Document:

EXHIBIT
10.22

 

AMENDED
AND RESTATED

EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment
Agreement is made as of April 26, 2005 by and between Edward M. Krell (the
“Employee”), and Mothers Work, Inc. (the “Company”).

 

WHEREAS, Employee and Company previously
entered into an employment agreement dated on or about September 30, 2003
(the “Prior Employment Agreement”) providing for certain terms and conditions,
and

 

WHEREAS, on the terms and conditions as
outlined in this Employment Agreement, the parties desire to replace the Prior
Employment Agreement with this Agreement.

 

THEREFORE, in consideration of the mutual
premises and promises contained in the Agreement, the parties agree as follows:

 

1.                                       EMPLOYMENT, TERM AND DUTIES. 
The Company will continue to employ Employee and Employee hereby accepts
continued employment with the Company, as Executive Vice President—Chief
Financial Officer (the “Position”) on the terms herein described for the period
beginning on the date hereof and continuing until terminated by either
party.  During his employment by the
Company, except for reasonable vacations consistent with paragraph 5(C),
absences due to temporary illness or as otherwise provided below in paragraph
4, Employee shall use his best efforts to serve the Company faithfully and
shall devote his full time, attention, skill and efforts to the performance of
the duties required by or appropriate for his Position.  Employee agrees to assume such duties and
responsibilities as may be customarily incident to the Position and as may be
reasonably assigned to him from time to time by the Company’s Board of
Directors (the “Board”), Chief Executive Officer or President, consistent with
the Company’s Bylaws and with the level of responsibility appropriate to the
Position.

 

2.                                       TERMINATION.

 

A.                                   Except
as otherwise provided for herein, the Employee’s employment is at will and may
be terminated at any time for any reason by the Employee or by the
Company.  Except in the event of
termination of Employee by Company for Cause (as defined below) or pursuant to
paragraph 2(C) below, either party shall provide the other with two weeks’
advance notice (or for Employee, such longer period as provided for in the Team
Member Handbook) prior to termination of employment.  Company may elect to pay Employee two weeks’
pay in lieu of such notice period.

 

B.                                     If
Employee’s employment is terminated by the Company without Cause or by Employee
with Good Reason (as defined below):

 

(1)                                  the
Company will make a lump sum payment to Employee (less applicable deductions
and withholdings), within fifteen (15) days after the effective

 

 

date of the event giving rise to such
payment, of a gross amount equal to (i) three times the sum of (a) Employee’s
then current base salary, plus (b) Employee’s target annual bonus amount (50%
of Employee’s then current base salary, or other amount agreed to by the
parties, as described below in paragraph 5(B)), plus (ii) any annual bonus
earned but not previously paid with respect to a year ended prior to the date
of termination;

 

(2)                                  the
Company will pay Employee a pro-rata annual bonus for the year of termination,
determined and paid in the same manner and at the same time as his annual bonus
would otherwise have been determined and paid for the applicable year, but for
the termination.  Such bonus will be
pro-rated based on the number of full and partial months of the year transpired
prior to the date of termination;

 

(3)                                  all
outstanding options Employee then holds will become immediately vested and
exercisable;

 

(4)                                  the
Company will continue to provide Employee the automobile, automobile insurance
and supplemental long term disability insurance premiums described below in
paragraph 5(D) for a period of three years following the date of such
termination;

 

(5)                                  for
a total period of three years following the date of such termination, Employee
will receive: (i) waiver of the applicable healthcare premium otherwise payable
for COBRA continuation coverage for the Employee (and, to the extent covered
immediately prior to the date of the Employee’s termination, his spouse and
dependents), plus (ii) once COBRA continuation coverage expires (unless such
expiration is due to eligibility for other group health insurance or Medicare),
reimbursement, on an after-tax basis, of an amount equal to the premium paid by
Employee for health coverage providing benefits substantially similar to those
then provided to active employees of the Company; and

 

(6)                                  the
Company will pay for full outplacement services for Employee, such payment to
be made to an agency selected by Employee, based upon the customary fees
charged by nationally rated firms engaged in such services.

 

C.                                     If
Employee is unable, after any reasonable accommodation required by law, to
perform his duties and responsibilities hereunder by reason of illness injury
or incapacity for more than six (6) consecutive months, Employee’s employment
hereunder may then be terminated by Company and, for a period of thirty (30)
months following the date of such termination, the Company will:

 

(1)                                   make
monthly supplemental disability payments to Employee, each equal to 1/12 of
Employee’s Base Salary as of the date of his termination;

 

2

 

(2)                                  (i)
waive the applicable premium otherwise payable for COBRA continuation coverage
for the Employee (and, to the extent covered immediately prior to the date of
the Employee’s termination, his spouse and dependents), plus (ii) once COBRA
continuation coverage expires (unless such expiration is due to eligibility for
other group health insurance or Medicare), reimburse Employee, on an after-tax
basis, for premiums paid for health insurance coverage providing benefits
substantially similar to those then provided to active employees of the
Company; and

 

(3)                                  continue
to provide Employee the automobile and automobile insurance described below in

paragraph 5(D)(1).

