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 during the three (3) year period
immediately prior to the termination of the Director’s service;


 


(v)                                 divulge, disclose, or
communicate to others in any manner whatsoever, any confidential information of
the Corporation, to the knowledge of the Director, including, but not limited
to, the names and addresses of customers or prospective customers, of the
Corporation, as they may have existed from time to time, of work performed or
services rendered for any customer, any method and/or procedures relating to
projects or other work developed for the Corporation or any of its
subsidiaries, earnings or other information concerning the Corporation.  The restrictions contained in this
subparagraph (v) apply to all information regarding the Corporation,
regardless of the source who provided or compiled such information.  Notwithstanding anything to the contrary, all
information referred to herein shall not be disclosed unless and until it
becomes known to the general public from sources other than the Director.


 


4.4.2        Judicial Remedies.  In
the event of a breach or threatened breach by the Director of any provision of
these restrictions, the Director recognizes the substantial and immediate harm
that a breach or threatened breach will impose upon the Corporation, and
further recognizes that in such event monetary damages may be inadequate to
fully protect the Corporation. 
Accordingly, in the event of a breach or threatened breach of this
Agreement, the Director consents to the Corporation entitlement to such ex  parte,
preliminary, interlocutory, temporary or permanent injunctive, or any other
equitable relief, protecting and fully enforcing the Corporation’s rights
hereunder and preventing the Director from further breaching any of his
obligations set forth herein.  The
Director expressly waives any requirement, based on any statute, rule of
procedure, or other source, that the Corporation post a bond as a condition of
obtaining any of the above-described remedies. 
Nothing herein shall be construed as prohibiting the Corporation from
pursuing any other remedies available to the Corporation at law or in equity
for such breach or threatened breach, including the recovery of damages from
the Director.  The Director expressly
acknowledges and agrees that:  (i) the
restrictions set forth in Section 4.4.1 hereof are reasonable, in terms of
scope, duration, geographic area, and otherwise, (ii) the protections
afforded the Corporation in Section 4.4.1 hereof are necessary to protect
their legitimate business interest, (iii) the restrictions set forth in Section 4.4.1
hereof will not be materially adverse to the Director’s service with the
Corporation, and (iv) the Director’s agreement to observe such
restrictions forms a material part of the consideration for this Agreement.


 


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4.4.3        Overbreadth of Restrictive Covenant.  It is the intention of the parties that if
any restrictive covenant in this Agreement is determined by a court of
competent jurisdiction to be overly broad, then the court should enforce such
restrictive covenant to the maximum extent permitted under the law as to area,
breadth and duration.


 


4.4.4        Change in Control. 
The non-compete provision detailed in Section 4.4.1 hereof shall
not be enforceable if there is a Change in Control of the Corporation.


 


4.5           Suicide or Misstatement. 
If the Director commits suicide within two years after the date of this
Agreement, or if the insurance company denies coverage for material
misstatements of fact made by the Director on any application for life
insurance purchased by the Corporation, or any other reason, provided however
that the Corporation shall evaluate the reason for the denial, and upon advice
of Counsel and in its sole discretion, consider judicially challenging any
denial.


 


Article 5

Assignment


 


The Director may assign without consideration
all interests in the Policy and in this Agreement to any person, entity or
trust.  In the event the Director
transfers all of the Director’s interest in the Policy, then all of the
Director’s interest in the Policy and in the Agreement shall be vested in the
Director’s transferee, subject to such transferee executing agreements binding
them to the provisions of this Agreement, who shall be substituted as a party
hereunder and the Director shall have no further interest in the Policy or in
this Agreement.


 


Article 6

Insurer


 


The Insurer shall be bound only by the terms
of the Policy.  Any payments the Insurer
makes or actions it takes in accordance with the Policy shall fully discharge
it from all claims, suits and demands of all entities or persons.  The Insurer shall not be bound by or be
deemed to have notice of the provisions of this Agreement, except to the extent
of any endorsement filed with the Insurer. 
The Insurer shall have the right to rely on the Corporation’s
representations with regard to any definitions, interpretations, or Policy
interests as specified under this Agreement.


 


Article 7

Claims and Review Procedures


 


7.1           Claims Procedure.  A
Director or beneficiary (“claimant”) who has not received benefits under the
Agreement that he or she believes should be paid shall make a claim for such
benefits as follows:


 


7.1.1        Initiation – Written Claim. 
The claimant initiates a claim by submitting to the Bank a written claim
for the benefits.


 


7.1.2        Timing of Bank Response. 
The Bank shall respond to such claimant within 90 days after receiving
the claim.  If the Bank determines that
special 


 


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circumstances require
additional time for processing the claim, the Bank can extend the response
period by an additional 90 days by notifying the claimant in writing, prior to
the end of the initial 90-day period, that an additional period is
required.  The notice of extension must
set forth the special circumstances and the date by which the Bank expects to
render its decision.


 


7.1.3        Notice of Decision. 
If the Bank denies part or all of the claim, the Bank shall notify the
claimant in writing of such denial.  The
Bank shall write the notification in a manner calculated to be understood by
the claimant.  The notification shall set
forth:


 


7.1.3.1          The
specific reasons for the denial,


 


7.1.3.2          A
reference to the specific provisions of the Agreement on which the denial is
based,


 


7.1.3.3          A
description of any additional information or material necessary for the
claimant to perfect the claim and an explanation of why it is needed,


 


7.1.3.4          An
explanation of the Agreement’s review procedures and the time limits applicable
to such procedures, and


 


7.1.3.5          A
statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following
an adverse benefit determination on review.


