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 30th day of December, 2008 (the “Effective Date”),
by and between Tennessee Commerce Bank, (the “Bank” or “Employer”), and Michael
R. Sapp (the “Executive”).


 


WITNESSETH:


 


WHEREAS, the Bank and the Executive were parties
to an Employment Agreement dated January 19, 2006 (the “Prior Employment
Agreement”);


 


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


 


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


 


WHEREAS this Amended and Restated Plan is
intended to comply with the requirements of Internal Revenue Code Section 409A.
Accordingly, the intent of the parties hereto is that the Plan shall be
operated and interpreted consistent with the requirements of Section 409A.


 


NOW,
THEREFORE, in
consideration of the promises, covenants and agreements contained herein, the
Bank 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 each 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 each of the Employer and the Bank 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 Bank. The
Executive shall be deemed to have resigned as a director of each of the
Employer and the Bank 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 the Employer, or in the
ownership of a substantial portion of the assets of the Employer, as such
change is defined in Treasury Regulation §1.409A-3(i)(5) or any
subsequently applicable Treasury Regulation.


 


“Cause” shall mean (a) fraud;
(b) embezzlement; (c) conviction of 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 suffers a sickness, accident or injury that is determined
by the carrier of any individual or group disability insurance policy covering
the Executive to be a disability rendering the Executive totally and
permanently disabled, as certified by a physician chosen by the Employer and
reasonably acceptable to the Executive, or as later defined by the Internal
Revenue Service in IRS Notice 2005 -1.


 


“Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended.


 


“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 Base Salary; (iii) a material diminution in the authority,
duties, or responsibilities of the supervisor to whom the Executive reports,
including a requirement to report to an officer or other employee, rather than
directly to the Board; (iv) a material diminution in the budget over which
the Executive retains authority; (iv) 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; 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.


 


“Regulatory Body” refers to The Office of the Comptroller of the Currency (OCC),
the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit
Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS), also
known as “the agencies”.


 


“Specified Employee” means an employee who at the time of Termination of Employment
is a key employee of the Bank, if any stock of the Bank 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 for Cause” and “Cause”  shall have the same definition
specified in any effective severance or employment agreement existing on the
date hereof or hereafter entered into between the Executive and the Bank. If
the Executive is not a party to a severance or employment agreement containing
a definition of termination for cause, Termination for Cause means the Bank
terminates the Executive’s employment because of:


 


(a)                                  the
Executive’s gross negligence or gross neglect of duties or intentional and
material failure to perform stated duties after written notice thereof, or


 


(b)                                 disloyalty
or dishonesty by the Executive in the performance of his duties, or a breach of
the Executive’s fiduciary duties for personal profit, in any case whether in
his capacity as a director or officer, or


 


(c)                                  embezzlement
or misappropriation of funds or property of the Bank or intentional wrongful
damage by the Executive to the business or property of the Bank or its
affiliates, including without limitation the reputation of the Bank, which in
the judgment of the Bank causes material harm to the Bank or affiliates, or


 


(d)                                 failure or
refusal by the Participant to devote full business time and attention to the
performance of his or her duties and responsibilities if such breach has not
been cured within fifteen (15) days after notice is given to the Participant;
or


 


(e)                                  a willful
violation by the Executive of any applicable law or significant policy of the
Bank or an affiliate that, in the Bank’s judgment, results in an adverse effect
on the Bank or the affiliate, regardless of whether the violation leads to
criminal prosecution or conviction. For purposes of this Agreement, applicable
laws include any statute, rule, regulatory order, statement of policy, or final
cease-


 

















 


and-desist order of any governmental
agency or body having regulatory authority over the Bank, or


 


(f)                                    the occurrence
of any event that results in the Executive being excluded from coverage, or
having coverage limited for the Executive as compared to other executives of
the Bank, under the Bank’s blanket bond or other fidelity or insurance policy
covering its directors, officers, or employees, or


 


(g)                                 the
Executive is removed from office or permanently prohibited from participating
in the Bank’s affairs by an order issued under section 8(e) (4) or
section 8(g) (1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e) (4) or
(g)(1), or


 


(h)                                 conviction
of the Executive for or plea of nolo contendere to a felony or conviction of or
plea of nolo contendere to a misdemeanor involving moral turpitude, or the
actual incarceration of the Executive for 45 consecutive days or more.


 


“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 Bank 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 Bank if the Executive has been
providing services to the Bank less than twenty-four (24) months).


 


“Voluntary Termination”
shall mean the termination by Executive of Executive’s employment following a
Change in Control which is not the result for Good Reason.


 


3.             Duties.
During the term hereof, the Executive shall hold the title of President of
the Employer and the Bank, and shall report directly to the Board. The
Executive shall have such duties and authority as are typical of the President
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, 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 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 Executive 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 percent 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)           Executive
Benefits. The Executive shall be eligible for all employee related benefit
programs currently in place or as may be adopted for the benefit of the Bank’s
executives or employees.


