AFFILIATE AGREEMENT

(Director)

 

Community Bank Shares of Indiana, Inc.

Attention:James D. Rickard

President and Chief Executive Officer

101 West Spring Street
New Albany, Indiana 47150

 

Gentlemen:

 

The undersigned is a shareholder and director of First Financial Service
Corporation (“FFKY”), a Kentucky corporation, and is also a director of its
subsidiary, First Federal Savings Bank of Elizabethtown (“FFB”). Pursuant to the
transactions described in the Agreement and Plan of Share Exchange, dated as of
April ___, 2014 (the “Agreement”), by and between FFKY and Community Bank Shares
of Indiana, Inc. (“CBIN”), all of the outstanding shares of FFKY Common Stock
will be acquired by CBIN pursuant to a statutory share exchange (the “Share
Exchange”) for the Common Stock Consideration. This Affiliate Agreement
represents an agreement between the undersigned and CBIN regarding certain
rights and obligations of the undersigned in connection with the Share Exchange.

 

In consideration of the benefits the undersigned will receive under the Share
Exchange as a shareholder of FFKY and the mutual covenants contained herein, the
undersigned and CBIN hereby agree as follows:

 

1.            Vote on the Share Exchange.

 

(a)          The undersigned agrees that, at any time the Agreement remains in
effect, he or she will vote all shares of FFKY Common Stock that the undersigned
owns beneficially or of record in favor of approving the Agreement, unless CBIN
is then in breach or default in any material respect as regards any covenant,
agreement, representation or warranty as to it contained in the Agreement;
provided, however, that nothing in this sentence shall be deemed to require the
undersigned to vote any shares of FFKY Common Stock over which he or she has or
shares voting power solely in a fiduciary capacity on behalf of any Person other
than FFKY, if the undersigned determines, in good faith after consultation and
receipt of an opinion of counsel, that such a vote would cause a breach of
fiduciary duty to such other Person.

 

(b)          CBIN acknowledges that the undersigned is not making any agreement
pursuant to this Section 1 in his capacity as a director or officer of FFKY and
that the undersigned is agreeing to the voting provisions of this Section 1
solely in his or her capacity as the beneficial or record owner of shares of
FFKY Common Stock and nothing herein shall limit or in any way affect any
actions taken by the undersigned in his or her capacity as a director or officer
of FFKY. Nothing herein shall limit or affect FFKY’s rights in connection with
the Agreement.

 

(c)          The obligation of the undersigned pursuant to this Section 1 is
subject to the absence of any of the following changes (by amendment, waiver or
otherwise) to the Agreement: (i) any decrease in the Common Stock Consideration
not contemplated by the Agreement; (ii) any change in the form of the Common
Stock Consideration; or (iii) any change in the Agreement or the structure of
the transactions contemplated thereby that would, in the judgment of the
undersigned, adversely affect the tax consequences to the undersigned from the
Agreement.

 

2.            Restriction on Transfer. The undersigned further agrees that he or
she will not, without the prior written consent of CBIN (which consent may be
withheld for any reason or no reason), transfer any shares of FFKY Common Stock
prior to the Effective Date, except by operation of law, by will, or under the
laws of descent and distribution.

 

3.            Affiliate Status. The undersigned understands and agrees that as
to FFKY the undersigned is an “affiliate” (a “FFKY Affiliate”) as defined in
Rule 405 of the Rules and Regulations of the SEC under the 1933 Act, and the
undersigned anticipates that the undersigned will be such an “affiliate” at the
time of the Share Exchange.

 

 

 

 

4.            Confidentiality Agreement. The undersigned shall not disclose or
use or otherwise exploit (for his own benefit or the benefit of any other
Person) at any time, any Confidential Information of which the undersigned
became aware while a director or employee of FFKY or FFB, whether or not any
such information was developed by him or her. For purposes of this Agreement,
“Confidential Information” shall mean all non-public, proprietary information of
or respecting FFKY, FFB or any Affiliate, including, without limitation, manner
of operations, financial information and customer lists, records and
relationships, other than information which, at the time of such disclosure or
use, exists in the public domain through no breach or violation by the
undersigned of this Affiliate Agreement or the undersigned’s duties or
contractual obligations to FFKY or FFB.

