Exhibit 10.9


 


EMPLOYMENT AGREEMENT


 


This
Employment Agreement (this “Agreement”) is made and entered into as of this 19th
day of January, 2006  by and between
TENNESSEE COMMERCE BANK (the “Employer” or “Bank”), and MICHAEL R. SAPP (the “Employee”
or “Executive”).


 


1.             Employment. The Employer employs the
Employee and the Employee accepts employment upon the terms and conditions of
this Agreement. For the purposes of this Agreement, the following terms shall
have the meanings indicated:


 


(a)           Change
in Control. A “Change in Control” shall be deemed to have occurred if:


 


(i)            any one
person or entity, or more than one person or entity acting as a group, acquires
ownership of stock of either the Corporation or the Bank constituting more than
50% of the total voting power of either the Corporation or the Bank;


 


(ii)           a merger
or consolidation where the holders of the voting stock of either the
Corporation or the Bank immediately prior to the effective date of such merger
or consolidation own less than 50% of the voting stock of either entity
surviving such merger or consolidation; or


 


(iii)          any
one person or entity or more than one person or entity acting as a group,
acquires assets from either the Corporation or the Bank that have a total fair
market value greater than 50% of the total fair market value of all of either
the Corporation’s or the Bank’s assets respectively immediately before the
acquisition or acquisitions; provided, however, that transfers of assets which
otherwise would satisfy the requirements of this subsection (iii) will
not be treated as an acquisition of such assets if the assets are transferred
to:


 


(A) any entity, 50% or more of the total value or
voting power of which is owned, directly or indirectly by either the
Corporation or the Bank;


 


(B) any person or entity, or more than one person or
entity acting as a group, that owns, directly or indirectly, 50% or more of the
total value or voting power of all of the outstanding stock of either the
Corporation or the Bank; or


 


(C) any entity, as least 50% of the total value or
voting power of which is owned, directly or indirectly, by a person who owns,
directly or indirectly, 50% or more of the total value or voting power of all
the outstanding capital stock of either the Corporation or the Bank.


 

















 


Notwithstanding
the foregoing, a Change in Control shall not be deemed to have occurred solely
as a result of any transaction or reorganization undertaken for the primary
purpose of implementing a change in jurisdiction or charter of the Bank. For
purposes of this Agreement, an “affiliate” of, or a person(s) “affiliated with”
a specified person(s), is a person that, directly or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the person(s) specified.


 


(b) Confidential
Information. Confidential Information shall mean any and all information the
Employee acquires or to which the Employee has access during the Term that has
not been disclosed publicly by the Employer and is not a matter of common knowledge
in the fields of work of the Employer. The Confidential Information shall
include, but not be limited to, trade secrets, technical data, mailing lists,
the names of suppliers and customers, and the arrangements made from time to
time with suppliers and customers.


 


(c)           Corporation. The Corporation is Tennessee Commerce Bancorp, Inc.,
the bank holding company for the Bank.


 


