Exhibit 10.3

 

 

RESTATED EXECUTIVE SUPPLEMENTAL RETIREMENT

INCOME AGREEMENT FOR

PATRICK C. BOTTS

 

This Restated Executive Supplemental Retirement Income Agreement (the
"Agreement"), effective as of the 19th day of December 2016, amends and restates
the Executive Supplemental Retirement Income Agreement (as originally entered
into on November 15, 1996 and as most recently amended and restated on April 1,
2015) and formalizes the understanding by and between MUTUALBANK (the "Bank"),
an Indiana commercial bank, and PATRICK C. BOTTS referred to as "Executive."

 

ARTICLE I.

 

DEFINITIONS

 

When used herein, the following words and phrases shall have the meanings below
unless the context clearly indicates otherwise:

 

Section 1.01     "Act" means the Employee Retirement Income Security Act of
1974, as amended from time to time.

 

Section 1.02     "Bank" means MutualBank and any successor thereto.

 

Section 1.03     "Beneficiary" means the person or persons (and their heirs)
designated as Beneficiary in Exhibit B of this Agreement to whom the deceased
Executive's benefits are payable. If no Beneficiary is so designated, then the
Executive's Spouse, if living, will be deemed the Beneficiary. If the
Executive's Spouse is not living, then the Children of the Executive will be
deemed the Beneficiaries and will take on a per stirpes basis. If there are no
Children, then the Estate of the Executive will be deemed the Beneficiary.

 

Section 1.04     "Board of Directors" means the board of directors of the Bank.

 

Section 1.05     "Change in Control" means any of the following events: (1) any
person or persons acting as a group (within the meaning of Section 409A of the
Code) 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
Company or the Bank possessing 30% or more of the total voting power of the
outstanding stock of the Company or the Bank; (2) individuals who are members of
the board of directors of the Company on the date hereof (the "Incumbent Board")
cease for any reason during any 12-month period to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least a majority of the
directors comprising the Incumbent Board, or whose nomination for election by
the Company’s stockholders was approved by the nominating committee serving
under an Incumbent Board, shall be considered a member of the Incumbent Board;
(3) any person or persons acting as a group (within the meaning of Section 409A
of the Code) acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or persons) assets of the
Company or the Bank that have a gross fair market value of 40% or more of the
total gross fair market value of all of the assets of the Company or the Bank
immediately before such acquisition or acquisitions; or (4) any other event
which is not covered by the foregoing subsections but which the Board of
Directors determines to affect control of the Company or the Bank and with
respect to which the Board of Directors adopts a resolution that the event
constitutes a Change in Control for purposes of the Agreement; provided that
with respect to each of the events covered by clauses (1) through (4) above, the
event must also be deemed to be either a change in the ownership of the Company
or the Bank, a change in the effective control of the Company or the Bank or a
change in the ownership of a substantial portion of the assets of the Company or
the Bank within the meaning of Section 409A of the Code. The term "Change in
Control" shall not include an acquisition of securities by an employee benefit
plan of the Bank or the Company.

 

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Section 1.06     "Children" means all natural or adopted children of the
Executive, and issue of any predeceased child or children.

 

Section 1.07     "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

 

Section 1.08     “Company” means MutualFirst Financial, Inc., a Maryland
corporation and the sole stockholder of the Bank.

 

Section 1.09     "Contributions" means those annual contributions which the Bank
is required to make in the amounts set forth in Exhibit A. The Bank shall pay
Contributions to the Executive within the tax year that the Executive owes taxes
for such Contributions under the Agreement.

 

Section 1.10     "Effective Date" of this Agreement as amended and restated
shall be the date first written above.

 

Section 1.11     "Estate" means the estate of the Executive.

 

Section 1.12     "Interest Factor" means monthly discounting at a rate set forth
in Exhibit A.

 

Section 1.13      "Plan Administrator" or "Administrator" shall mean the Bank.

 

Section 1.14      "Plan Year" shall mean the 12-month period commencing on
January 1st and each consecutive 12-month period thereafter.

 

Section 1.15     "Spouse" means the individual to whom the Executive is legally
married at the time of the Executive's death.

 

Section 1.16     "Termination of Employment" means a cessation or reduction in
the Executive’s services for the Bank and the Company (and any other affiliated
entities that are deemed to constitute a “service recipient” as defined in
Treasury Regulation §1.409A-1(h)(3) that constitutes a “Separation from Service”
as determined under Section 409A of the Code, taking into account all of the
facts, circumstances, rules and presumptions set forth in Treasury Regulation
§1.409A-1(h), for any reason other than death. Whether a Termination of
Employment has occurred is determined based on whether the facts and
circumstances indicate that the Bank and the Executive reasonably anticipated
that no further services would be performed after a certain date or that the
level of bona fide services the Executive would perform after such date (whether
as an employee or as an independent contractor) would permanently decrease to no
more than twenty percent (20%) of the average level of bona fide services
performed (whether as an employee or an independent contractor) over the
immediately preceding 36-month period.