 

5.            Restrictive Covenants.

 

(a)          Acknowledgments. The undersigned acknowledges that (i) his or her
services with FFKY or FFB were of a special, unique and extraordinary character
and that his or her position with FFKY or FFB placed him or her in a position of
confidence and trust with the customers of FFKY and FFB and allowed him or her
access to Confidential Information, (ii) he or she will benefit from the
consummation of the transactions contemplated under the Share Exchange, (iii) he
or she would not have had significant contact with any FFKY or FFB customers if
not for his or her service as a director of FFKY or FFB and the name, reputation
and for the goodwill of FFKY or FFB, (iv) the nature and periods of restrictions
imposed by the covenants contained in this Section 5 are fair, reasonable and
necessary to protect and preserve for CBIN (A) the customer relationships
developed by FFKY or FFB through significant time and expense and (B) the
benefits of the undersigned’s service with FFKY or FFB, (v) CBIN and its
Affiliates would sustain great and irreparable loss and damage if the
undersigned were to breach any of such covenants, (vi) CBIN and its Affiliates
conduct their business actively in and throughout the entire Territory (as
herein defined) and (vii) the Territory is reasonably sized.

 

(b)          Covenants. Having acknowledged the foregoing, the undersigned
covenants and agrees with CBIN that he or she will not, directly or indirectly,
from the date hereof through the second anniversary of the Closing Date, engage
in any of the following:

 

(i)          attempt in any manner to cause or otherwise encourage any employee
of FFKY, FFB, CBIN or YCB to leave the employ of FFKY, FFB, CBIN or YCB;

 

(ii)         engage in, own, manage, operate, or control as an officer,
director, shareholder, partner, proprietor, employee, agent, consultant,
independent contractor or otherwise, any Person which is, at the time engaged in
a Competitive Business within the Territory (provided, however, that the
undersigned may own, solely as a passive investment, securities of any Person
which are traded on a national securities exchange or in the over-the-counter
market if the undersigned does not own more than 5% of any class of securities
of such Person);

 

(iii)        solicit, divert, or take away, or attempt to solicit, divert or
take away, the business of any of the customers, borrowers or depositors of FFB
or YCB, or any prospective customers, borrowers or depositors which were
solicited by FFB while the undersigned was a director or executive officer of
FFKY or FFB, for the purpose of selling to or servicing for any such customer,
borrower or depositor or prospective customer, borrower or depositor any
Competitive Business product or service; or

 

(iv)        cause or attempt to cause any of the foregoing customers, borrowers
or depositors or prospective customers, borrowers or depositors to refrain from
maintaining or acquiring from or through FFKY, FFB, CBIN or YCB any Business
product or service, and will not assist any other Person or Persons to do so.

 

 

 

 

(c)          Definitions. For purposes of this Agreement,

 

(i)          the “Territory” shall mean that area comprised of all points in the
Kentucky counties of Hardin, Meade, Hart, Nelson, Bullitt and Jefferson. The
undersigned shall be prohibited from maintaining a business address within such
Territory if he or she is engaged in any of the prohibited activities enumerated
in Subsection 6(b)(ii) hereof at such address, and he or she shall also be
prohibited from engaging in any of the activities enumerated in Subsection
6(b)(ii) hereof within such Territory even if the undersigned maintains a
business or residential address outside said Territory; and

 

(ii)         the “Competitive Business” shall mean the business or operations of
a bank, thrift, credit union, mortgage bank, industrial bank, finance company or
bank holding company either located or doing business within the Territory.

 

(d)          Injunctive Relief; Invalidity of Any Provision. The undersigned
acknowledges that his or her breach of any covenant contained in this Section 5
will result in irreparable injury to CBIN and its Affiliates and that CBIN’s and
the Affiliates’ remedy at Law for such a breach will be inadequate. Accordingly,
the undersigned agrees and consents that CBIN or any of its Affiliates, in
addition to all other remedies available to any of them at Law, shall be
entitled to seek both preliminary and permanent injunctions to prevent and/or
halt a breach or threatened breach by the undersigned of any covenant contained
in this Section 5. If any provision of this Section 5 is invalid in part or in
whole, it shall be deemed to have been amended, whether as to time, area covered
or otherwise, as and to the extent required for its validity under applicable
law and, as so amended, shall be enforceable. The parties further agree to
execute all documents necessary to evidence such amendment.

 

(e)          Rights Cumulative. The rights and remedies of CBIN and its
Affiliates under this Section 5 are in addition to, and cumulative of, any other
rights and remedies that CBIN and its Affiliates may have by Law with respect to
this Agreement. The parties further agree that in the event of a breach by the
undersigned of Section 5(b) hereof, the period set forth in Section 5(b) hereof
shall not begin until the undersigned permanently ceases his breach thereof.

