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Exhibit 10.2
 
EMPLOYMENT AGREEMENT
 
This Employment Agreement (the “Agreement”) is made effective as of September 1,
2011 (the “Effective Date”), by and between Madison County Bank (the “Bank”) and
Daniel A. Fullner (“Executive”).
 
WHEREAS, the Bank wishes to assure itself of the continued services of Executive
for the period provided in this Agreement; and
 
WHEREAS, in order to induce Executive to remain in the employ of the Bank and to
provide further incentive for Executive to achieve the financial and performance
objectives of the Bank, the parties desire to enter into this Agreement; and
 
WHEREAS, the Bank desires to set forth the rights and responsibilities of
Executive and the compensation payable to Executive, as modified from time to
time.
 
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
 
1.             POSITION AND RESPONSIBILITIES.
 
During the term of this Agreement, Executive agrees to serve as Senior Vice
President, Treasurer and General Counsel of the Bank (the “Executive Position”),
and will perform the duties and will have all powers associated with such
position as set forth in any job description provided to Executive by the Bank,
and as may be set forth in the bylaws of the Bank.  During the period provided
in this Agreement, Executive also agrees to serve, if elected, as an officer of
any subsidiary or affiliate of the Bank and in such capacity carry out such
duties and responsibilities reasonably appropriate to that office.
 
2.             TERM AND DUTIES.
 
(a)           The term of this Agreement and the period of Executive’s
employment hereunder shall begin as of the Effective Date and shall continue for
thirty-six (36) full calendar months thereafter.  Commencing on the first
anniversary of the Effective Date and continuing on each anniversary date
thereafter (the “Anniversary Date”), this Agreement shall renew for an
additional year such that the remaining term shall be thirty-six (36) months,
provided, however, that in order for this Agreement to renew, the disinterested
members of the Board of Directors of the Bank (the “Board”) must take the
following actions prior to each non-renewal notice period (as described in the
next sentence): (i) at least sixty (60) days prior to the Anniversary Date,
conduct a comprehensive performance evaluation and review of Executive for
purposes of determining whether to extend this Agreement; and (ii) affirmatively
approve the renewal or non-renewal of this Agreement, which such decision shall
be included in the minutes of the Board’s meeting.  If the decision of such
disinterested members of the Board is not to renew this Agreement, then the
Board shall provide Executive with a written notice of non-renewal (“Non-Renewal
Notice”) at least thirty (30) days and not more than sixty (60) days prior to
any Anniversary Date, such that this Agreement shall terminate at the end of
twenty-four (24) months following such Anniversary Date.  Notwithstanding the
foregoing, in the event that at any time prior to the Anniversary Date the Bank
or the Bank’s stock holding company (hereinafter referred to as the “Company”)
has entered into an agreement to effect a transaction which would be considered
a Change in Control as defined under Section 5 hereof, then the term of this
Agreement shall be extended for thirty-six (36) months following the date on
which the Change in Control occurs.
 
 
 

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(b)           During the period of his employment hereunder, except for periods
of absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive will devote all of his business time, attention,
skill and efforts to the faithful performance of his duties under this
Agreement, including activities and duties related to the Executive
Position.  Notwithstanding the preceding sentence, subject to the approval of
the Board, Executive may serve as a member of the board of directors of
business, community and charitable organizations, provided that in each case
such service shall not materially interfere with the performance of his duties
under this Agreement, adversely affect the reputation of the Bank or any other
affiliates of the Bank, or present any conflict of interest.
 
(c)           Nothing in this Agreement shall mandate or prohibit a continuation
of Executive’s employment following the expiration of the term of this
Agreement, upon such terms and conditions as the Bank and Executive may mutually
agree in writing.
 
3.            COMPENSATION, BENEFITS AND REIMBURSEMENT.
 
(a)           In consideration of Executive’s performance of the
responsibilities and duties set forth in this Agreement, the Bank will provide
Executive the compensation specified in this Agreement.  The Bank will pay
Executive a salary of not less than $100,123.01 per year (“Base Salary”). Such
Base Salary will be payable in accordance with the customary payroll practices
of the Bank. During the term of this Agreement, Executive’s Base Salary shall be
reviewed at least annually.  Such review shall be conducted by a Committee
designated by the Board, and the Board may increase, but not decrease (other
than a decrease which is applicable to all senior officers of the Bank and in a
percentage not in excess of the percentage decrease for other senior officers),
Executive’s Base Salary (any increase in Base Salary shall become the “Base
Salary” for purposes of this Agreement).
 
