of the Executive's agreement under this Section 11 is determined by any court of competent jurisdiction to be too broad to permit the enforcement of all of the provisions of this Section 11 to their fullest extent, then the provisions of this Section 11 shall be construed (and each of the parties hereto hereby confirm its intent is that such provisions be so construed) to be enforceable to the fullest extent permitted by applicable law. To the maximum extent permitted by applicable law, the Executive hereby consents to the judicial modification of the provisions of this Section 11 in any proceeding brought to enforce such provisions in such a manner that renders such provisions enforceable to the maximum extent permitted by applicable law.

c.The provisions of this Section 11 shall remain in full force and effect after the expiration or termination of this Agreement and the Executive's employment hereunder.

 

12.Acknowledgments; Irreparable Harm.

The Executive agrees that the restrictions on competition, solicitation and disclosure in this Agreement are fair, reasonable and necessary for the protection of the interests of the Company. The Executive further agrees that a breach of any of the covenants set forth in Sections 10 and 11 of this Agreement will result in irreparable injury and damage to the Company for which the Company would have no adequate remedy at law, and the Executive further agrees that in the event of a breach, the Company will be entitled to an immediate restraining order and injunction to prevent such violation or continued violation, without having to prove damages, in addition to any other remedies to which the Company may be entitled to at law or in equity.

13.Notification to Subsequent Employers.

The Executive grants the Company the right to notify any future employer or prospective employer of the Executive concerning the existence of and terms of this Agreement and grants the Company the right to provide a copy of this Agreement to any such subsequent employer or prospective employer.

14.Full Settlement.

The Company's obligations to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. The Executive will not be obligated to seek other employment, and except as provided in Section 7(c)(iii) above, take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement.

15.Resolution of Disputes.

11

 

US-DOCS\92602672.8

 

Any controversy, claim or dispute arising out of or relating to this Agreement or the breach of this Agreement shall be settled by arbitration before a single neutral arbitrator in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association (the "Rules"), and a judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction. The Rules may be found online at www.adr.org. The award rendered in any arbitration proceeding under this section will be final and binding. Any demand for arbitration must be made and filed within sixty (60) days of the date the requesting party knew or reasonably should have known of the event giving rise to the lists, financial information, business plans and may relate to such matters as research and 

controversy or claim. Any claim or controversy not submitted to arbitration in accordance with this section will be considered waived, and therefore, no arbitration panel or court will have the power to rule or make any award on such claims or controversy. Any such arbitration will be conducted in the Las Vegas, Nevada metropolitan area. Both the Company and the Executive

 
 recognize that each would give up any right to a jury trial, but believe the benefits of arbitration significantly out-weigh any disadvantage. Both further believe arbitration is likely to be both less expensive and less time-consuming than litigation of any dispute there might be.
Each party shall pay the fees of its own attorneys, the expenses of its witnesses and all other expenses connected with presenting its case; however, Executive and the Company agree that, to the extent permitted by law, the arbitrator may, in his or her discretion, award reasonable attorneys' fees and expenses to the prevailing party. Other costs of the arbitration, including the cost of any record or transcripts of the arbitration, AAA's administrative fees, the fee of the arbitrator, and other similar fees and costs, shall be borne by the Company. This section is intended to be the exclusive method for resolving any and all claims by the parties against each other for payment of damages under this Agreement or relating to the Executive's employment; provided, however, that the Executive shall retain the right to file administrative charges with or seek relief through any government agency of competent jurisdiction, and to participate in any government investigation, including but not limited to (a) claims for workers' compensation, state disability insurance or unemployment insurance; (b) claims for unpaid wages or waiting time penalties brought before an appropriate state authority; provided, however, that any appeal from an award or from denial of an award of wages and/or waiting time penalties shall be arbitrated pursuant to the terms of this Agreement; and (c) claims for administrative relief from the United States Equal Employment Opportunity Commission (or any similar state agency in any applicable jurisdiction); provided, further, that the Executive shall not be entitled to obtain any monetary relief through such agencies other than workers' compensation benefits or unemployment insurance benefits. This Agreement shall not limit either party's right to obtain any provisional remedy, including, without limitation, injunctive or similar relief, from any court of competent jurisdiction as may be necessary to protect their rights and interests pending the outcome of arbitration, including without limitation injunctive relief, in any court of competent jurisdiction. Seeking any such relief shall not be deemed to be a waiver of such party's right to compel arbitration.

If there shall be any dispute between the Company and the Executive (a) in the event of any termination of Executive's employment by the Company, whether such termination was 

12

 

US-DOCS\92602672.8

 

with or without Cause, or (b) in the event of a Constructive Termination of employment by the Company, then, unless and until there is a final award by an arbitrator, to the extent permitted by applicable law, the Company shall pay, and provide all benefits to the Executive and/or the Executive's family or other beneficiaries, as the case may be, that the Company would be required to pay or provide pursuant to Section 7 hereof, as the case may be, as though such termination were by the Company without Cause or was a Constructive Termination by the Company; provided, however, that the Company shall not be required to pay any disputed amounts pursuant to this section except upon receipt of an undertaking by or on behalf of the Executive to repay all such amounts to which Executive is ultimately adjudged by such arbitrator not to be entitled.

16.Withholding.

The Company may withhold from any amounts payable under this Agreement the minimum Federal, state and local taxes as shall be required to be withheld pursuant to any applicable law, statute or regulation.

17.Successors and Assigns.

 

This Agreement is binding upon and shall inure to the benefit of all successors and assigns of the Company. This Agreement shall be binding upon and inure to the benefit of the Executive and his heirs and personal representatives. None of the rights of the Executive to receive any form of compensation payable pursuant to this Agreement shall be assignable or transferable except through a testamentary disposition or by the laws of descent and distribution upon the death of the Executive. The rights of the Company under this Agreement may, without the consent of the Executive, be assigned by the Company, in its sole and unfettered discretion, to any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly, acquires all or substantially all of the assets or business of the Company. The Company will require any successor (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement, prior to the effectiveness of any such succession shall be a material breach of this Agreement. As used in this Agreement, the "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.

 

18.Survival. The covenants, agreements, representations and warranties contained in or made in Sections 7 through 22 of this Agreement shall survive any termination of the Executive's employment.

