Exhibit 10.12


 


	
  

  	
  FTN

  FINANCIAL

  	
  CAPITAL
  MARKETS

  EQUITY RESEARCH

  INVESTMENT BANKING

  CORRESPONDENT SERVICES

  
	
   

  	
  STRATEGIC ALLIANCES

  



 


 


December 6,
2005


 


Mr. George
Fort

Chief Financial Officer

Tennessee Commerce Bancorp Inc.

381 Mallory Station, Suite 207

Franklin, TN 37067


 


RE:
COMMITMENT LETTER/LETTER AGREEMENT


 


Dear
George:


 


I am pleased to inform you that First Tennessee Bank,
National Association (“Lender”) hereby commits to provide a revolving line of
credit (“Loan”) to Tennessee Commerce Bancorp (“Borrower”) for the purpose of
general working capital needs of the company. If accepted, this Commitment
Letter shall serve as the Letter Agreement governing the Loan. The commitment
is subject to the following terms and conditions:


 


	
  Borrower:

  	
  Tennessee
  Commerce Bancorp (A Tennessee Corporation)

  
	
   

  	
   

  
	
  Bank:

  	
  Tennessee
  Commerce Bank (“Bank”)

  
	
   

  	
   

  
	
  Purpose:

  	
  General
  Corporate purposes.

  
	
   

  	
   

  
	
  Amount:

  	
  Up
  to $5,000,000.00 on a revolving basis (“The Note”).

  
	
   

  	
   

  
	
  Collateral:

  	
  100%
  of Tennessee Commerce Bank stock owned by Borrower

  
	
   

  	
   

  
	
  Terms:

  	
  Interest
  Payable quarterly. Principal at maturity.

  
	
   

  	
   

  
	
  Rate:

  	
  90
  day LIBOR plus 250bps

  
	
   

  	
   

  
	
  Maturity:

  	
  September 30,
  2006.

  
	
   

  	
   

  
	
  Term
  Provision:

  	
  Lender agrees one year renewal of this line or to term any outstanding
  balance under the Note at its maturity for a period of up to ten years,
  assuming no adverse change in the financial condition of the Borrower or
  Bank; no change in senior management of the Borrower or Bank; no adverse
  change in the Borrower’s local economic conditions; and no default in this
  Letter Agreement. The aforementioned conditions to this Term Provision shall
  be determined by Lender in its sole discretion.

  



 






Although this information
has been obtained from sources which we believe to be reliable, we do not
guarantee its accuracy, and it may be incomplete or condensed. This is for
informational purposes only and is not intended as an offer or solicitation
with respect to the purchase or sale of any security. All herein listed securities
are subject to availability and change in price. Past performance is not
indicative of future results. Changes in any assumptions may have a material effect
on projected results.


 


FTN Financial Group and FTN
Financial Capital Markets are divisions of First Tennessee Bank National
Association (FTB), FTN Financial Securities Corp (FFSC), FTN Financial Capital
Assets Corporation, and FTN Midwest Securities Corp (MWRE) are wholly owned
subsidiaries of FTB. FFSC and MWRE are members of the NASD and SIPC. Equity
research is provided by MWRE. FTN Financial Group, through FTB or its affiliates,
offers investment products and services.


 

















 


	
  Affirmative
  Covenants:

  	
  Borrower hereby covenants and agrees that, until the Note, together
  with interest thereon, is paid in full, unless specifically waived by the
  Lender in writing, Borrower will, or will cause Borrower and Bank to;

  
	
   

  	
   

  
	
  Financial Reports

  	
  Furnish to Lender (a) as soon as available and in any event
  within ninety (90) days after the end of each calendar year, consolidated and
  consolidating balance sheets of Borrower and Bank, as at the end of such year
  and consolidated and consolidating statements of income of Borrower and Bank
  for the year then ended, together with the audit report and opinion of
  independent Certified Public Accountants acceptable to the Lender with
  respect thereto, which audit report and opinion shall contain no exceptions
  or qualifications unacceptable to Lender; (b) promptly upon receipt,
  copies of all management letters and other assessments and recommendations,
  formal or informal, submitted by the Certified Public Accountants to Borrower
  or Bank; (c) a copy of each of Borrower’s FR Y-9 Parent Company Only
  Financial Statement and (d) a copy of Borrower’s F.R. Y-6 Annual Report
  promptly upon the filing of the same with the Federal Reserve Board; and
  (e) a copy of Bank’s Quarterly Report of Condition and Income promptly
  upon the filing with the appropriate regulatory agency.

  
	
   

  	
   

  
	
  Capital Ratios

  	
  With respect to the financial statements of the Borrower and Bank,
  maintain at all times until payment in full of the Loan capital levels of
  both Borrower and Bank in full compliance with all state and federal
  regulatory authorities and without limiting the generality of the foregoing,
  a ratio of Qualifying Total Capital to Weighted Risk Assets as required by
  all state and federal regulatory authorities; provided further, however, with
  respect to the financial statement of the Bank, in no event shall the ratio
  of Tier 1 Capital to the difference between Total Assets and Goodwill be less
  than six and one-half percent (6.5%) at the end of each calendar quarter. For
  purposes hereof, “Qualifying Total Capital” and “Weighted Risk Assets” are
  defined in Appendix A to Title 12, Code of Federal Regulations,
  Part 225, Capital Adequacy Guidelines for Bank Holding Companies:
  Risk-Based Measure.

  
	
   

  	
   

  
	
  Loan Loss Reserves

  	
  With respect to Bank, maintain at all times loan loss reserves in
  amounts deemed adequate by all federal and state regulatory authorities.
  Non-performing loans shall have the meaning as set out under the paragraph
  headed “Non-Performing Loans “ below.
  Loans identified at closing as “restructured” are fully secured and
  performing as scheduled. The lender will monitor these loans that are
  identified on the attached schedule on a quarterly basis.