 

Amounts payable under this paragraph 2(C)
will be reduced by (x) any disability or life insurance benefits payable with
respect to the same period under any Company funded disability or death benefit
plan, policy or arrangement (including, without limitation, any insurance
purchased with the allowance described below in paragraph 5(D)(2)) or under the
Social Security Act, and (y) with respect to the 30 month period described
above, any amounts earned by Employee during that period for the performance of
personal services.  To the extent any
insurance benefit described in the preceding sentence is exempt from federal
income tax, then for purposes of this reduction, the amount of that insurance
benefit will be deemed to be 150% of the amount actually received by Employee.

 

D.                                    In
consideration of and as a condition to receiving all the rights and benefits
described in paragraph 2(B) or 2(C) above, Employee will be required to sign
the Company’s then standard release agreement. 
Rights and benefits described in those paragraph are in lieu of, and not
in addition to, any severance or termination benefits provided under any other
plan, policy, or arrangement of the Company.

 

E.                                      For
purposes of this Agreement:

 

(1)                                  “Cause”
shall include fraud, theft, misconduct, negligence, or Employee’s unwillingness
or refusal to perform his job, but shall not include the inability of Employee
to perform his duties and responsibilities hereunder by reason of illness,
injury or incapacity.  For avoidance of
doubt, termination of Employee’s employment under circumstances entitling him
to payments under paragraph 2(C) will not be construed as a termination without
Cause.

 

(2)                                  “Good
Reason” means any of the following, without Employee’s prior consent: (i) a
material, adverse change in title, authority or duties (including the
assignment of duties materially inconsistent with the Employee’s position);
(ii) a reduction in base salary or bonus opportunity (described in paragraph
5); or (iii) a relocation of Employee’s principal worksite more than 50
miles.  However, none of the foregoing
events or conditions will constitute Good Reason unless the Employee provides
the

 

3

 

Company with written objection to the event
or condition within 90 days following the occurrence thereof, the Company does
not reverse or otherwise cure the event or condition within 15 days of
receiving that written objection, and the Employee resigns his employment
within 30 days following the expiration of that cure period.

 

E.                                      In
addition, if Employee resigns for any reason (other than a resignation in
anticipation of a termination for Cause) during the 24 month period immediately
following any Change in Control (as defined below), he will be entitled to the
severance benefits described above in paragraph 2(B)(subject to the execution
of the standard release agreement also described in that paragraph).

 

F.                                      Except
as otherwise specifically set forth in this Agreement, all salary, benefits and
other amounts payable by the Company to Employee shall cease at the time of any
cessation of his employment with the Company, subject to the terms of any
benefit or compensation plans then in force and applicable to Employee.

 

3.                                       CHANGE OF CONTROL.

 

A.                                   For
purposes of this Agreement, a Change of Control shall have occurred if any of
the following events shall occur: (1) the sale, transfer, assignment or other
disposition (including by merger or consolidation) by stockholders of the
Company, in one transaction or a series of related transactions, of more than
thirty-five percent (35%) of the voting power represented by the then
outstanding stock of the Company to one or more Persons (as defined below),
other than any such sales, transfers, assignments or other dispositions by such
stockholders to their respective Affiliates (as defined below); (2) the Company
sells all or substantially all of its assets to any other Person in any sale or
series of related sales (other than a transaction to which only the Company and
one or more of its subsidiaries are parties); or (3) any Person becomes a
direct or indirect beneficial owner of shares of stock of the Company
representing the aggregate of 35% or more of the votes then entitled to be cast
at an election of directors of the Company (unless a voting agreement remains
in effect in respect of greater then 51% of such shares).

 

B.                                     Employee
hereby agrees that if his employment with the Company ceases for any reason
following a Change of Control, then for a period of 6 months following the date
of that cessation of employment (the “Consulting Period”), the Employee will
make himself available to the management of the Company for consultation with
respect to strategic planning, corporate development and other matters mutually
determined by Employee and the Board. The Company will cooperate with Employee
to schedule the time and place for the performance of such consulting
services so as to permit Employee to fulfill this obligation with minimal
interruption of his other personal and professional obligations. It is the
mutual intent of the parties that during the Consulting Period, Employee will
act strictly in a professional consulting capacity and will not be considered
an employee of the Company.  The services
to be rendered by Employee during the Consulting Period are additional
consideration for the severance commitments described

 

4

 

above in paragraph 2(B) and, accordingly,
Employee will not be entitled to any additional compensation for the
performance of those services.