 


7.2           Review Procedure.  If
the Claimant is determined by the Corporation not to be eligible for benefits,
or if the Claimant believes that he or she is entitled to greater or different
benefits, the Claimant shall have the opportunity to have such claim reviewed
by the Corporation by filing a petition for review with the Corporation within
sixty (60) days after receipt of the notice issued by the Corporation.  Said petition shall state the specific
reasons which the Claimant believes entitle him or her to benefits or to
greater or different benefits.  Within
sixty (60) days after receipt by the Corporation of the petition, the
Corporation shall afford the Claimant (and counsel, if any) an opportunity to
present his or her position to the Corporation orally or in writing, and the
Claimant (or counsel) shall have the right to review the pertinent
documents.  The Corporation shall notify
the Claimant of its decision in writing within the sixty- day period, stating
specifically the basis of its decision, written in a manner calculated to be
understood by the Claimant and the specific provisions of this Agreement on
which the decision is based.  If, because
of the need for a hearing, the sixty-day period is not sufficient, the decision
may be deferred for up to another sixty-day period at the election of the
Corporation, but notice of this deferral shall be given to the Claimant.


 


Article 8

Amendments and Termination


 


No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and such officer or officers as
may be specifically designated by the Boards of Directors of the Corporation to
sign on their behalf.  No waiver by any
party hereto at any time of any breach by 


 


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any other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.


 


Article 9

Miscellaneous


 


9.1                               Administrator.  The
Corporation shall be the administrator under this Agreement.  The Corporation may delegate to others
certain aspects of the management and operational responsibilities including
the service of advisors and the delegation of ministerial duties to qualified
individuals.


 


9.2                               Administration.  The
Corporation shall have powers which are necessary to administer this Agreement,
including but not limited to:


 


9.2.1        Interpreting
the provisions of the Agreement;


 


9.2.2        Establishing
and revising the method of accounting for the Agreement;


 


9.2.3        Maintaining
a record of benefit payments; and


 


9.2.4        Establishing
rules and prescribing any forms necessary or desirable to administer the
Agreement.


 


9.3                               Applicable Law.  The
Agreement and all rights hereunder shall be governed by and construed according
to the laws of State of Tennessee, except to the extent preempted by the laws
of the United States of America.


 


9.4                               Binding Effect.  This
Agreement shall bind the Director and the Corporation, their beneficiaries,
survivors, executors, successors, administrators and transferees, and any
Policy beneficiary.


 


9.5                               Right of Offset.  The
Corporation shall have the right to offset the benefits against any unpaid
obligation the Director may have with the Corporation.


 


9.6                               No Guarantee of Service. 
This Agreement is not a contract for services.  It does not give the Director the right to
remain a Director of the Corporation, nor does it interfere with the
shareholders’ rights to replace the Director. 
It also does not require the Director to remain a Director nor interfere
with the Director’s right to terminate services at any time.


 


9.7                               Notice.  Any notice,
consent or demand required or permitted to be given under the provisions of
this Split Dollar Agreement by one party to another shall be in writing, shall
be signed by the party giving or making the same, and may be given 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 Corporation.  The date of such mailing shall be deemed the
date of such mailed notice, consent or demand.


 


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9.8           Recovery of Estate Taxes. 
If the Director’s gross estate for federal estate tax purposes includes
any amount determined by reference to and on account of this Agreement, and if
the beneficiary is other than the Director’s estate, then the Director’s estate
shall be entitled to recover from the beneficiary receiving such benefit under
the terms of the Agreement, an amount by which the total estate tax due by the
Director’s estate, exceeds the total estate tax which would have been payable
if the value of such benefit had not been included in the Director’s gross
estate.  If there is more than one person
receiving such benefit, the right of recovery shall be against each such
person.  In the event the beneficiary has
a liability hereunder, the beneficiary may petition the Corporation for a lump
sum payment in an amount not to exceed the beneficiary’s liability hereunder.


 


9.9           Reorganization.  The
Corporation shall not merge or consolidate into or with another company, or
reorganize, or sell substantially all of its assets to another company, firm or
person unless such succeeding or continuing company, firm or person agrees to
assume and discharge the obligations of the Corporation.


 


9.10         Unfunded Arrangement. 
The Director and beneficiary are general unsecured creditors of the
Corporation for the payment of benefits under this Agreement.  The benefits represent the mere promise by the
Corporation to pay such benefits.  Any
insurance on the Director’s life is a general asset of the Corporation to which
the Director and beneficiary have no preferred or secured claim.


 


IN WITNESS WHEREOF, the parties have executed
this Agreement the day and year first above written.


 


	
  DIRECTOR:

  	
   

  	
  BANK:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FIRST FARMERS AND MERCHANTS NATIONAL BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
						



 


 


By execution hereof, First Farmers &
Merchants Corporation consents to and agrees to be bound by the terms and
condition of this Agreement.


 


	
  ATTEST:

  	
   

  	
  CORPORATION:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FIRST FARMERS & MERCHANTS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
					



 


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SCHEDULE


TO


FIRST FARMERS AND MERCHANTS NATIONAL BANK

DIRECTOR SPLIT DOLLAR AGREEMENT


 


Director


 


Kenneth Abercrombie


James L. Bailey, Jr.


H. Terry Cook, Jr.


O. Rebecca Hawkins


Joseph W. Remke, III


T. Randy Stevens


John P. Tomlinson, III


William R. Walter


Dan C. Wheeler


David S. Williams


 


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