FIRST FARMERS AND MERCHANTS BANK DIRECTOR DEFERRED COMPENSATION AGREEMENT

1.8                                 “ Deferral Account ” means the Bank’s accounting of the Director’s accumulated Deferrals, plus accrued interest.

1.9                                 “ Deferral Election Form ” means the form established from time to time by the plan Administrator that the Director completes, signs, and returns to the Plan Administrator to designate the amount of the deferrals.

1.10                           “ Distribution Election Form ” means the form established from time to time by the Plan Administrator that the Director completes, signs, and returns to the Plan Administrator to designate the time and form of distribution.

1.11                           “ Fees ” means the total fees payable to the Director during a Plan Year.

1.12                           “ Original Effective Date ” means                   .

1.13                           “ Plan Administrator ” means the plan administrator described in Article 8.

1.14                           “ Plan Year ” means each twelve (12) month period commencing on January 1 st  and ending on December 31 st  of each year.

1.15                           “ Separation from Service ” In accordance with Section 409A, “Separation from Service” shall mean the Director dies, retires, or otherwise has a termination of service with the Bank. However, the employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six (6) months, or if longer, so long as the individual retains a right to reemployment with the service recipient under an applicable statute or by contract. For purposes of this definition, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Director will return to perform services for the Bank. If the period of leave exceeds six (6) months and the individual does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six (6) month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, where such impairment causes the Director to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a twenty-nine (29) month period of absence may be substituted for such six (6) month period.

Whether a termination of service has occurred is determined based on whether the facts and circumstances indicate that the Bank and Director reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Director would perform

2

after such date (whether as a Director 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 a Director or an independent contractor) over the immediately preceding thirty-six (36) month period (or the full period of services to the Bank if the Director has been providing services to the Bank less than 36 months). Facts and circumstances to be considered in making this determination include, but are not limited to, whether the Director continues to be treated as an Director for other purposes (such as continuation of salary and participation in Director benefit programs), whether similarly situated service providers have been treated consistently, and whether the Director is permitted, and realistically available, to perform services for other service recipients in the same line of business. A Director is presumed to have separated from service where the level of bona fide services performed decreases to a level equal to twenty percent (20%) or less of the average level of services performed by the Director during the immediately preceding thirty-six (36) month period. A Director will be presumed not to have separated from service where the level of bona fide services performed continues at a level that is fifty percent (50%) or more of the average level of service performed by the Director during the immediately preceding thirty-six (36) month period.

1.16                           “ Termination for Cause ” means a Separation from Service for:

(a)                                   Gross negligence or gross neglect of duties to the Bank; or

(b)                                  Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Director’s service with the Bank; or

(c)                                   Fraud, disloyalty, dishonesty or willful violation of any law or significant Bank policy committed in connection with the Director’s service and resulting in a material adverse effect on the Bank.

1.17                           “ Unforeseeable Emergency ” means a severe financial hardship to the Director resulting from an illness or accident of the Director, the Director’s spouse, or the Director’s dependent (as defined in Section 152(a) of the Code), loss of the Director’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Director.

Article 2
Deferral Election

2.1                                 “ Elections Generally ”. In any Plan Year during which Director defers fees, Director shall file a Deferral Election Form for any fees deferred. Such form shall be filed with the Plan Administrator no later than the end of the Plan

3

Year preceding the Plan Year during which services will be performed for fees deferred, and is effective only to deferred fees that have not yet been earned by the Director.

2.2                                 A deferral election submitted for a particular year may continue to be valid for succeeding years until changed or modified. Deferral elections, once made, however, are irrevocable for the Plan Year in which the fees are to be deferred.

A.                                    Initial Deferral Election(s) .

Upon notification of eligibility in this Agreement during the initial Plan Year, and if Director elects to defer fees, Director shall deliver to the Plan Administrator:

(a)                                   a Deferral Election Form, signed and dated;

(b)                                  a Beneficiary Form, signed and dated;

(c)                                   a Distribution Election Form, signed and dated.