 

C.                                     Parachute
Tax Gross-Up.

 

(1)                                  Subject
to paragraph 3(C)(2), below, if the Total Payments would result in the
imposition of a Parachute Excise Tax on Employee, the Company will make an
additional payment to Employee in an amount such that, after the payment of all
federal and state income, employment and excise taxes on both the Total
Payments and the additional payment made pursuant to this paragraph 3(C)(1),
Employee will be in the same after-tax position as if no Parachute Excise Tax
had been imposed.

 

(2)                                  Notwithstanding
any other provision of this Agreement, no additional payment will be made to
Employee pursuant to paragraph 3(C)(1) and the Total Payments will instead be
reduced or limited to the Capped Amount, if:

 

(i)            Employee
resigns his employment during the 6 month period immediately following any
Change in Control and there is not otherwise Good Reason for that resignation;
or

 

(ii)           the
additional payment described above in paragraph 3(C)(1) would not cause the
Total After-Tax Payments to exceed the Capped Amount (after reduction for all
applicable taxes) by more than 20%.

 

(3)                                  The
determination of whether and to what extent reductions or payments under this
paragraph 3(C) are required will be made in good faith by the Board, after
consultation with the Company’s independent auditor.  In the event of any underpayment or
overpayment to Employee (determined after the application of this paragraph
3(C)), the amount of such underpayment or overpayment will be immediately paid
by the Company to Employee or refunded by Employee to the Company, as the case
may be, with interest at the applicable federal rate specified in Section 7872(f)(2)
of the Code.

 

(4)                                  For
purposes of this Agreement:

 

(i)            “Affiliate”
means, with respect to any stockholder of the Company, (a) any Person directly
or indirectly controlling, controlled by or under common control with such
stockholder, or (b) any officer, director, or general partner of such
stockholder.

 

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(ii)           “Capped
Amount” means the largest amount payable to Employee without causing the
application of a Parachute Excise Tax.

 

(iii)          “Code”
means the Internal Revenue Code of 1986, as amended, and all rules and
regulations promulgated thereunder.

 

(iv)          “Parachute
Excise Tax” means the federal excise tax levied on certain “excess parachute
payments” under Section 4999 of the Code or any successor provision.

 

(v)           “Person”
means an individual, partnership, corporation, joint venture, association,
trust, unincorporated association, other entity, association or group of
associated persons acting in concert (except that such term shall not include
employees of the Company, Dan W. Matthias and/or Rebecca C. Matthias).

 

(vi)          “Total
After-Tax Payments” means the total value of all “parachute payments” (as that
term is defined in Section 280G(b)(2) of the Code) made to or for the
benefit of Employee (whether made under this Agreement or otherwise), after
reduction for all applicable taxes (including, without limitation, the
Parachute Excise Tax).

 

(vii)         “Total
Payments” means the total of all “parachute payments” (as that term is defined
in Section 280G(b)(2) of the Code, but determined without regard to Section 280G(b)(2)(A)(ii))
made to or for the benefit of Employee, whether made under this Agreement or
otherwise.

 

4.                                       EXTENT OF SERVICES.   
During his employment by the Company, Employee will not, directly or
indirectly, engage in any other business activities or pursuits whatsoever, except:
(i) activities in connection with any charitable or civic activities, (ii)
personal investments, (iii) service as an executor, trustee or in other similar
fiduciary capacity, or (iv) other activities specifically authorized by the
Compensation Committee of the Board; provided, however, that any
of the foregoing exceptions do not: (x) interfere with Employee’s performance
of responsibilities and obligations pursuant to this Agreement, or (y) create a
conflict of interest with Employee’s responsibilities to the Company.  For avoidance of doubt, incidental use of
Company facilities (such as telephone or email systems) in furtherance of
activities authorized under this paragraph will not constitute an interference
with Employee’s obligations to the Company.

 

6

 

5.                                       COMPENSATION AND BENEFITS.

 

A.                                   The Company shall
pay to the Employee and the Employee agrees to accept from the Company, in full
payment for the Employee’s services hereunder, the annual base salary of
$381,600 or as otherwise agreed to by the parties.

 

B.                                     For each fiscal
year ending during the Term, Employee will be eligible to earn an annual
bonus.  The target amount of that bonus
will be 50% percent of Employee’s annual salary for the applicable fiscal year,
or such other amount agreed to by the parties. 
The actual bonus payable with respect to a particular year will be
determined by the Board (or its Compensation Committee) in its discretion,
based on the achievement of corporate and individual performance objectives
established by the Board (or its Compensation Committee).