 

19.Miscellaneous.

a.This Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada, without reference to principles of conflict of laws. Except as provided in Sections 12 and 15, any suit brought hereon shall be brought in the state or federal 

13

 

US-DOCS\92602672.8

 

courts sitting in Las Vegas, Nevada, the parties hereto hereby waiving any claim or defense that such forum is not convenient or proper. Each party hereby agrees that any such court shall have in personam jurisdiction over it and consents to service of process in any manner authorized by Nevada law.

b.All notices and other communications under this Agreement shall be in writing and shall be given by hand to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

IF TO THE EXECUTIVE:

Ned Martin 

c/o Golden Entertainment, Inc.
6595 S. Jones Boulevard
Las Vegas, Nevada  89118

 

IF TO THE COMPANY:

Golden Entertainment, Inc.
Attn: Chief Executive Officer
6595 S. Jones Boulevard    
Las Vegas, Nevada  89118

or to such other address as either party furnishes to the other in writing in accordance with this Section 19(b). Notices and communications shall be effective when actually received by the addressee.

c.The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with the law.

d.Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld by applicable laws or regulations.

e.The Executive's or the Company's failure to insist upon strict compliance with any provision of, or to assert any right under, this Agreement shall not be deemed to be a waiver of such provision or right or of any other provision of or right under this Agreement.

f.This Agreement may be executed in several counterparts, each of which shall be deemed original, and said counterparts shall constitute but one and the same instrument.

g.The language in all parts of this Agreement shall in all cases be construed simply, according to its fair meaning, and not strictly for or against any of the parties hereto. Without limitation, there shall be no presumption against any party on the ground that 

14

 

US-DOCS\92602672.8

 

such party was responsible for drafting this Agreement or any part thereof. Where the context so requires, the use of the masculine gender shall include the feminine and/or neuter genders and the singular shall include the plural, and vice versa, and the word "person" shall include any corporation, firm, partnership or other form of association. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

h.This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement.

20.Entire Agreement.

This Agreement and the other documents referenced herein constitute the entire agreement between the parties, and supersede all prior agreements and understandings between the parties with respect to the subject matter hereof, including but not limited to any prior employment agreement or offer letter with the Company or any subsidiary or Affiliate, including without limitation, Executive’s employment agreement with American Casino & Entertainment Properties LLC.  No modification, termination or attempted waiver of this Agreement shall be valid unless in writing and signed by the party against whom the same is sought to be enforced. 

 

21.Code Section 409A.

a.It is intended that the severance payments and benefits to be provided under this Agreement will be exempt from or comply with Section 409A of the Code and any ambiguities herein will be interpreted to ensure that such payments and benefits be so exempt or, if not so exempt, comply with Section 409A of the Code. To the extent applicable, this Agreement shall be interpreted in accordance with the applicable exemptions from, or in compliance with, Code Section 409A and Department of Treasury regulations and other interpretive guidance issued thereunder. Each series of installment payments made under this Agreement is hereby designated as a series of "separate payments" within the meaning of Section 409A of the Code. For purposes of this Agreement, all references to the Executive's "termination of employment" shall mean the Executive's "separation from service," as defined in Treasury Regulation Section 1.409A-1(h) ("Separation from Service").

b.If the Executive is a "specified employee" (as defined in Section 409A of the Code), as determined by the Company in accordance with Section 409A of the Code, on the date of the Executive's Separation from Service, to the extent that the payments or benefits under this Agreement are subject to Section 409A of the Code and the delayed payment or distribution of all or any portion of such amounts to which the Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, then such portion deferred pursuant to this Section 21(b) shall be paid or distributed to the Executive in a lump sum on the earlier of (i) the date that is six (6)-months following the Executive's Separation from Service, (ii) the date of the Executive's death or (iii) the earliest date as is permitted under Section 409A of the Code. Any remaining payments due under the Agreement shall be paid as otherwise provided herein.

c.If the Executive and the Company determine that any payments or benefits payable under this Agreement intended to comply with Sections 409A(a)(2), (3) and (4) of the 

15

 

US-DOCS\92602672.8

 

Code do not comply with Section 409A of the Code, Executive and the Company agree to amend this Agreement, or take such other actions as Executive and the Company deem reasonably necessary or appropriate, to comply with the requirements of Section 409A of the Code and the Treasury Regulations thereunder (and any applicable transition relief) while preserving the economic agreement of the parties. To the extent that any provision in this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner that no payments payable under this Agreement shall be subject to an "additional tax" as defined in Section 409A(a)(1)(B) of the Code.

d.Any reimbursement of expenses or in-kind benefits payable under this Agreement shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) and shall be paid on or before the last day of the Executive's taxable year following the taxable year in which the Executive incurred the expenses. The amount of expenses reimbursed or in-kind benefits payable during any taxable year of the Executive shall not affect the amount eligible for reimbursement or in-kind benefits payable in any other taxable year of the Executive, and the Executive's right to reimbursement for such amounts shall not be subject to liquidation or exchange for any other benefit.

 

22.Clawbacks and Forfeitures.

 

This Agreement and all compensation paid or payable hereunder shall be subject in all respects to the applicable provisions of any claw-back policy or forfeiture policy implemented by the Company after the Effective Date, including without limitation, any claw-back policy or forfeiture policy adopted to comply with the requirements of applicable law or the rules and regulations of any stock exchange applicable to the Company, including without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder, to the extent set forth in such claw-back policy or forfeiture policy.

 

[Signature Page Follows]

16

 

US-DOCS\92602672.8

 

 
IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the due authorization of its Board, the Company has caused this Agreement to be executed in its name and on its behalf, all as of the day and year first written above.
GOLDEN ENTERTAINMENT, INC.:EXECUTIVE:

 

	
By:
	
/s/ BLAKE L. SARTINI
	
 
	
By:
	
/s/ EDWARD W. MARTIN III

	
 
	
Name:  Blake L. Sartini
	
 
	
 
	
Edward W. Martin III

	
 
	
Its:  President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

US-DOCS\92602672.8

 

EXHIBIT A

ADDITIONAL BENEFITS

The Executive shall be entitled to receive the following additional benefits:

	
 
	
•
	
Allowance for health insurance premiums for the Executive and his covered dependents and participation in the Company's supplemental health insurance program, in each case consistent with the Company’s past practice.
	
 

 

18

 

US-DOCS\92602672.8Exhibit

Exhibit 10.21

EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of February 1, 2015 (the “Effective Date”), by and among SmartFinancial, Inc., a Tennessee corporation and registered bank holding company (the “Company”); SmartBank, a banking corporation organized under the laws of the State of Tennessee (the “Bank,” and together with the Company, collectively, the “Employer”); and Rhett Jordan, a resident of the State of Tennessee (the “Employee”). The Company, the Bank, and the Employee are sometimes referred to herein collectively as the “Parties,” and each is sometimes referred to herein individually as a “Party.” 
R E C I T A L S
A.The Employer desires to employ the Employee as Executive Vice President and Chief Credit Officer of the Company and the Bank, and the Employee desires to accept such employment.

B.The Parties desire to set forth in this Agreement the terms and conditions upon which the Employee will be so employed. 

A G R E E M E N T
In consideration of the premises set forth above, the mutual agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1.Definitions.  When used in this Agreement, the following terms and their variant forms shall have the meanings set forth below:

(a)    “Affiliate” shall mean any person that controls, is controlled by, or is under common control with another person. For this purpose, “control” means ownership of more than 50% of the ordinary voting power of the outstanding equity securities of a person.  For the avoidance of doubt, it is expressly acknowledged that, following the Merger, the Bank and Cornerstone Community Bank, a banking corporation organized under the laws of the State of Tennessee (“Cornerstone”), will be Affiliates for purposes of this Agreement.