 


(d)           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.


 


(e)           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
for the use of a Employer car and 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.


 


(f)            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.


 


(g)           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.


 


(h)           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 (i) for Cause, (ii) if the Executive becomes
Disabled, (iii) upon the Executive’s death, or (iv) without Cause.


 


(i)            If
the Employer terminates Executive’s employment under this Agreement for Cause
pursuant to clause (i) of Section 6(a) above, 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.


 


(ii)           If
the Employer terminates Executive’s employment under this Agreement pursuant to
clauses (ii) or (iii) of Section 6(a) above, the Employer’s
obligations hereunder, 


 

















 


including the obligations under
Sections 5(a) above, shall cease on the date of death or Disability, 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)         Subject to Section 6(c) below,
if the Employer terminates Executive’s employment without Cause pursuant to
clause (iv) of Section 6(a) above, 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).


 


(iv)          Subject to Section 6(c) below,
in the event of termination without Cause pursuant to clause (iv) of Section 6(a),
(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, (B) the Executive
shall be deemed to be credited with service with the Employer for such
remaining Term for the purposes of the Employer’s benefit plans, (C) the
Executive shall be deemed to have retired from the Employer and shall be
entitled as of the termination date, or at such later time as he may elect (or
may have previously elected) to commence receiving the total combined qualified
and non-qualified retirement benefit to which he is entitled hereunder, and (D) if
any provision of this Section 6(a)(iv) cannot, in whole or in part,
be implemented and carried out under the terms of the applicable compensation,
benefit, or other plan or arrangement of the Employer because the Executive has
ceased to be an actual employee of the Employer, because the Executive has
insufficient or reduced credited service based upon his actual employment by
the Employer, because the plan or arrangement has been terminated or amended after
the effective date of this Agreement, or because of any other reason, the
Employer itself shall pay or otherwise provide the equivalent of such rights,
benefits and credits for such benefits to Executive, his dependents,
beneficiaries and estate. 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. Except when
Executive’s employment is terminated for Cause prior to a Change in Control or
for death or Disability under Sections 6(a)(i), (ii) or (iii), Executive
shall have the right to terminate his employment hereunder if (i) the
Executive at any time gives written notice of termination (for any reason) to
the Employer; (ii) there is a Voluntary Termination; (iii) there is
Good Reason, or (iv) the Employer materially breaches this Agreement and
such breach is not cured within 30 days after written notice of such breach is
given by the Executive to the Employer.


 

















 


(i)            If
Executive terminates his employment hereunder pursuant to clauses (i) or (ii) of
Section 6(b) above, 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.


 


(ii)           If
Executive terminates his employment hereunder pursuant to clauses (iii) or
(iv) of Section 6(b), 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 this Section 6(b)(ii).
The Employer may prepay any or all of the Severance Payment without fee or
penalty.


 


(iii)           Subject
to Section 6(c) below, in addition, in the event of termination
pursuant to any of clauses (iii) or (iv) of this Section 6(b), (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, (B) the Executive shall be deemed
to be credited with service with the Employer for such remaining Term for the
purposes of the Employer’s benefit plans, (C) the Executive shall be
deemed to have retired from the Employer and shall be entitled as of the
termination date, or at such later time as he may elect (or may have previously
elected) to commence receiving the total combined qualified and non-qualified
retirement benefit to which he is entitled hereunder, and (D) if any
provision of this Section 6(b) cannot, in whole or in part, be
implemented and carried out under the terms of the applicable compensation,
benefit, or other plan or arrangement of the Employer because the Executive has
ceased to be an actual employee of the Employer, because the Executive has
insufficient or reduced credited service based upon his actual employment by
the Employer, because the plan or arrangement has been terminated or amended
after the effective date of this Agreement, or because of any other reason, the
Employer itself shall pay or otherwise provide the equivalent of such rights,
benefits and credits for such benefits to Executive, his dependents,
beneficiaries and estate.


 


(c)              Payment of Severance.


 


(i)            The
Employer’s obligation to make the severance benefit payments (Section 6(a)(iii) and
6(b)(ii)) and to provide the other rights set forth in Sections 6(a)(iv) and
6(b)(iii) , 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 of the
Employer occurs, and the Executive’s employment is terminated during the period
beginning one (1) year prior to and ending two (2) years following a
Change in Control, 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.


 


(a)            Amount.
Notwithstanding anything to the contrary in Section 6, upon a Change
in Control and termination of employment without Cause or for Good Reason
following a Change in Control, the Executive will receive a Change in Control
benefit equal to an amount that is one (1) dollar less than that amount
which would constitute an “excess parachute payment” as defined in IRC 280(G),
or 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 a Change in Control, and shall be in addition to any other rights of
the Executive under this Agreement with regard to termination of the Executive
without cause and under any other agreement between the Executive and the
Employer


 


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.


 


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 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 1.409A1(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.


 


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/ Darrel Reifschneider

  
	
  Michael R. Sapp