Exhibit 10.13
FIRST FARMERS AND MERCHANTS
NATIONAL BANK
DIRECTOR SPLIT DOLLAR AGREEMENT
THIS AGREEMENT is made effective
this
day of
(the “Effective Date”), by and between First Farmers
and Merchants National Bank (the “Bank”), a national
banking association located in Columbia, Tennessee and
(the “Director”). This Agreement shall append the
Split Dollar Endorsement entered into on
,
2002, by and between the aforementioned parties, intending to be
legally bound hereby.
INTRODUCTION
To encourage the Director to
continue to serve on the Board of Directors of the Bank, the Bank
is willing to divide the death proceeds of a life insurance policy
on the Director’s life. The Bank will pay life
insurance premiums from its general assets.
Article 1
General Definitions
The following terms shall have the meanings
specified:
1.1
“ 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.
1.2
“ Code ” means the Internal Revenue Code of
1986, as amended.
1.3
“ Corporation ” means First Farmers &
Merchants Corporation.
1.4
“ Insured ” means the Director.
1.5
“ Insurer ” means Clarica Life Insurance Company
or its successor thereto.
1.6
“ Policy ” means insurance policy # 656894
issued by the Insurer.
1.7
“ Termination of Service ” means the Director
ceasing to be a member of the Board of Directors of the Bank or the
Corporation for any reason other than death.
Article 2
Policy Ownership/Interests
2.1
Bank Ownership . The Bank is the sole owner of the
Policy and shall have the right to exercise all incidents of
ownership. The Bank shall be the direct beneficiary of the
death proceeds of the Policy remaining after the Director’s
interest is determined according to Section 2.2
below.
2.2
Director’s Interest . Subject to the provisions
of Article 4, the Director shall have the right to designate
the beneficiary of $100,000 of death proceeds. The Director
shall also have the right to elect and change settlement options
that may be permitted.
2.3
Comparable Coverage . Upon execution of this
Agreement, the Bank shall maintain the Policy in full force and
effect and in no event shall the Bank amend, terminate or otherwise
abrogate the Director’s interest in the Policy.
However, the Bank may replace the Policy with a comparable
insurance policy to cover the benefit provided under this
Agreement. The Policy or any comparable policy shall be
subject to the claims of the Bank’ creditors.
2.4
Option to Purchase . The Bank shall not sell,
surrender or transfer ownership of the Policy while this Agreement
is in effect without first giving the Director or the
Director’s transferee the option to purchase the Policy for a
period of sixty (60) days from written notice of such
intention. The purchase price shall be an amount equal to the
cash surrender value of the Policy. This provision shall not
apply if this Agreement has terminated pursuant to
Article 4.
Article 3
Premiums
3.1
Premium Payment . The Bank shall pay any premiums due
on the Policy.
3.2
Imputed Income . The Bank shall impute income to the
Director in an amount equal to the annual cost of current life
insurance protection on the life of the Director measured by the
lesser of the Table 2001 rate set forth in Notice 2002-8 (or the
corresponding applicable provision of any later Revenue Ruling) or
the Insurer’s current published premium rate for annually
renewable term insurance for standard risks; provided that the
Insurer’s current published premium rate meets the
limitations set forth in Notice 2001-10 (or the corresponding
applicable provision of any later Revenue Ruling.) The Corporation
will provide each Director with an annual statement of the amount
of income reportable by the Director for federal and state income
tax purposes as a result of such imputed income.
Article 4
Forfeiture of Benefit
4.1
Excess Parachute or Golden Parachute Payment . If the
payments and benefits pursuant to this Agreement, either alone or
together with other payments and benefits which the Director has
the right to receive from the Corporation, would constitute a
“parachute payment”
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under Section 280G of the Code, the
payments and benefits pursuant to this Agreement shall be reduced,
in the manner determined by the Director, by the amount, if any,
which is the minimum necessary to result in no portion of the
payments and benefits under this Agreement being non-deductible to
the Corporation pursuant to Section 280G of the Code and
subject to the excise tax imposed under Section 4999 of the
Code.
4.2
Termination for Cause . Notwithstanding any provision
of this Agreement to the contrary, the Corporation shall not pay
any benefit under this Agreement, if the Corporation terminates the
Director’s service for cause. Termination of the
Director’s service for “Cause” shall mean
termination because of personal dishonesty, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law,
rule or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order or material breach of any
provision of the Agreement. For purposes of this paragraph,
no act or failure to act on the Director’s part shall be
considered “willful” unless done, or omitted to be
done, by the Director not in good faith and without reasonable
belief that the Director’s action or omission was in the best
interest of the Corporation.
4.3
Removal . Notwithstanding any provision of this
Agreement to the contrary, the benefit provided under this
Agreement shall be forfeited if the Director is subject to a final
removal or prohibition order issued by an appropriate federal
banking agency pursuant to Section 8(e) of the Federal
Deposit Insurance Act (“FDIA”).
4.4
Competition After Termination of Service . The
Director shall forfeit his right to his split dollar benefit if the
Director, without the prior written consent of the Corporation,
violates the following described restrictive covenants.
4.4.1
Non-compete Provision . The Director shall not,
directly or indirectly, either as an individual or as a proprietor,
stockholder, partner, officer, director, employee, agent,
consultant or independent contractor of any individual,
partnership, corporation or other entity (excluding an ownership
interest of three percent (3%) or less in the stock of a publicly
traded company):
(i)
become employed by, participate in,
or be connected in any manner with the ownership, management,
operation or control of any bank, savings and loan or other similar
financial institution if the Director’s responsibilities will
include providing banking or other financial services within the
twenty-five (25) miles of any office maintained by the Corporation
as of the date of the termination of the Director’s
service;
(ii)
participate in any way in hiring or
otherwise engaging, or assisting any other person or entity in
hiring or otherwise engaging, on a temporary, part-time or
permanent basis, any individual who was employed by the Corporation
as of the date of termination of the Director’s
service;
(iii)
assist, advise, or serve in any
capacity, representative or otherwise, any third party in any
action against the Corporation or transaction involving the
Corporation;
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(iv)
sell, offer to sell, provide banking
or other financial services, assist any other person in selling or
providing banking or other financial services, or solicit or
otherwise compete for, either directly or indirectly, any orders,
contract, or accounts for services of a kind or nature like or
substantially similar to the financial services performed or
financial products sold by the Corporation (the preceding
hereinafter referred to as “Services”), to or from any
person or entity from whom the Director or the Corporation, to the
knowledge of the Director provided banking or other financial
services, sold, offered to sell or solicited orders, contracts or
accounts for Services duri