(d)           Good Cause. “Good Cause” shall be deemed to have occurred if
either party has breached this Agreement and the non-breaching party gives
notice in writing, delivered to the breaching party and providing ten (10) calendar
days, from the date of delivery of the notice, within which the breaching party
has the opportunity to cure, if possible, the breach. In addition, Good Cause
for termination shall exist if Employee engages in any of the following conduct
while an employee of the Employer:  (1) willful
and knowing dishonesty in communication of any kind on any material subject for
any purpose either to the Employer or to any person or entity for or on behalf
of the Employer; (2) use of more than an insubstantial and quantitatively
small amount of time during normal business hours of the Employer for
activities not calculated and reasonably designed to produce profit for the
Employer; (3) theft, embezzlement, false entries on records,
misapplication of funds or property, misappropriation of any asset, any conduct
resulting in conversion of any kind, or any actual or constructive fraud; (4) at
any time during or after employment at the Employer, imparting Confidential
Information, whether proprietary or non-proprietary, to any person other than (i) an
authorized employee of the Employer; or (ii) as required by law, or (iii) as
part of a privileged communication to an attorney; (5) gross neglect
of duty, including, but not limited to, failure or refusal to attend to the
duties of employment at the Employer; (6) participating in any conduct
involving moral turpitude or which results in public disgrace including, but
not limited to, conduct for which there is probable cause to believe that, if
criminally prosecuted, such conduct would be adjudged felonious; (7) counseling,
advising, assisting, procuring or aiding any employee of the Employer in any
above-recited conflict of interest; (8) knowing, believing or having
reason to know or believe that an employee of the Employer has, is, or is about
to engage in any above-recited conflict of interest and not revealing said
knowledge or belief and the reason for it to the Employer; (9) receiving,
during the term of this Agreement, compensation, income, anything of value, or
a future interest in or future entitlement to compensation, income or a thing
of value, from any person or entity who or which is engaged in the same or
substantially the same business as the Employer in the same product, service or
geographical market, except stock dividends and/or capital gains from passive
investments in financial institutions by Employee made in the ordinary course
of business and as part of Employee’s investment portfolio. However, cause
shall not be deemed to exist merely because of a difference of opinion between
Employee and the Employer, or any employees, directors or officers of either,
as to philosophy of management or other personal beliefs.


 


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(e)           Total Disability. The phrase “Total Disability” means the
inability of Employee to perform his normal required services hereunder by
reason of Employee’s mental or physical illness or incapacity, which illness or
incapacity is expected to be permanent and continuous during the remainder of
Employee’s life, as so determined by a licensed physician selected by Employee
and reasonably satisfactory to the Employer’s Board of Directors.


 


2.             Term. The term (“Term”) of this
Agreement shall begin on the date of the Agreement (Effective Date) and end on
the second anniversary of such date (the Employment Period). The Employment
Period shall be a constant rolling period of two years, commencing on the
Effective Date, with the result that, for each day after the Effective Date the
Executive’s term of employment shall be two years. The Termination Date may be
modified upon:


 


(a)           Mutual Agreement. The mutual written agreement of the
Employer and the Employee.


 


(b)           Resignation. The effective date of the Employee’s
resignation.


 


(c)           Death or Disability. The death or total disability of the
Employee.


 


(d)           Termination. The Employer’s termination of the Employee’s
employment, upon written notice to the Employee, for Good Cause, as further
defined above, certified by a vote of the Board of Directors exclusive of the
Employee.


 


(e)           Breach. The breach by the Employee of any provision of this
Agreement.


 


3.             Compensation.


 


(a)           Base Salary. As compensation for the
services to be rendered by Employee during the period of his employment
hereunder, and upon the condition that Employee shall fully and faithfully keep
and perform all of the terms and conditions hereof, Employer shall pay
Employee a salary of $190,000 per year, less income tax withholdings and other
normal employee deductions, plus any additional amounts designated as Base
Salary increases by the Board of Directors of the Employer, which amount is
payable in equal installments (no less frequent than monthly) in accordance
with the payroll practices from time to time adopted by the Employer.


 


(b)           Additional Compensation. During the Term of this
Agreement, Employee shall participate in an incentive program providing an
earning potential equivalent of up to 100% of the salary.


 


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(c)           Benefits. The Bank shall provide the
Employee with medical, dental, vision and disability insurance (collectively, “Health
Insurance”), as well as a term life insurance policy (“Life Insurance”) with a
death benefit equal to $300,000. The Bank will provide the Employee with
automobile benefits commensurate with his position and at least comparable to
other employees of the Employer.


 


This Agreement
shall not be deemed abrogated or terminated if the Board of Directors or
stockholders of Employer shall determine to increase the compensation of
Employee for any period of time.


