EXHIBIT
10.2


 


TENNESSEE
COMMERCE BANK


AMENDED
and RESTATED


EMPLOYMENT
AGREEMENT


For
MICHAEL R. SAPP


 


This Amended and Restated Employment Agreement (the “Agreement”)
is made as of this 19th day of May, 2009 (the “Effective Date”), by and between
Tennessee Commerce Bank and Tennessee Commerce Bancorp, Inc. (collectively,
the “Employer”), and Michael R. Sapp (the “Executive”).


 


WITNESSETH:


 


WHEREAS, the Employer and the Executive were
parties to an Employment Agreement dated December 30, 2008 (the “Prior
Employment Agreement”);


 


WHEREAS, the Employer and the Executive wish to
amend and restate the Prior Employment Agreement; and


 


WHEREAS, the Employer desires to continue the
services of and employ the Executive, and the Executive desires to continue to
provide services to the Employer, pursuant to the terms and conditions of this
Agreement; and


 


WHEREAS this Amended and Restated Agreement is
intended to comply with the requirements of Internal Revenue Code Section 409A
and the Capital Purchase Program (“CPP”). Accordingly, the intent of the
parties hereto is that the Agreement shall be operated and interpreted
consistent with the requirements of Section 409A and the CPP.


 


NOW,
THEREFORE, in
consideration of the promises, covenants and agreements contained herein, the
Employer and the Executive agree as follows:


 


1.             Employment. Upon the
terms and subject to the conditions contained in this Agreement, the Executive
agrees to provide full-time services for the Employer during the term of this
Agreement, and the Executive hereby accepts such employment. Executive agrees
to devote his best efforts to the business of the Employer, and shall perform
his duties in a diligent, trustworthy, and business-like manner, all for the
purpose of advancing the business of the Employer. Notwithstanding the above,
the Executive may engage in other business interests or investments which do
not materially prevent the Executive from performing his contemplated services
hereunder on behalf of the Employer and which do not conflict with any duty or
obligation Executive owes to the Employer under this Agreement. The Executive
is currently serving as a director of the Employer. The Employer shall nominate
the Executive for election as a director at such times as necessary so that the
Executive will, if elected by stockholders, remain a director of the Employer
throughout the term of this Agreement. The Executive hereby consents to serving
as a director and to being named as a director of the Employer in documents
filed with the Securities and Exchange Commission. The board of directors of the
Employer shall undertake every lawful effort to ensure that the Executive
continues throughout the term of employment to be elected or reelected as a
director of the Employer. The Executive shall be deemed to have resigned as a
director of the Employer effective immediately after termination of the
Executive’s employment under Section 6 of this Agreement, regardless of
whether the Executive submits a formal, written resignation as director.


 


2.             Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified below.


 


“Change in Control” shall
mean: a change in the ownership or effective control of either or both of
Tennessee Commerce Bank and Tennessee Commerce Bancorp, Inc., or in the
ownership of a substantial portion of the assets of either or both of Tennessee
Commerce Bank and Tennessee Commerce 


 

















 


Bancorp, Inc., as such change is defined under
the default definition in Treasury Regulation §1.409A-3(i)(5) or any
subsequently applicable Treasury Regulation.


 