(b)           Executive shall be eligible to receive discretionary bonuses that
are authorized and declared by the Board to its senior management employees from
time to time.  No other compensation provided for in this Agreement shall be
deemed a substitute for Executive’s right to receive such discretionary bonuses
as declared by the Board.
 
(c)           Executive will be entitled to participate in all employee benefit
plans, arrangements and perquisites offered to senior management employees of
the Bank.  Without limiting the generality of the foregoing provisions of this
Section 3(c), Executive also will be entitled to participate in any employee
benefit plans including but not limited to, bonus plans, retirement plans,
pension plans, profit-sharing plans, health-and-accident plans, or any other
employee benefit plan or arrangement made available by the Bank in the future to
management employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements.
 
 
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(d)           The Bank shall provide Executive with medical, dental, vision and
disability coverage made available by the Bank to its senior management
employees, subject to and on a basis consistent with the terms, conditions and
overall administration of such coverage.  In addition, Executive may submit to a
physical examination or examinations and such physicals may be conducted by a
health care provider of the Executive’s choice.  The net cost of such
examinations, services and tests, after regular health insurance benefits have
been paid, shall be paid by the Bank in their entirety, including reasonable
travel expenses.  Such reimbursable expenses shall not exceed $15,000 per year.
 
(e)           Executive will be entitled to paid vacation time each year during
the term of this Agreement measured on a calendar year basis, in accordance with
the Bank’s customary practices, as well as sick leave, holidays and other paid
absences in accordance with the Bank’s policies and procedures for senior
management employees.  Any unused paid time off during an annual period will be
treated in accordance with the Bank’s personnel policies as in effect from time
to time.
 
(f)           The Bank will reimburse Executive for all reasonable travel,
entertainment and other reasonable expenses incurred by Executive during the
course of performing his obligations under this Agreement, including, without
limitation, fees for memberships in such organizations as Executive and the
Board mutually agree are necessary and appropriate in connection with the
performance of his duties under this Agreement, upon substantiation of such
expenses in accordance with applicable policies and procedures of the Bank.  All
reimbursements pursuant to this Section 3(f) shall be paid promptly by the Bank
and in any event no later than thirty (30) days following the date on which the
expense was incurred.
 
(g)           To the extent not specifically set forth in this Section 3, any
compensation payable or provided under this Section 3 shall be paid or provided
no later than two and one-half (2.5) months after the calendar year in which
such compensation is no longer subject to a substantial risk of forfeiture
within the meaning of Treasury Regulation Section 1.409A-1(d).
 
4.
TERMINATION AND TERMINATION PAY.

 
Subject to Section 5 of this Agreement which governs the occurrence of a Change
in Control, Executive’s employment under this Agreement may be terminated in the
following circumstances:
 
(a)           Death.  Executive’s employment under this Agreement will terminate
upon his death during the term of this Agreement, in which event Executive’s
estate or beneficiary shall be paid Executive’s Base Salary at the rate in
effect at the time of Executive’s death for a period of one (1) year following
Executive’s death (payable in accordance with the regular payroll practices of
the Bank).  In addition, for the later of: (i) the remaining term of this
Agreement or (ii) one (1) year following Executive’s death, the Bank will
continue to provide non-taxable medical and dental coverage substantially
comparable to the coverage maintained by the Bank for Executive and his family
immediately prior to Executive’s death.  Such continued benefits will be fully
paid for by the Bank.
 
 
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(b)           Disability.
 
 
(i)
Termination of Executive’s employment based on “Disability” shall mean Executive
becomes disabled or incapacitated to the extent that Executive is unable to
perform his duties under this Agreement, by reason of a medically determinable
physical or mental impairment, as determined by a doctor engaged by the Board.