(b)    “Agreement” shall mean this Employment Agreement and any appendices incorporated herein together with any amendments hereto made in the manner described in this Agreement.

(c)    “Area” shall mean, during the period of the Employee’s employment, a radius of 75 miles from each banking office (whether a main office, branch office, or loan or deposit production office) maintained by the Bank and/or any Affiliate of the Bank from time to time during such period of employment, and, following the period of the Employee’s employment, a radius of 75 miles from each banking office (whether a main office, branch office, or loan or deposit production office) maintained by the Bank and/or any Affiliate of the Bank as of the last day of the Employee’s employment.

(d)    “Board of Directors” shall mean the board of directors of the Bank or the Company, as indicated herein, and, where appropriate, any committee or designee thereof.

(e)    “Business of the Employer” shall mean the business conducted by the Company and/or the Bank and/or any Affiliate of the Company or the Bank, which as to the Bank and the Company shall include the business of commercial and consumer banking.
(f)    “Cause” shall mean:

(i)    In the context of the termination of this Agreement by the Employer:

(1)    a breach of the terms of this Agreement by the Employee not cured by the Employee within 15 business days after the Employee’s receipt of the Employer’s written notice thereof, including without limitation failure by the Employee to perform the Employee’s duties and responsibilities in the manner and to the extent required under this Agreement; 

(2)    any act by the Employee of fraud against, misappropriation from, or dishonesty to the Company or the Bank or any Affiliate of the Company or the Bank; 

(3)    the conviction of the Employee of any crime; 

(4)    conduct by the Employee that amounts to willful misconduct, gross neglect, or a material failure to perform the Employee’s duties and responsibilities hereunder, including prolonged absences without the written consent of the President and Chief Executive Officer of the Company; provided that the nature of such conduct shall be set forth with reasonable particularity in a written notice to the Employee who shall have 15 business days following delivery of such notice to cure such alleged conduct, provided that such conduct is, in the reasonable discretion of the President and Chief Executive Officer of the Company, susceptible to a cure;

(5)    the exhibition by the Employee of a standard of behavior within the scope of or related to the Employee’s employment that is in violation of: (i) any written policy, which violation results in or is likely to result in a material loss or regulatory criticism, (ii) any board committee charter, or (iii) any code of ethics or business conduct of the Company or any Affiliate of the Company; provided in each case that the nature of such behavior shall be set forth with reasonable particularity in a written notice to the Employee who shall have 15 business days following delivery of such notice to cure such alleged behavior, provided that such behavior is, in the reasonable discretion of the President and Chief Executive Officer of the Company, susceptible to a cure;

(6)    conduct or behavior by the Employee that, in the reasonable opinion of the President and Chief Executive Officer of the Company, has harmed or could be expected to harm the business or reputation of the Company, the Bank, or any Affiliate of the Company or the Bank, including without limitation conduct or behavior that is unethical or involves moral turpitude;

(7)    receipt of any form of written notice that any regulatory agency or authority having jurisdiction over the Company, the Bank, or any Affiliate of the Company or the Bank has instituted any form of regulatory action against the Employee; or

(8)    the Employee’s removal from office or permanent prohibition from participating in the conduct of the affairs of the Company, the Bank, or any Affiliate of the Company or the Bank by an order issued under Section 8(e) or Section 8(g) of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e) and (g)).

(ii)    In the context of the termination of this Agreement by the Employee:

(1)    a material reduction, when considered in the aggregate, in the scope of the Employee’s duties and responsibilities, which (A) is not consented to by the Employee in writing, or (B) does not occur within the 12 months following either the Merger or the merger of the Bank and Cornerstone;  

(2)    a material reduction, when considered in the aggregate, in the salary and other compensation and benefits provided for in Section 4 hereof from the level in effect immediately prior to such reduction, which is not consented to by the Employee in writing; or

(3)    a change in the location of the Employee’s primary office such that the Employee is required to report regularly to an office located outside of a radius of 75 miles from the location of the Employee’s primary office as of the date of such change in location, which change is not consented to by the Employee in writing. 

(g)    “Change of Control” shall mean:

(i)    the acquisition by any person or persons acting in concert (other than any officer(s), director(s), and/or shareholder(s) of the Company or any Affiliate of the Company), in a single transaction or series of related transactions, of 50% or more of the outstanding voting securities of the Company entitled to vote in the election of Company directors; 

(ii)    a reorganization, merger, or consolidation to which the Company is a party with respect to which persons who were shareholders of the Company immediately prior to such reorganization, merger, or consolidation do not immediately thereafter own more than 50% of the combined voting power of the reorganized, merged, or consolidated company’s then outstanding voting securities entitled to vote in the election of directors; or

(iii)    the sale, transfer, or assignment by the Company of all or substantially all of the assets of the Company and its subsidiaries to any third party (excluding, however, any pledge by the Company of the capital stock of any subsidiary of the Company to secure indebtedness of the Company or for other general corporate or commercial purposes).

Notwithstanding the foregoing, the Parties expressly acknowledge and agree that neither the Merger nor any merger of the Bank and Cornerstone (irrespective of the surviving bank of such merger) shall constitute or give rise to a Change of Control for purposes of this Agreement.

(h)    “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

(i)    “Competing Business” shall mean any person (other than an Affiliate of the Company or the Bank) that is conducting any business that is the same or substantially the same as the Business of the Bank.

(j)    “Confidential Information” means data and information relating to the business of the Company or the Bank or any Affiliate of the Company or the Bank (which does not rise to the status of a Trade Secret) which is or has been disclosed to the Employee or of which the Employee became aware as a consequence of or through the Employee’s relationship with the Company or the Bank or any Affiliate of the Company or the Bank and which has value to Company or the Bank or any Affiliate of the Company or the Bank and is not generally known to its or their competitors. Confidential Information shall not include any data or information that has been voluntarily disclosed to the public by the Company or the Bank or any Affiliate of the Company or the Bank (provided that no such public disclosure shall be deemed to be voluntary when made without authorization by the Employee or any other employee of Company or the Bank or any Affiliate of the Company or the Bank) or that has been independently developed and disclosed by others or that otherwise enters the public domain through lawful means.

(k)    “Disability” shall mean the inability of the Employee to perform each of the Employee’s duties and responsibilities under this Agreement for a period of more than 90 consecutive days; provided that the Parties agree that, to the extent necessary to comply with Section 409A of the Code, the definition of “Disability” shall be amended to the definition of disability required by Section 409A of the Code.

(l)    “Employer Information” shall mean, collectively, Confidential Information and Trade Secrets.

(m)    “Merger” shall mean the merger of the Company with and into Cornerstone Bancshares, Inc. (“Cornerstone Bancshares”), a Tennessee corporation, as contemplated by that certain Agreement and Plan of Merger, by and among the Company, the Bank, Cornerstone Bancshares, and Cornerstone, dated December 5, 2014.

(n)    “Post-Termination Period” shall mean a period of 12 months following the effective date of the termination of the Employee’s employment.