“Cause” shall mean (a) fraud;
(b) embezzlement; (c) conviction of or plea of nolo contendere by the
Executive of any felony; (d) a material breach of, or the willful failure
or refusal by the Executive to perform and discharge the Executive’s duties,
responsibilities and obligations under this Agreement; (e) any act of
moral turpitude or willful misconduct by the Executive intended to result in
personal enrichment of the Executive at the expense of the Employer, or any of
its affiliates or which has a material adverse impact on the business or
reputation of the Employer or any of its affiliates (such determination to be
made by the Board in its reasonable judgment); (f) intentional material
damage to the property or business of the Employer; (g) gross negligence;
or (h) the ineligibility of the Executive to perform his duties because of
a ruling, directive or other action by any agency of the United States or any
state of the United States having regulatory authority over the Employer; but
in each case only if (1) the Executive has been provided with written
notice of any assertion that there is a basis for termination for cause which
notice shall specify in reasonable detail specific facts regarding any such
assertion, (2) such written notice is provided to the Executive a
reasonable time (and in any event no less than three business days) before the
Board meets to consider any possible termination for cause, (3) at or
prior to the meeting of the Board to consider the matters described in the
written notice, an opportunity is provided to the Executive and his counsel to
be heard before the Board with respect to the matters described in the written
notice, (4) any resolution or other Board action held with respect to any
deliberation regarding or decision to terminate the Executive for cause is duly
adopted by a vote of at least two-thirds of the entire Board (excluding the
Executive) at a meeting of the Board duly called and held, and (5) the
Executive is promptly provided with a copy of the resolution or other corporate
action taken with respect to such termination. No act or failure to act by the
Executive shall be considered willful unless done or omitted to be done by him
not in good faith and without reasonable belief that his action or omission was
in the best interests of the Employer. The unwillingness of the Executive to
accept any or all of a material change in the nature or scope of his position,
authorities or duties, a reduction in his total compensation or benefits, a
relocation that he deems unreasonable in light of his personal circumstances,
or other action by or request of the Employer in respect of his position,
authority, or responsibility that he reasonably deems to be contrary to this
Agreement, may not be considered by the Board to be a failure to perform or
misconduct by the Executive.


 


“Code” shall mean the
Internal Revenue Code of 1986, as amended, or any successor statute, rule or
regulation of similar effect.


 


“Confidential Information”
shall mean all business and other information relating to the business of the
Employer, including without limitation, technical or nontechnical data,
programs, methods, techniques, processes, financial data, financial plans,
product plans, and lists of actual or potential customers, 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, and (ii) is
the subject of efforts that are reasonable under the circumstances to maintain
its secrecy or confidentiality. Such information and compilations of
information shall be contractually subject to protection under this Agreement
whether or not such information constitutes a trade secret and is separately
protectable at law or in equity as a trade secret. Confidential Information
does not include confidential business information which does not constitute a
trade secret under applicable law two years after any expiration or termination
of this Agreement.


 


“Disability” or “Disabled”
means the Executive (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months or (ii) is by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the
Employer.


 


“Good Reason” shall mean (i) without
the Executive’s express written consent, a material diminution in authority,
duties or responsibilities; (ii) any reduction by the Employer in the
Executive’s 


 


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Base Salary; (iii) any failure of the Employer to
obtain the assumption of, or the agreement to perform, this Agreement by any
successor as contemplated in Section 13 hereof; (iv) the Employer
materially breaches this Agreement; or (v) the Employer requiring the
Executive to be permanently assigned to a location other than the current or
future headquarters of the Employer, except for required travel on the Employer
business to an extent substantially consistent with the Executive’s present
business travel obligations and as described under Section 3, or, in the
event the Executive consents to any relocation, the failure by the Employer to
pay (or reimburse the Executive) for all reasonable moving expenses incurred by
the Executive relating to a change of the Executive’s principal residence in
connection with such relocation and to indemnify the Executive against any loss
realized on the sale of the Executive’s principal residence in connection with
any such change of residence. Good Reason shall be deemed to occur only when
Executive provides notice to the Employer of his judgment that a Good Reason
event has occurred within 90 days of such occurrence, and the Employer will
have at least 30 days during which it may remedy the condition.


 


“Person” shall mean any
individual, corporation, limited liability Employer, bank, partnership, joint
venture, association, joint-stock Employer, trust, unincorporated organization
or other entity.


 


“Specified Employee” means an employee who at the time of Termination of Employment
is a key employee of the Employer, if any stock of the Employer is publicly
traded on an established securities market or otherwise. For purposes of this
Agreement, an employee is a key employee if the employee meets the requirements
of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in
accordance with the regulations thereunder and disregarding section 416(i)(5))
at any time during the 12-month period ending on December 31 (the “identification
period”). If the employee is a key employee during an identification period,
the employee is treated as a key employee for purposes of this Agreement during
the twelve (12) month period that begins on the first day of April following
the close of the identification period.