 
 
(ii)
In the event of Executive’s termination of employment due to Disability,
Executive shall be entitled to receive disability benefits, if any, provided
under any disability plan sponsored by the Bank.  In addition, the Bank will
continue to provide Executive (at no cost to the Executive) his non-taxable
medical and dental coverage substantially comparable to the coverage maintained
by the Bank for Executive immediately prior to his date of termination until the
later of: (i) the remaining term of this Agreement; or (ii) date on which
Executive attains age 65.  If the Bank cannot provide one or more of the
benefits set forth in this Section 4(b)(ii) because Executive is no longer an
employee, applicable rules and regulations prohibit such benefits or the payment
of such benefits in the manner contemplated, or it would subject the Bank to
penalties, then the Bank shall pay Executive a cash lump sum payment reasonably
estimated to be equal to the value of such benefits or the value of the
remaining benefits at the time of such determination. Such cash payment shall be
made in a lump sum within thirty (30) days after the later of Executive’s date
of termination or the effective date of the rules or regulations prohibiting
such benefits or subjecting the Bank to penalties.

 
(c)           Termination for Cause.
 
 
(i)
The Board may by written notice to Executive in the form and manner specified in
paragraph (ii) below, immediately terminate his employment at any time for
“Cause.”  Executive shall have no right to receive compensation or other
benefits for any period after termination for Cause, except for already vested
benefits.  Termination for Cause shall mean termination because of, in the good
faith determination of the Board, Executive’s:

 
 
(A)
material act of dishonesty or fraud in performing Executive’s duties on behalf
of the Bank;

 
 
(B)
willful misconduct that in the judgment of the Board will likely cause economic
damage to the Bank or injury to the business reputation of the Bank;

 
 
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(C)
incompetence (in determining incompetence, the acts or omissions shall be
measured against standards generally prevailing in the savings institutions
industry);

 
 
(D)
breach of fiduciary duty involving personal profit;

 
 
(E)
intentional failure to perform stated duties under this Agreement after written
notice thereof from the Board;

 
 
(F)
willful violation of any law, rule or regulation (other than traffic violations
or similar offenses which results only in a fine or other non-custodial penalty)
that reflect adversely on the reputation of the Bank, any felony conviction, any
violation of law involving moral turpitude, or any violation of a final
cease-and-desist order; any violation of the policies and procedures of the Bank
as outlined in the Bank’s employee handbook, which would result in termination
of the Bank employees, as from time to time amended and incorporated herein by
reference, or

 
 
(G)
material breach by Executive of any provision of this Agreement.

 
 
(ii)
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
notice of termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of the disinterested members of
the Board that Executive was guilty of the conduct described above and
specifying the particulars of such conduct.

 
(d)           Voluntary Termination by Executive.  In addition to his other
rights to terminate his employment under this Agreement, Executive may
voluntarily terminate employment during the term of this Agreement (other than
With Good Reason) upon at least thirty (30) days prior written notice to the
Board.  Upon Executive’s voluntary termination, Executive will receive only his
compensation and vested rights and benefits as of the date of his termination.
 
(e)           Termination Without Cause or With Good Reason.
 
 
(i)
The Board may, by providing a Notice of Termination (as defined in Section 6
hereof) to Executive, immediately terminate his employment at any time for a
reason other than Cause (a termination “Without Cause”), and Executive may, by
written notice to the Board, terminate this Agreement at any time within ninety
(90) days following an event constituting “Good Reason,” as defined below (a
termination “With Good Reason”); provided, however, that the Bank shall have
thirty (30) days to cure the “Good Reason” condition, but the Bank may waive its
right to cure.  Any termination of Executive’s employment, other than
termination for Cause shall have no effect on or prejudice the vested rights of
Executive under the Bank’s qualified or non-qualified retirement, pension,
savings, thrift, profit-sharing or bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans or other employee benefit plans or programs, or
compensation plans or programs in which Executive was a participant.

 
 
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(ii)
In the event of Executive’s termination as described under Section 4(e)(i) and
subject to the requirements of Section 4(e)(v), the Bank shall continue to pay
Executive, or in the event of Executive’s subsequent death, Executive’s
beneficiary or estate, as the case may be, as severance pay, Executive’s Base
Salary at the rate in effect as of his date of termination for the later of: (A)
remaining term of this Agreement or (B) twelve (12) months.  Such payment shall
commence within thirty (30) days following Executive’s date of termination and
shall be payable in accordance with the Bank’s regular payroll practices.

