EXHIBIT 10.6
FORM OF CONSULTING AND
NON-COMPETITION AGREEMENT
This CONSULTING AND
NON-COMPETITION AGREEMENT (this “Agreement”) is
entered into as of this 19 th day of May, 2009, by and between Tennessee
Commerce Bancorp, Inc., a Tennessee corporation (the
“Company”), Tennessee Commerce Bank (the
“Bank”) and
,
(the “Executive”).
WHEREAS , Executive is an employee of the Bank who has
provided guidance, leadership, and direction in the growth,
management, and development of the Company and the Bank and has
learned trade secrets, confidential procedures and information, and
technical and sensitive plans of the Company and the
Bank,
WHEREAS , the Company desires to restrict after the
Executive’s separation from service with the Company and the
Bank the Executive’s availability to other employers or
entities that compete with the Company or the Bank,
WHEREAS , the Company desires to offer to Executive a
non-competition and consulting arrangement, and the parties hereto
have reached an agreement concerning the arrangement and other
matters contained herein and desire to set forth the terms and
conditions thereof, and
NOW THEREFORE
, in consideration of these
premises, the mutual promises and undertakings set forth in this
Agreement, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Executive and
the Company hereby agree as follows.
1.
Administration of this
Agreement .
(a)
Administrator duties
. This Agreement shall be
administered by the Company’s board of directors or by such
committee or person as the board shall appoint (the
“Administrator”). The Administrator shall have the
discretion and authority to (x) make, amend, interpret, and
enforce all appropriate rules and regulations for the
administration of this Agreement and (y) decide or resolve any
and all questions that may arise, including interpretations of this
Agreement.
(b)
Agents . In the administration of this Agreement the
Administrator may employ agents and delegate to them such
administrative duties as it sees fit (including acting through a
duly appointed representative) and may from time to time consult
with counsel, who may be counsel to the Company.
(c)
Binding effect of
decisions . The decision
or action of the Administrator concerning any question arising out
of the administration, interpretation, and application of this
Agreement and the rules and regulations promulgated hereunder
shall be final and conclusive and binding upon all persons having
any interest in this Agreement.
(d)
Indemnity of
Administrator . The
Company shall indemnify and hold harmless the members of the
Administrator against any and all claims, losses, damages,
expenses, or liabilities arising from any action or failure to act
with respect to this Agreement,
except in the case of willful misconduct by the
Administrator or any of its members. No individual shall be liable
while acting as Administrator for any action or determination made
in good faith regarding this Agreement, and any such individual
shall be entitled to indemnification and reimbursement in the
manner provided in the Company’s Charter and Bylaws and under
applicable law.
(e)
Information
. To enable the Administrator to
perform its functions, the Company shall supply full and timely
information to the Administrator on all matters relating to the
date and circumstances of the separation from service of the
Executive and such other pertinent information as the Administrator
may reasonably require.
(f)
Action by the
Administrator . In
addition to acting at a meeting in accordance with applicable laws,
any action of the Administrator concerning this Agreement may be
taken by a written instrument signed by the Administrator
(including, if the Company’s board of directors or a board
committee serves as the Administrator, by written consent in
accordance with Tennessee law and the Charter and Bylaws of the
Company, and any such action so taken by written consent shall be
effective as if it had been taken by a majority of the members at a
meeting duly called and held).
2.
Consulting
Services .
(a)
Services . For the first 24 months after separation from
service, at the sole discretion of the Company the Executive shall
provide consulting services as an independent contractor to the
Company as and when the Company requests, which services may have
to do with any or all phases of the Company’s or the
Bank’s business, but particularly concerning those phases in
which the Executive has particular expertise and knowledge. The
Executive shall devote best efforts to performance of the
consulting services hereunder, and shall in a timely manner commit
and make available sufficient time to provide the services
reasonably requested by the Company. The amount of time in any
month for which the Executive provides consulting services under
this Agreement shall not exceed 25% of the amount of time for which
the Executive provided services to the Company or the Bank each
month as an officer or employee before the Executive’s
separation from service.