 

BENEFITS—GENERALLY

 

Section 2.01   Payment Upon a Change in Control.   If a Change in Control
occurs, followed within 36 months by either (i) the Executive's   involuntary
Termination of Employment, or (ii) a termination by the Executive as a result of
any of the following: (a) a material diminution of or interference with the
Executive’s duties, titles, responsibilities and benefits as President and Chief
Operating Officer of the Bank and Executive Vice President of the Company, (b) a
change in the principal workplace of the Executive to a location outside of a 30
mile radius from the Bank’s headquarters office as of the date hereof, (c) a
material reduction in the number or seniority of other Bank personnel reporting
to the Executive or a material reduction in the frequency with which, or in the
nature of the matters with respect to which, such personnel are to report to the
Executive, other than as part of a Bank-or Company-wide reduction in staff, (d)
a material reduction in the Executive’s salary or a material adverse change in
the Executive’s perquisites, benefits, contingent benefits or vacation, other
than as part of an overall program applied uniformly and with equitable effect
to all members of the senior management of the Bank or the Company, or (e) a
material permanent increase in the required hours of work or the workload of the
Executive; provided, however, that before the Executive terminates his
employment pursuant to clause (ii) above, the Executive must first provide
written notice to the Bank and the Company within ninety (90) days of the
initial existence of the condition, describing the existence of such condition,
and the Bank and the Company shall thereafter have the right to remedy the
condition within thirty (30) days of the date they received the written notice
from the Executive. If the Bank and the Company remedy the condition within such
thirty (30) day cure period, then the Executive shall not have the right to
terminate his employment as the result of such event. If the Bank and the
Company do not remedy the condition within such thirty (30) day cure period,
then the Executive may terminate his employment as the result of such event at
any time within sixty (60) days following the expiration of such cure period.
The Bank shall be required to make a final Contribution to the Executive within
ten days of the Termination of Employment, subject to Section 2.07 below.   The
amount of such final Contribution shall be equal to the present value (computed
using a discount rate equal to the Interest Factor) of all remaining
Contributions which would have been required to be made on behalf of the
Executive if the Executive had remained in the employ of the Bank.

 

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Section 2.02   Termination for Cause.   If the Executive is terminated for
Cause, no further Contributions shall be required of the Bank, and if not yet
made, no Contribution shall be required for the Plan Year in which such
Termination of Employment for Cause occurs.

 

Section 2.03   Voluntary Termination of Employment. If the Executive's
employment with the Bank is voluntarily terminated for any reason other than a
termination for Cause or a termination following a Change in Control, the
Executive shall not be entitled to any Contributions attributable to any Plan
Years which commence subsequent to the date of termination.

 

Section 2.04   Involuntary Termination of Employment. If the Executive's
employment with the Bank is involuntarily terminated for any reason, excluding
termination for Cause or termination following a Change in Control, the Bank
shall be required to make a final Contribution to the Executive within ten days
of the Termination of Employment, subject to Section 2.07 below.   The amount of
such final Contribution shall be an amount equal to: (i) the full Contribution
required for the Plan Year in which such voluntary termination occurs, if not
yet made, plus (ii) the present value (computed using a discount rate equal to
the Interest Factor) of the lesser of (A) the next five years Contributions to
the Executive or (B) all remaining Contributions to the Executive.

 

Section 2.05   Death During Employment. If the Executive dies while employed by
the Bank prior to payment of all remaining Contributions, the Bank shall be
required to make a Contribution to the Beneficiaries equal to the sum of the
remaining Contributions set forth in Exhibit A, reduced by any payment to the
Beneficiaries under any life insurance policies that may have been obtained on
the Executive's life with premiums paid by the Bank. Such final Contributions
shall be payable in a lump sum within ten days of the Executive's death.

 

Section 2.06   Additional Death Benefit - Burial Expense. In addition to the
above-described death benefits, upon the Executive’s death, the Executive's
Beneficiary shall be entitled to receive a one-time lump sum death benefit in
the amount of Thirty Thousand ($30,000.00) Dollars. The Executive's Beneficiary
shall not be entitled to such benefit if the Executive is terminated for Cause
prior to death.

 

Section 2.07   Restriction on Timing of Contributions. If (a) the Contributions
payable under Section 2.01 or Section 2.04 above are deemed to be deferred
compensation and are not exempt from Section 409A of the Code pursuant to either
the short-term deferral exemption in Treasury Regulation §1.409A-1(b)(4) or the
separation pay plan exemption in Treasury Regulation §1.409A-1(b)(9), and (b)
the Executive is a “Specified Employee” (as defined in Section 409A of the Code)
at the time of his Termination of Employment, then such Contributions shall not
be paid until (y) the later of the 185th day following the Executive’s
Termination of Employment or the 18-month anniversary of the Effective Date, or
(z) if the Executive dies prior to the time specified in clause (y), the date of
his earlier death (the “Delayed Distribution Date”). Any payments deferred on
account of the preceding sentence shall be accumulated without interest and paid
on the Delayed Distribution Date in accordance with the preceding sentence and
Section 409A of the Code. To the extent permitted by Section 409A of the Code,
amounts payable under Section 2.01 or Section 2.04 which are considered deferred
compensation shall be treated as payable after amounts which are not considered
deferred compensation.