(o)    “Severance Benefit” shall mean any post-termination benefit(s) to be paid by the Employer pursuant to Section 5(a)(ii), Section 5(b)(i), or Section 6 hereof.

(p)    “Trade Secrets” shall mean information of the Company of the Bank or any Affiliate of the Company or the Bank, including without limitation technical and  nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans, and lists of actual or potential customers, prospects, or suppliers, which:

(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.

2.    Employee Duties.

(a)    Position(s).  The Employee will be employed as Executive Vice President and Chief Credit  Officer of the Company and the Bank, and shall perform and discharge faithfully the duties and responsibilities which may be assigned to the Employee from time to time in connection with the conduct of the Employer’s business. The duties and responsibilities of the Employee shall be commensurate with those of individuals holding similar positions at other banks similarly situated. The Employee will report directly to the President and Chief Executive Officer of the Company and the Bank, or such other officer as the Board of Directors may determine. 

(b)    Full-Time Status.  In addition to the duties and responsibilities specifically assigned to the Employee pursuant to Section 2(a) hereof, the Employee shall:

(i)    subject to Section 2(c) hereof, during regular business hours devote substantially all of the Employee’s time, energy, attention, and skill to the performance of the duties and responsibilities of the Employee’s employment (reasonable vacations, approved leaves of absence, and reasonable absences due to illness excepted) and faithfully and industriously perform such duties and responsibilities;

(ii)    diligently follow and implement all reasonable and lawful policies and decisions communicated to the Employee; and

(iii)    timely prepare and forward to the requesting party or  parties all reports and accountings as may be reasonably requested of the Employee.

(c)    Permitted Activities.  The Employee shall devote substantially all of the Employee’s entire business time, attention, and energies to the Business of the Employer and shall not, during the Term, be engaged (whether or not during normal business hours) in any other significant business or professional activity, whether or not such activity is pursued for gain, profit, or other pecuniary advantage, but as long as the following activities do not interfere with the Employee’s obligations to the Employer, this shall not be construed as preventing the Employee from:

(i)    investing the Employee’s personal assets in any manner which will not require any services on the part of the Employee in the operations or affairs of the subject person and in which the Employee’s participation is solely that of an investor; provided that such investment activity following the Effective Date shall not result in the Employee owning, beneficially or of record, at any time 2% or more of the equity securities of any Competing Business; or

(ii)    participating in civic and professional affairs and organizations and conferences, preparing or publishing papers or books, or teaching, so long as any such activities do not interfere with the ability of the Employee to effectively discharge the Employee’s duties and responsibilities hereunder; provided that the Board of Directors may direct the Employee in writing to resign from any such organization and/or cease any such activities in the event the Board of Directors reasonably determines that continued membership and/or activities of the type identified would not be in the best interests of the Employer.

3.    Term of Employment.  The initial term of this Agreement (the “Initial Term”), and the Parties’ employment relationship, shall commence on and as of the Effective Date and, unless this Agreement is sooner terminated in accordance with its terms, shall end on the date which is the second anniversary of the Effective Date. At the end of the Initial Term (and at the end of any one-year renewal term), this Agreement will automatically renew for an additional, successive term of one year, unless the Employer or the Employee gives the other written notice of its intent to terminate this Agreement as of the end of the Initial Term (or as of the end of the then-current renewal term) at least 60 days prior to the end of the Initial Term (or then-current renewal term). The Initial Term and any and all renewal terms, if any, are referred to together herein as the “Term.”   

4.    Compensation.  The Employer shall compensate the Employee as follows during the Employee’s period of employment hereunder, except as otherwise provided below:

(a)    Annual Base Salary.  The Employee shall be compensated at an annual base rate of $178,500.00 per year (the “Annual Base Salary”). The Employee’s Annual Base Salary will be reviewed by the compensation committee of the Board of Directors at least annually (in accordance with the committee’s charter and any procedures adopted by the committee) for adjustments based on an evaluation of the Employee’s performance. The Employee’s Annual Base Salary shall be payable in accordance with the Employer’s normal payroll practices.

(b)    Annual Incentive Compensation.

(i)    The Employee shall be eligible to receive annual bonus compensation as determined by, and based on performance measures established by, the Board of Directors (upon recommendation by the compensation committee) consistent with the strategic plan(s) of the Employer pursuant to any incentive compensation program that may be adopted from time to time by the Board of Directors (an “Annual Bonus”). 

(ii)    Any Annual Bonus earned shall be payable in cash in the first calendar quarter of the year following the year in which the Annual Bonus is earned, in accordance with the Employer’s normal practices for the payment of short-term incentives. The payment of any Annual Bonus shall be subject to any approvals or non-objections required by any regulator of the Company or the Bank or any Affiliate of the Company or the Bank, and it is understood by the Parties that the Employee may not be eligible to receive any such Annual Bonus or other short-term incentive compensation if the Company or the Bank or any Affiliate of the Company or the Bank is subject to restrictions imposed on the Company or the Bank or any such Affiliate by the United States Department of the Treasury, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, the Tennessee Department of Financial Institutions, or any other bank or bank holding company regulatory authority, or if the Employer is otherwise restricted from making payment of such compensation under applicable law.

(c)    Reimbursement of Business Expenses.  Subject to the reimbursement policies from time to time adopted by the Board of Directors, and consistent with the annual budget approved for the period during which an expense is incurred, the Employer will reimburse the Employee for reasonable and necessary business expenses incurred by the Employee in the performance of the Employee’s duties and responsibilities hereunder; provided, however, that, as a condition to any such reimbursement, the Employee shall submit verification of the nature and amount of such expenses in accordance with said reimbursement policies. Examples of appropriate categories of reimbursable expenses include memberships in professional and civic organizations, professional development, and customer entertainment. The Employee acknowledges that the Employer makes no representation with respect to the taxability or non-taxability of the benefits provided under this Section 4(c).

(d)    Automobile. The Bank will provide the Employee an automobile satisfactory to the Employee and the Bank.

(e)    Cellular Telephone.  The Bank will provide the Employee with a Bank-owned cellular telephone for use by the Employee in the course of the Employee’s employment and for Employer-related business. 

(f)    Paid Leave.  On a non-cumulative basis, the Employee shall be entitled to 20 days of paid leave per calendar year, prorated for any partial calendar year of service. The provisions of this Section 4(e) shall apply, notwithstanding any less generous paid leave policy then maintained by the Employer, but the use of Employee’s paid leave shall otherwise be in accordance with and subject to the Employer’s paid leave policy as in effect from time to time.

(g)    Other Benefits.  In addition to the benefits specifically described in this Agreement, the Employee shall be entitled to such benefits as may be available from time to time to similarly situated employees of the Employer, including, by way of example only, retirement plan and health, dental, life, and disability insurance benefits. All such benefits shall be awarded and administered in accordance with the written terms of any applicable benefit plan or, if no written terms exist, the Employer’s standard policies and practices relating to such benefits.  