(b)
The Executive shall be an
independent contractor .
In the Executive’s capacity as a consultant the Executive
shall be an independent contractor and shall not operate under the
direction or supervision of any officer of the Company or the Bank,
except as is necessary to outline the end product of consulting
services to be provided by the Executive under this Agreement. The
Executive’s services shall not be on a day-to-day regularly
scheduled operational basis, and shall be provided only when
Executive is reasonably available. The Executive and the Company
agree that the Executive shall be, under the terms of this
Agreement, an independent contractor and the Executive agrees that
the Executive’s rights and privileges and obligations are
solely those provided in this Agreement. However, if the Company
determines that the consulting payments under this Agreement are
compensation for services other than consulting and that the
payments are subject to withholding, Social Security, employment,
income, and other taxes or assessments under applicable tax law,
the payments shall be subject to the required
withholdings.
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Covenants against competition,
solicitation, or disclosure of confidential
information .
(a)
Competition
. For and in consideration of the
monthly payments described in section 4 the Executive shall not,
either separately, jointly, or in association with others, directly
or indirectly, as an agent, employee, owner, partner, stockholder,
or otherwise, allow the Executive’s name to be used by, or
establish, engage in, or become interested in any business, trade,
or occupation similar to the business being conducted by the
Company or the Bank, in any county in any of the States of the
United States in which the Company’s or the Bank’s
business is currently being conducted or is being conducted when
the Executive’s separation from service occurs, as long as
the Company or the Bank, or any person, firm, or corporation
deriving title to the goodwill of, or shares from it, carries on a
like business therein. The Company and the Executive acknowledge
that during the term of the Executive’s employment the
Executive has acquired and will acquire special knowledge and skill
that can be used to compete with the Company or the Bank.
Furthermore, although not a term or condition of this Agreement,
the Company and the Executive acknowledge that the
Executive’s services are being and will be used by the
Company and the Bank in executive, managerial, and supervisory
capacities throughout the areas in which Company and the Bank
conduct business.
(b)
Solicitation
. For and in consideration of the
monthly payments described in section 4, the Executive shall not
(x) directly or indirectly solicit or attempt to solicit any
customer of the Company or the Bank to accept or purchase financial
products or services of the same nature, kind or variety currently
being provided to the customer by the Company or the Bank or being
provided to the customer by the Company or the Bank when the
Executive’s separation from service occurs, (y) directly
or indirectly influence or attempt to influence any customer, joint
venturer, or other business partner of the Company or the Bank to
alter that person or entity’s business relationship with the
Company or the Bank in any way, and (z) accept the financial
products or services business of any customer or provide financial
products or services to any customer on behalf of anyone other than
the Company or the Bank. In addition, the Executive shall not
solicit or attempt to solicit and shall not encourage or induce in
any way any employee, joint venturer, or business partner of the
Company or the Bank to terminate an employment or contractual
relationship with the Company or the Bank, and shall not hire any
person employed by Company or the Bank during the two-year period
immediately before the Executive’s employment termination or
any person employed by the Company or the Bank during the term of
this covenant.
For purposes of this Agreement the
term “customer” shall mean any individual, joint
venturer, entity of any sort, or other business partner of the
Company or the Bank with, for, or to whom the Company or the Bank
has provided financial products or services during the final two
years of the Executive’s employment with the Company or the
Bank, or any individual, joint venturer, entity of any sort, or
business partner whom the Company or the Bank has identified as a
prospective customer of financial products or services within the
final two years of the Executive’s employment with the
Company or the Bank. For purposes of this Agreement the term
financial products or services shall mean any product or service
that a financial institution or a financial holding company could
offer by engaging in any activity that is financial in nature or
incidental to such a financial activity under
Section 4(k) of the Bank Holding Company Act of 1956 and
that is offered by the Company, the Bank, or an affiliate on the
date of the Executive’s
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employment termination, including but not
limited to banking activities and activities that are closely
related and a proper incident to banking, or other products or
services of the type in which the Executive was involved during the
Executive’s employment with the Company or the Bank. For
purposes of this Agreement, the term affiliate means the Bank and
any entity that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with the Company.