 


“Termination of Employment”  with
the Employer means that the Executive shall have ceased to be employed by the
Employer for reasons other than death, excepting a leave of absence approved by
the Employer. Whether a termination of employment has occurred is determined
based on whether the facts and circumstances indicate that the Employer and the
Executive reasonably anticipated that no further services would be performed
after a certain date or that the level of bona fide services the Executive
would perform after such date (whether as an employee or as an independent
contractor) would permanently decrease to no more than twenty percent (20%) of
the average level of bona fide services performed (whether as an employee or an
independent contractor) over the immediately preceding twenty-four (24) month
period (or the full period of services to the Employer if the Executive has
been providing services to the Employer less than twenty-four (24) months).


 


“Voluntary Termination”
shall mean the termination by Executive of Executive’s employment which is not
the result of Good Reason.


 


3.             Duties. During the
term hereof, the Executive shall hold the title of Chief Executive Officer of
the Employer, and shall report directly to the Board. The Executive shall have
such duties and authority as are typical of the Chief Executive Officer of a
Employer such as the Employer, including, without limitation, those specific in
the Employer’s bylaws. The Executive shall also promote, by entertainment or
otherwise, as and to the extent permitted by law, the business of the Employer
The Executive’s duties may, from time to time, be changed or modified at the
discretion of the Board; provided however, except with his written consent,
Executive shall not be assigned to any position of lower professional status.


 


4.             Employment Term. Unless
earlier terminated as provided herein, the Employer agrees to employ Executive,
and the Executive hereby accepts employment hereunder, for an initial term of
two (2) years commencing on the Effective Date, subject to the terms of
this Agreement. Thereafter, the term of this Agreement will automatically renew
each day after the Effective Date for one additional day so that the term of
the Agreement shall always be two (2) years unless notified of intent not
to renew by either party.


 


5.             Compensation and
Benefits. In consideration of Executive’s services and covenants
hereunder, Employer shall pay to Executive the compensation and benefits
described below (which 


 


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compensation shall be paid in accordance with the normal
compensation practices of the Employer and shall be subject to such deductions
and withholdings as are required by law or policies of the Employer in effect
from time to time, provided that his salary pursuant to Section 5(a) below
shall be payable not less frequently than monthly):


 


(a)           Base Salary. As of the
Effective Date of this Agreement, the Employer agrees to pay the Executive
during the term of this Agreement an initial Base Salary at the rate of
$400,000 per annum, payable in accordance with Employer’s normal payroll
practices with such payroll deductions and withholdings as are required by law.
The Executive’s Base Salary shall be reviewed no less frequently than annually
and may be increased (but not reduced) at the discretion of the Board (or a
committee thereof) and, as so increased, shall constitute the Executive’s “Base
Salary” hereunder.


 


(b)           Annual Incentive
Payment. During the term of this Agreement, provided that Executive
is a full-time employee of the Employer on the final day of the Employer’s
fiscal year, in addition to other compensation to be paid under this Section 5,
the Executive shall receive a performance-based annual incentive payment for
the then completed fiscal year of the Employer (the “Annual Incentive Payment”),
which shall be a percentage of Base Salary. The amount actually awarded and
paid to the Executive each fiscal year will be determined by the Board and will
be based on specific performance criteria to be identified in writing in
advance to Executive under a separate communication. The total amount of the
Annual Incentive Bonus to be paid hereunder shall be calculated by the Employer
and paid to the Executive within 60 days of the end of the Employer’s fiscal
year to which the Annual Incentive Bonus applies. The Employer’s calculation of
the Annual Incentive Bonus amount shall be conclusive and binding absent fraud
or manifest and material error.


 


(c)           Vacation. The
Executive shall be entitled to paid vacation of five (5) weeks, or as
specified in the Employer’s then current vacation policy, as amended from time
to time if greater.


 


(d)           Reimbursement of
Expenses. The Employer shall reimburse the Executive in accordance
with Employer’s expense reimbursement policies for all reasonable, ordinary and
necessary business expenses incurred by the Executive in the course of his
duties conducted on behalf of the Employer. In addition, the Employer shall pay
Executive a reasonable allowance and pay Executive for the Executive’s annual
dues at a local country club, and expenses related to the Executive’s use of
such country club for matters related to the business of the Employer. The
Employer shall also reimburse Executive’s reasonable expenses for continuing
education courses necessary to maintain any certifications or licenses
Executive may hold.


