Exhibit 10.15
FIRST FARMERS &
MERCHANTS BANK
GROUP TERM CARVE-OUT
PLAN
THIS PLAN, hereby made effective
this 27 th day of March, 2007 (the “Effective
Date”), by and between First Farmers and Merchants Bank,
state-chartered bank located in Columbia; Tennessee (the
“Bank”), and the Participant (the
“Participant”) selected to participate in this Plan,
intending, to be legally bound hereby.
INTRODUCTION
The Bank wishes to attract, retain
and reward highly qualified executives. To further this objective,
the Bank is willing to divide the death proceeds of certain life
insurance policies which are owned by the Bank on the lives of the
participating executives with the designated beneficiary of each
insured participating executive. The Bank will pay the life
insurance premiums from its general assets.
Article 1
General
Definitions
The following terms shall have the
meanings specified:
1.1
“Base Annual Salary” shall mean the Participant’s
current annual salary as of January 1, 2007, exclusive of
special payments such as bonuses or fees, but including any salary
reductions made in accordance with Sections 125 or 401(k) of
the Code.
1.2
“Change in Control of the Corporation” means a change
in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
(“Exchange Act”), or any successor thereto, whether or
not the Corporation is registered under Exchange Act; provided
that, without limitation, such a change in control shall be deemed
to have occurred if (i) any “person” (as such term
is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing 25% or more of the
combined voting power of the Corporation’s then outstanding
securities; or (ii) during any period of two
(2) consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Corporation
cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were
directors at the beginning of the period.
1.3
“Code” shall mean the Internal Revenue Code of 1986, as
amended.
1.4
“Corporation” shall mean First Fanners &
Merchants Corporation.
1.5
“Disability” means the Participant’s suffering a
sickness, accident or injury which has been determined by the
carrier of any individual or group disability insurance policy
covering the Participant, or by the Social Security Administration,
to be a disability rendering the
Participant totally and permanently disabled.
The Participant must submit proof to the Bank of the
carrier’s or Social Security Administration’s
determination upon the request of the Bank.
1.6
“Insured” shall mean the individual whose life is
insured.
1.7.
“Insurer” shall mean the insurance company issuing the
life insurance policy on the life of the insured.
1.8.
“Normal Retirement Age” shall mean the
Participant’s 65th birthday.
1.9
“Participant” shall mean the employee who is designated
by the Board of Directors as eligible to participate in the Plan,
elects in writing to participate in the Plan using the form
attached hereto as Exhibit A , and signs a Split Dollar
Endorsement for the Policy in which he or she is the
insured.
1.10
“Policy” or “Policies” shall mean the
individual insurance policy (or policies) adopted by the Board of
Directors for purposes of insuring a Participant’s life under
this Plan.
1.11
“Plan” shall mean this instrument, including all
amendments thereto.
1.12
“Plan Year” shall mean each consecutive twelve (12)
month period commencing with the Effective Date of this
Plan.
1.13
“Termination of Employment” shall mean that the
Participant ceases to be employed by the Bank for any reason
whatsoever other than by reason of a leave of absence, which is
approved by the Bank. For purposes of this Plan, if there is a
dispute over the employment status of the Participant or the date
of the Participant’s Termination of Employment, the Bank
shall have the sole and absolute right to decide the
dispute.
1.14
“Vested Insurance Benefit” shall mean the Bank will
provide the Participant with continued insurance coverage from the
date of vesting until death, subject to the forfeiture provisions
detailed in Section 5.2 and Article 8. Article 5
explains how a Participant achieves vested status.
1.15
“Years of Service” shall mean the number of consecutive
twelve (12) month periods of continuous employment with the Bank,
including leaves of absences approved by the Bank.
Article 2
Participation
2.1
Eligibility to Participate . The Board of Directors in its
sole discretion shall designate from time to time Participants that
are eligible to participate in this Plan. The Board may delegate
this authority to management.
