FIRST FARMERS & MERCHANTS BANK LIFE INSURANCE ENDORSEMENT METHOD SPLIT DOLLAR PLAN AGREEMENT
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.
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.
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 65th 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.
2
The Bank shall pay all premiums due on all Policies under this Plan.
Article 4
Policy Ownership/Interests
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.
3
Article 6
Imputed Income/Reimbursement
The Bank shall impute income to the Participant in an amount equal to the annual cost of current life insurance protection on the life of the Participant 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 qualifies under current IRS Rules. The Bank will provide each Participant with an annual statement of the amount of income reportable by the Participant for federal and state income tax purposes as a result of such imputed income.
4
the Bank shall evaluate the reason for the denial, and upon advice of Counsel and in its sole discretion, consider judicially challenging any denial. The Bank shall have no liability to the Participant for any denial of coverage by the insurance company.
Any Participant may assign without consideration all interest in his or her Policy and in this Plan to any person, entity or trust. In the event a Participant shall transfer all of his/her interest in the Policy, then all of that Participant’s interest in his or her Policy and in the Plan shall be vested in his/her transferee, subject to such transferee executing agreements binding them to the provisions of this Plan, who shall be substituted as a party hereunder, and that Participant shall have no further interest in his or her Policy or in this Plan.
The Insurer shall be bound only by the terms of their corresponding Policy. Any payments the Insurer makes or actions it takes in accordance with a Policy shall fully discharge it from all claims, suits and demands of all persons relating to that Policy. The Insurer shall not be bound by the provisions of this Plan, except to the extent of any endorsement files with the Insurer. The Insurer shall have the right to rely on the Bank’s representations with regard to any definitions, interpretations or Policy interests as specified under this Plan.
5
11.1.3.1 The specific reasons for the denial,
11.1.3.2 A reference to the specific provisions of the Plan on which the denial is based,
11.1.3.3 A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,
11.1.3.4 An explanation of the Plan’s review procedures and the time limits applicable to such procedures, and
11.1.3.5 A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.
Article 12
Amendment or Termination of Plan
12.2 This Plan is established based on the assumption that current accounting, tax, and regulatory rules will remain in effect. In the event that these rules change, and such change is considered by the Bank to be detrimental to the operation of the Bank, the Bank reserves the right to terminate or amend the Plan in its sole discretion.
13.2.1 Interpreting the provisions of the Plan;
13.2.2 Establishing and revising the method of accounting for the Plan;
13.2.3 Maintaining a record of benefit payments; and
13.2.4 Establishing rules and prescribing any forms necessary or desirable to administer the Plan.
6
13.3 Applicable Law. The Plan and all rights hereunder shall be governed by the laws of the State of Tennessee, except to the extent preempted by the laws of the United States of America.
13.8 Notice. Any notice, consent or demand required or permitted to be given under the provisions of this Life Insurance Endorsement Method Split Dollar Plan Agreement by one party to another shall be in writing, shall be signed by the party giving or making the same, and may be give either by delivering the same to such other party personally, or by mailing the same, by United States certified mail, postage prepaid, to such party, addressed to his or her last known address as shown on the records of the Bank. The date of such mailing shall be deemed the date of such mailed notice, consent or demand.
IN WITNESS WHEREOF, the Bank executes this Plan as of the date indicated above.
|
ATTEST: |
BANK: |
|
||||
|
|
FIRST FARMERS & MERCHANTS |
||||
|
|
BANK |
||||
|
|
|
||||
|
/s/ Xxxxxx X. XxXxxxxx |
|
By: |
/s/ T. Xxxxx Xxxxxxx |
|
||
|
|
|
|
||||
|
|
Title: Chairman and CEO |
||||
7
By execution hereof, First Farmers & Merchants Corporation consents to and agrees to be bound by the terms and conditions of this Plan document.
|
ATTEST: |
CORPORATION: |
||||
|
|
FIRST FARMERS & MERCHANTS |
||||
|
|
CORPORATION |
||||
|
|
|
||||
|
/s/ Xxxxxx X. XxXxxxxx |
|
By: |
/s/ T. Xxxxx Xxxxxxx |
|
||
|
|
|
|
||||
|
|
Title: Chairman and CEO |
||||
8