 


(e)           Other Employee
Benefits. The Executive shall be entitled to participate in any
employee benefit plans now existing or established hereafter generally
available to employees of the Employer or senior officers of the Employer, and
to all normal perquisites provided to senior officers of the Employer, provided
Executive is otherwise qualified to participate in such plans or programs. As
part of its normal course of business, the Employer may amend or terminate
employee benefits.


 


(f)            Benefits Not in
Lieu of Compensation. No benefit or perquisite provided
to the Executive shall be deemed to be in lieu of Base Salary, bonus, or other
compensation, provided that the reporting of any benefits shall be consistent
with the Code.


 


(g)           Insurance. The
Employer shall maintain or cause to be maintained director and officer
liability insurance covering the Executive throughout the term of this
Agreement.


 


6.             Termination. Employment with the Employer hereunder may be
terminated as follows:


 


(a)      The Employer. The Employer shall have the right to terminate
Executive’s employment hereunder at any time during the term hereof for Cause,
if the Executive becomes Disabled, upon the Executive’s death, or without
Cause.


 


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(i)            Termination for
Cause.  If the Employer
terminates Executive’s employment under this Agreement for Cause, the Employer’s
obligations under this Agreement, including any obligations of the Employer
under Section 5 hereof, shall cease as of the date of termination, except
that Employer shall pay Executive any earned but unpaid salary and benefits.


 


(ii)           Disability or Death.  If the Employer terminates Executive’s
employment under this Agreement pursuant to the Executive’s Disability or death,
the Employer’s obligations hereunder, including the obligations under Sections
5(a) above, shall cease on the date of Disability or death, as
appropriate. During the period of incapacity leading up to the termination of
the Executive’s employment under this provision, the Employer shall continue to
pay the full Base Salary at the rate then in effect and all perquisites and
other benefits (other than bonus) until Executive has satisfied the “elimination
period” specified under any disability plan or insurance program maintained by
the Employer, provided that the amount of the Employer’s payments under this Section 6(a)(ii) to
Executive shall be reduced by the sum of the amounts, if any, payable to
Executive for the same period under any Employer sick pay, paid time off, or
other leave program or any disability benefit or pension plan covering
Executive. In no event shall the Employer be required to pay the Executive Base
Salary or any other compensation or benefits twelve (12) months after the onset
of Executive’s Disability. Furthermore, Executive shall receive any bonus
earned or accrued through the date of incapacity, including any unvested
amounts awarded for previous years.


 


(iii)          Termination without Cause.  Subject
to Section 6(c) below, if the Employer terminates Executive’s
employment without Cause, Executive shall be entitled to receive as severance,
less applicable taxes and other deductions, a sum equal to two times the
aggregate cash compensation provided in Sections 5(a) and 5(b) being
paid at the time of termination (the “Severance Payment”). For purposes of
determining compensation which is not fixed (such as a bonus), the annual
amount of such unfixed compensation shall be deemed to be equal to the average
of such compensation over the three year period immediately prior to the
termination. Subject to Section 6(c) below, the Severance Payment
shall be payable without interest in equal installments, but no less frequently
than monthly, with the final installment due on the second anniversary of the
date of the termination of Executive’s employment in accordance with this Section 6(a)(iii).


 


Subject to Section 6(c) below, in the event of termination
without Cause, (A) all rights of Executive pursuant to awards of share
grants or options granted by the Employer shall be deemed to have vested and
shall be released from all conditions and restrictions, except for restrictions
on transfer pursuant to the Securities Act of 1933, as amended. Notwithstanding
the foregoing, the Employer shall be under no obligation to provide life
insurance coverage or long-term disability income benefit coverage beyond the
period otherwise available to employees after termination of employment under
the terms and conditions of such plans or programs.