(h)    Reimbursement of Expenses; In-Kind Benefits.  All expenses eligible for reimbursement described in this Agreement must be incurred by the Employee during the Term of this Agreement to be eligible for reimbursement. Any in-kind benefits provided by the Employer must be provided during the Term of this Agreement. The amount of reimbursable expenses incurred, and the amount of any in-kind benefits provided, in one taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits provided, in any other taxable year. Each category of reimbursement shall be paid as soon as administratively practicable, but in no event shall any such reimbursement be paid after the last day of the calendar year following the calendar year in which the expense was incurred. Neither rights to reimbursement nor in-kind benefits shall be subject to liquidation or exchange for other benefits.

(i)    Clawback of Compensation.  The Employee agrees to return or repay any compensation previously paid or otherwise made available to the Employee that is subject to recovery under any applicable law, rule, or regulation (including any rule of any exchange or service on or through which the securities of the Company or any Affiliate of the Company are traded) where such compensation was in excess of what should have been paid or made available because the determination of the amount due was based, in whole or in part, on materially inaccurate financial information of the Employer. The Employee agrees to return or repay promptly any such compensation identified by the Employer. If the Employee fails to return or repay such compensation promptly, the Employee agrees that the amount of such compensation may be deducted from any and all other compensation owed to the Employee. The Employee acknowledges that the Employer may take appropriate disciplinary action (up to and including termination of employment) if the Employee fails to return or repay such compensation. The provisions of this Section 4(h) shall be modified to the extent, and remain in effect for the period, required by applicable law, rule, or regulation.

5.    Termination of Employment. 

(a)    Termination by Employer.  During the Term, the Employee’s employment, and this Agreement, may be terminated by the Employer:

(i)    for Cause, upon written notice to the Employee approved by two-thirds of the members of the Board of Directors, in which event the Employee shall not be entitled to any post-termination compensation or benefits;

(ii)    at any time without Cause (provided that the Bank shall give the Employee at least 30 days prior written notice of the Employer’s intent to terminate), in which event the Employer shall (1) be required to pay to the Employee a severance benefit equal to one times the Employee’s Annual Base Salary as of the date of termination, said benefit to be payable over the course of the 12-month period following termination in accordance with the Employer’s normal payroll practices, and (2) reimburse the Employee for the reasonable cost of premium payments paid by the Employee to continue the Employee’s then-existing health insurance for himself as provided by the Employer for the lesser of (A) 12 months following termination and (B) until such time as the Employee obtains other employment providing health insurance coverage, provided that the Employer may discontinue reimbursing the Employee for such premium payments for the applicable time period and instead provide a cash payment to the Employee (for the Employee to use as the Employee deems appropriate) equal to the amount of the remainder of such reimbursable premium payments in the event that the Employer determines that continued reimbursement of premium payments would cause a violation of applicable nondiscrimination rules (for the avoidance of doubt, the termination of the Employee’s employment by the Employer upon the disability of the Employee under Section 5(a)(iii) below shall not be considered or deemed termination of the Employee’s employment without Cause under this Section 5(a)(ii)); or

(iii)    at any time upon the Disability of the Employee (provided that the Employer shall give the Employee at least 30 days prior written notice of the Employer’s intent to terminate), in which event the Employee will be entitled to such benefits (if any) as may be available to the Employee under the Employer’s disability insurance policy or policies (if any) then in effect. 

(b)    Termination by Employee.  During the Term, the Employee’s employment, and this Agreement, may be terminated by the Employee:

(i)    for Cause, in which event the Employer shall (1) be required to pay to the Employee a severance benefit equal to (A) if termination is for Cause as defined in Section 1(f)(ii)(1) or Section 1(f)(ii)(3), one times the Employee’s Annual Base Salary as of the date of termination, said benefit to be payable over the course of the 12-month period following termination in accordance with the Employer’s normal payroll practices, or (B) if termination is for Cause as defined in Section 1(f)(ii)(2), one times the Employee’s Annual Base Salary immediately before the reduction in salary and other compensation and benefits giving rise to termination, said benefit to be payable over the course of the 12-month period following termination in accordance with the Employer’s normal payroll practices, and (2) reimburse the Employee for the reasonable cost of premium payments paid by the Employee to continue the Employee’s then-existing health insurance for himself as provided by the Employer for the lesser of (A) 12 months following termination and (B) until such time as the Employee obtains other employment providing health insurance coverage, provided that the Employer may discontinue reimbursing the Employee for such premium payments for the applicable time period and instead provide a cash payment to the Employee (for the Employee to use as the Employee deems appropriate) equal to the amount of the remainder of such reimbursable premium payments in the event that the Employer determines that continued reimbursement of premium payments would cause a violation of applicable nondiscrimination rules; or 

(ii)    at any time without Cause or upon the Disability of the Employee (provided that the Employee shall give the Employer at least 60 days prior written notice of the Employee’s intent to terminate), in which event the Employee shall not be entitled to any post-termination compensation or benefits other than such benefits (if any) as may be available to the Employee under the Employer’s disability insurance policy or policies (if any) then in effect. 

(c)    Termination by Mutual Agreement.  During the Term, the Employee’s employment, and this Agreement, may be terminated at any time by mutual, written agreement of the Parties. 
(d)    Termination Upon Death.  The Employee’s employment, and this Agreement, shall terminate automatically upon the death of the Employee. 

(e)    Effect of Termination; Resignation.  Upon the termination of the Employee’s employment hereunder, the Employer shall have no further obligations to the Employee or the Employee’s estate, heirs, beneficiaries, executors, administrators, or legal or personal representatives with respect to this Agreement, except for the payment of any amounts earned and owing under Sections 4(a)-4(c) hereof as of the effective date of the termination of the Employee’s employment and any payment(s) required by Section 5(a)(ii), Section 5(b)(i), or Section 6 of this Agreement. Further, upon the termination of the Employee’s employment, if the Employee is a member of the Board of Directors or the board of directors of any Affiliate of the Employer, the Employee shall, at the request of the Employer, resign from his position(s) on such board(s), with any and all such resignations to be effective not later than the date on which the Employee’s employment is terminated.

6.    Change of Control.  

(a)    If, within 12 months following a Change of Control, the Employer (or any successor of or to the Employer) terminates the Employee’s employment without Cause, the Employee (or in the event of the Employee’s subsequent death the Employee’s estate or designated beneficiary or beneficiaries, as the case may be) shall receive, as liquidated damages, in lieu of all other claims, a severance payment equal to two times the Employee’s Annual Base Salary as of the date of termination, such amount to be paid in full in one lump sum payment on the last day of the month following the date of termination of the Employee’s employment. Additionally, the Employee will continue to receive the health insurance plan benefits then in effect for employees of the Employer for the lesser of (i) 12 months following termination and (ii) until such time as the Employee obtains other employment providing health insurance plan benefits, to include payment of any Bank-funded portion of the plan; provided, however, that the Employer may discontinue paying insurer(s) COBRA premiums for health insurance coverage for the applicable time period and instead provide a cash payment to the Employee (for the Employee to use as the Employee deems appropriate) equal to the amount of the remainder of such COBRA premiums in the event that the Employer determines that continued provision of a COBRA subsidy would cause a violation of applicable nondiscrimination rules.