 

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ARTICLE III.

 

NON-COMPETITION

 

Section 3.01   Non-Competition. In consideration of the agreements of the Bank
contained herein and of the payments to be made by the Bank pursuant hereto, the
Executive hereby agrees that, for as long as he remains employed by the Bank, he
will devote substantially all of his time, skill, diligence and attention to the
business of the Bank, and will not actively engage, either directly or
indirectly, in any business or other activity which is, or may be deemed to be,
in any way competitive with or adverse to the best interests of the business of
the Bank. The Executive further agrees that following his employment with the
Bank and continuing until all Contributions payable under this Agreement have
been paid, he will not actively engage, either directly or indirectly, in any
business or other activity which is, or may be deemed to be, in any way
competitive with or adverse to the best interests of the Bank, unless the
Executive has the prior express written consent of the Board of Directors of the
Bank.

 

Section 3.02   Breach of Non-Competition Clause.

 

a.          During Employment.   In the event the Executive breaches Section
3.01 while employed at the Bank, all further Contributions to the Executive
shall immediately cease, and all benefits under this Agreement, other than those
which can be paid from previous Contributions to the Executive, shall be
forfeited.

 

In the event (i) any breach by the Executive of the agreements and covenants
described in Section 3.01 occurs while the Executive is employed at the Bank,
and (ii) the Executive's employment with the Bank is terminated due to such
breach, such Termination of Employment shall be deemed to be for Cause and, as
set forth in Section 2.02 of this Agreement, the Executive shall have no right
to receive additional compensation or other benefits pursuant to this Agreement.

 

b.          Breach Following Termination of Employment. In the event the
Executive breaches Section 3.01 following the Executive's Termination of
Employment with the Bank, all benefits under this Agreement which have not been
paid to the Executive shall be forfeited.

 

In the event of a Termination of Employment related to a Change in Control as
described in Section 2.01, Section 3.01 shall cease to be a condition to the
performance by the Bank of its obligations under this Agreement.

 

ARTICLE IV.

 

BENEFICIARY DESIGNATION

 

The Executive shall make or re-confirm his designation of primary and secondary
Beneficiaries upon execution of this Agreement and shall have the right to
change such designation, at any subsequent time, by submitting to the
Administrator, in substantially the form attached as Exhibit B, a written
designation of primary and secondary Beneficiaries. Any Beneficiary designation
made subsequent to execution of this Agreement shall become effective only when
receipt thereof is acknowledged in writing by the Administrator.

 

ARTICLE V.

 

ACT PROVISIONS

 

Section 5.01   Named Fiduciary and Administrator. The Bank shall be the Named
Fiduciary and the Administrator of this Agreement. The Administrator shall be
responsible for the interpretation and administration of the Agreement as
established herein. The Bank 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.

 

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Section 5.02   Claims Procedure and Arbitration. In the event that benefits
under this Agreement are not paid to the Executive (or to his Beneficiary in the
case of the Executive's death) and such claimant feels he is entitled to receive
such benefits, then a written claim must be made to the Administrator within 60
days from the date payments are refused.   The Administrator shall review the
written claim and, if the claim is denied, in whole or in part, it shall provide
in writing, within 90 days of receipt of such claim, its specific reasons for
such denial, reference to the provisions of this Agreement upon which the denial
is based, and any additional material or information necessary to perfect the
claim.   Such writing by the Administrator shall further indicate the additional
steps which must be undertaken by claimant if an additional review of the claim
denial is desired.

 

If claimant desires a second review, he shall notify the Administrator in
writing within 60 days of the first claim denial.   Claimant may review this
Agreement or any documents relating thereto and submit any issues and comments,
in writing, he may feel appropriate. In its sole discretion, the Administrator
shall then review the second claim and provide a written decision within 60 days
of receipt of such claim. This decision shall state the specific reasons for the
decision and shall include reference to specific provisions of this Agreement
upon which the decision is based.

 

If claimant continues to dispute the benefit denial based upon completed
performance of this Agreement or the meaning and effect of the terms and
conditions thereof, then claimant may submit the dispute to an arbitration panel
for settlement. The arbitration panel shall consist of three members: one member
selected by the claimant, one member selected by the Bank, and the third member
selected by the first two members. The arbitration panel shall conduct the
arbitration in accordance with the applicable rules of the American Arbitration
Association. The arbitral award may grant any relief deemed by the arbitrators
to be just and equitable and shall state the reasons for the award and the
relief granted. The patties hereto agree that they, their heirs, personal
representatives, successors and assigns shall be bound by the decision of the
arbitration panel with respect to any controversy properly submitted to it for
determination. Any award rendered may be confirmed, judgment upon any award
rendered may be entered, and such award of the judgment thereon may be enforced
in any court of any state or country having jurisdiction over the parties.

 

ARTICLE VI.

