AMENDED AND RESTATED DIRECTOR DEFERRED COMPENSATION MASTER AGREEMENT

 

(b)

a change in the effective control of the Bank or the Holding Company, which shall occur only on either of the following dates:

 

(i)

the date any one person, or more than one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Bank or the Holding Company possessing thirty percent (30%) or more of the total voting power of the stock of the Bank or the Holding Company.

 

(ii)

the date a majority of members of the Holding Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Holding Company’s board of directors before the date of the appointment or election; provided, however, that this provision shall not apply if another corporation is a majority shareholder of the Holding Company.

 

(c)

a change in the ownership of a substantial portion of the Bank’s assets, which shall occur on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Bank that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Bank immediately before such acquisition or acquisitions.  For this purpose, gross fair market value means the value of the assets of the Bank, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. No change in control event occurs under this subsection (c) when there is a transfer to an entity that is controlled by the shareholders of the Bank immediately after the transfer.  A transfer of assets by the Bank is not treated as a change in the ownership of such assets if the assets are transferred to -

 

(i)

a shareholder of the Bank (immediately before the asset transfer) in exchange for or with respect to its stock;

 

(ii)

an entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the Bank.

 

(iii)

a person, or more than one person acting as a group, that owns, directly or indirectly, 50 percent or more of the total value or voting power of all the outstanding stock of the Bank; or

 

(iv)

an entity, at least 50 percent of the total value or voting power of which is owned, directly or indirectly, by a person described in paragraph (c).

 

(d)

For purposes of this section, persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering.  Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Bank or the Holding Company; provided, however, that they will not be considered to be acting as a group if they are owners of an entity that merges into the Bank or the Holding Company where the Bank or the Holding Company is the surviving corporation.

1.23

“Separation from Service” means with respect to a Director who is not also an employee of the Bank the good faith and complete termination of such Director’s relationship with the Bank as a member of its board of directors.  A Director who is also an employee of the Bank shall incur a “Separation from Service” only if he both incurs a good faith and complete termination of his relationship with the Bank as a member of its board of directors and has a “termination of employment;” provided, however, that the Director shall not be required to have a “termination of employment” if this Plan is not required to be aggregated with any other nonqualified deferred compensation plan of the Bank in which the Director participates as an employee under Section 409A of the Code.  For purposes of this section, a “termination of employment” means the termination of the individual’s employment with the Bank for reasons other than death or disability.  Whether a “termination of employment” takes place as determined based on the facts and circumstances surrounding the termination of the individual’s employment.  A “termination of employment” will be considered to have occurred if it is reasonably anticipated that:  (a) the individual will not perform any services for the Bank after the termination of employment, or (b) the individual will continue to provide services to the Bank at an annual rate that is less than fifty percent (50%) of the bona fide services rendered during the immediately preceding twelve months of employment.

4.1

Retirement Benefit. Subject to Subsections 4.3 and 5.1 (or 5.2) of this Agreement, the Bank agrees to pay the Director the Deferred Compensation Benefit commencing on the Director’s Benefit Eligibility Date. Such payments will be made over the term of the Payout Period. In the event of the Director’s death after commencement of the Deferred Compensation Benefit, but prior to completion of all such payments due and owing hereunder, the Bank shall pay to the Director’s Beneficiary a continuation of the annuity for the remainder of the Payout Period.

4.2

Disability Benefit.  Notwithstanding any other provision hereof, if requested by the Director and approved by the Board, the Director shall be entitled to receive the Disability Benefit hereunder, in any case in which it is determined by a duly licensed physician selected by the Association, that the Director has a medically determinable physical or mental impairment which can be expected to result in death or to last for a continuous period of not less than 12 months and which (1) renders Director unable to engage in any substantial gainful activity or (2) entitles Director to income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Association.  If the Director's service is terminated pursuant to this paragraph and Board approval is obtained, the Director shall begin receiving the Disability Benefit annuity in lieu of any Deferred Compensation Benefit which is not available prior to the Director's Benefit Eligibility Date.  The annuity shall begin not more than thirty (30) days following the above-mentioned disability determination.  The amount of the monthly benefit shall be the annuitized value of the Director's Elective Contribution Account, measured upon such determination and payable over the Payout Period.  The Interest Factor shall be used to annuitize the Elective Contribution Account.  In the event the Director dies while receiving payments pursuant to this Subsection, or after becoming eligible for such payments but before the actual commencement of such payments, his Beneficiary shall be entitled to receive those benefits provided for in Subsection 5.l(a) or 5.2(a) and the Disability Benefits provided for in this Subsection shall terminate upon the Director's death.