 

C.                                     The Employee shall
also receive such benefits as are customarily provided by the Company to
employees as described in the Company’s Team Member Handbook and in the Company’s
benefit summary plan descriptions and plan documents, which are subject to
change from time to time, within the sole discretion of the Company and in
accordance with applicable law.  Nonetheless,
Employee will be entitled to three (3) weeks paid vacation during each year of
employment.  Vacation days that remain
unused at the end of any year will accrue or expire to the extent provided by
Company policy, as in effect from time to time. 
If the Employee gives notice of termination that is, from the last day
of employment, less than the period provided for in the Company’s Team Member
Handbook, the Employee shall forfeit any accrued but unpaid vacation otherwise
payable to him upon such termination.

 

D.                                    In addition to the
benefits customarily provided to other employees of the Company, the Company
will:

 

(1)                                provide
Employee with the use of an automobile comparable to that presently made
available to him, together with insurance coverage for the use of that
automobile commensurate with that presently provided; and

 

(2)                                reimburse
Employee for (or pay on Employee’s behalf) the reasonable costs of purchasing
supplemental long term disability insurance providing a disability benefit of
$6,250 per month.

 

6.                                       CONFIDENTIAL INFORMATION. 
Confidential Information means information which the Company regards as
confidential or proprietary and which the Employee learns or develops during or
related to their employment, including, but not limited to, information
relating to:

 

a.                                       the
Company’s products, suppliers, pricing, costs, sourcing, design, fabric and
distribution processes;

 

b.                                      the
Company’s marketing plans and projections;

 

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c.                                       lists
of names and addresses of the Company’s employees, agents, factories and
suppliers;

 

d.                                      the
methods of importing and exporting used by the Company;

 

e.                                       manuals
and procedures created and/or used by the Company;

 

f.                                         trade
secrets or other information that is used in the Company’s business, and which
give the Company an opportunity to obtain an advantage over competitors who do
not know such trade secrets or how to use the same; and

 

g.                                      software
in various stages of development (source code, object code, documentation, flow
charts), specifications, models, data and customer information.

 

Employee assigns to Company any rights
Employee may have in any Confidential Information. Employee shall not disclose
any Confidential Information to any third-party or use any Confidential Information
for any purposes other than as authorized by the Company.

 

7.                                       SURRENDER OF MATERIALS.   
The Employee hereby agrees to deliver to the Company promptly upon
request or on the date of termination of the Employee’s employment, all
documents, copies thereof and other materials in the Employee’s possession
pertaining to the business of the Company and its customers, including, but not
limited to, Confidential Information (and each and every copy, disk, abstract,
summary or reproduction of the same made by or for the Employee or acquired by
the Employee), and thereafter to promptly return documents and copies thereof
and other material in the Employee’s possession. The Employee will be
responsible for the value of all Company or customer property that is not timely
returned. Employee authorizes the Company to deduct the fair market value of
such property from any monies owed to Employee.

 

8.                                       DISCLOSURE OF INFORMATION AND SOLICITATION OF EMPLOYEES; NON-COMPETE;
CONFIDENTIAL INFORMATION OF THIRD PARTIES.    The Employee acknowledges that the Company
has developed and maintains at great expense, a valuable supplier network,
supplier contacts, many of which are of longstanding, product designs, and
other information of the type described in paragraph 6 of this Agreement, and
that in order to pursue Employee’s employment gainfully under the Agreement,
Employee will be given Confidential Information concerning such suppliers and
products, including information concerning such suppliers’ purchasing
personnel, policies, requirements, and preferences, and such product’s design,
manufacture and marketing.

 

a.                                       Accordingly,
the Employee agrees that during the period of Employee’s employment and for
twenty-four (24) months after termination of employment with the Company by Employee
or by Company, for any

 

8

 

reason, with or without Cause, the Employee
will not directly or indirectly:

 

(i)            on
Employee’s behalf or on behalf of any other person or entity, perform any act
with respect to the design, manufacture, sale, attempted sale or promotion of
the sale of any Conflicting Product.

 

(ii)           own,
manage, operate, finance, join, control, or participate in the ownership,
management, operation, financing or control of, or be connected as an officer,
director, employee, partner, principal, agent, representative, consultant or
otherwise with, or use or permit Employee’s name to be used in connection with:
(a) any entity offering for sale or contemplating offering for sale any
Conflicting Product, or (b) any entity contacted by, or the responsibility of,
the Employee or any person under the Employee’s supervision or direction,
including applicable agents and suppliers (or, with respect to the application
of this provision following Employee’s termination of employment, any entity
which during the twenty-four (24) month period prior to such termination was
contacted by, or the responsibility of, the Employee or any person under the
Employee’s supervision or direction, including applicable agents and
suppliers), or (c) a Competing Business, or (d) any entity which would require
by necessity use of Confidential Information.