 


4.             Duties. The Employee is engaged as President
of the Employer and the Corporation with such duties to be established by the
Board of Directors and/or as specified in the Bylaws of the Employer.


 


5.             Working Facilities. The Employee shall have a
private office, stenographic help, and such other facilities and services as
are suitable to his position and appropriate for the performance of his duties.


 


6.             Disclosure of Information. The Employee acknowledges that
the Confidential Information is a valuable, special, and unique asset of the
Employer’s business. The Employee will not, during or after the term of his
employment, disclose any Confidential Information to any person, firm,
corporation, association, or other entity for any reason or purpose whatsoever.
In the event of a breach or threatened breach by the Employee of the provisions
of this paragraph, the Employer shall be entitled to an injunction restraining
the Employee from disclosing, in whole or in part, the Confidential
Information, or from rendering any services to any person, firm, corporation,
association, or other entity to whom such Confidential Information, in whole or
in part, has been disclosed or is threatened to be disclosed. Nothing herein
shall be construed as prohibiting the Employer from pursuing any other remedies
available to the Employer for such breach or threatened breach, including the
recovery of damages from the Employee.


 


7.             Expenses. The Employee may incur
reasonable expenses for promoting the Employer’s business, including expenses
for entertainment, travel, and similar items. The Employer will reimburse the
Employee for all such expenses upon the Employee’s periodic presentation of an
itemized account of such expenditures.


 


8.             Vacations. The Employee shall be entitled
each year to a vacation of five (5) weeks, during which time his
compensation shall be paid in full. A portion of such vacation shall be taken
over a two week consecutive period.


 


9.             Force Majeure and Disability. If Employer is unable to conduct
its business, or a substantial portion thereof, by virtue of governmental
regulation or order, or by strike, war, fire, earthquake, hurricane, or similar
acts of God, or other calamity (declared or undeclared), or because of other
similar or dissimilar cause beyond control of Employer (all of which events are
hereinafter sometimes referred to as “Force Majeure”), or in the event Employee
suffers a Total Disability, Employer shall, in the event the Force Majeure
and/or Total Disability continue for at least eight aggregate weeks during any
four-month period, have the right to suspend the operation of this Agreement
for the duration of said Force Majeure and/or Total Disability (except for any
benefits payable to Employee under such benefit plans generally available to
all executive employees), and Employer shall, at its option, have the right to
add a period equal to such suspension to the Term hereof. If the Term shall
expire prior to the end of the Termination Date because of the Employee’s Total
Disability, the Employer shall continue to pay the amounts specified in Section 3
during the Term of this Agreement, provided however, that any such continued
payments shall be reduced, dollar-for-dollar, by the amount of any payments
made to the Employee pursuant to the Employer-sponsored disability plan,
program or arrangement or pursuant to disability insurance provided by the
Employer to the Employee. If the Employer’s Board of Directors determines that
the Employee, after suffering Total Disability, is unable to manage his or her
affairs, the Employer shall pay the amounts due under this Section 9 as
the Employee’s duly appointed guardian, conservator, or other legal
representative, instead of the Employee.


 


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10.          Termination With Cause. With Good Cause, the Employer may terminate
this Agreement at any time upon written notice to the Employee. In such event,
the Employee, if requested by the Employer, shall continue to render his
services, and shall be paid his regular compensation up to the date of
termination, but no other payments or benefits shall be paid or vested to him.


 