The Director shall deliver such forms to the Plan Administrator within thirty (30) days of notification of eligibility, and shall set forth on the forms the amount of fees to be deferred.

2.3                                 Change in Form or Timing of Distributions . All changes in the form or timing of distributions hereunder must comply with the following requirements. The changes:

(a)                                   may not accelerate the time or schedule of any distribution, except as provided in Section 409A of the Code and the regulations thereunder;

(b)                                  must, for benefits distributable under Section 4.1, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

(c)                                   must take effect not less than twelve (12) months after the election is made.

Article 3
Deferral Account

3.1                                 Establishing and Crediting . The Bank shall establish a Deferral Account on its books for the Director and shall credit to the Deferral Account the following amounts:

4

(a)                                   Any Deferrals hereunder: and

(b)                                  Interest as follows:

(i)                                    On the last day of each month and immediately prior to the distribution of any benefits, but only until commencement of benefit distributions under this Agreement, interest shall be credited on the Deferral Account at an annual rate equal to the Crediting Rate, compounded monthly; and

(ii)                                 Prior to the commencement of any distributions hereunder, the Board, in its sole discretion, may change the rate used to calculate interest credited on the unpaid Deferral Account balance during any applicable installment period. Once the annual interest rate is determined it will compound monthly on the last day of each month.

3.2                                 Accounting Device Only . The Deferral Account is solely a device for measuring amounts to be paid under this Agreement. The Deferral Account is not a trust fund of any kind. The Director is a general unsecured creditor of the Bank for the distribution of benefits. The benefits represent the mere Bank promise to distribute such benefits. The Director’s rights are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by the Director’s creditors.

Article 4
Distributions During Lifetime

4.1                                 Separation from Service Benefit . Upon Separation from Service, the Bank shall distribute to the Director the benefit described in this section 4.1.

4.1.1                       Amount of Benefit . The benefit under this Section 4.1 is the Deferral Account balance at Separation from Service.

4.1.2                       Distribution of Benefit . The Bank shall pay the benefit to the Director as elected by the Director on the Distribution Election Form commencing within sixty (60) days following Separation from Service. In the event the Director elects monthly installments, the Bank shall annuitize the Deferral Account using an interest rate determined in accordance with Section 3.1(b)(ii).

4.2                                 Hardship Distribution . The Bank will permit early withdrawals for an unforeseeable emergency under certain circumstances arising as a result of events beyond the control of the Director. The Director may submit an application for an in-service early withdrawal due to an unforeseeable

5

emergency to the Board of Directors. If, in the discretion of the Board, the Director is permitted to take an early withdrawal due to an unforeseeable emergency, the Board shall make a distribution to such Director from the Director’s Account. Such distribution shall be paid in one (1) lump sum payment within thirty (30) days, after the Board determines that the Director is permitted to take an early withdrawal due to an unforeseeable emergency. The amount of such lump sum payment shall be limited to the amount reasonably necessary to meet the Director’s requirements to the extent such emergency is not relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Director’s assets, (to the extent the liquidation of such assets will not cause severe financial hardship) or by cessation of deferrals. For purposes of this section the term “unforeseeable emergency” means a severe financial hardship to the Director resulting from an illness or accident of the Director, the Director’s spouse, the Director’s dependent, or the Director’s Beneficiary, loss of the Director’s property due to casualty, other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Director. The imminent foreclosure of or eviction from the service provider’s primary residence may constitute an unforeseeable emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the costs of prescription drug medication, may constitute an unforeseeable emergency. Finally, the need to pay for the funeral expenses of a spouse, a beneficiary, or a dependent may also constitute an unforeseeable emergency. At all times this definition shall be construed in accordance with the definition under Section 409A. If the Director seeks to terminate any current deferral elections or re-start the deferral election, it must be done in accordance with Section 409A.

4.3                                 Restriction on Timing of Distribution . Notwithstanding any provision of this Agreement to the contr