 

The term “Conflicting Product” shall mean any
product, process or service which is the same as, similar to, or is in any manner
competitive with any Company product (which includes third-party products that
are distributed by Company), process, or service. Conflicting Products include,
but are not limited to, maternity and nursing apparel and related accessories.

 

The term “Competing Business” shall mean any
business or enterprise engaged in the design, manufacture or sale of any
maternity or nursing apparel or related accessories, or any other business
engaged in by the Company (or, with respect to the application of this provision
following any termination of Employee’s employment, any other business engaged
in by the Company at the time of Employee’s termination of employment) within:
(x) a state or commonwealth of the United States or the District of Columbia,
or (y) any foreign country in which the Company has engaged in business, or has
undertaken preparations to engage in business within the preceding year (or,
with respect to the application of this provision following any termination of
Employee’s employment, within the year preceding Employee’s termination of
employment).

 

b.                                      During
the period of Employee’s employment by the Company and for twenty-four (24)
months thereafter, the Employee will not induce, attempt to induce or in any
way assist any other person in inducing or attempting

 

9

 

to induce any employee or agent of the
Company to terminate their relationship with the Company. Further, during such
period Employee will not directly or indirectly, on Employee’s own behalf or on
behalf of any other person or entity, employ or solicit for employment any
current or former Company employee or agent.

 

c.                                       If
there is a breach or threatened breach of any of the foregoing provisions of
this section, or any other obligation contained in this Agreement, the Company
shall be entitled to an injunction restraining the Employee from any such
breach without the necessity of proving actual damages, and the Employee waives
the requirement of posting a bond. Nothing herein, however, shall be construed
as prohibiting the Company from pursuing other remedies for such breach or
threatened breach.

 

d.                                      Employee
agrees not to disclose to Company or use for its benefit any confidential
information that Employee may possess from any prior employers or other
sources.

 

9.                                       OTHER CONDITIONS OF EMPLOYMENT.    The Employee shall be subject to other
terms and conditions of employment as set forth in the prevailing Company: a)
Team Member Handbook, b) commission, bonus or stock option programs and c) any
other Company policies or benefits, all of which shall be subject to
interpretation and change from time to time at the sole discretion of the
Company.

 

10.                                 GOVERNING
LAW AND RELATED MATTERS.   
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania. Employee agrees
that in the event of any violation of this Agreement, or any other matter
arising out of or relating to this Agreement, an action may be removed to or
commenced by Employer in any federal or state court of competent jurisdiction
in the Commonwealth of Pennsylvania. Employee hereby waives, to the fullest
extent permitted by law, any objection that Employee may now or hereafter have
to such jurisdiction or to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that such suit, action or
proceeding has been brought in an inconvenient forum. Employee agrees that
effective service of process may be made upon Employee by mail to any address
Employee has provided to Company. In the event either party files suit against
the other for any reason, or in the event either party is otherwise involved in
litigation concerning this Agreement or the employment relationship between the
parties, and a court of competent jurisdiction finds in favor of a party on any
such matter, the losing party shall reimburse the prevailing party its
reasonable costs and attorney’s fees incurred in connection with such suit.

 

The various parts of this Agreement are intended
to be severable. Should any part be rendered or declared invalid be reason of
any legislation or by a decree of a court of competent jurisdiction, such part
shall be deemed modified to the extent required by such legislation or decree
and the invalidation or modification of such part shall not invalidate or
modify the remaining parts hereof. Without limiting the generality of the
foregoing, if the scope of any covenant contained in this Agreement is too
broad to permit enforcement to its full extent, such

 

10

 

covenant shall be enforced to the maximum
extent permitted by law. The Employee agrees that such scope may be judicially
modified accordingly.

 

11.                                 SUCCESSORS
AND ASSIGNMENT.   The Company
may assign its interest in connection with this Agreement to any successor to
all or substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise, provided
that such successor assumes in writing all of the obligations of the Company
under this Agreement, and further subject, however, to Employee’s rights to
termination as provided in paragraph 2(D) hereof.

 

12.                                 ENTIRE
AGREEMENT.    This Agreement
represents the full and complete understanding between the Company and the
Employee with respect to the subject matter hereof and supersedes all prior
representations and understandings, whether oral or written and, except as
provided for herein, shall not be modified except upon written amendment
executed by Employee and an officer of Company holding the position of Vice
President or above.

 

13.                                 ACKNOWLEDGMENT.    Employee acknowledges that Employee was
provided with an unsigned copy of this Agreement in advance of continuing
employment and was accorded ample opportunity to read, ask questions, seek
clarification, and seek whatever counsel relative to the Agreement Employee
desired. Employee further acknowledges receipt of a signed copy of this
Agreement and that Employee has read and understands all of its terms and
conditions.