 


(b)           By Executive. Executive shall have the right to terminate his
employment hereunder if there is a Voluntary Termination or there is Good
Reason.


 


(i)            Voluntary
Termination.  If Executive
terminates his employment hereunder pursuant to a Voluntary Termination, the
Employer’s obligations under this Agreement, including any obligations of the
Employer under Section 5 hereof, shall cease as of the date of termination,
except that Employer shall pay Executive any earned but unpaid salary and
benefits.


 


(ii)           Good Reason.  If Executive terminates his employment
hereunder for Good Reason, Executive, subject to Section 14 below, shall
be entitled to receive as severance, less applicable taxes and other
deductions, the Severance Payment as defined in Section 6(a)(iii) above.
Subject to Section 6(c) below, the Severance Payment shall be payable
without interest in equal installments, but no less frequently than monthly,
with the final installment due on the second anniversary of the date of the
termination of Executive’s employment in accordance with 


 


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this Section 6(b)(ii). The
Employer may prepay any or all of the Severance Payment without fee or penalty.


 


Subject to Section 6(c) below, in addition, in the event of
termination for Good Reason, (A) all rights of Executive pursuant to
awards of share grants or options granted by the Employer shall be deemed to
have vested and shall be released from all conditions and restrictions, except
for restrictions on transfer pursuant to the Securities Act of 1933, as
amended.


 


(c)           Payment of Severance.


 


(i)            Any severance and
other benefit due hereunder shall commence being paid to the Executive within
thirty (30) days following the Termination of Employment. Any severance and
other benefit earned hereunder shall be in lieu of any other claim for
compensation whether under this Agreement, or under any wage continuation law
or at common law or otherwise, and any and all claims to severance or similar
payments or benefits which the Executive may otherwise have or make.


 


(ii)           Notwithstanding
anything contained herein to the contrary, in the event of a violation or breach
by Executive of any of the provisions of Sections 8 or 9, below, the Employer,
in addition to, and not in limitation of, any other rights, remedies, or
damages available to the Employer at law or in equity, shall be entitled to
suspend, cease, and terminate the Employer’s obligations to make the Severance
Payment, and any other benefits, reimbursements, or rights of the Executive
arising under this Agreement, and to recover from the Executive the Severance
Payment, if any, previously paid to the Executive. In addition, in the event
that any legal challenge to the validity or enforceability of any provision in Section 8
or 9 is asserted by or on behalf of the Executive, the Executive shall
immediately forfeit the Executive’s right to the Severance Payment and all
other benefits, reimbursements, and rights of Executive arising under this
Agreement. These remedies shall be in addition to, and not in limitation of,
any injunctive relief or other rights, remedies, or damages, to which the
Employer is or may be entitled as a result of this Agreement.


 


(iii)          Notwithstanding anything to the contrary
herein, if the Executive is suspended or temporarily prohibited from
participating in the conduct of the Employer’s affairs by a notice served under
section 8(e)(3) or (g)(1) of Federal Deposit Insurance Act (12 U.S.C.
1818 (e)(3) and (g)(1), the Employer’s obligations under this Agreement
shall be suspended as of the date of service unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Employer may in
its discretion (i) pay the Executive all or part of the compensation
withheld while the obligations under this Agreement were suspended and (ii) reinstate
(in whole or in part) any of such obligations which were suspended.
Notwithstanding anything to the contrary herein, if the Executive is removed or
permanently prohibited from participating in the conduct of the Employer’s
affairs by an order issued under section 8 (e)(4) or (g)(1) of the
Federal Deposit Insurance Act (12 U.S.C. 1818 (e)(4) or (g)(1), all
obligations of the Executive under this Agreement shall terminate as of the
effective date of the order, but any vested rights of the parties hereto shall
not be affected. Notwithstanding anything to the contrary herein, if the
Employer is in default (as defined in section 3(x)(1) of the Federal
Deposit Insurance Act), all obligations under this Agreement shall terminate as
of the date of default, but this Section shall not affect any vested
rights of the parties hereto. Any payments made to the Executive pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. Section 1828(k) and any regulations
promulgated thereunder.