 
 
(iii)
In addition, the Bank will continue to provide Executive with non-taxable
medical and dental insurance coverage substantially comparable to the coverage
maintained by the Bank for Executive immediately prior to his date of
termination at no cost to Executive.  Such continued coverage shall continue for
the later of: (A) the remaining term of this Agreement or (B) twelve (12)
months.  The period of continued health coverage required by Section 4980B(f) of
the Internal Revenue Code of 1986, as amended (the “Code”), shall run
concurrently with the coverage period provided herein.  If the Bank cannot
provide one or more of the benefits set forth in this Section 4(e)(iii) because
Executive is no longer an employee, applicable rules and regulations prohibit
such benefits or the payment of such benefits in the manner contemplated, or it
would subject the Bank to penalties, then the Bank shall pay Executive a cash
lump sum payment reasonably estimated to be equal to the value of such benefits
or the value of the remaining benefits at the time of such determination. Such
cash payment shall be made in a lump sum within thirty (30) days after the later
of Executive’s date of termination or the effective date of the rules or
regulations prohibiting such benefits or subjecting the Bank to penalties.

 
 
(iv)
“Good Reason” exists if, without Executive’s express written consent, any of the
following occurs:

 
 
(A)
a material reduction in Executive’s Base Salary or benefits provided in this
Agreement (other than a reduction or elimination of Executive’s benefits under
one or more benefit plans maintained by the Bank as part of a good faith,
overall reduction or elimination of such plans or benefits applicable to all
participants in a manner that does not discriminate against Executive (except as
such discrimination may be necessary to comply with applicable law));

 
 
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(B)
a material reduction in Executive’s authority, duties or responsibilities from
the position and attributes associated with the Executive Position;

 
 
(C)
a relocation of Executive’s principal place of employment by more than
thirty-five (35) miles from the Bank’s main office location as of the date of
this Agreement; or

 
 
(D)
a material breach of this Agreement by the Bank.

 
 
(v)
Notwithstanding the foregoing, Executive shall not be entitled to any payments
or benefits under this Section 4(e) unless and until Executive executes a
release of his claims against the Bank and any affiliate, and their officers,
directors, successors and assigns, releasing said persons from any and all
claims, rights, demands, causes of action, suits, arbitrations or grievances
relating to the employment relationship, including claims under the Age
Discrimination in Employment Act (“ADEA”), but not including claims for benefits
under tax-qualified plans or other benefit plans in which Executive is vested,
claims for benefits required by applicable law or claims with respect to
obligations set forth in this Agreement that survive the termination of this
Agreement.  In order to comply with the requirements of Code Section 409A and
the ADEA, the release shall be provided to Executive no later than the date of
his Separation from Service (as defined below) and Executive shall have no fewer
than twenty-one (21) days to consider the release, and following Executive’s
execution of the release, Executive shall have seven (7) days to revoke said
release.

 
5.
CHANGE IN CONTROL.

 
(a)           Change in Control Defined.  For purposes of this Agreement, a
“Change in Control” shall mean (i) a change in the ownership of the Company or
Bank, (ii) a change in the effective control of the Company or Bank, or (iii) a
change in the ownership of a substantial portion of the assets of the Company or
Bank, as described below.
 
 
(i)
A change in the ownership of a corporation occurs on the date that any one
person, or more than one person acting as a group (as defined in Treasury
Regulation 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Company or
Bank that, together with stock held by such person or group, constitutes more
than fifty (50) percent of the total fair market value or total voting power of
the stock of such corporation.  For these purposes, a change in ownership will
not be deemed to have occurred if no stock of the Company or Bank is
outstanding.

 
 
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(ii)
A change in the effective control of the Company or Bank occurs on the date that
either (A) any one person, or more than one person acting as a group (as defined
in Treasury Regulation 1.409A-3(i)(5)(vi)(D)) acquires (or has acquired during
the twelve (12)-month period ending on the date of the most recent acquisition
by such person or persons) ownership of stock of the Company or Bank possessing
thirty (30) percent or more of the total voting power of the stock of the
Company or Bank, or (B) a majority of the members of the Company’s or Bank’s
board of directors is replaced during any twelve (12)-month period by directors
whose appointment or election is not endorsed by a majority of the members of
the Company’s or Bank’s board of directors prior to the date of the appointment
or election, provided that this subsection “(B)” is inapplicable where a
majority shareholder of the Company or Bank is another corporation.