 

MISCELLANEOUS

 

Section 6.01 No Effect on Employment Rights. Nothing contained herein will
confer upon the Executive 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
Executive without regard to the existence of the Agreement. The following
conditions shall apply to this Agreement:

 

(a)The Bank's Board of Directors may terminate the Executive at any time, but
any termination by the Bank's Board of Directors other than termination for
Cause shall not prejudice the Executive's vested right to compensation or other
benefits under the Agreement. As provided in Section 2.02, the Executive shall
have no right to receive additional compensation or other benefits after
termination for Cause.

 

(b)If the Executive 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)(l) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(3) and (g)(l)), the Bank's obligations under the Agreement 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 Executive 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.

 

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(c)If   the Executive is terminated 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)(l) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(4) or (g)(l)), all non-vested obligations of the Bank under the
Agreement shall terminate as of the effective date of the order.

 

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

 

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

 

(i)by the Director of the Federal Deposit Insurance Corporation or his designee
at the time the Federal Deposit Insurance 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 of the Federal Deposit Insurance Corporation 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.

 

Any rights of the parties that have already vested shall not be affected by such
action.

 

Section 6.02 State Law. The Agreement is established under, and will be
construed according to, the laws of the state of Indiana, to the extent such
laws are not preempted by the Act and valid regulations published thereunder.

 

Section 6.03 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: (a) insofar as is reasonable, effect will be
given to the intent manifested in the provisions held invalid or inoperative,
and (b) the validity and enforceability of the remaining provisions will not be
affected thereby.

 

Section 6.04 Incapacity of Recipient. In the event the Executive 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 Executive is entitled shall be paid to such conservator or other person
legally charged with the care of his person or Estate.

 

Section 6.05 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Agreement, no individual acting as an employee or agent of the
Bank or as a member of the Board of Directors shall be personally liable to the
Executive or any other person for any claim, loss, liability or expense incurred
in connection with the Agreement.

 

Section 6.06   Gender and Number. 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. Similarly,
words in the plural shall be construed in the singular and vice versa, whenever
applicable.

 

Section 6.07   Effect on Other Corporate Benefits. Nothing contained in this
Agreement shall affect the right of the Executive to participate in or be
covered by any qualified or nonqualified pension, profit sharing, group, bonus
or other supplemental compensation plan or fringe benefit agreement constituting
a part of the Bank's existing or future compensation structure.

 

Section 6.08   Inurement. This Agreement shall be binding upon and shall inure
to the benefit of the Bank, its successors and assigns, and the Executive, his
successors, heirs, executors, administrators and Beneficiaries.

 

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Section 6.09   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.

 

ARTICLE VII.

 

AMENDMENT AND PLAN TERMINATION

 

Section 7.01   Amendments.   The Bank may amend this Agreement unilaterally by
written action. Any amendment of the Agreement shall be made pursuant to a
resolution of the Board of Directors of the Bank and shall be effective as of
the date of such resolution.

 

Section 7.02   Plan Termination Generally. The Bank may terminate this Agreement
unilaterally by written action.   However, if such termination is done in
anticipation of or pursuant to a Change in Control, the Bank shall pay the final
Contribution due pursuant to Section 2.01.

 

ARTICLE VIII.

 

EXECUTION

 

Section 8.01   This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby, and any previous
agreements or understandings between the parties hereto regarding the subject
matter hereof are merged into and superseded by this Agreement.

 

Section 8.02   This Agreement shall be executed in triplicate, each copy of
which, when so executed and delivered, shall be an original, but all three
copies shall together constitute one and the same instrument.

 

[Signature Page Follows]

 

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  MUTUALBANK:   (Bank)       By:                                         Title:
 

 

ATTEST:                                 EXECUTIVE:                          
Patrick C. Botts

 

WITNESS:                    

 

[Signature Page for Restated Executive Supplemental Retirement Income Agreement
for Patrick C. Botts]

 

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EXHIBIT A

 

SCHEDULE OF CONTRIBUTIONS and interest factor

 

Schedule of Annual Gross Contributions:

 

Plan Year  Amount        2015  $6,602  2016  $7,358  2017  $8,194  2018  $9,119 
2019  $10,141  2020  $11,269  2021  $12,516  2022  $13,891  2023  $15,408  2024 
$17,080 

 

Interest Factor: Eight percent (8%) per annum compounded monthly

 

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EXHIBIT B

 

RESTATED EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME AGREEMENT BENEFICIARY
DESIGNATION

 

The Executive, under the terms of the Restated Executive Supplemental Retirement
Income Agreement executed by the Bank, effective as of the ___ day of ______
2016, hereby designates the following Beneficiary to receive any guaranteed
payments or death benefits under such Agreement, following his death:

 

PRIMARY BENEFICIARY:       SECONDARY BENEFICIARY:  

 

This Beneficiary Designation hereby revokes any prior Beneficiary Designation
which may have been in effect.

 

This Beneficiary Designation is revocable:

 

DATE: _______, 20____

 

      WITNESS   EXECUTIVE

 

ACKNOWLEDGEMENT:

 

Received by MutualBank this __ day of __________, 20__.