4.3

Financial Hardship Benefit. In the event the Director incurs a Financial Hardship, the Director may request a Financial Hardship Benefit. Such request shall be either approved or rejected by the Bank in the exercise of its sole discretion. The Director will be required to demonstrate to the satisfaction of the Bank that a Financial Hardship has occurred and that the Director is otherwise entitled to a Financial Hardship Benefit in accordance with Subsections 1.14 and 1.15. If a Financial Hardship Benefit is approved, it shall be paid in a lump sum within thirty (30) days of the event which triggers payment. The balance of the Director’s Elective Contribution Account shall be reduced for any Financial Hardship Benefit distribution. Also, any subsequent Deferred Compensation Benefit annuity, Survivor’s Benefit annuity or Disability Benefit annuity shall be actuarially adjusted to reflect such distribution.

4.4

Removal For Cause. In the event the Director is removed for Cause at any time prior to reaching his Benefit Age, he shall be entitled to receive the balance of his Elective Contribution Account, measured as of the date of removal. Such amount shall be paid in a lump sum within thirty (30) days of the Director’s date of removal. All other benefits provided for the Director or his Beneficiary under this agreement shall be forfeited and the Agreement shall become null and void.

4.5

Change in Control.  If a Change in Control occurs prior to the Director’s Benefit Eligibility Date and the Director incurs a Separation from Service as of such Change in Control, Director shall be paid his Accrued Benefit hereunder in one lump sum on the effective date of the Change in Control.

5.1

Death Benefit Prior to Commencement of Deferred Comnensation Benefit. In the event of the Director’s death prior to commencement of the Deferred Compensation Benefit, the Bank shall pay the Director’s Beneficiary a monthly amount for the Payout Period, commencing within thirty (30) days of the Director’s death. The amount of such benefit payments shall be determined as follows:

 

(a)

In the event death occurs (i) while the Director is receiving the Disability Benefit provided for in Subsection 4.2, or (ii) after the Director has become eligible for such Disability Benefit payments but before such payments have commenced, the Director’s Beneficiary shall be entitled to receive the Survivor’s Benefit for the Payout Period, reduced by the number of months Disability Benefit payments were made to the Director. In the event death occurs after the Director has received the Disability Benefit, provided for in Subsection 4,2, for the entire Payout Period, the Director’s Beneficiary shall not be entitled to the Survivor’s Benefit for any length of time. However, the lump sum payment described in the second paragraph of this Subsection (a) shall still be applicable to such Beneficiary.

 

(b)

In the event death occurs while the Director is (i) in the service of the Bank, (ii) deferring fees pursuant to Section II and (iii) prior for to any reduction or discontinuance, via an effective filing of a Notice of Adjustment of Deferral Amount, in the level of deferrals reflected in the Director’s initial Joinder Agreement, for any period during the Deferral Period, the Director’s Beneficiary shall be paid the Survivor’s Benefit.

 

(c)

In the event death occurs while the Director is (i) in the service of the Bank, (ii) deferring fees pursuant to Section II and (iii) after any reduction or discontinuance, via an effective filing of a Notice of Adjustment of Deferral Amount, in the level of deferrals reflected in the Director’s initial Joinder Agreement, for any period during the Deferral Period, the Director’s Beneficiary shall be paid a reduced Survivor’s Benefit, such amount being determined by multiplying the monthly payment available as a Survivor’s Benefit by a fraction, the numerator of which is equal to the total Board fees actually deferred by the Director as of his death and the denominator of which is equal to the amount of Board fees that would have been deferred as of his death, if no reduction or discontinuance in the level of deferrals had occurred at any time following execution of the Joinder Agreement and during the Deferral Period.