 

14.                                 COMPLIANCE
WITH SECTION 409A OF THE CODE. 
Notwithstanding any other provision of this Agreement, no payment will
be made hereunder other than on a date consistent with Section 409A of the
Code or related guidance.

 

IN WITNESS WHEREOF, the parties have executed
this instrument the day and year above and below written.

 

	
  MOTHERS WORK, INC.

  	
  EDWARD M. KRELL

  
	
   

  	
   

  
	
  By:

  	
  /s/ Dan W. Matthias

  	
   

  	
  /s/ Edward M. Krell

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  April 26, 2005

  	
   

  	
  Date:

  	
  April 26, 2005

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Executed At: Philadelphia, PA

  	
   

  
									

 

11EXHIBIT
4.1

 

SHAREHOLDERS’
AGREEMENT

 

THIS
AGREEMENT is made by and among Dorris (Eli) Bennett,
James W. Burton, Paul W. Dierksen, William Jeffrey Ervin, Dennis L. Grimaud,
Arthur F. Helf, Winston C. Hickman, Fowler H. Low, William W. McInnes, Thomas
R. Miller, Kathy S. Potter, Michael R. Sapp, Regg E. Swanson, and Paul A.
Thomas, M.D. (hereinafter referred to collectively as “Shareholders” and
individually as a “Shareholder”)

 

W
I T N E S S E T H:

 

WHEREAS, each
Shareholder owns shares of stock (“Stock”) in Tennessee Commerce Bank (the “Bank”),
and each Shareholder is an incorporator or member of the Bank’s Board of
Directors;

 

WHEREAS, the
Shareholders desire to restrict the transfer of the shares of Stock that they
each now own or may hereafter acquire;

 

NOW,
THEREFORE, the Shareholders agree as follows:

 

1.                                      First Right of Refusal.  Each Shareholder, shall have the first right
of refusal to purchase any Shareholder’s shares of Stock.  The Shareholders shall not transfer, assign,
sell, or otherwise dispose of shares of Stock or rights to acquire shares of
Stock, or the certificates representing the same, except in compliance with the
terms and conditions of this Agreement. 
The first right of refusal shall operate as follows:

 

(a)                                  If any Person, other than a
Family Member or Affiliate of a Shareholder, makes a bona fide offer to
purchase shares of Stock from any Shareholder, then the Shareholder to whom the
offer was made (hereinafter referred to as “Offeror”) shall give notice of such
offer to each of the other Shareholders individually.  An offer shall be considered bona fide by
presenting evidence that funds representing at least ten percent (10%) of the
purchase price have been paid to the Offeror as an earnest money deposit.  This notice from the Offeror to each of the
other Shareholders shall set forth the name and address of the proposed
purchaser of Offeror’s shares of Stock and shall set forth all of the terms,
conditions, and prices of said purchase and a statement of the intention of the
shareholder to transfer his shares of Stock.

 

(i)                                     “Family Member” for purposes of
this Section 1(a) shall mean any individual within (2) generations of direct
familial lineage of a Shareholder.

 

(ii)                                  “Affiliate” for purposes of this
Section 1(a) shall mean any Person whose management policies the Offeror
possesses the direct or indirect power to direct or cause the direction of
(which power would include the power to vote the shares of Stock of the Bank if
they were owned by such Person), whether through the ownership of voting
securities, by contract or otherwise.

 

 

(iii)                               “Person” for purposes of this
Section 1(a) shall mean an individual, trust, estate or any entity, which shall
include, but not be limited to, any foreign or domestic corporation,
partnership, joint venture, limited liability company, unincorporated
association or business trust.

 

(b)                                 For fifteen (15) days from the
receipt of notice by the Offeror, the remaining Shareholders shall have an
absolute right to purchase the offered shares of Stock upon the same terms and
conditions as set forth in the notice. 
The right of each Shareholder to purchase the offered shares of Stock
shall be on a pro rata basis with each other Shareholder.  If only one other Shareholder desires to
exercise such right and purchase all of the offered shares of Stock, such other
Shareholder shall be allowed to do so. 
If more than one Shareholder accepts the offer, such Shareholders’ right
to purchase all the offered shares of Stock shall be on a pro rata basis,
unless otherwise agreed.

 

(c)                                  If the Shareholders do not
exercise their right of first refusal, as set forth above, to purchase all of
the offered shares of Stock within the aforesaid time periods, such omission
shall be a rejection of the offer, and at the end of the period, Offeror shall
be free to sell all of his initially offered shares of Stock to the party
designated in the original notice and upon the terms, conditions and price
designated in the original notice.  If
Offeror, however, shall fail to make such a transfer within ninety (90) days
following the expiration of the time herein above provided for the exercise of
the Shareholders option, such shares of Stock shall again become subject to all
of the restrictions of this Agreement. 
The Shareholders have no right to purchase or attempt to purchase,
pursuant to the terms of this Agreement, anything other than all of the Offeror’s
shares of Stock that are involved in the offer.