11.          Change
in Control Payment. In the event that a Change in Control occurs during the term hereof, irrespective of
whether or not the Employee’s employment is terminated by the Bank or the
Corporation or any successor to the Bank or the Corporation, the Bank shall (i) pay
the Employee an amount equal to (w) the product of 2.99 times the sum of the
Employee’s expected Base Salary and Additional Compensation for the calendar
year during which the Change in Control occurs (which expected Base Salary and
Additional Compensation shall be in no event less than that earned by the
Employee during the preceding calendar year), plus (x) provide continued health
and life insurance benefits, at the level maintained by the Bank for the
Employee, for the remaining term of the Agreement, and (ii) grant the Employee
the right to purchase the employer-owned or leased automobile used by the
employee as of the effective date of the Change in Control at the lower of (y)
the Trade-In Value (as that term is defined in the current Kelley Blue Book) or
(z) the book value as shown on the leasing Employer’s books. Any payments to be
made by the Bank to the Employee pursuant to clause (i) of this Subsection 11
shall be paid in the Bank’s discretion either in a lump sum or in equal
installments over a twenty-four (24) month period beginning on the effective
date of the Change in Control. If it is determined by the Bank’s independent
auditors that any monetary or other benefit received or deemed received by the
Employee in the event of a Change in Control is or will become subject to any
excise tax under Section 4999 of the Code or any similar tax under any
United States federal, state, or local law, the Bank shall pay to the Employee,
within 30 business days, an amount equal to the estimated excise tax but not to
exceed $100,000.00.


 


12.          Death During
Employment. If
the Term shall expire prior to the end of the Termination Date because of the
Employee’s death, the Employer shall thereafter make payments equal to 75% of
the amount specified in Section 3(a), (b), and (c), during the Term. The
payments described in this Section 12 shall be made to the Employee’s
spouse if the Employee is married at the time of the Employee’s death, but if
the Employee is not married at the time of the Employee’s death or if the
Employee is married at the time of the Employee’s death and the Employee’s
spouse dies before all the payments are made under this Section 12, the
remaining payments shall be made to the Employee’s estate.


 


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13.          Competition During and After Term.
Employee agrees
that during the Term hereof, and for a period of one (1) year after the
expiration of the Term, he will not, either separately, jointly, or in
association with others, directly or indirectly, as an agent, employee, owner,
partner, stockholder, or otherwise, allow his name to be used by, or establish,
engage in, or become interested in any business, trade or occupation similar to
the business being conducted by Employer, in any county in any of the States of
the United States in which Employer’s business is presently being conducted, as
long as Employer, or any person, firm, or corporation deriving title to the
goodwill of, or shares from it, carries on a like business therein. Notwithstanding
the preceding sentence, Employee shall be allowed to engage in or be interested
in the businesses and activities enumerated in Schedule 1 annexed hereto,
if any, provided that his interest or involvement therein does not otherwise
violate any other term or provision of this Agreement other than the preceding
sentence of this Section. Employer and Employee acknowledge that during the
Term of Employee’s employment, Employee will acquire special knowledge and/or
skill that he can effectively utilize in competition with Employer. Furthermore,
although not a term or condition of this Agreement, Employer and Employee
acknowledge that, as of the date hereof, it is reasonably contemplated that
Employee’s services will be utilized by Employer in executive, managerial,
and/or supervisory capacities throughout the areas in which Employer conducts
its business, and in the general operation of Employer’s business wherever it
is being conducted, throughout the United States.


 


Employee
agrees that the remedy at law for any breach by him of the covenants contained
herein will be inadequate, and that in the event of a violation of the
covenants contained herein, in addition to any and all legal and equitable
remedies which may be available, the said covenants may be enforced
by an injunction in a suit in equity, without the necessity of proving actual
damage, and that a temporary injunction may be granted immediately upon
the commencement of any such suit, and without notice. The parties hereto
intend that the covenants contained in this Section shall be deemed to be
a series of separate covenants, one for each county of each state where
Employer does business. If, in any judicial proceeding, a court shall refuse to
enforce any or all of the separate covenants deemed included in such action,
then such unenforceable covenants shall be deemed eliminated from the
provisions hereof for the purposes of such proceeding to the extent necessary
to permit the remaining separate covenants to be enforced in such proceeding. Furthermore,
if in any judicial proceeding a court shall refuse to enforce any covenant by
reason of the duration or extent thereof, such covenant shall be construed to
have only the maximum duration or extent permitted by law.


