Exhibit 10.18
FIRST FARMERS &
MERCHANTS BANK
LIFE INSURANCE ENDORSEMENT METHOD SPLIT
DOLLAR PLAN AGREEMENT
THIS PLAN, hereby made effective
this 7th day of January, 2008 (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
“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” shall mean the
Internal Revenue Code of 1986, as amended.
1.3
“Corporation” shall mean
First Farmers & Merchants Corporation.
1.4
“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.
1.5
“Insured” shall mean the
individual whose life is insured.
1.6
“Insurer” shall mean the
insurance company issuing the life insurance policy on the life of
the insured.
1.7
“Normal Retirement Age”
shall mean the Participant’s 65 th birthday.
1.8
“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.
1.9
“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.
1.10
“Plan” shall mean this
instrument, including all amendments thereto.
1.11
“Plan Year” shall mean
each consecutive twelve (12) month period commencing with the
Effective Date of this Plan.
1.12
“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.
1.13
“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.
1.14
“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 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
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, the Plan or any
Participant’s rights under the Plan are terminated in
accordance with Sections 5.2 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, the amount specified in Exhibit A.
4.2.2
Death After Termination of
Employment. At the date of death, the Participant’s
beneficiary shall be entitled to a benefit as specified in
Exhibit A.
4.2.3
Notwithstanding any provision to the
contrary in this Agreement, the bank shall