 

          Name:           Title:  

 

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RESTATED EXECUTIVE SUPPLEMENTAL RETIREMENT

INCOME AGREEMENT FOR

DAVID W. HEETER

 

This Restated Executive Supplemental Retirement Income Agreement (the
"Agreement"), effective as of the 19th day of December 2016, amends and restates
the Executive Supplemental Retirement Income Agreement (as originally entered
into on November 15, 1996 and as most recently amended and restated on April 1,
2015) and formalizes the understanding by and between MUTUALBANK (the "Bank"),
an Indiana commercial bank, and DAVID W. HEETER referred to as "Executive."

 

ARTICLE I.

 

DEFINITIONS

 

When used herein, the following words and phrases shall have the meanings below
unless the context clearly indicates otherwise:

 

Section 1.01   "Act" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.

 

Section 1.02   "Bank" means MutualBank and any successor thereto.

 

Section 1.03   "Beneficiary" means the person or persons (and their heirs)
designated as Beneficiary in Exhibit B of this Agreement to whom the deceased
Executive's benefits are payable. If no Beneficiary is so designated, then the
Executive's Spouse, if living, will be deemed the Beneficiary. If the
Executive's Spouse is not living, then the Children of the Executive will be
deemed the Beneficiaries and will take on a per stirpes basis. If there are no
Children, then the Estate of the Executive will be deemed the Beneficiary.

 

Section 1.04   "Board of Directors" means the board of directors of the Bank.

 

Section 1.05   "Change in Control" means any of the following events: (1) any
person or persons acting as a group (within the meaning of Section 409A of the
Code) 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
Company or the Bank possessing 30% or more of the total voting power of the
outstanding stock of the Company or the Bank; (2) individuals who are members of
the board of directors of the Company on the date hereof (the "Incumbent Board")
cease for any reason during any 12-month period to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least a majority of the
directors comprising the Incumbent Board, or whose nomination for election by
the Company’s stockholders was approved by the nominating committee serving
under an Incumbent Board, shall be considered a member of the Incumbent Board;
(3) any person or persons acting as a group (within the meaning of Section 409A
of the Code) acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or persons) assets of the
Company or the Bank that have a gross fair market value of 40% or more of the
total gross fair market value of all of the assets of the Company or the Bank
immediately before such acquisition or acquisitions; or (4) any other event
which is not covered by the foregoing subsections but which the Board of
Directors determines to affect control of the Company or the Bank and with
respect to which the Board of Directors adopts a resolution that the event
constitutes a Change in Control for purposes of the Agreement; provided that
with respect to each of the events covered by clauses (1) through (4) above, the
event must also be deemed to be either a change in the ownership of the Company
or the Bank, a change in the effective control of the Company or the Bank or a
change in the ownership of a substantial portion of the assets of the Company or
the Bank within the meaning of Section 409A of the Code. The term "Change in
Control" shall not include an acquisition of securities by an employee benefit
plan of the Bank or the Company.

 

Section 1.06   "Children" means all natural or adopted children of the
Executive, and issue of any predeceased child or children.

 

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Section 1.07   "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

 

Section 1.08   “Company” means MutualFirst Financial, Inc., a Maryland
corporation and the sole stockholder of the Bank.

 

Section 1.09   "Contributions" means those annual contributions which the Bank
is required to make in the amounts set forth in Exhibit A. The Bank shall pay
Contributions to the Executive within the tax year that the Executive owes taxes
for such Contributions under the Agreement.

 

Section 1.10   "Effective Date" of this Agreement as amended and restated shall
be the date first written above.

 

Section 1.11   "Estate" means the estate of the Executive.

 

Section 1.12   "Interest Factor" means monthly discounting at a rate set forth
in Exhibit A.

 

Section 1.13    "Plan Administrator" or "Administrator" shall mean the Bank.

 

Section 1.14    "Plan Year" shall mean the 12-month period commencing on January
1st and each consecutive 12-month period thereafter.

 

Section 1.15   "Spouse" means the individual to whom the Executive is legally
married at the time of the Executive's death.

 

Section 1.16   "Termination of Employment" means a cessation or reduction in the
Executive’s services for the Bank and the Company (and any other affiliated
entities that are deemed to constitute a “service recipient” as defined in
Treasury Regulation §1.409A-1(h)(3) that constitutes a “Separation from Service”
as determined under Section 409A of the Code, taking into account all of the
facts, circumstances, rules and presumptions set forth in Treasury Regulation
§1.409A-1(h), for any reason other than death. Whether a Termination of
Employment has occurred is determined based on whether the facts and
circumstances indicate that the Bank and the Executive reasonably anticipated
that no further services would be performed after a certain date or that the
level of bona fide services the Executive would perform after such date (whether
as an employee or as an independent contractor) would permanently decrease to no
more than twenty percent (20%) of the average level of bona fide services
performed (whether as an employee or an independent contractor) over the
immediately preceding 36-month period.