  
	
   

  	
   

  
	
  Events
  of Default

  	
  Any one or more of the following events shall constitute a default
  (“Event of Default”) under the terms of this Agreement:

  
	
   

  	
   

  
	
  Payment

  	
  Default in the payment when due of the principal or interest on the
  Note;

  
	
   

  	
   

  
	
  Performance

  	
  Default in the performance of any provisions or breach of any covenant
  of this Letter Agreement or any other Loan Document;

  
	
   

  	
   

  
	
  Bankruptcy

  	
  If Borrower or Bank files a petition in bankruptcy or seeks
  reorganization or arrangements under the Bankruptcy Code (as it now exists or
  as amended); is unable or admits in writing its inability to pay its debts as
  they become due or is not generally paying its debts as they come due; makes
  an assignment for the benefit of creditors; has a receiver, custodian or
  trustee appointed voluntarily or involuntarily, for its property; or is
  adjudicated bankrupt; or if an involuntary petition is filed in bankruptcy,
  for reorganization or arrangements, or for the appointment of a receiver,
  custodian or trustee of Borrower or Bank on their respective properties
  and if Borrower or Bank either acquiesce therein or fails to have such
  petition dismissed within sixty (60) days of the filing thereof.

  



 

















 


	
  Return
  on Assets

  	
  If Borrower
  shall fail to maintain an annualized return on total average assets of at
  least fifty one hundredths of one percent (.50%) as reported on a quarterly
  calendar basis. For purposes of this covenant “total average assets” shall be
  deemed to mean the year-to-date average of total assets of Bank.

  
	
   

  	
   

  
	
  Non-Performing
  Loans

  	
  If the
  Borrower’s non-performing loans exceed two and one-quarter percent (2.25%) of
  the Borrower’s gross loans. For purposes hereof, “non-performing loans” shall
  be defined as the sum of all loans any installment or prepayments on which
  are 90 days or more past due plus all loans that are on non-accrual plus
  those loans which have been renegotiated (as defined by the regulatory
  agencies) or restructured to provide a reduction in either interest or
  principal because of a deterioration in the financial position of the borrower.

  
	
   

  	
   

  
	
  Change
  in Control

  	
  If there shall
  at any time occur without the prior written approval of Lender a change in control
  (including any change in control under the Change in Bank Control Act of
  1978, as amended, and any transaction or restructuring which requires
  approval under the Bank Holding Company Act of 1956, as amended) of Bank or
  Borrower.

  
	
   

  	
   

  
	
  Supervisory
  Action

  	
  The issuance,
  after the date hereof, by or at the request of any bank regulatory authority
  of any Supervisory Action. As used herein, “Supervisory Action” shall mean
  and include the issuance by any bank regulatory authority of a letter
  agreement or memorandum of understanding (regardless of whether consented or
  agreed to by the party to whom it is addressed); or the issuance by or at the
  behest of any bank regulatory authority of a cease and desist order,
  injunction, directive, restraining order, notice of charges, or civil money
  penalties, against Borrower, Bank or the directors or officers of either of
  them, whether temporary or permanent.

  
	
   

  	
   

  
	
  Remedies

  	
  If an Event of Default
  shall occur, at any time thereafter, Lender may, at its option without demand
  or notice (except as otherwise provided herein), the same being expressly
  waived, declare the Loan, with interest thereon, to be immediately due and
  payable, and may proceed to exercise all rights and remedies available under
  the Pledge Agreement, under any other Loan Document, at law or in equity,
  concurrently or sequentially, in such order as Lender may elect, all such
  rights and remedies being cumulative.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Miscellaneous

  	
   

  
	
   

  	
   

  
	
  Binding
  Effect

  	
  This Loan
  Agreement shall be binding upon, and inure to the benefit of the parties
  hereto and their respective heirs, successors, and assigns, except that
  Borrower shall not have the right to assign its rights hereunder or any
  interest therein without the prior written consent of Lender.

  
	
   

  	
   

  
	
  Governing
  Law

  	
  This Loan
  Agreement shall be governed and construed in accordance with the laws of the State
  of Tennessee; except that the provisions hereof which relate to the payment
  of interest shall be governed by (i) the taws of the United States or,
  (ii) the laws of the State of Tennessee, whichever permits the Lender to
  charge the higher rate, as more particularly set out in the Note.

  



 

















 


	
  Survival

  	
  The terms and
  provisions of this commitment shall survive the closing of the Loan made
  hereunder, the delivery of all documents necessary to carry out the
  provisions of this commitment, and the funding and making of loans and
  disbursements hereunder. Unless superseded or supplemented by a separate loan
  agreement, this Letter Agreement shall constitute the Loan Agreement between
  the parties.

  
	
   

  	
   

  
	
  Dividends

  	
  Borrower may pay
  cash dividends without restriction provided an event of default has not occurred
  and is continuing or if the payment of such dividend would result in an event
  of default.

  
	
   

  	
   

  
	
  Other

  	
  This Commitment expires
  Feb 28, 2006.

  



 


George,
if the terms and conditions herein are acceptable please sign one copy of this
letter in the space indicated below and return to me. I certainly appreciate
the opportunity to provide this line and look forward to working with you more
in the future. Please give me a call if you have any questions or if I can
assist in any other way.


 


Sincerely,


 


 


	
  /s/ Steve Shelton

  	
   

  
	
  Steve Shelton

  
	
  Vice President

  



 


 


	
   

  	
  Accepted
  this 10th day of February 2005

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tennessee Commerce Bancorp, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George Fort

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  CFO

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  2/10/06