(c)
Disclosure of confidential
information . For and in
consideration of the monthly payments described in section 4 the
Executive shall not reveal to any person, firm, or corporation any
confidential information of any nature concerning the Company or
the Bank or the business of the Company, the Bank, or affiliates.
For purposes of this Agreement the term confidential information
shall mean any and all information of the Company, the Bank, or
affiliates that the Executive acquires or to which the Executive
has access that has not been disclosed publicly by the Company or
the Bank and that is not a matter of common knowledge in the fields
of work of the Company or the Bank. Confidential information shall
include but shall not be limited to trade secrets, technical data,
mailing lists, the names of suppliers and customers, and the
arrangements made from time to time with suppliers and customers.
Despite the foregoing, confidential information excludes
information that — as of the date hereof or at any time after
the date hereof — is published or disseminated without
obligation of confidence or that becomes a part of the public
domain (x) by or through action of the Company or the Bank or
(y) otherwise than by or at the Executive’s direction.
The covenant in this section 4(c) does not prohibit disclosure
required by an order of a court having jurisdiction or a subpoena
from an appropriate governmental agency or disclosure made by the
Executive in the ordinary course of business and within the scope
of the Executive’s authority.
(d)
Duration; no impact on existing
obligations under law or contract . The covenants in this section 3 shall apply
throughout the 24-month period in which the Executive is providing
consulting services under section 2, as well as for the entire
eight-year period thereafter. The Executive acknowledges and agrees
that nothing in this Agreement is intended to or shall have any
impact on the Executive’s obligations as an officer or
employee of the Company or the Bank to refrain from competing
against, soliciting customers, officers, or employees of, or
disclosing confidential information of the Company or the Bank
while the Executive is serving as an officer or employee of the
Company or the Bank or thereafter, whether the Executive’s
obligations arise under applicable law or under an employment
agreement or otherwise.
(e)
Remedies . The Executive acknowledges and agrees that
remedies at law for the Executive’s breach of the covenants
contained herein are inadequate and that for violation of the
covenants contained herein, in addition to any and all legal and
equitable remedies that may be available, the covenants may be
enforced by an injunction in a suit in equity without the necessity
of proving actual damage, and that a temporary injunction may be
granted immediately upon the commencement of any such suit, and
without notice. The parties hereto intend that the covenants
contained in this section 3 shall be deemed to be a series of
separate covenants, one for each county of each state in which the
Company or the Bank does business. If in any judicial proceeding a
court refuses to enforce any or all of the separate covenants, the
unenforceable covenants shall be deemed eliminated from the
provisions hereof for the purposes of that proceeding to the extent
necessary to permit the remaining separate covenants to be
enforced.
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Furthermore, if in any judicial proceeding a
court refuses to enforce any covenant because of the
covenant’s duration or extent, the covenant shall be
construed to have only the maximum duration or extent permitted by
law.
(f)
Forfeiture of payments under this
Agreement . If the
Executive breaches any of the covenants in this section 3, the
Executive’s right to any of the payments specified in section
4 after the date of the breach shall be forever forfeited and the
right of the Executive’s designated beneficiary or estate to
any payments under this Agreement shall likewise be forever
forfeited. This forfeiture is in addition to and not instead of any
injunctive or other relief that may be available to the Company.
The Executive further acknowledges and agrees that any breach of
any of the covenants in this section 3 shall be deemed a material
breach by the Executive of this Agreement.
4.
Consulting and Noncompete
Payments .
(a)
Payments . For the Executive’s separation from
service and in consideration of the Executive’s support,
sponsorship, advisory, and other services provided to the Company
and the Bank in accordance with section 2, and in
consider