 

(d)

In the event the Director completes less than one hundred (100%) percent of his Projected Deferrals due to any voluntary or involuntary termination other than removal for Cause, the Director’s Beneficiary shall be paid a reduced Survivor’s Benefit, such amount being determined by multiplying the monthly payment available as a Survivor’s Benefit by a fraction, the numerator of which is equal to the total Board fees actually deferred by the Director and the denominator of which is equal to the Director’s Projected Deferral.

 

(e)

In the event the Director completes one hundred (100%) percent of his Projected Deferrals ,prior to any voluntary or. involuntary termination other than removal for Cause and provided no payments have been made pursuant to Subsection 4.2, the Director’s Beneficiary shall be paid the full Survivor’s Benefit.

5.2

Death Benefit Prior to Commencement of Deferred Compensation Benefit. In the event of the Director’s death prior to commencement of the Deferred Compensation Benefit, the Bank shall pay the Director’s Beneficiary a monthly amount determined as follows:

 

(a)

In the event death occurs (i) while the Director is receiving the Disability Benefit provided for in Subsection 4.2, or (ii) after the Director has become eligible for such Disability Benefit payments but before such payments have commenced, ‘the Director’s Beneficiary shall be entitled to receive a continuation of the Disability Benefit payments for the Payout Period, reduced by the number of months Disability Benefit payments were made to the Director. In the event death occurs after the Director has received the Disability Benefit, provided for in Subsection 4.2, for the entire Payout-Period, the Director’s Beneficiary shall not be entitled to the Survivor’s Benefit for any length of time. However, the lump sum payment described in the second paragraph of this Subsection (a) shall still be applicable to such Beneficiary.

 

(b)

In the event death occurs while the Director is (i) in the service of the Bank, (ii) deferring fees pursuant to Section II and (iii) prior for to any reduction or discontinuance, via an effective filing of a Notice of Adjustment of Deferral Amount, in the level of deferrals reflected in the Director’s initial Joinder Agreement, for any period during the Deferral Period, the Director’s Beneficiary shall be paid the Survivor’s Benefit. Such Survivor’s Benefit shall be paid for the Payout Period and shall commence within thirty (30) days of the subsequent death of any other Director electing to participate in this Agreement.

 

(c)

In the event death occurs while the Director is (i) in the service of the Bank, (ii) deferring fees pursuant to Section II and (iii) after any reduction or discontinuance, via an effective filing of a Notice of Adjustment of Deferral Amount, in the level of deferrals reflected in the Director’s initial Joinder Agreement, for any period during the Deferral Period, the Director’s Beneficiary shall be paid a reduced Survivor’s Benefit, such amount being determined by multiplying the monthly payment available as a Survivor’s Benefit by a fraction, the numerator of which is equal to the, total Board fees actually deferred by the Director as of his death and the denominator of which is equal to the amount of Board fees that would have been deferred as of his death, if no reduction or discontinuance in the level of deferrals had occurred at any time following execution of the Joinder Agreement and during the Deferral Period. Such reduced Survivor’s Benefit shall be paid for the Payout Period and shall commence within thirty (30) days of the subsequent death of any other Director electing to participate in this Agreement.

 

(d)

In the event the Director completes less than one hundred (100%) percent of his Projected Deferrals due to any voluntary or involuntary termination other than removal for Cause, the Director’s Beneficiary shall be paid a reduced Survivor’s Benefit, such amount being determined by multiplying the monthly payment available as a Survivor’s Benefit by a fraction, the numerator of which is equal to the total Board fees actually deferred by the Director and the denominator of which is equal to the Director’s Projected Deferral. Such reduced Survivor’s Benefit shall be paid for the Payout Period and shall commence within thirty (30) days of the subsequent death of any other Director electing to participate in this Agreement.

 

(e)

In the event the Director completes one hundred (100%) percent of his Projected Deferrals prior to any voluntary or involuntary termination other than removal for Cause and provided no payments have been made pursuant to Subsection 4.2, the Director’s Beneficiary shall be paid the full Survivor’s Benefit. Such Survivor’s Benefit shall be paid for the Payout Period and shall commence within thirty (30) days of the subsequent death of any other Director electing to participate in this Agreement.