 

6.            Termination. Section 1 of this Affiliate Agreement shall terminate
upon the earlier to occur of (a) the termination of the Agreement by CBIN or
FFKY in accordance with its terms pursuant to Section 10.1 thereof and (b) the
Effective Time. All other provisions of this Affiliate Agreement shall terminate
upon the termination of the Agreement by CBIN or FFKY in accordance with its
terms pursuant to Section 10.1 thereof. Upon termination, this Affiliate
Agreement shall have no further force or effect.

 

7.            Entire Agreement; Modification; Waiver. This Affiliate Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties, whether written or oral. No
supplements, modification, or amendment of this Affiliate Agreement shall be
binding unless executed in writing by all parties hereto. No waiver of any of
the provisions of this Affiliate Agreement will be deemed, or will constitute, a
waiver of any other provision, whether or not similar, nor will any waiver
constitute a continuing waiver. No waiver will be binding unless executed in
writing by the party making the waiver.

 

8.            Successors and Assigns; Assignment. This Affiliate Agreement shall
be binding on, and inure to the benefit of, the parties hereto and their
respective heirs, executors, legal representatives, successors and assigns;
provided, however, that this Affiliate Agreement is intended to be personal to
the undersigned and the rights and obligations of the undersigned hereunder may
not be assigned or transferred by him.

 

9.            Governing Law. This Affiliate Agreement is executed and delivered
in, and shall be governed by, enforced and interpreted in accordance with the
laws of, the State of Indiana without taking into account provisions regarding
choice of Law or conflicts of Law, except to the extent certain matters may be
governed as a matter of law by federal Law.

 

10.          Execution in Counterparts. This Affiliate Agreement may be executed
in multiple counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same document.

 

 

 

 

11.          Severability of Provisions. The invalidity or unenforceability of
any particular provision of this Agreement shall not affect the other provisions
hereof and this Affiliate Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted.

 

12.          WAIVER OF JURY TRIAL. The undersigned hereby waives any right to a
trial by jury in any action arising hereunder.

 

13.          Third Party Beneficiaries. Each Affiliate of CBIN shall be deemed
to be a third party beneficiary of the rights of CBIN hereunder.

 

14.          Capitalized Terms. All capitalized terms in this Affiliate
Agreement shall have the same meanings as given such terms under the Agreement.

 

This Affiliate Agreement is executed as of the __ day of __________, 2014.

 

  Very truly yours,           Signature           Printed Name           Address
          Telephone Number

 

AGREED TO AND ACCEPTED as of _____________ __, 2014
COMMUNITY BANK SHARES OF INDIANA, INC.

 

By:       James D. Rickard     President and Chief Executive Officer  

 

 

 

 

AFFILIATE AGREEMENT

(Officer)

 

Community Bank Shares of Indiana, Inc.

Attention:James D. Rickard

President and Chief Executive Officer

101 West Spring Street

New Albany, Indiana 47150

 

Gentlemen:

 

The undersigned is an officer of either First Financial Service Corporation
(“FFKY”), a Kentucky corporation, or its subsidiary, First Federal Savings Bank
of Elizabethtown (“FFB”). Pursuant to the transactions described in the
Agreement and Plan of Share Exchange, dated as of April 21, 2014 (the
“Agreement”), by and between FFKY and Community Bank Shares of Indiana, Inc.
(“CBIN”), all of the outstanding shares of FFKY Common Stock will be acquired by
CBIN pursuant to a statutory share exchange (the “Share Exchange”) for the
Common Stock Consideration. This Affiliate Agreement represents an agreement
between the undersigned and CBIN regarding certain rights and obligations of the
undersigned in connection with the Share Exchange.

 

In consideration of the benefits the undersigned will receive under the Share
Exchange as a shareholder of FFKY, or as an employee of FFKY or FFB, and the
mutual covenants contained herein, the undersigned and CBIN hereby agree as
follows:

 

1.            Vote on the Share Exchange.

 

(a)          The undersigned agrees that, at any time the Agreement remains in
effect, he or she will vote all shares of FFKY Common Stock that the undersigned
owns beneficially or of record in favor of approving the Agreement, unless CBIN
is then in breach or default in any material respect as regards any covenant,
agreement, representation or warranty as to it contained in the Agreement;
provided, however, that nothing in this sentence shall be deemed to require the
undersigned to vote any shares of FFKY Common Stock over which he or she has or
shares voting power solely in a fiduciary capacity on behalf of any Person other
than FFKY, if the undersigned determines, in good faith after consultation and
receipt of an opinion of counsel, that such a vote would cause a breach of
fiduciary duty to such other Person.