(b)    If, within 12 months following a Change of Control, the Employee terminates the Employee’s employment with the Employer (or any successor of or to the Company or the Bank) for Cause, the Employee (or in the event of the Employee’s subsequent death the Employee’s estate or designated beneficiary or beneficiaries, as the case may be) shall receive, as liquidated damages, in lieu of all other claims, a severance payment equal to (i) if termination is for Cause as defined in Section 1(f)(ii)(1) or Section 1(f)(ii)(3), two times the Employee’s Annual Base Salary as of the date of termination, such amount to be paid in full in one lump sum payment on the last day of the month following the date of termination of the Employee’s employment, or (ii) if termination is for Cause as defined in Section 1(f)(ii)(2), two times the Employee’s Annual Base Salary immediately before the reduction in salary and other compensation and benefits giving rise to termination, such amount to be paid in full in one lump sum payment on the last day of the month following the date of termination of the Employee’s employment. Additionally, the Employee will continue to receive the health insurance plan benefits then in effect for employees of the Employer for the lesser of (i) 12 months following termination and (ii) until such time as the Employee obtains other employment providing health insurance plan benefits, to include payment of any Bank-funded portion of the plan; provided, however, that the Employer may discontinue paying insurer(s) COBRA premiums for health insurance coverage for the applicable time period and instead provide a cash payment to the Employee (for the Employee to use as the Employee deems appropriate) equal to the amount of the remainder of such COBRA premiums in the event that the Employer determines that continued provision of a COBRA subsidy would cause a violation of applicable nondiscrimination rules.

7.    Employer Information.

(a)    Ownership of Employer Information.  All Employer Information received or developed by the Employee or by the Company or the Bank or any Affiliate of the Company or the Bank while the Employee is employed by the Employer shall be and will remain the sole and exclusive property of the Company or the Bank or such Affiliate, as the case may be.

(b)    Obligations of the Employee.  The Employee agrees:

(i)    to hold all Employer Information in strictest confidence;

(ii)    to not use, duplicate, reproduce, distribute, disclose, or otherwise disseminate Employer Information or any physical embodiments of Employer Information to any unauthorized recipient; and

(iii)    in any event, to not take any action causing any Employer Information to lose its character or cease to qualify as, and to not fail to take any action necessary in order to prevent any Employer Information from losing its character or ceasing to qualify as, Confidential Information or a Trade Secret; provided, however, that none of the foregoing obligations shall preclude the Employee from making any disclosures of Employer Information which the Employee has been advised in writing by independent legal counsel are required by applicable law, rule, or regulation. This Section 7 shall survive for a period of two years following the termination of this Agreement for any reason with respect to Confidential Information, and shall survive the termination of this Agreement for any reason for so long as is permitted by applicable law with respect to Trade Secrets.

(c)    Delivery Upon Request or Termination.  Upon the request of the Employer, and in any  event upon the termination of the Employee’s employment with the Employer, the Employee will promptly deliver to the Employer all property belonging to the Employer, including without limitation all Employer Information then in the Employee’s possession or control.

8.    Non-Competition; Non-Solicitation; Non-Disparagement.  

(a)    Non-Competition.  The Employee agrees that during the period of the Employee’s employment by the Employer hereunder and, in the event of the termination of the Employee’s employment, for the period of time in which the Employee is entitled to receive any Severance Benefit, the Employee will not (except on behalf of or with the prior written consent of the Employer):

(i)    within the Area, either directly or indirectly, on the Employee’s own behalf or in the service of or on behalf of others, engage in any business, activity, enterprise, or venture competitive with the Business of the Employer;

(ii)    within the Area, either directly or indirectly, perform for any Competing Business any services that are the same as, or substantially the same as, the services the Employee provides or provided for the Employer;

(iii)    within the Area, accept employment with or be employed by any person engaged in any business, activity, enterprise, or venture competitive with the Business of the Employer; or
(iv)    work for or with, consult for, or otherwise be affiliated with, in either a paid or unpaid capacity, or be employed by any person or group of persons proposing to establish a new bank or other financial institution within the Area.

(b)    Non-Solicitation of Customers.  The Employee agrees that, during the period of the Employee’s employment by the Employer hereunder and, in the event of the termination of the Employee’s employment for any reason, for the duration of the Post-Termination Period, the Employee will not, directly or indirectly (except on behalf of or with the prior written consent of the Employer), on the Employee’s own behalf or in the service of or on behalf of others, solicit, divert, or appropriate, or attempt to solicit, divert, or appropriate, any business from any of the customer of the Company, the Bank, or any Affiliate of the Company or the Bank, including prospective customers actively sought by the Company, the Bank, or any Affiliate of the Company or the Bank, with whom the Employee has or had contact during the last two years of the Employee’s employment with the Employer, for purposes of selling, offering, or providing products or services that are competitive with those sold, offered, or provided by the Company, the Bank, or any Affiliate of the Company or the Bank.

(c)    Non-Solicitation of Employees.  The Employee agrees that, during the period of the Employee’s employment by the Employer hereunder and, in the event of the termination of the Employee’s employment for any reason, for the duration of the Post-Termination Period, the Employee will not, directly or indirectly (except on behalf of or with the prior written consent of the Employer), on the Employee’s own behalf or in the service of or on behalf of others, solicit, recruit, or hire away, or attempt to solicit, recruit, or hire away, any employee of the Company, the Bank, or any Affiliate of the Company or the Bank with whom the Employee had contact during the last two years of the Employee’s employment with the Employer, regardless of whether such employee is a full-time, part-time, or temporary employee of the Company, the Bank, such an Affiliate of the Company or the Bank or such employee’s employment is pursuant to a written agreement, for a determined period, or at will. 

(d)    Non-Disparagement.  The Employee agrees that, during the period of the Employee’s employment by the Employer hereunder and for a period of two years thereafter, the Employee will not make any untruthful statement (written or oral) that is or could reasonably be perceived as disparaging to the Company, the Bank, or any Affiliate of the Company or the Bank.

(e)    Modification.  The Parties agree that the provisions of this Agreement represent a reasonable balancing of their respective interests and have attempted to limit the restrictions imposed on the Employee to those necessary to protect the Employer from inevitable disclosure of Confidential Information and Trade Secrets and/or unfair competition. The Parties agree that, if the scope or enforceability of this Agreement is in any way disputed at any time and an arbitrator, court, or other trier of fact determines that the scope of the restrictions contained in this Agreement is overbroad, then such arbitrator, court, or other trier of fact may modify the scope of the restrictions contained in this Agreement.

(f)    Tolling.  The Employee agrees that, in the event the Employee breaches this Section 8, the Post-Termination Period shall be tolled during the period of such breach and shall be extended to 12 months after all breaches of this Agreement have ceased. 