5.3

Additional Death Benefit - Burial Expense. In addition to the above-described death benefits, within thirty (30) days of the Director’s death, the Director’s Beneficiary shall be entitled to receive a one-time lump hum death benefit in the amount of Ten Thousand ($10,000.00) Dollars.

10.1

Named Fiduciary and Administrator. Financial Institution Consulting Corporation, a Tennessee Corporation (“FICC”) shall be the Named Fiduciary and Administrator (the “Administrator”) of this Agreement. As Administrator, FICC shall be responsible for the management, control and administration of the Agreement as established herein. The Administrator may delegate to others certain aspects of the management and operational responsibilities of the Agreement, including the employment of advisors and the delegation of ministerial duties to qualified individuals.

10.2

Claims Procedure and Arbitration. In the event that benefits under this Agreement are not paid to the Director (or to his Beneficiary in the case of the Director’s death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Administrator within sixty (60) days from the date payments are refused. The Bank and its Board shall review the written claim and, if the claim is denied, in whole or in part, they shall provide in writing, within ninety (90) days of receipt of such claim, their specific reasons for such denial, reference to the provisions of this Agreement or the Joinder Agreement upon which the denial is based, and any additional material or information necessary to perfect the claim. Such writing by the Bank and its Board shall further indicate the additional steps which must be undertaken by claimants if an additional review of the claim denial is desired.

11.1

No Effect on Directorship Rights. Nothing contained herein will confer upon the Director the right to be retained in the service of the Bank nor limit the right of the Bank to discharge or otherwise deal with the Director without regard to the existence of the Agreement. Pursuant to 12 C.F.R. § 563.39(b), the following conditions shall apply to this Agreement:

 

(1)

The Bank’s Board of Directors may remove the Director at any time, but any removal by the Bank’s Board of Directors other than removal for Cause shall not prejudice the Director’s vested right to compensation or other benefits under the contract. As provided in Section 4.4, the Director shall be paid the balance of his Elective Contribution Account in a lump sum within thirty (30) days of his removal in the event he is removed for Cause. He shall have no right to receive additional compensation or other benefits for any period after removal for Cause.

 

(2)

If the Director is suspended and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1)) the Bank’s obligations under the contract shall be suspended (except vested rights) as of the date of termination of service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion (i) pay the Director all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

 

(3)

If the Director is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) or (g)(1)), all non-vested obligations of the Bank under the contract shall terminate as of the effective date of the order, but vested rights of the Director shall not be affected.

 

(4)

If the Bank is in default (as defined in Section 3(x)(1) of the Federal Deposit Insurance Act), all non-vested obligations under the contract shall terminate as of the date of default.

 

(5)

All non-vested obligations under the contract shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank:

 

(i)

by the Director or his designee at the time the Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in § 13(c) of the Federal Deposit Insurance Act; or

 

(ii)

by the Director or his designee, at the time the Director or his designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition.

11.2

State Law. The Agreement is established under, and will be construed according to, the laws of the State of Indiana.

11.3

Severability. In the event that any of the provisions of this Agreement or portion thereof, are held to be inoperative or invalid by any court of competent jurisdiction, then: (1) insofar as is reasonable, effect will be given to the intent manifested in the provisions held invalid or inoperative, and (2) the validity and enforceability of the remaining provisions will not be affected thereby.

11.4

Incapacity of Recipient. In the event the Director is declared incompetent and a conservator or other person legally charged with the care of his person or Estate is appointed, any benefits under the Agreement to which such, Director is entitled shall be paid to such conservator or other person legally charged with the care of his person or Estate. Except as provided above in this paragraph, when the Bank’s Board of Directors, in its sole discretion, determines that the Director is unable to manage his financial affairs, the Board may direct the Bank to make distributions to any person for the benefit of the Director.

11.5

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 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.  To the extent permitted under Section 409A of the Code, in the event the Beneficiary has a liability hereunder, the Beneficiary may petition the Association for a lump sum payment in an amount not to exceed the Beneficiary’s liability hereunder.

11.6

Unclaimed Benefit. The Director shall keep the Bank informed of his current address and the current address of his Beneficiaries. If the location of the Director is not made known to the Bank within three (3) years after the date on which any payment of the Deferred Compensation Benefit may be made, payment may be made as though the Director had died at the end of the three (3) year period. If, within one (1) additional year after such three (3) year period has elapsed, or, within three (3) years after the actual death of the Director, whichever occurs first, the Bank is unable to locate any Beneficiary of the Director, the Bank may fully discharge its obligation by payment to the Estate.

