Exhibit 10.22
FIRST FARMERS AND MERCHANTS
CORPORATION
DIRECTOR DEFERRED COMPENSATION
AGREEMENT
This Director Deferred Compensation Agreement
(the “Agreement”) is adopted this 5th day of March,
2008, by and between First Fanners and Merchants Corporation, a
Tennessee corporation located in Columbia, Tennessee (the
“Company”), and Tim E. Pettus (the
“Director”) and is effective as of the 5th day of
March, 2008.
The purpose of this Agreement is to
provide specified benefits to the Director who contributes to the
continued growth, development and future business success of the
Company.
ARTICLE 1
Definitions
Whenever used in this Agreement, the
following words and phrases shall have the meaning
specified:
1.1
“ Beneficiary ”
means each designated person, or the estate of the deceased
Director, entitled to benefits, if any, upon the death of the
Director determined pursuant to Article 6.
1.2
“ Beneficiary Designation
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 one or more
beneficiaries.
1.3
“ Board ” means
the Board of Directors of the Company as from time to time
constituted.
1.4
“ Change in Control
” means a change in the ownership or effective control of the
Company, as such change is defined in section 409A of the code and
regulations there under.
1.5
“ Code ” means
the Internal Revenue Code of 1986, as amended.
1.6
“ Crediting Rate
” means the Wall Street Journal Prime Rate as published on
the last business day of the previous Plan Year plus three percent
(3%), with a maximum rate of nine and three quarters percent
(9.75%).
1.7
“ Deferrals ”
means the amount of Fees which the Director elects to defer
according to this Agreement. In the absence of a valid Deferral
Election Form, Deferrals shall mean 100% of the Fees.
1.8
“ Deferral Account
” means the Company’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 March 5, 2008.
1.13
“ Plan Administrator
” means the plan administrator described in
Article 8.
1.14
“ Plan Year ”
means each twelve-month period commencing on January 1 and
ending on December 31 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
Company. 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 Company. 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 Company 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 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 Company if the Director has been providing services
to the Company 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 Company; or
(b)
Conviction of a felony or of a gross
misdemeanor involving moral turpitude in connection with the
Director’s service with the Company; or
(c)
Fraud, disloyalty, dishonesty or
willful violation of any law or significant Company policy
committed in connection with the Director’s service and
resulting in a material adverse effect on the Company.
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 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 Company
shall establish a Deferral Account on its books for the Director
and shall credit to the Deferral Account the following
amounts:
(a)
Any Deferrals hereunder:
and
(b)
Interest as follows:
(i)
On the last day of each month
interest shall be credited on the Deferral Account at an annual
rate equal to the Crediting Rate, compounded monthly until the
account has a zero balance; 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 Company for the distribution of
benefits. The benefits represent the mere Company 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 Company 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 plus interest at
Separation from Service.
4.1.2
Distribution of
Benefit . The Company
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 Company shall annuitize the
Deferral Account using an interest rate determined in accordance
with Section 3.1(b)(ii).
4.2
Hardship Distribution
. The Company 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 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 contrary, if
the Director is considered a Specified Employee at S