 

(b)          CBIN acknowledges that the undersigned is not making any agreement
pursuant to this Section 1 in his or her capacity as an officer of FFKY or FFB
and that the undersigned is agreeing to the voting provisions of this Section 1
solely in his or her capacity as the beneficial or record owner of shares of
FFKY Common Stock and nothing herein shall limit or in any way affect any
actions taken by the undersigned in his or her capacity as an officer of FFKY or
FFB. Nothing herein shall limit or affect FFKY’s rights in connection with the
Agreement.

 

(c)          The obligation of the undersigned pursuant to this Section 1 is
subject to the absence of any of the following changes (by amendment, waiver or
otherwise) to the Agreement: (i) any decrease in the Common Stock Consideration
not contemplated by the Agreement; (ii) any change in the form of the Common
Stock Consideration; or (iii) any change in the Agreement or the structure of
the transactions contemplated thereby that would, in the judgment of the
undersigned, adversely affect the tax consequences to the undersigned from the
Agreement.

 

2.            Restriction on Transfer. The undersigned further agrees that he or
she will not, without the prior written consent of CBIN (which consent may be
withheld for any reason or no reason), transfer any shares of FFKY Common Stock
prior to the Effective Date, except by operation of law, by will, or under the
laws of descent and distribution.

 

3.            Affiliate Status. The undersigned understands and agrees that as
to FFKY the undersigned is an “affiliate” (a “FFKY Affiliate”) as defined in
Rule 405 of the Rules and Regulations of the SEC under the 1933 Act, and the
undersigned anticipates that the undersigned will be such an “affiliate” at the
time of the Share Exchange.

 

 

 

 

4.            Confidentiality Agreement. The undersigned shall not disclose or
use or otherwise exploit (for his or her own benefit or the benefit of any other
Person) at any time, any Confidential Information of which the undersigned
became aware while an officer or employee of FFKY or FFB, whether or not any
such information was developed by him or her. For purposes of this Agreement,
“Confidential Information” shall mean all non-public, proprietary information of
or respecting FFKY, FFB or any Affiliate, including, without limitation, manner
of operations, financial information and customer lists, records and
relationships, other than information which, at the time of such disclosure or
use, exists in the public domain through no breach or violation by the
undersigned of this Affiliate Agreement or the undersigned’s duties or
contractual obligations to FFKY or FFB.

 

5.            Restrictive Covenants.

 

(a)          Acknowledgments. The undersigned acknowledges that (i) his or her
services with FFKY or FFB were of a special, unique and extraordinary character
and that his or her position with FFKY or FFB placed him or her in a position of
confidence and trust with the customers of FFKY and FFB and allowed him or her
access to Confidential Information, (ii) he or she will benefit from the
consummation of the transactions contemplated under the Share Exchange, (iii) he
or she would not have had significant contact with any FFKY or FFB customers if
not for his or her service as an officer of FFKY or FFB and the name, reputation
and for the goodwill of FFKY or FFB, (iv) the nature and periods of restrictions
imposed by the covenants contained in this Section 5 are fair, reasonable and
necessary to protect and preserve for CBIN (A) the customer relationships
developed by FFKY or FFB through significant time and expense and (B) the
benefits of the undersigned’s service with FFKY or FFB and (v) CBIN and its
Affiliates would sustain great and irreparable loss and damage if the
undersigned were to breach any of such covenants.

 

(b)          Covenants. Having acknowledged the foregoing, the undersigned
covenants and agrees with CBIN that he or she will not, directly or indirectly,
from the date hereof through the first anniversary of the Closing Date, engage
in any of the following:

 

(i)          attempt in any manner to cause or otherwise encourage any employee
of FFKY, FFB, CBIN or YCB to leave the employ of FFKY, FFB, CBIN or YCB;

 

(ii)         solicit, divert, or take away, or attempt to solicit, divert or
take away, the business of any of the customers, borrowers or depositors of FFB
or YCB, or any prospective customers, borrowers or depositors which were
solicited by FFB while the undersigned was an officer of FFKY or FFB, for the
purpose of selling to or servicing for any such customer, borrower or depositor
or prospective customer, borrower or depositor any Competitive Business product
or service; or

 

(iii)        cause or attempt to cause any of the foregoing customers, borrowers
or depositors or prospective customers, borrowers or depositors to refrain from
maintaining or acquiring from or through FFKY, FFB, CBIN or YCB any Business
product or service, and will not assist any other Person or Persons to do so.