 


7.             Change in Control Benefit. Notwithstanding anything to the contrary
in Section 6, if a Change in Control occurs, and the Executive’s
employment is involuntarily terminated during the period beginning one (1) year
prior to and ending two (2) years following a Change in Control for any
reason other than death, Disability or Cause, the Employer shall pay to the
Executive a benefit as defined in Section 7(a) below in lieu of any
other payment or benefit whatsoever.


 


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(a)           Amount.  The benefit payable to Executive under this Section 7
shall be an amount that is one (1) dollar less than that amount which,
when aggregated with all other “parachute payments,” would create an “excess
parachute payment” as such terms are defined in Section 280G of the Code,
as subsequently amended.


 


(b)           Payment. The amount
due under the above Subsection (a) shall be paid in a lump sum within
thirty (30) days of termination of employment or, if later, the Change in
Control.


 


8.             Confidential Information. The Executive recognizes and
acknowledges that he will have access to certain information of the Employer
and its subsidiaries and that such information is confidential and constitutes
valuable, special and unique property of the Employer. The Executive agrees to
maintain in strict confidence and, except as necessary to perform his duties
for the Employer, agrees not to use or disclose any Trade Secrets of the
Employer during or after his employment. “Trade Secret” means information,
including a formula, pattern, compilation, program, device, method, technique,
process, drawing, cost data or customer list, that: (i) derives economic
value, actual or potential, from not being generally known to, and not being
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. In addition,
the Executive agrees to maintain in strict confidence and, except as necessary
to perform his duties for the Employer, not to use or disclose any Confidential
Business Information of the Employer during his employment and for a period of
36 months following termination of the Executive’s employment (regardless of
whether this Agreement terminates or expires). “Confidential Business
Information” shall mean any internal, non-public information (other than Trade
Secrets already addressed above) concerning the Employer’s financial position
and results of operations (including revenues, assets, net income, etc.);
annual and long-range business plans; product or service plans; marketing plans
and methods; training, educational and administrative manuals; customer and
supplier information and purchase histories; and employee lists. The provisions
of this Section 8 shall also apply to protect Trade Secrets and
Confidential Business Information of third parties provided to the Employer
under an obligation of secrecy.


 


9.             Delivery of
Documents upon Termination. At the Employer’s request, the
Executive shall deliver to the Employer or its designee at the termination of
the Executive’s employment all correspondence, memoranda, notes, records,
drawings, sketches, plans, customer lists, product compositions, and other
documents and all copies thereof, made, composed or received by the Executive,
solely or jointly with others, that are in the Executive’s possession, custody,
or control at termination and that are related in any manner to the past,
present, or anticipated business of the Employer.


 


10.           Remedies. The
Executive acknowledges that a remedy at law for any breach or attempted breach
of the Executive’s obligations under Sections 8 and 9 may be inadequate, agrees
that the Employer may be entitled to specific performance and injunctive and
other equitable remedies in case of any such breach or attempted breach and
further agrees to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief. The Employer shall have the right to offset against amounts to be paid
to the Executive pursuant to the terms hereof any amounts from time to time
owing by the Executive to the Employer. The termination of the Agreement shall
not be deemed to be a waiver by the Employer of any breach by the Executive of
this Agreement or any other obligation owed the Employer, and notwithstanding
such a termination the Executive shall be liable for all damages attributable
to such a breach.


 


11.           Arbitration.  Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
pursuant to the Tennessee law in Nashville, Tennessee. Judgment may be entered
on the arbitrator’s award in any court having jurisdiction.


 


12.           Indemnification.  The Executive shall be protected against any
and all legal actions when he is either a party, witness or a participant in
any legal action brought against the Employer or the Executive or a board
member. He will be protected through any programs that cover the outside
directors or other executives of the Employer.


 


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13.           Miscellaneous Provisions.


 


(a)           Successors of the
Employer.  The Employer will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Employer, by agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Employer would be required to perform it
if no such succession had taken place. Failure of the Employer to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to compensation from the
Employer in the same amount and on the same terms as the Executive would be
entitled hereunder if the Executive terminated his employment for Good Reason
(or, solely at the Executive’s option, compensation from the Employer in the
same amount and on the same terms as the Executive would be entitled under Section 7
above), except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date of
termination. As used in this Agreement, “Employer” as hereinbefore defined
shall include any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 13 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.