 


14.          Intellectual Property. The Employee also shall
disclose fully and only to the Employer all ideas, methods, plans,
developments, improvements, or patentable inventions, that relate directly or
indirectly to the business of the Employer, that are known, made, or discovered
by the Employee at any time during the Term. Nothing in this Section, however,
shall be construed as requiring any communication to the Employer of the idea,
method, plan, development, improvement, or invention if protected by any lawful
prohibition against the communication. All disclosures are to be made promptly
after conception or discovery of the idea, method, plan, development,
improvement, or invention. Any idea, method, plan, development, improvement, or
invention that the Employee is obligated to disclose to the Employer under this
Section shall be the property of the Employer. The Employee shall (a) provide
any and all assistance to the Employer in making any patent applications or
other applications for obtaining exclusive rights in, and (b) do all other
things reasonably necessary to vest in the Employer or its assigns, the ideas,
methods, plans, development, improvements, or inventions. Nothing herein shall
be construed as prohibiting the Employer from pursuing any other remedies
available to the Employer for such breach or threatened breach, including the
recovery of damages from the Employee.


 


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15.          Notices. Any notice required or desired
to be given under this Agreement shall be deemed given if in writing sent by
certified mail to his residence, in the case of the Employee, or to its
principal office, in the case of the Employer.


 


16.          Waiver of Breach. The waiver by the Employer of a
breach of any provision of this Agreement by the Employee shall not operate or
be construed as a waiver of any subsequent breach by the Employee. No waiver
shall be valid unless in writing and signed by an authorized officer of the
Employer.


 


17.          Assignment. The Employee acknowledges that
the services to be rendered by him are unique and personal. Accordingly, the
Employee may not assign any of his rights or delegate any of his duties or
obligations under this Agreement. The rights and obligations of the Employer
under this Agreement shall inure to the benefit of and shall be binding upon
the successors and assigns of the Employer.


 


18.          Compliance with Other Agreements. The Employee represents and
warrants that the execution of this Agreement and the performance of the
Employee’s obligations under this Agreement will not conflict with, result in
the breach of any provision of, cause the termination of, or constitute a
default under any Agreement to which the Employee is a party or by which the
Employee is or may be bound.


 


19.          Litigation Expense. In the event of a default
under this Agreement, the defaulting party shall reimburse the nondefaulting
party for all costs and expenses reasonably incurred by the nondefaulting party
in connection with the default, including without limitation attorney’s fees. Additionally,
in the event a suit or action if filed to enforce this agreement or with
respect to this Agreement, the prevailing party or parties shall be reimbursed
by the other party for all costs and expenses incurred in connection with the
suit or action, including without limitation reasonable attorney’s fees at the
trial level and on appeal.


 


20.          Severability. In the event any section,
subsection, provision, or clause of this Agreement or any combination thereof
is found to be unenforceable at law, in equity, or under any presently existing
other after enacted legislation, regulation, or order of the United Sates, any
state or subdivision thereof or any municipality, those finding shall not in
any way affect the other sections, subsections, provision, or clauses of this
Agreement, which shall continue in full force and effect, and the unenforceable
provision shall be interpreted in a manner that imposed the maximum restriction
or obligation permitted by applicable law.


 


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21.          Entire Agreement. This Agreement contains the entire
understanding of the parties. It may not be changed orally but only by an
agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, extension, or discharge is sought.


 


22.          Governing Law. This Agreement shall be
construed and enforced in accordance with the laws of the State of Tennessee.


 


IN
WITNESS WHEREOF, the parties hereto have executed this
Agreement on


 


January 19,
2006.


 


	
   

  	
  EMPLOYER:

  
	
   

  	
   

  
	
   

  	
  TENNESSEE COMMERCE BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Arthur F. Helf

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Chairman & Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Michael R. Sapp

  	
   

  
	
   

  	
  Michael R. Sapp

  



 


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