 

BENEFITS—GENERALLY

 

Section 2.01   Payment Upon a Change in Control.   If a Change in Control
occurs, followed within 36 months by either (i) the Executive's   involuntary
Termination of Employment, or (ii) a termination by the Executive as a result of
any of the following: (a) a material diminution of or interference with the
Executive’s duties, titles, responsibilities and benefits as Chief Executive
Officer of the Bank and President and Chief Executive Officer of the Company,
(b) a change in the principal workplace of the Executive to a location outside
of a 30 mile radius from the Bank’s headquarters office as of the date hereof,
(c) a material reduction in the number or seniority of other Bank personnel
reporting to the Executive or a material reduction in the frequency with which,
or in the nature of the matters with respect to which, such personnel are to
report to the Executive, other than as part of a Bank-or Company-wide reduction
in staff, (d) a material reduction in the Executive’s salary or a material
adverse change in the Executive’s perquisites, benefits, contingent benefits or
vacation, other than as part of an overall program applied uniformly and with
equitable effect to all members of the senior management of the Bank or the
Company, or (e) a material permanent increase in the required hours of work or
the workload of the Executive; provided, however, that before the Executive
terminates his employment pursuant to clause (ii) above, the Executive must
first provide written notice to the Bank and the Company within ninety (90) days
of the initial existence of the condition, describing the existence of such
condition, and the Bank and the Company shall thereafter have the right to
remedy the condition within thirty (30) days of the date they received the
written notice from the Executive. If the Bank and the Company remedy the
condition within such thirty (30) day cure period, then the Executive shall not
have the right to terminate his employment as the result of such event. If the
Bank and the Company do not remedy the condition within such thirty (30) day
cure period, then the Executive may terminate his employment as the result of
such event at any time within sixty (60) days following the expiration of such
cure period. The Bank shall be required to make a final Contribution to the
Executive within ten days of the Termination of Employment, subject to Section
2.07 below.   The amount of such final Contribution shall be equal to the
present value (computed using a discount rate equal to the Interest Factor) of
all remaining Contributions which would have been required to be made on behalf
of the Executive if the Executive had remained in the employ of the Bank.

 

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Section 2.02   Termination for Cause.   If the Executive is terminated for
Cause, no further Contributions shall be required of the Bank, and if not yet
made, no Contribution shall be required for the Plan Year in which such
Termination of Employment for Cause occurs.

 

Section 2.03   Voluntary Termination of Employment. If the Executive's
employment with the Bank is voluntarily terminated for any reason other than a
termination for Cause or a termination following a Change in Control, the
Executive shall not be entitled to any Contributions attributable to any Plan
Years which commence subsequent to the date of termination.

 

Section 2.04   Involuntary Termination of Employment. If the Executive's
employment with the Bank is involuntarily terminated for any reason, excluding
termination for Cause or termination following a Change in Control, the Bank
shall be required to make a final Contribution to the Executive within ten days
of the Termination of Employment, subject to Section 2.07 below.   The amount of
such final Contribution shall be an amount equal to: (i) the full Contribution
required for the Plan Year in which such voluntary termination occurs, if not
yet made, plus (ii) the present value (computed using a discount rate equal to
the Interest Factor) of the lesser of (A) the next five years Contributions to
the Executive or (B) all remaining Contributions to the Executive.

 

Section 2.05   Death During Employment. If the Executive dies while employed by
the Bank prior to payment of all remaining Contributions, the Bank shall be
required to make a Contribution to the Beneficiaries equal to the sum of the
remaining Contributions set forth in Exhibit A, reduced by any payment to the
Beneficiaries under any life insurance policies that may have been obtained on
the Executive's life with premiums paid by the Bank. Such final Contributions
shall be payable in a lump sum within ten days of the Executive's death. [LET’S
DISCUSS]

 

Section 2.06   Additional Death Benefit - Burial Expense. In addition to the
above-described death benefits, upon the Executive’s death, the Executive's
Beneficiary shall be entitled to receive a one-time lump sum death benefit in
the amount of Thirty Thousand ($30,000.00) Dollars. The Executive's Beneficiary
shall not be entitled to such benefit if the Executive is terminated for Cause
prior to death.

 

Section 2.07   Restriction on Timing of Contributions. If (a) the Contributions
payable under Section 2.01 or Section 2.04 above are deemed to be deferred
compensation and are not exempt from Section 409A of the Code pursuant to either
the short-term deferral exemption in Treasury Regulation §1.409A-1(b)(4) or the
separation pay plan exemption in Treasury Regulation §1.409A-1(b)(9), and (b)
the Executive is a “Specified Employee” (as defined in Section 409A of the Code)
at the time of his Termination of Employment, then such Contributions shall not
be paid until (y) the later of the 185th day following the Executive’s
Termination of Employment or the 18-month anniversary of the Effective Date, or
(z) if the Executive dies prior to the time specified in clause (y), the date of
his earlier death (the “Delayed Distribution Date”). Any payments deferred on
account of the preceding sentence shall be accumulated without interest and paid
on the Delayed Distribution Date in accordance with the preceding sentence and
Section 409A of the Code. To the extent permitted by Section 409A of the Code,
amounts payable under Section 2.01 or Section 2.04 which are considered deferred
compensation shall be treated as payable after amounts which are not considered
deferred compensation.