 


(b)           Executive’s Heirs,
etc.  The Executive may not
assign the Executive’s rights or delegate the Executive’s duties or obligations
hereunder without the written consent of the Employer. This Agreement shall
inure to the benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would
still be payable to the Executive hereunder as if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive’s designee or, if there be no
such designee, to the Executive’s estate.


 


(c)           Notices. Any
notice, request, approval, consent, demand or other communication shall be
effective upon the first to occur of the following: (i) upon receipt by
the party to whom such notice, request, approval, consent, demand or other
communication is being given; or (ii) three (3) business days after
being duly deposited in the United States mail, registered or certified, return
receipt requested, and addressed as follows:


 


	
  Executive:

  	
  Michael R. Sapp

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Franklin, TN

  	
   

  
	
   

  	
   

  	
   

  
	
  Employer:

  	
  Tennessee Commerce Bank

  	
   

  
	
   

  	
   

  	
   

  



 


The parties hereto may change their
respective addresses by notice in writing given to the other party to this
Agreement.


 


(d)           Amendment or Waiver. No
provisions of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by the
Executive and such officer as may be specifically designated by the Board
(which shall not include the Executive). No waiver by either party hereto at
any time of any breach by the other party hereto of or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party that are not set forth expressly in this Agreement.


 


(e)           Invalid Provisions.  Should any portion of this Agreement be
adjudged or held to be invalid, unenforceable or void, such holding shall not
have the effect of invalidating or voiding the remainder of this Agreement and
the parties hereby agree that the portion so held invalid, unenforceable or 


 


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void shall if possible, be deemed amended or reduced in
scope, or otherwise be stricken from this Agreement to the extent required for
the purposes of validity and enforcement thereof.


 


(f)            Survival of the
Executive’s Obligations.  The Executive’s obligations under this
Agreement shall survive regardless of whether the Executive’s employment by the
Employer is terminated, voluntarily or involuntarily, by the Employer or the
Executive, with or without Cause.


 


(g)           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.


 


(h)           Governing Law.  This Agreement and any action or proceeding
related to it shall be governed by and construed under the laws of the State of
Tennessee.


 


(i)            Captions and Gender.  The use of Captions and Section headings
herein is for purposes of convenience only and shall not effect the
interpretation or substance of any provisions contained herein. Similarly, the
use of the masculine gender with respect to pronouns in this Agreement is for
purposes of convenience and includes either sex who may be a signatory.


 


(j)            Effect on Prior
Agreements.  This
Agreement, and any attachments, represent the entire understanding between the
parties hereto and supersedes in all respects any other prior Agreement or
understanding between the Employer and the Executive regarding the Executive’s
employment.


 


14.           Section 409A.  This
Agreement is intended to comply with the requirements of Section 409A of
the Code and regulations promulgated thereunder (together, “Section 409A”),
and shall, to the extent practicable, be construed in accordance therewith. If
any amount payable pursuant to this Agreement constitutes a “deferral of
compensation” subject to Section 409A and if, at the date of the Executive’s
“separation from service,” as such term is defined in Section 409A, from
the Employer (his “Separation from Service”), the Executive is a “specified
employee”, within the meaning of Section 409A, of the Employer as
determined by the Employer from time to time, then each such payment that would
otherwise be payable to the Executive within the six (6) month period
following the Executive’s Separation from Service shall be delayed and paid to
the Executive without interest on the first business day of the seventh month
following the Executive’s Separation from Service. For the avoidance of doubt,
for purposes of this Agreement, any amount which would not be considered a “deferral
of compensation” within the meaning of Section 409A by reason of Treas.
Reg. Sections 1.409A-1(b)(4) or 1.409A-1(b)(9) shall not be
considered a deferral of compensation for which payment shall be delayed in
accordance with the preceding sentence. For purposes of this Agreement, each
payment to which the Executive may be entitled pursuant to this Agreement,
including each of the severance payments, shall be considered a separate
payment within the meaning of Treas. Reg. Section 1.409A-2(b)(2).
Notwithstanding the foregoing, to the extent that this Agreement or any payment
or benefit hereunder shall be deemed not to comply with Section 409A, then
neither the Employer, nor any of its principals, employees, designees or
agents, shall be liable to the Executive or to any other person to the extent
such failure to comply results from any actions, decisions or determinations
made in good faith.