(g)    Remedies.  The Employee agrees that the covenants contained in Section 7 and Section 8 of this Agreement are of the essence of this Agreement; that each of such covenants is reasonable and necessary to protect the business, interests, and properties of the Employer and its Affiliates; and that irreparable loss and damage will be suffered by the Employer should the Employee breach any of such covenants. Therefore, the Employee agrees and consents that, in addition to any and all other remedies provided by or available at law or in equity, the Employer shall be entitled to a temporary restraining order and temporary and permanent injunctions to prevent a breach or threatened or contemplated breach of any of the covenants contained in Section 7 or Section 8 of this Agreement, and that, in such event, the Employer shall not be required to post a bond. The Employer and the Employee agree that all remedies available to the Employer shall be cumulative.

9.    Severability.  The Parties agree that each of the provisions included in this Agreement is separate, distinct, and severable from the other provisions of this Agreement and that the invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. Further, if any provision of this Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of a conflict between the provision and any applicable law, rule, regulation, or public policy, the provision shall be redrawn to make the provision consistent with, and valid and enforceable under, such law, rule, regulation, or public policy.

10.    No Set-Off by Employee.  The existence of any claim, demand, action, or cause of action by the Employee against the Company, the Bank, or any Affiliate of the Company or the Bank, whether predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement by the Employer of any of the Employer’s rights hereunder.

11.    Notices.  All notices, requests, waivers, and other communications required or permitted hereunder shall be in writing and shall be either personally delivered; sent by national overnight courier service, postage prepaid, next-business-day delivery guaranteed; or mailed by first class United States Mail, postage prepaid return receipt requested, to the recipient at the address below indicated:

If to the Employer:        SmartFinancial, Inc.
SmartBank
Attention: President & Chief Executive Officer
5401 Kingston Pike
Suite 600
Knoxville, Tennessee 37919

If to the Employee:        Rhett Jordan
317 Sugarwood Drive
Knoxville, Tennessee 37934

or to such other address or to the attention of such other person as the recipient Party shall have specified by prior written notice to the sending Party. All such notices, requests, waivers, and other communications shall be deemed to have been effectively given: (a) when personally delivered to the Party to be notified; (b) two business days after deposit with a national overnight courier service, postage prepaid, addressed to the Party to be notified as set forth above with next-business-day delivery guaranteed; or (c) four business days after deposit in the United States Mail, first class, postage prepaid with return receipt requested, at any time other than during a general discontinuance of postal service due to strike, lockout, or otherwise (in which case such notice, request, waiver, or other communication shall be effectively given upon receipt), and addressed to the Party to be notified as set forth above. A Party may change such Party’s notice address set forth above by giving the other Party 10 days written notice of the new address in the manner set forth above.

1.    Assignment.  The rights and obligations of the Company and the Bank under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company and the Bank, including without limitation a purchaser of all or substantially all of the assets of the Company or the Bank. If this Agreement is assigned pursuant to the foregoing sentence, the assignment shall be by novation, and the assigning Party shall have no further liability hereunder, and the successor or assign shall become the “Company” or the “Bank,” as applicable, hereunder, but the Employee will not be deemed to have experienced a termination of employment by virtue of such assignment. Without limiting the generality of the foregoing, the Parties expressly acknowledge and agree that, in the event of any merger of the Company with and into Cornerstone, Cornerstone as the surviving company of such merger will, as successor by merger to the Company, succeed to all rights and obligations of the Company hereunder, without any further action by the Parties, and that at and after the effective time of such merger, all references in this Agreement to the “Company” shall be references to Cornerstone as successor by merger to the Company. This Agreement is a personal contract and the rights and interest of the Employee may not be assigned by the Employee. This Agreement shall inure to the benefit of and be enforceable by the Employee and the Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. 

2.    Waiver.  A waiver by one Party to this Agreement of any provision of this Agreement or of any breach of this Agreement by any other Party to this Agreement shall not be effective unless in writing, and no waiver shall operate or be construed as a waiver of the same or any other provision or breach on any other or subsequent occasion.

3.    Mediation.  Except with respect to Section 7, Section 8, and Section 22 hereof, and except as provided in Section 15 hereof, in the event of any dispute arising out of or relating to this Agreement, or a breach hereof, which dispute cannot be settled through direct discussions between the Parties, the Parties agree to first endeavor to settle the dispute in an amicable manner by non-binding mediation in accordance with the rules of alternative dispute resolution of the State of Tennessee for the judicial circuit containing Knox County, Tennessee before resorting to any other process for resolving the dispute.

4.    Applicable Law and Choice of Forum.  This Agreement shall be governed by and construed and enforced under and in accordance with the laws of the State of Tennessee, without regard to or the application of principles of conflicts of laws. The Parties agree that any legal action or proceeding arising under or relating to this Agreement shall be brought in a state court of record located in Knox County, Tennessee, or, in the event (but only in the event) that no such state court has subject matter jurisdiction over such action or proceeding, in the United States District Court for the Eastern District of Tennessee, which courts shall have exclusive jurisdiction over any such action or proceeding. Each Party consents to, and waives any objection such Party may otherwise have to, the jurisdiction and venue of such courts.

5.    Interpretation.  Words used herein importing any gender include all genders. Words used herein importing the singular shall include the plural and vice versa. When used herein, the terms “herein,” “hereunder,” “hereby,” “hereto,” and “hereof,” and any similar terms, refer to this Agreement. When used herein, the term “person” shall include an individual, a corporation, a limited liability company, a partnership, an association, a trust, and any other entity or organization, whether or not incorporated. Any captions, titles, or headings preceding the text of any section or subsection of this Agreement are solely for convenience of reference and shall not constitute part of this Agreement or affect its meaning, construction, or effect.

6.    Entire Agreement.  This Agreement embodies the entire, final, and integrated agreement of the Parties on the subject matter stated in this Agreement. No amendment or supplement to or modification of this Agreement shall be valid or binding upon the Employer or the Employee unless made in a writing signed by all of the Parties. All prior understandings and agreements relating to the subject matter of this Agreement are hereby expressly terminated. 

7.    Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

8.    Rights of Third Parties.  Nothing herein expressed is intended to or shall be construed to confer upon or give to any person, other than the Parties hereto and their successors and permitted assigns, any rights or remedies under or by reason of this Agreement.

9.    Legal Fees.  In the event of any claim, action, suit, or proceeding arising out of or in any way relating to this Agreement, the prevailing Party or Parties shall be entitled to recover from the non-prevailing Party or Parties all reasonable fees, expenses, and disbursements, including without limitation reasonable attorneys’ fees and court costs, incurred by such prevailing Party or Parties in connection with such claim, action, suit, or proceeding, in addition to any other relief to which such prevailing Party or Parties may be entitled at law or in equity.

10.    Survival.  The obligations of the Parties pursuant to Sections 4(h), 7, 8, 14, 15, 20, 21, 23, 24, 25, 26, and 27 shall survive the expiration and/or termination of this Agreement and/or the termination of the Employee’s employment hereunder for the periods expressly designated under such sections or, if no such period is designed, for the maximum period permissible under applicable law.
 