11.7

Limitations on Liability. Notwithstanding any of the preceding provisions of the Agreement, neither the Bank, nor any individual acting as an employee or agent of the Bank, or as a member of the Board of Directors shall be liable to the Director or any other person for any claim, loss, liability or expense incurred in connection with the Agreement.

11.8

Gender. Whenever in this Agreement words are used in the masculine or neuter gender, they shall be read and construed as in the, masculine, feminine or neuter gender, whenever they should so apply.

11.9

Affect on Other Corporate Benefit Agreements. Nothing contained in this Agreement shall affect the right of the Director to participate in or be covered by any qualified or non qualified pension, profit sharing, group, bonus or other supplemental compensation or fringe benefit agreement constituting a part of the Bank’s existing or future compensation structure.

11.10

Suicide. Notwithstanding anything to the contrary in this Agreement, the benefits otherwise provided herein shall not be payable if the Director’s death results from suicide, whether sane or insane, within twenty-six (26) months after the execution of this Agreement. If the Director dies during this twenty-six (26) month period due to suicide, the balance of his Elective Contribution Account will be paid to the Director’s Beneficiary in a single payment. Payment is to be made within thirty (30) days after the Director’s death is declared a suicide by competent legal authority. Credit shall be given to the Bank for payments made prior to determination of suicide.

11.11

Headings. Headings and sub-headings in this Agreement are inserted for reference and convenience only and shall not be deemed a part of this Agreement.

11.12

Reference to Controlled Group.  With respect to any benefit payable as a result of termination of or separation from employment, termination of or separation from employment shall be determined by reference to the Association and all members of any controlled group (determined under Section 414(b) of the Code) or trades or businesses under common control (determined under Section 414(c) of the Code) that includes the Association.

11.13

Restrictions on Payment to Key Employees.  To the extent the Director is a “key employee” (as defined in Section 416(i) of the Code determined without regard to paragraph (5) thereof) of a corporation whose stock is publicly traded on an established securities market or otherwise, within the meaning of Section 409A(a)(2)(B)(i) of the Code, no distribution of benefits that are made upon a Separation from Service and that represent payment of deferred compensation that is subject to 409A of the Code may commence before the date which is six months after the Director’s date of Separation from Service (or, if earlier, the date of the Director’s death); provided, however, that the six (6) month delay required under this Section 11.13 shall not apply to the portion of any payment resulting from the Director’s “involuntary separation from service” (as defined in Treas. Reg. § 1.409A-1(n) and including a “separation from service for good reason,” as defined in Treas. Reg. § 1.409A-1(n)(2)) that (a) is payable no later than the last day of the second year following the year in which the Separation from Service occurs, and (b) does not exceed two times the lesser of (i) the Director’s annualized compensation for the year prior to the year in which the Separation from Service occurs, or (ii) the dollar limit described in Section 401(a)(17) of the Code.  In the event this Section 11.13 is applicable to a Director, any distribution which would otherwise be paid to the Director within the first six months following the Separation from Service shall be accumulated and paid to the Director in a lump sum on the first day of the seventh month following the Separation from Service.  All subsequent distributions shall be paid in the manner specified in this Plan.

 

(a)

Within thirty (30) days before or twelve (12) months after a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank as described in Section 409A(2)(A)(v) of the Code, provided that termination of this Agreement was effected through an irrevocable action taken by the Bank and provided further that all distributions are made no later than twelve (12) months following such termination of the Agreement and that all the Bank's arrangements which are substantially similar to the Agreement are terminated so all Directors and any participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the termination of the arrangements;

 

(b)

Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Agreement are included in each Director's gross income in the latest of (i) the calendar year in which the Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

 

(c)

Upon the Bank’s termination of this and all other account balance plans (as referenced in Section 409A of the Code or the regulations thereunder), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, provided further that the termination of this Agreement does not occur proximate to the downturn in the financial health of the Bank and provided further that the Bank does not adopt any new account balance plans for a minimum of three (3) years following the date of such termination.