 
 
(iii)
A change in a substantial portion of the Company’s or Bank’s assets occurs on
the date that any one person or more than one person acting as a group (as
defined in Treasury Regulation 1.409A-3(i)(5)(vii)(C)) acquires (or has acquired
during the twelve (12)-month period ending on the date of the most recent
acquisition by such person or persons) assets from the Company or Bank that have
a total gross fair market value equal to or more than forty (40) percent of the
total gross fair market value of (A) all of the assets of the Company or Bank,
or (B) the value of the assets being disposed of, either of which is determined
without regard to any liabilities associated with such assets.  For all purposes
hereunder, the definition of Change in Control shall be construed to be
consistent with the requirements of Treasury Regulation 1.409A-3(i)(5), except
to the extent that such regulations are superseded by subsequent guidance.

 
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred upon the conversion of Madison County Holding Company, MHC, a federal
mutual corporation, into the capital stock form of organization.
 
(b)           Change in Control Benefits.  In the event of Executive’s
termination Without Cause or With Good Reason occurring on or after, but within
two (2) years following, a Change in Control, Executive shall be paid an amount
equal to one dollar less than the product of three (3) times Executive’s “base
amount” as defined in Section 280G(b)(3) of the Code and the regulations
promulgated thereunder.  Such payment shall commence within thirty (30) days
following Executive’s date of termination and shall be paid in periodic payments
over the next thirty-six (36) months in accordance with the regular payroll
practices of the Bank.  Such payments shall be made in lieu of any other future
payments which Executive would be otherwise entitled to receive under Section
4(e)(ii) hereof.  In addition, Executive shall be entitled to receive the
benefits set forth in Section 4(e)(iii) hereof, provided however that the
release of claims requirement set forth in Section 4(e)(v) hereof shall not be
required with respect to any severance payments or benefits payable in
accordance with this Section 5(b).
 
(c)           280G Cutback.  Notwithstanding anything in this Agreement to the
contrary, in no event shall the aggregate payments or benefits to be made or
afforded to Executive under this Agreement, either as a stand-alone benefit or
when aggregated with other payments to, or for the benefit of, Executive that
are contingent on a change in control (as defined under Section 280G of the
Code), constitute an “excess parachute payment” under Section 280G of the Code
or any successor thereto, and in order to avoid such a result, Executive’s
benefits hereunder shall be reduced, if necessary, to an amount, the value of
which is one dollar ($1.00) less than an amount equal to three (3) times
Executive’s “base amount,” as determined in accordance with Section 280G of the
Code.
 
 
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6.             NOTICE OF TERMINATION.
 
(a)           Any purported termination by the Bank shall be communicated by
Notice of Termination to Executive.  For purposes of this Agreement, a “Notice
of Termination” shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so indicated.
 
(b)           If the party receiving a Notice of Termination desires to dispute
or contest the basis or reasons for termination, the party receiving the Notice
of Termination must notify the other party in writing within thirty (30) days
after receiving the Notice of Termination that such a dispute exists, and shall
pursue the resolution of such dispute in good faith and with reasonable
diligence pursuant to Section 15 of this Agreement.  During the pendency of any
such dispute, the Bank shall not be obligated to pay Executive Base Salary or
other compensation beyond Executive’s date of termination.  Any amounts paid to
Executive upon resolution of such dispute under this Section shall be offset
against or reduce any other amounts due under this Agreement.
 
7.             COVENANTS OF EXECUTIVE.
 
(a)           Confidentiality.  Executive recognizes and acknowledges that the
knowledge of the business activities, plans for business activities, and all
other proprietary information of the Bank, as it may exist from time to time,
are valuable, special and unique assets of the business of the Bank.  Executive
will not, during or after the term of his employment, disclose any knowledge of
the past, present, planned or considered business activities or any other
similar proprietary information of the Bank to any person, firm, corporation, or
other entity for any reason or purpose whatsoever unless expressly authorized by
the Board or required by law.  Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Bank.  Further, Executive may disclose information
regarding the business activities of the Bank to any bank regulator having
regulatory jurisdiction over the activities of the Bank pursuant to a formal
regulatory request.  In the event of a breach or threatened breach by Executive
of the provisions of this Section 7(a), the Bank will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Bank or any other similar proprietary information, or from rendering any
services to any person, firm, corporation, or other entity to whom such
knowledge, in whole or in part, has been disclosed or is threatened to be
disclosed.  Nothing herein will be construed as prohibiting the Bank from
pursuing any other remedies available to the Bank for such breach or threatened
breach, including the recovery of damages from Executive.
 