 

(d)                                 In the event that any of the
Shareholders shall accept the Offeror’s offer, then the Offeror shall sell to
the remaining Shareholders, as applicable, such shares of Stock as may be
accepted by the remaining Shareholders within fifteen (15) days after
acceptance.  In the event the
Shareholders to whom the notice is sent elect to purchase such shares but
cannot close the purchase within the time period described herein on account of
the necessity of obtaining federal or state regulatory or court approval, the
Shareholders shall be given a reasonable period of time to obtain the approval,
not to exceed six (6) months, and only so long as they are pursuing such
approval in good faith.  The closing
shall take place at a reasonable time and place chosen by the Shareholders;
provided, however, that such place shall be in Williamson County or in such
other place as shall be mutually agreed upon.

 

2.                                      Compliance with Terms.  The procedures and rights incorporated in
this Agreement shall be operative and strictly observed each and every time
that any Shareholder desires or attempts to sell his respective shares of
Stock.  Failure by any Shareholder to
comply strictly with the terms and provisions hereof shall invalidate any and
all sales, transfers, or delivery of his respective shares, and in such an
event, in addition to any and all legal rights and remedies available, the non-compliant
party shall be subject to injunctive and equitable relief.

 

2

 

3.                                      Notices.  Any and all notices, offers or other
communications provided herein shall be given in writing and delivered in
person or by registered or certified mail which, if to an individual
Shareholder, shall be addressed to such individual Shareholder at his or her
address appearing on the stock books of the Bank, to his or her personal
residence, or to such other address as may be designated by the Shareholders.

 

4.                                      Restrictive Legend.  The parties hereto agree that each
Shareholder shall immediately cause to be placed a restrictive legend on the
face of the stock certificates he now owns or subsequently acquires in the Bank
as follows:

 

SALE, TRANSFER
OR OTHER DISPOSITION OF THE STOCK REFLECTED BY THIS CERTIFICATE MAY NOT BE MADE
EXCEPT IN ACCORDANCE WITH, AND AS RESTRICTED BY, THE SHAREHOLDERS’ AGREEMENT
DATED JUNE 18, 1999, TOGETHER WITH ANY SUBSEQUENT AMENDMENTS THERETO.

 

If for any reason any party shall fail to
place said restrictive legend on the stock certificates now held or
subsequently acquired by that person, said failure shall not invalidate any
provision, term or condition, or any other part of this Agreement.

 

5.                                      Future Ownership.  The Shareholders hereby agree that this
Agreement shall apply to the Stock and shall apply to any stock ownership in
the Bank hereafter acquired by the Shareholders by gift, purchase, devise, by
the laws of descent and distribution, or acquired by the Shareholders as a
result of stock dividends, stock splits, recapitalization, reissue, or in any
other manner.  This Agreement shall also
apply to any rights that the Shareholders might have to purchase additional
shares, whether by preemptive rights or otherwise.  It is the intent of the parties hereto that
this Agreement shall be binding upon the respective heirs, successors, assigns,
representatives, executors, administrators, guardians, guardians ad litem,
trustees or trusts for any of the Shareholders. 
The Shareholders agree that the terms, conditions, provisions and
agreements hereof shall be binding upon any receiver, trustee, debtor-in-possession
or similar officer or agent in a bankruptcy or receivership proceeding.  The terms of this Agreement do not supercede
the terms of any stock option agreements between the Shareholders and the Bank.

 

6.                                      Termination of Rights a
Shareholder.  A Shareholder shall have no rights under this
Agreement upon the termination of all of such Shareholder’s ownership interests
in shares of Stock.

 

7.                                      Termination of Agreement. 
This Agreement shall terminate upon any of the following:

 

(a)                                  If all shares of Stock of the
Bank are owned by any one Shareholder;

 

(b)                                 If the Bank is adjudicated a
bankrupt, the Bank executes an assignment for the benefit of creditors, a 

 

3

 

receiver is appointed for the Bank, the Bank
voluntarily or involuntarily dissolves, or the Bank’s primary
federal regulator directs the Bank to require any Shareholders to exercise or
forfeit their stock rights if the Bank’s capital falls below the minimum
requirements, as determined by the Bank’s state or primary federal regulator;

 

(c)                                  If all Shareholders and the Bank
agree in writing to terminate this Agreement; or

 

(d)                                 If all or substantially all of
the assets of the Bank are sold or if the Bank is dissolved.

 

8.                                      Relationship among the Parties.  This Agreement shall not be construed in any
way  to create any agreement by and among
the parties hereto to form any type of partnership, association, business
trust, or joint venture, and shall not be construed as an agreement by and
among the parties hereto to vote the shares of Stock that they own in a
collective manner.  None of the parties
shall have any influence whatsoever over the vote of the shares of Stock owned
by the other parties, the purpose of this Agreement being solely to provide for
the efficient and effective transfer of Stock from one or more parties hereto.