2.2
Participation . The eligible executive may participate in
this Plan by executing an Election to Participate (
Exhibit A ) and a Split Dollar Endorsement. The Split
Dollar Endorsement shall bind the Participant and his or her
beneficiaries, assigns and transferees, to the
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terms and conditions of this Plan. A
Participant’s participation is limited to only Policies where
he or she is the Insured. Exhibit A sets forth the
information about the Policy or Policies and maximum Participant
benefit under the Plan.
2.3
Termination of Participation . A Participant’s rights
under this Plan shall cease and his or her participation in this
Plan shall terminate if one of the following events occur:
(1) the Participant’s employment with the Bank is
terminated prior to the Participant meeting any of the criteria for
a Vested Insurance Benefit under Section 5.1, or (2) the
Plan or any Participant’s rights under the Plan are
terminated in accordance with Sections 5.2 or 12.1 of this Plan. In
the event that the Bank decides to maintain the Policy after the
Participant’s termination of participation in the Plan, the
Bank shall be the direct beneficiary of the entire death proceeds
of the Policy. The Bank may document the Participant’s
termination from the Plan by indicating the date of termination on
Exhibit A . However, the Bank’s failure to do so
will not be deemed evidence of Participant’s continued
participation in the Plan.
Article 3
Premium Payments
The Bank shall pay all premiums due
on all Policies under this Plan.
Article 4
Policy
Ownership/Interests
4.1
Bank Ownership . The Bank shall own the Policies and shall
have the right to exercise all incidents of ownership, including
the right to terminate a Policy without the consent of the Insured.
With respect to each Policy, the Bank shall be the direct
beneficiary of an amount of death proceeds equal to the greatest
of: (1) the cash surrender value of the policy; (2) the
aggregate premiums paid on the Policy by the Bank less any
outstanding indebtedness to the Insurer; or (3) the amount in
excess of the Participant’s interest specified in
Section 4.2. If the Bank owns more than one policy on a
Participant, the Policies shall be aggregated with respect to item
(3) of this paragraph.
4.2
Participant’s Interest . Each Participant, or the
Participant’s assignee, shall have the right to designate the
beneficiary of the death proceeds of the Policy as specified in
Section 4.2.1 or 4.2.2. The Participant shall also have the
right to elect and change settlement options.
4.2.1
Death Prior to termination of Employment . If the
Participant dies while employed by the Bank, the
Participant’s beneficiary shall be entitled to a benefit
equal to two and one-half (2-1/2) times the deceased
Participant’s Base Annual Salary at the effective date of the
Plan, the amount of which is specified in Exhibit A
.
4.2.2
Death After Termination of Employment . If, pursuant to
Article 5, a terminated Participant has a Vested Insurance
Benefit at the date of death, the Participant’s beneficiary
shall be entitled to a benefit equal to two and one-half (2-1/2)
times the Participant’s Base Annual Salary as specified in
Exhibit A . If the terminated Participant has not
achieved a Vested Insurance Benefit, the Participant’s
beneficiary will not be entitled to a benefit under this
Plan.
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4.2.3
Notwithstanding any provision to the contrary in this Agreement,
the bank shall not be liable for a death benefit in the event of
bankruptcy or insolvency of the insurer at the time of
Participant’s death, or in the event the Policy has been
cancelled, surrendered or otherwise terminated at the time of the
Participant’s death.
Article 5
Vesting
5.1
Vested Insurance Benefit . The Participant shall have a
Vested Insurance Benefit equal to the amount specified in
Section 4.2 at the earliest of the following
events:
5.1.1
Remaining in continuous employment with the Bank until age
65;
5.1.2
Remaining in continuous employment with the Bank until age 60 with
ten (1) or more Years of Service from the date of this
Agreement;
5.1.3
Remaining in continuous employment with the Bank for ten
(10) years or more from the date of this Agreement;
5.1.4
Termination of Employment due to Disability; or
5.1.5
At the discretion of the Board of Directors if there are other
circumstances not addressed in Sections 5.1.1 through 5.1.4 of this
Plan.
5.2
Forfeiture of Benefit . Notwithstanding the provisions of
Section 5.1, th