 
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(b)           Information/Cooperation.  Executive shall, upon reasonable notice,
furnish such information and assistance to the Bank as may be reasonably
required by the Bank, in connection with any litigation in which it or any of
its subsidiaries or affiliates is, or may become, a party; provided, however,
that Executive shall not be required to provide information or assistance with
respect to any litigation between Executive and the Bank or any other
subsidiaries or affiliates.
 
(c)           Reliance.  Except as otherwise provided, all payments and benefits
to Executive under this Agreement shall be subject to Executive’s compliance
with this Section 7, to the extent applicable.  The parties hereto, recognizing
that irreparable injury will result to the Bank, its business and property in
the event of Executive’s breach of this Section 7, agree that, in the event of
any such breach by Executive, the Bank will be entitled, in addition to any
other remedies and damages available, to an injunction to restrain the violation
hereof by Executive and all persons acting for or with Executive.  Executive
represents and admits that Executive’s experience and capabilities are such that
Executive can obtain employment in a business engaged in other lines of business
than the Bank, and that the enforcement of a remedy by way of injunction will
not prevent Executive from earning a livelihood.  Nothing herein will be
construed as prohibiting the Bank from pursuing any other remedies available to
them for such breach or threatened breach, including the recovery of damages
from Executive.
 
8.             SOURCE OF PAYMENTS.
 
All payments provided in this Agreement shall be timely paid by check or direct
deposit from the general funds of the Bank (or any successor of the Bank).
 
9.             EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
 
This Agreement contains the entire understanding between the parties hereto and
supersedes any prior employment agreement between the Bank or any predecessor of
the Bank and Executive, except that this Agreement shall not affect or operate
to reduce any benefit or compensation inuring to Executive of a kind expressly
provided elsewhere.
 
10.           NO ATTACHMENT; BINDING ON SUCCESSORS.
 
(a)           Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
 
(b)           The Bank shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank’s obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
 
11.           MODIFICATION AND WAIVER.
 
(a)           This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
 
 
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(b)           No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel.  No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived  and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
 
12.           REQUIRED PROVISIONS.
 
(a)           The Board may terminate Executive’s employment at any time, but
any termination by the Bank’s Board other than termination for Cause shall not
prejudice Executive’s right to compensation or other benefits under this
Agreement.  Executive shall have no right to receive compensation or other
benefits for any period after his termination for Cause.
 
(b)           If Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Bank’s affairs by a notice
served under Section 8(e)(3) (12 U.S.C. §1818(e)(3)) or 8(g)(1) (12 U.S.C.
§1818(g)(1)) of the Federal Deposit Insurance Act, the Bank’s obligations under
this Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings.  If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay Executive all or part of the compensation withheld
while its Agreement obligations were suspended and (ii) reinstate (in whole or
in part) any of its obligations which were suspended.
 
(c)           If Executive 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) (12 U.S.C. §1818(e)(4)) or 8(g)(1) (12 U.S.C. §1818(g)(1)) of
the Federal Deposit Insurance Act, all obligations of the Bank under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the contracting parties shall not be affected.
 
(d)           If the Bank is in default as defined in Section 3(x)(1) (12 U.S.C.
§1813(x)(1)) of the Federal Deposit Insurance Act, all obligations of the Bank
under this Agreement shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting parties.
 
(e)           All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Bank: (i) by the Comptroller of the Office of the
Comptroller of the Currency (the “OCC”) or his or her designee, at the time the
Federal Deposit Insurance Corporation (the “FDIC”) enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) (12 U.S.C. §1823(c)) of the Federal Deposit Insurance Act; or
(ii) by the Comptroller or his or her designee at the time the Comptroller or
his or her designee approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Comptroller to be in
an unsafe or unsound condition.  Any rights of the parties that have already
vested, however, shall not be affected by such action.
 