11.    Representation Regarding Restrictive Covenants.  The Employee represents that the Employee is not and will not become a party to any non-competition or non-solicitation agreement or any other agreement which would prohibit the Employee from entering into this Agreement or providing the services for the Employer contemplated by this Agreement on or after the Effective Date. In the event the Employee is subject to any such agreement, this Agreement shall be rendered null and void and the Employer shall have no obligations to the Employee under this Agreement. 

12.    Right to Contact.  The Employee acknowledges and agrees that the Employer shall retain and have the right to contact any new employer or potential employer (or other business) and apprise such person of the Employee’s responsibilities and obligations owed under this Agreement.

13.    Section 409A.  It is the intent of the Parties for any payment to which the Employee is entitled under this Agreement to be exempt from Section 409A of the Code to the maximum extent permitted under Section 409A of the Code. However, if any amounts payable are considered to be “nonqualified deferred compensation” subject to Section 409A of the Code, such amounts shall be paid and provided in a manner that, and at such time and in such form as, complies with the applicable requirements of Section 409A of the Code to avoid the unfavorable tax consequences provided therein for non-compliance. Neither the Employee nor the Employer shall intentionally take any action to accelerate or delay the payment of any amounts in any manner which would not be in compliance with Section 409A of the Code without the consent of the other Party. For purposes of this Agreement, all rights to payments shall be treated as rights to receive a series of separate payments to the fullest extent allowed by Section 409A of the Code. To the extent that some portion of the payments provided for under this Agreement may be bifurcated and treated as exempt from Section 409A of the Code under the “short-term deferral” or “separation pay” exemptions, then such amounts may be so treated as exempt from Section 409A of the Code.

14.    Tax Matters.

(a)    Withholding of Taxes.  The Employer may deduct and withhold from any amounts payable under this Agreement all federal, state, city, or other taxes the Employer is required to deduct or withhold pursuant to applicable law, rule, regulation, or ruling.

(b)    Excise Taxes.  

(i)    In the event that any amounts payable under this Agreement or otherwise to the Employee would (1) constitute “parachute payments” within the meaning of Section 280G of the Code or any comparable successor provision and (2) but for this Section 25(b), be subject to the excise tax imposed by Section 4999 of the Code or any comparable successor provision (the “Excise Tax”), then such amounts payable to the Employee shall be either (y) provided to the Employee in full or (z) provided to the Employee to the maximum extent that would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, when taking into account applicable federal, state, local, and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the Employee’s receipt, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Employer and the Employee otherwise agree in writing, any determination required under this Section 25(b) shall be made in writing in good faith by the Employer’s independent accounting firm (the “Independent Accountants”). In the event of a reduction in benefits hereunder, the reduction of the total payments shall apply as follows, unless otherwise agreed in writing and such agreement is in compliance with Section 409A of the Code: (1) any cash severance payments subject to Section 409A of the Code due under this Agreement shall be reduced, with the last such payment due first forfeited and reduced, and sequentially thereafter working from the next last payment; (2) any cash severance payments not subject to Section 409A of the Code due under this Agreement shall be reduced, with the last such payment due first forfeited and reduced, and sequentially thereafter working from the next last payment; (3) any acceleration of vesting of any equity subject to Section 409A of the Code shall remain as originally scheduled to vest, with the tranche that would vest last (without any such acceleration) first remaining as originally scheduled to vest; and (4) any acceleration of vesting of any equity not subject to Section 409A of the Code shall remain as originally scheduled to vest, with the tranche that would vest last (without any such acceleration) first remaining as originally scheduled to vest. For purposes of making the calculations required by this Section 25(b), the Independent Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good-faith interpretations concerning the application of the Code and other applicable legal authority. The Employer and the Employee shall furnish to the Independent Accountants such information and documents as the Independent Accountants may reasonably request in order to make a determination under this Section 25(b). The Employer shall bear all costs that the Independent Accountants may reasonably incur in connection with any calculations contemplated by this Section 25(b). 

(ii)    If notwithstanding any reductions described in this Section 25(b) the Internal Revenue Service (the “IRS”) determines that the Employee is liable for the Excise Tax as a result of the receipt of amounts payable under this Agreement or otherwise as described above, then the Employee shall be obligated to pay back to the Employer, within 30 days after a final IRS determination or, in the event that the Employee challenges the final IRS determination, a final judicial determination, a portion of such amounts equal to the Repayment Amount. The “Repayment Amount,” with respect to the payment of benefits, shall be the smallest such amount, if any, that is required to be paid to the Employer so that the Employee’s net after-tax proceeds with respect to any payment of benefits (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such payment) are maximized. The Repayment Amount with respect to the payment of benefits shall be zero if a Repayment Amount of more than zero would not result in the Employee’s net after-tax proceeds with respect to the payment of such benefits being maximized. If the Excise Tax is not eliminated pursuant to this Section 25(b), the Employee shall pay the Excise Tax.

(iii)    Notwithstanding any other provision of this Section 25(b), if (1) there is a reduction in the payment of benefits as described in this Section 25(b), (2) the IRS later determines that the Employee is liable for the Excise Tax, the payment of which would result in the maximization of the Employee’s net after-tax proceeds (calculated as if the Employee’s benefits had not previously been reduced), and (3) the Employee pays the Excise Tax, then the Employer shall pay to the Employee those benefits which were reduced pursuant to this Section 25(b) as soon as administratively possible after the Employee pays the Excise Tax, so that the Employee’s net after-tax proceeds with respect to the payment of benefits are maximized.

15.    Regulatory Restrictions.  The Parties expressly acknowledge and agree that (a) any and all payments contemplated by this Agreement are subject to and conditioned upon their compliance with 12 U.S.C. § 1828(k) and 12 C.F.R. Part 359, as such laws and regulations may be amended from time to time, and (b) the obligations of the Parties under this Agreement are generally subject to such conditions, restrictions, and limitations as may be imposed from time to time by applicable state and/or federal banking laws, rules, and regulations.

16.    Nature of Employer Obligations. The obligations of the Company and the Bank hereunder shall be joint and several.

1.    Effect on Prior Agreements and Existing Benefits Plans. This Agreement contains the entire understanding between the Parties and supersedes any prior employment agreement, whether written or oral, between the Company, the Bank, and the Employee. This Agreement shall not affect or operate to reduce any benefit or compensation inuring to the Employee of a kind elsewhere provided, and no provision of this Agreement shall be interpreted to mean that the Employee is subject to receiving fewer benefits than those available to the Employee without reference to this Agreement.
(Signature Page Follows)
2.    

IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of the date first written above.

BANK:    SMARTBANK

/s/ William Y. Carroll, Jr.            
William Y. Carroll, Jr.
President & Chief Executive Officer

COMPANY:                        SMARTFINANCIAL, INC.

/s/ William Y. Carroll, Jr.            
William Y. Carroll, Jr.
President & Chief Executive Officer

EMPLOYEE:    

/s/ Rhett Jordan                                                        Rhett Jordan

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00281-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00281-of-00352.parquet"}]]