 

(c)          Definition. For purposes of this Agreement, the “Competitive
Business” shall mean the business or operations of a bank, thrift, credit union,
mortgage bank, industrial bank, finance company or bank holding company.

 

(d)          Injunctive Relief; Invalidity of Any Provision. The undersigned
acknowledges that his or her breach of any covenant contained in this Section 5
will result in irreparable injury to CBIN and its Affiliates and that CBIN’s and
the Affiliates’ remedy at Law for such a breach will be inadequate. Accordingly,
the undersigned agrees and consents that CBIN or any of its Affiliates, in
addition to all other remedies available to any of them at Law, shall be
entitled to seek both preliminary and permanent injunctions to prevent and/or
halt a breach or threatened breach by the undersigned of any covenant contained
in this Section 5. If any provision of this Section 5 is invalid in part or in
whole, it shall be deemed to have been amended, whether as to time, area covered
or otherwise, as and to the extent required for its validity under applicable
law and, as so amended, shall be enforceable. The parties further agree to
execute all documents necessary to evidence such amendment.

 

 

 

 

(e)          Rights Cumulative. The rights and remedies of CBIN and its
Affiliates under this Section 5 are in addition to, and cumulative of, any other
rights and remedies that CBIN and its Affiliates may have by Law with respect to
this Agreement. The parties further agree that in the event of a breach by the
undersigned of Section 5(b) hereof, the period set forth in Section 5(b) hereof
shall not begin until the undersigned permanently ceases his breach thereof.

 

6.            Termination. Section 1 of this Affiliate Agreement shall terminate
upon the earlier to occur of (a) the termination of the Agreement by CBIN or
FFKY in accordance with its terms pursuant to Section 10.1 thereof and (b) the
Effective Time. All other provisions of this Affiliate Agreement shall terminate
upon the termination of the Agreement by CBIN or FFKY in accordance with its
terms pursuant to Section 10.1 thereof. Upon termination, this Affiliate
Agreement shall have no further force or effect.

 

7.            Entire Agreement; Modification; Waiver. This Affiliate Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties, whether written or oral. No
supplements, modification, or amendment of this Affiliate Agreement shall be
binding unless executed in writing by all parties hereto. No waiver of any of
the provisions of this Affiliate Agreement will be deemed, or will constitute, a
waiver of any other provision, whether or not similar, nor will any waiver
constitute a continuing waiver. No waiver will be binding unless executed in
writing by the party making the waiver.

 

8.            Successors and Assigns; Assignment. This Affiliate Agreement shall
be binding on, and inure to the benefit of, the parties hereto and their
respective heirs, executors, legal representatives, successors and assigns;
provided, however, that this Affiliate Agreement is intended to be personal to
the undersigned and the rights and obligations of the undersigned hereunder may
not be assigned or transferred by him.

 

9.            Governing Law. This Affiliate Agreement is executed and delivered
in, and shall be governed by, enforced and interpreted in accordance with the
laws of, the State of Indiana without taking into account provisions regarding
choice of Law or conflicts of Law, except to the extent certain matters may be
governed as a matter of law by federal Law.

 

10.          Execution in Counterparts. This Affiliate Agreement may be executed
in multiple counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same document.

 

11.          Severability of Provisions. The invalidity or unenforceability of
any particular provision of this Agreement shall not affect the other provisions
hereof and this Affiliate Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted.

 

12.          WAIVER OF JURY TRIAL. The undersigned hereby waives any right to a
trial by jury in any action arising hereunder.

 

13.          Third Party Beneficiaries. Each Affiliate of CBIN shall be deemed
to be a third party beneficiary of the rights of CBIN hereunder.

 

14.          Capitalized Terms. All capitalized terms in this Affiliate
Agreement shall have the same meanings as given such terms under the Agreement.

 

 

 

 

This Affiliate Agreement is executed as of the __ day of __________, 2014.

 

  Very truly yours,           Signature           Printed Name           Address
          Telephone Number

 

AGREED TO AND ACCEPTED as of _____________ __, 2014
COMMUNITY BANK SHARES OF INDIANA, INC.

 

By:       James D. Rickard     President and Chief Executive Officer