 

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ARTICLE III.

 

NON-COMPETITION

 

Section 3.01   Non-Competition. In consideration of the agreements of the Bank
contained herein and of the payments to be made by the Bank pursuant hereto, the
Executive hereby agrees that, for as long as he remains employed by the Bank, he
will devote substantially all of his time, skill, diligence and attention to the
business of the Bank, and will not actively engage, either directly or
indirectly, in any business or other activity which is, or may be deemed to be,
in any way competitive with or adverse to the best interests of the business of
the Bank. The Executive further agrees that following his employment with the
Bank and continuing until all Contributions payable under this Agreement have
been paid, he will not actively engage, either directly or indirectly, in any
business or other activity which is, or may be deemed to be, in any way
competitive with or adverse to the best interests of the Bank, unless the
Executive has the prior express written consent of the Board of Directors of the
Bank.

 

Section 3.02   Breach of Non-Competition Clause.

 

a.         During Employment.   In the event the Executive breaches Section 3.01
while employed at the Bank, all further Contributions to the Executive shall
immediately cease, and all benefits under this Agreement, other than those which
can be paid from previous Contributions to the Executive, shall be forfeited.

 

In the event (i) any breach by the Executive of the agreements and covenants
described in Section 3.01 occurs while the Executive is employed at the Bank,
and (ii) the Executive's employment with the Bank is terminated due to such
breach, such Termination of Employment shall be deemed to be for Cause and, as
set forth in Section 2.02 of this Agreement, the Executive shall have no right
to receive additional compensation or other benefits pursuant to this Agreement.

 

b.         Breach Following Termination of Employment. In the event the
Executive breaches Section 3.01 following the Executive's Termination of
Employment with the Bank, all benefits under this Agreement which have not been
paid to the Executive shall be forfeited.

 

In the event of a Termination of Employment related to a Change in Control as
described in Section 2.01, Section 3.01 shall cease to be a condition to the
performance by the Bank of its obligations under this Agreement.

 

ARTICLE IV.

 

BENEFICIARY DESIGNATION

 

The Executive shall make or re-confirm his designation of primary and secondary
Beneficiaries upon execution of this Agreement and shall have the right to
change such designation, at any subsequent time, by submitting to the
Administrator, in substantially the form attached as Exhibit B, a written
designation of primary and secondary Beneficiaries. Any Beneficiary designation
made subsequent to execution of this Agreement shall become effective only when
receipt thereof is acknowledged in writing by the Administrator.

 

ARTICLE V.

 

ACT PROVISIONS

 

Section 5.01   Named Fiduciary and Administrator. The Bank shall be the Named
Fiduciary and the Administrator of this Agreement. The Administrator shall be
responsible for the interpretation and administration of the Agreement as
established herein. The Bank 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.

 

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Section 5.02   Claims Procedure and Arbitration. In the event that benefits
under this Agreement are not paid to the Executive (or to his Beneficiary in the
case of the Executive's death) and such claimant feels he is entitled to receive
such benefits, then a written claim must be made to the Administrator within 60
days from the date payments are refused.   The Administrator shall review the
written claim and, if the claim is denied, in whole or in part, it shall provide
in writing, within 90 days of receipt of such claim, its specific reasons for
such denial, reference to the provisions of this Agreement upon which the denial
is based, and any additional material or information necessary to perfect the
claim.   Such writing by the Administrator shall further indicate the additional
steps which must be undertaken by claimant if an additional review of the claim
denial is desired.

 

If claimant desires a second review, he shall notify the Administrator in
writing within 60 days of the first claim denial.   Claimant may review this
Agreement or any documents relating thereto and submit any issues and comments,
in writing, he may feel appropriate. In its sole discretion, the Administrator
shall then review the second claim and provide a written decision within 60 days
of receipt of such claim. This decision shall state the specific reasons for the
decision and shall include reference to specific provisions of this Agreement
upon which the decision is based.

 

If claimant continues to dispute the benefit denial based upon completed
performance of this Agreement or the meaning and effect of the terms and
conditions thereof, then claimant may submit the dispute to an arbitration panel
for settlement. The arbitration panel shall consist of three members: one member
selected by the claimant, one member selected by the Bank, and the third member
selected by the first two members. The arbitration panel shall conduct the
arbitration in accordance with the applicable rules of the American Arbitration
Association. The arbitral award may grant any relief deemed by the arbitrators
to be just and equitable and shall state the reasons for the award and the
relief granted. The patties hereto agree that they, their heirs, personal
representatives, successors and assigns shall be bound by the decision of the
arbitration panel with respect to any controversy properly submitted to it for
determination. Any award rendered may be confirmed, judgment upon any award
rendered may be entered, and such award of the judgment thereon may be enforced
in any court of any state or country having jurisdiction over the parties.

 

ARTICLE VI.