 


15.           Compensation Modification.  Notwithstanding
anything herein to the contrary and to the extent consistent with the Capital
Purchase Program (“CPP”), during the time the United States Department of
Treasury (“Treasury”) owns any debt or equity securities of the Employer
acquired pursuant to the CPP (the “CPP Period”), the terms of this Section 15
hereby amend and shall override any contrary or inconsistent terms contained in
this Agreement and any and all other employment, compensation and benefit
agreements, plans and policies with respect to the Executive that are in
existence on the date hereof and that hereafter are adopted (the “Compensation
Arrangements”). This Section 15 shall be construed in a manner that is
consistent with Section 111(b) of the Emergency Economic
Stabilization Act of 2008, as amended by the American Recovery and Reinvestment
Act of 2009 and regulations issued thereunder (“EESA”). The Employer and
Executive further agree that the Employer shall not adopt any new benefit plan
with respect to Executive that does not comply with Section 111(b) of
EESA as implemented by any 


 


9

















 


guidance
or regulation thereunder that has been issued and is in effect as of the date
the Employer issues preferred stock and warrants to the
Treasury.  The Executive acknowledges that the Employer’s
Compensation Committee has the sole and absolute discretion to modify or revoke
any bonus or incentive compensation arrangement that would encourage the
Executive to take unnecessary and excessive risks that would threaten the value
of the Employer.


 


a.             Recovery of Incentive Compensation. In the event Executive receives
compensation that was based on financial statements or performance metric
criteria that are determined to be materially inaccurate, Executive shall repay
the Employer upon demand the amount of the bonus or incentive compensation
received by Executive in excess of the amount that would have been paid to
Executive had the inaccurate statements or criteria been accurate.


 


b.             Golden Parachute Limit. In the event of Executive’s
termination of employment, severance payments to the Executive shall not be
made to the extent that the payment would otherwise constitute a “golden
parachute” as defined under Section 111(a) of the EESA and any
regulations issued thereunder.


 


c.             Bonus and Incentive Compensation.  If,
and to the extent required by the CPP, Executive will not receive or accrue any
bonus, retention award, or incentive compensation.  This prohibition will not apply, however, to (a) the
payment of long-term restricted stock that (i) does not fully vest during
the CPP Period, (ii) does not have a value greater than one-third of
Executive’s total annual compensation amount and (iii) is subject to such
other terms and conditions as Treasury may determine are in the public interest
or (b) any bonus payment required to be paid under a written employment
agreement executed on or before February 11, 2009 and determined to be
valid by Treasury.


 


d.             Waiver. Executive hereby voluntarily waives any claim for any changes to
the Compensation Arrangements that are made or contemplated in this Section 15.  This
waiver includes all claims Executive may have under the laws of the United
States or any state related to the requirements imposed by the EESA, including,
without limitation, a claim for any compensation or other payments Executive
would otherwise receive.


 


e.             Modification - Waivers. No provisions of this Section 15 may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing, signed by the Executive and on behalf of the Employer
by such officer as may be specifically designated by the Board of Directors of
the Employer. No waiver by either party hereto at any time of any breach by the
other party hereto of, or in compliance with, any condition or provision of
this Section 15 to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.


 


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IN WITNESS WHEREOF, the Executive and a duly authorized Employer
officer have signed this Agreement to be effective as of the Effective Date.


 


	
  EXECUTIVE

  	
  TENNESSEE
  COMMERCE BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Michael R. Sapp

  	
   

  	
  /s/ Frank Perez

  
	
  Michael R. Sapp

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENNESSEE
  COMMERCE BANCORP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Darrel E. Reifschneider

  
			



 


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