 

9.                                      No Options.  Each Shareholder represents that no options
or agreements, other than this Agreement, exist to which he is a party or by
which he is bound which affect the right of any Shareholder to enter into this
Agreement and to make the representations and agreements set forth herein.  Each Shareholder also represents that no
prior commitment to sell, transfer, or otherwise dispose of his stock ownership
in the Bank is in existence.

 

10.                               Agreement Drafted by Bank’s
Attorney.  The parties acknowledge this Agreement  was drafted by the Bank’s attorneys at Baker,
Donelson, Bearman & Caldwell and that:

 

(a)                                  They have been advised a
conflict of interest may exist between them, and

 

(b)                                 They have had the opportunity to
seek the advice of independent counsel, and

 

(c)                                  They have been advised by the
Bank’s attorney that this Agreement may have  tax consequences, and that they should seek
the advice of an independent tax adviser; and  they have had the opportunity to seek the
advice of an independent tax adviser.

 

11.                               Divorce of a Shareholder. The
rights and obligations of the parties hereunder, shall be binding upon and
superior to any property agreement entered into by any presently married
Shareholder, whether said property agreement is a part of a divorce proceeding
or otherwise. In the event of the divorce of a Shareholder, the Shareholder
shall use his or her best efforts to cause any property settlement agreement,
or similar document having the same effect, to provide that all the shares of
Stock owned by the Shareholder shall be retained by the Shareholder. If a
property settlement agreement or similar document having the same effect cannot
be obtained, then the Shareholder involved in the divorce proceeding shall use
his or her best efforts to petition the Court 

 

4

 

in which such proceeding is pending to order that all the shares of
Stock owned by the Shareholder shall be retained by the Shareholder.

 

12.                               Entire Agreement.  This instrument sets out the entire Agreement
among the parties on the subject matter of the Agreement and shall not be
amended in any manner except by a writing signed by all of the persons or
entities who are parties at the time of the amendment.

 

13.                               Waiver.  Any waiver of a right or obligation under the
Agreement must be made in writing, and no failure or delay by any party shall
operate as a waiver by another party; no single or partial exercise of a right
shall preclude a later exercise of the right or another right; and no express,
written waiver of a right or obligation on one occasion shall constitute a
waiver of another right or obligation.

 

14.                               Governing Law.  This Agreement and the rights and obligations
hereunder shall be construed and interpreted under the laws of the State of
Tennessee.

 

15.                               Violation of Agreement.  Any Shareholder may apply to a court of
proper jurisdiction for the specific performance of the terms of this
Agreement.  In the event legal action is
instituted to enforce this Agreement, or any part hereof, the prevailing party
shall be entitled to reasonable attorneys’ fees, in addition to actual costs
and expenses incurred in connection with such action.

 

16.                               Captions.  Titles and captions are used for the sake of
convenience or reference only, and shall not be deemed to define or limit the
provisions under them or to affect in any way their construction or
application.

 

17.                               Enforceability.  In the event that any one or more of the
provisions of this Agreement shall be held to be invalid or unenforceable by a
court of competent jurisdiction, such holding shall not affect the validity or
enforceability of the remainder of the Agreement, and, if any such
determination is made by reason of the scope or breadth of any such provision,
the provision shall nevertheless be deemed valid and enforceable to the extent
permitted by law.

 

18.                               Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

 

IN
WITNESS WHEREOF, the parties hereto have executed this
Agreement to be effective as of the 18th day of June, 1999.

 

SHAREHOLDERS:

 

5

 

 

	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ Dorris E. Bennett

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dorris E. Bennett

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ James W. Burton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  James W. Burton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ Paul W. Dierksen

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Paul W. Dierksen

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 20, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ William J. Ervin

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  William J. Ervin

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ Dennis L. Grimaud

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dennis L. Grimaud

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ Arthur F. Helf

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Arthur F. Helf

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ Winston C. Hickman

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Winston C. Hickman

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ Fowler H. Low

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Fowler H. Low

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ William W. McInnes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  William W. McInnes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ Kathy S. Potter

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Kathy S. Potter

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ Michael R. Sapp

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Michael R. Sapp

  	
   

  

 

6

 

	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ Regg E. Swanson

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Regg E. Swanson

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ Paul A. Thomas, M.D.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Paul A. Thomas, M.D.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 18, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ H. Lamar Cox

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  H. Lamar Cox

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  November 20, 1999

  	
   

  	
   

  	
  By:

  	
  /s/ Thomas Miller

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Thomas Miller

  	
   

  

 

7

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