 

MISCELLANEOUS

 

Section 6.01 No Effect on Employment Rights. Nothing contained herein will
confer upon the Executive 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
Executive without regard to the existence of the Agreement. The following
conditions shall apply to this Agreement:

 

(a)The Bank's Board of Directors may terminate the Executive at any time, but
any termination by the Bank's Board of Directors other than termination for
Cause shall not prejudice the Executive's vested right to compensation or other
benefits under the Agreement. As provided in Section 2.02, the Executive shall
have no right to receive additional compensation or other benefits after
termination for Cause.

 

(b)If the Executive 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)(l) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(3) and (g)(l)), the Bank's obligations under the Agreement 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 Executive 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.

 

  15

 

 

(c)If   the Executive is terminated 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)(l) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(4) or (g)(l)), all non-vested obligations of the Bank under the
Agreement shall terminate as of the effective date of the order.

 

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

 

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

 

(i)by the Director of the Federal Deposit Insurance Corporation or his designee
at the time the Federal Deposit Insurance 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 of the Federal Deposit Insurance Corporation 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.

 

Any rights of the parties that have already vested shall not be affected by such
action.

 

Section 6.02 State Law. The Agreement is established under, and will be
construed according to, the laws of the state of Indiana, to the extent such
laws are not preempted by the Act and valid regulations published thereunder.

 

Section 6.03 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: (a) insofar as is reasonable, effect will be
given to the intent manifested in the provisions held invalid or inoperative,
and (b) the validity and enforceability of the remaining provisions will not be
affected thereby.

 

Section 6.04 Incapacity of Recipient. In the event the Executive 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 Executive is entitled shall be paid to such conservator or other person
legally charged with the care of his person or Estate.

 

Section 6.05 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Agreement, no individual acting as an employee or agent of the
Bank or as a member of the Board of Directors shall be personally liable to the
Executive or any other person for any claim, loss, liability or expense incurred
in connection with the Agreement.

 

Section 6.06   Gender and Number. 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. Similarly,
words in the plural shall be construed in the singular and vice versa, whenever
applicable.

 

Section 6.07   Effect on Other Corporate Benefits. Nothing contained in this
Agreement shall affect the right of the Executive to participate in or be
covered by any qualified or nonqualified pension, profit sharing, group, bonus
or other supplemental compensation plan or fringe benefit agreement constituting
a part of the Bank's existing or future compensation structure.

 

Section 6.08   Inurement. This Agreement shall be binding upon and shall inure
to the benefit of the Bank, its successors and assigns, and the Executive, his
successors, heirs, executors, administrators and Beneficiaries.

 

  16

 

 

Section 6.09   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. 

 

ARTICLE VII.

 

AMENDMENT AND PLAN TERMINATION

 

Section 7.01   Amendments.   The Bank may amend this Agreement unilaterally by
written action. Any amendment of the Agreement shall be made pursuant to a
resolution of the Board of Directors of the Bank and shall be effective as of
the date of such resolution.

 

Section 7.02   Plan Termination Generally. The Bank may terminate this Agreement
unilaterally by written action.   However, if such termination is done in
anticipation of or pursuant to a Change in Control, the Bank shall pay the final
Contribution due pursuant to Section 2.01.

 

ARTICLE VIII.

 

EXECUTION

 

Section 8.01   This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby, and any previous
agreements or understandings between the parties hereto regarding the subject
matter hereof are merged into and superseded by this Agreement.

 

Section 8.02   This Agreement shall be executed in triplicate, each copy of
which, when so executed and delivered, shall be an original, but all three
copies shall together constitute one and the same instrument.

 

[Signature Page Follows]

 

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  MUTUALBANK:   (Bank)       By:           Title:  

 

ATTEST:                           EXECUTIVE:                 David W. Heeter

 

WITNESS:          

 

[Signature Page for Restated Executive Supplemental Retirement Income Agreement
for David W. Heeter]

 

  18

 

 

EXHIBIT A

 

SCHEDULE OF CONTRIBUTIONS AND INTEREST FACTOR

 

Schedule of Annual Gross Contributions:

 

Plan Year  Amount        2015  $11,302  2016  $12,595  2017  $14,028  2018 
$15,611  2019  $17,359  2020  $19,291  2021  $21,423 

 

Interest Factor:       Eight percent (8%) per annum compounded monthly

 

  19

 

 

EXHIBIT B

 

RESTATED EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME AGREEMENT BENEFICIARY
DESIGNATION

 

The Executive, under the terms of the Restated Executive Supplemental Retirement
Income Agreement executed by the Bank, effective as of the ___ day of ______
2016, hereby designates the following Beneficiary to receive any guaranteed
payments or death benefits under such Agreement, following his death:

 

PRIMARY BENEFICIARY:       SECONDARY BENEFICIARY:  

 

This Beneficiary Designation hereby revokes any prior Beneficiary Designation
which may have been in effect.

 

This Beneficiary Designation is revocable:

 

DATE: _______, 20____

 

      WITNESS   EXECUTIVE

 

ACKNOWLEDGEMENT:

 

Received by MutualBank this __ day of __________, 20__.

 

          Name:           Title:  

 

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