(f)           Notwithstanding anything herein contained to the contrary, any
payments to Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the
regulations promulgated thereunder in 12 C.F.R. Part 359.
 
 
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(g)           Notwithstanding anything else in this Agreement to the contrary,
Executive’s employment shall not be deemed to have been terminated unless and
until Executive has a Separation from Service within the meaning of Code Section
409A.  For purposes of this Agreement, a “Separation from Service” shall have
occurred if the Bank and Executive reasonably anticipate that either no further
services will be performed by Executive after the date of termination (whether
as an employee or as an independent contractor) or the level of further services
performed is less than twenty (20) percent of the average level of bona fide
services in the thirty-six (36) months immediately preceding the
termination.  For all purposes hereunder, the definition of Separation from
Service shall be interpreted consistent with Treasury Regulation Section
1.409A-1(h)(ii).
 
(h)           Notwithstanding the foregoing, if Executive is a “specified
employee” (i.e., a “key employee” of a publicly traded company within the
meaning of Section 409A of the Code and the final regulations issued thereunder)
and any payment under this Agreement is triggered due to Executive’s Separation
from Service (other than due to Disability or death), then solely to the extent
necessary to avoid penalties under Section 409A of the Code, no  payment shall
be made during the first six (6) months following Executive’s Separation from
Service.  Rather, any payment which would otherwise be paid to Executive during
such period shall be accumulated and paid to Executive in a lump sum on the
first day of the seventh month following such Separation from Service.  All
subsequent payments shall be paid in the manner specified in this Agreement.
 
13.           SEVERABILITY.
 
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
 
14.           GOVERNING LAW.
 
This Agreement shall be governed by the laws of the State of Nebraska but only
to the extent not superseded by federal law.
 
15.           ARBITRATION.
 
Any dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by binding arbitration, as an alternative to civil
litigation and without any trial by jury to resolve such claims, conducted by a
single arbitrator mutually acceptable to the Bank and Executive, sitting in a
location selected by the Bank within fifty (50) miles from the main office of
the Bank, in accordance with the rules of the American Arbitration Association’s
National Rules for the Resolution of Employment Disputes then in
effect.  Judgment may be entered on the arbitrator’s award in any court having
jurisdiction.
 
 
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16.           PAYMENT OF LEGAL FEES.
 
To the extent that such payment(s) may be made without triggering penalty under
Section 409A of the Code, all reasonable legal fees paid or incurred by
Executive pursuant to any dispute relating to this Agreement shall be paid or
reimbursed by the Bank, provided that the dispute is resolved in Executive’s
favor, and such reimbursement shall occur no later than sixty (60) days after
the end of the year in which the dispute is settled or resolved in Executive’s
favor.
 
17.           INDEMNIFICATION.
 
The Bank shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors’ and officers’
liability insurance policy at its expense, and shall indemnify Executive (and
his heirs, executors and administrators) to the fullest extent permitted under
applicable law against all expenses and liabilities reasonably incurred by him
in connection with or arising out of any action, suit or proceeding in which he
may be involved by reason of his having been a director or officer of the Bank
or any subsidiary or affiliate of the Bank (whether or not he continues to be a
director or officer at the time of incurring such expenses or liabilities), such
expenses and liabilities to include, but not be limited to, judgments, court
costs and attorneys’ fees and the cost of reasonable settlements (such
settlements must be approved by the Board, as appropriate); provided, however,
the Bank shall not be required to indemnify or reimburse Executive for legal
expenses or liabilities incurred in connection with an action, suit or
proceeding arising from any illegal or fraudulent act committed by
Executive.  Any such indemnification shall be made consistent with Section
145.121 of the OCC Regulations.
 
18.           NOTICE.
 
For the purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below:
 

 
To the Bank
Madison County Bank
111 West Third Street
P.O. Box 650
Madison, NE 68748
 
 
To Executive:
Daniel A. Fullner
Most recent address on file with the Bank

 
 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
 

 
MADISON COUNTY BANK
       
 
By:  
/s/ Janet S. Irwin
    Name: Janet S. Irwin     Title: Vice President  

 

  EXECUTIVE          
 
/s/ Daniel A. Fullner
    Daniel A. Fullner  

 
 
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