Exhibit 10.4

 
AMENDED AND RESTATED
DIRECTOR DEFERRED COMPENSATION MASTER AGREEMENT
 
This Director Deferred Compensation Master Agreement (the “Agreement”),
originally effective as of the 1st day of November, 1993, is hereby amended and
restated effective January 1, 2005 and formalizes the understanding by and
between RIVER VALLEY FINANCIAL BANK (formerly known as MADISON FIRST FEDERAL
SAVINGS & LOAN ASSOCIATION) (the “Bank”), a federally chartered savings and
loan, and certain eligible Directors, hereinafter referred to as “Director”, who
shall be approved by the Bank to participate and who shall elect to become a
party to this Amended and Restated Director Deferred Compensation Master
Agreement by execution of a Director Deferred Compensation Joinder Agreement
(“Joinder Agreement”) in a form provided by the Bank.
 
WITNESSETH:
 
WHEREAS, the Directors serve the Bank as members of the Board; and
 
WHEREAS, the Bank recognizes the valuable services heretofore performed for it
by such Directors and wishes to encourage continued service of each; and
 
WHEREAS, the Bank values the efforts, abilities and accomplishments of such
Directors and recognizes that the Directors’ services will substantially
contribute to its continued growth and profits in the future; and
 
WHEREAS, these Directors wish to defer a certain portion of their fees to be
earned in the future; and
 

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WHEREAS, the Directors and the Bank desire to formalize the terms and conditions
upon which the Bank shall pay such deferred compensation to the Directors or
their designated beneficiaries; and
 
WHEREAS, the Bank has been advised by legal counsel of the need to amend the
Agreement effective January 1, 2005 to comply with the requirements of Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”); and
 
WHEREAS, the Bank has amended and restated this Director Deferred Compensation
Master Agreement which controls all issues relating to the Deferred Compensation
Benefit as described herein;
 
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties hereto agree to the following terms and conditions:
 
SECTION I
 
DEFINITIONS
 
When used herein, the following words and phrases shall have the meanings below
unless the context clearly indicates otherwise:
 
1.1
“Bank” means RIVER VALLEY FINANCIAL BANK (formerly known as MADISON FIRST
FEDERAL SAVINGS & LOAN ASSOCIATION) and any successor thereto.

 
1.2
“Beneficiary” means the person or persons (and their heirs) designated as
Beneficiary in the Director’s Joinder Agreement to whom the deceased Director’s
benefits are payable. If no Beneficiary is so designated, then the Director’s
Spouse, if living, will be deemed the Beneficiary. If the Director’s Spouse is
not living, then the Children of the Director will be deemed the Beneficiaries
and will take on a per stirpes basis. If there are no living Children, then the
Estate of the Director will be deemed the Beneficiary.

 
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1.3
“Benefit Age” shall be the birthday on which the Director becomes eligible to
receive benefits under the Plan. Such birthday shall be designated in the
Director’s Joinder Agreement.

 
1.4
“Benefit Eligibility Date” shall be the date on which a Director is entitled to
receive his Deferred Compensation Benefit. It shall be the 1st day of the month
coincident with or next following the month in which the Director attains the
Benefit Age designated in his Joinder Agreement.

 
1.5
“Cause” means personal dishonesty, willful misconduct, willful malfeasance,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule, regulation (other
than traffic violations or similar offenses), or final cease-and-desist order,
material breach of any provision of this Agreement, or gross negligence in
matters of material importance to the Bank.

 
1.6
“Children” means the Director’s children, both natural and adopted, then living
at the time payments are due the Children under this Agreement.

 
1.7
“Deferral Period” means the period of months designated in the Director’s
Joinder Agreement during which the Director shall defer current Board fees. The
Deferral Period shall commence on the date designated in the Director’s Joinder
Agreement.

 
1.8
“Deferred Compensation Benefit” means the annuitized value of the Director’s
Elective Contribution Account, measured as of the Director’s Benefit Age,
payable in monthly installments throughout the Payout Period and commencing on
the Director’s Benefit Eligibility Date.

 
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1.9
“Disability Benefit” means the benefit annuity payable to the Director following
a determination in accordance with Subsection 4.2, that he is disabled as
provided in that Subsection.

 
1.10
“Effective Date” of this Agreement shall be November 1, 1993.  The Effective
Date of the amendment and restatement of the Agreement is January 1, 2005.

 
1.11
“Elective Contribution” shall refer to any bookkeeping entry required to record
a Director’s voluntary monthly pre-tax deferral which shall be made in
accordance with the Director’s Joinder Agreement.

 
1.12
“Elective Contribution Account” shall be represented by the bookkeeping entries
required to record a Director’s Elective Contributions plus accrued interest,
equal to the Interest Factor, earned to date on such amounts. However, neither
the existence of such bookkeeping entries nor the Elective Contribution Account
itself shall be deemed to create either a trust of any kind, or a fiduciary
relationship between the Bank and the Director or any Beneficiary.

 
1.13
“Estate” means the estate of the Director.

 
1.14
“Financial Hardship” means a severe financial hardship to the Director resulting
from an illness or accident of the Director, the Director’s spouse, or a
dependent (as defined in Section 152(a) of the Code) of the Director, loss of
the Director’s property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Director.

 
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1.15
“Financial Hardship Benefit” means a withdrawal or withdrawals of an amount or
amounts attributable to a Financial Hardship; provided, however that, consistent
with regulations of the Internal Revenue Service, amounts distributed with
respect to a Financial Hardship may not exceed the amounts necessary to satisfy
such emergency plus amounts necessary to pay taxes reasonably anticipated as a
result of the distribution of benefits after taking into account the extent to
which such Financial Hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the Director’s
assets (to the extent the liquidation of such assets would not itself cause a
Financial Hardship).

 
1.16
“Interest Factor” means monthly compounding at Ten Percent (10%) per annum.

 
1.17
“Payout Period” means the time frame during which certain benefits payable
hereunder shall be distributed. Payments shall be made in equal monthly
installments commencing on the first day of the month coincident with or next
following the occurrence of the event which triggers distribution and continuing
for a period of months, as designated in the Director’s Joinder Agreement.

 
1.18
“Projected Deferral” is an estimate, determined upon execution of a Joinder
Agreement, of the total amount to be deferred by the Director during his
Deferral Period, and so designated in the Director’s Joinder Agreement.

 
1.19
“Spouse” means the individual to whom the Director is legally married at the
time of the Director’s death.

 
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1.20
“Survivor’s Benefit” means an annuity stream payable to the Beneficiary in
monthly installments throughout the Payout Period, equal to the amount
designated in the Joinder Agreement, and subject to Subsections 4.3 and 5.1 (or
5.2).

 
1.21
“Joinder Agreement” shall mean an agreement in the form of Exhibit A hereto
which shall be completed and signed as of the Effective Date or, as to Directors
who elect to participate in this Agreement after the Effective Date, by
completing and signing such Joinder Agreement no later than the December 31st
preceding the January 1st as of which the deferral of fees hereunder shall be
effective.  A director may change the amount of fees deferred hereunder provided
such change is made before the end of the year prior to the year in which the
revised deferral is to be effective.  Changes in the Payout Period and Benefit
Age must be in writing, at least twelve (12) months prior to the date of the
first scheduled payment and shall not be effective earlier than twelve (12)
months after the modification is made.  In addition, such modification shall
extend the deferral period for a period of at least five additional years from
the date the distribution was scheduled to begin prior to such change.

 
1.22
“Change in Control” shall mean

 
 
(a)
a change in the ownership of the Bank or its sole shareholder, River Valley
Bancorp (the “Holding Company”), which shall occur on the date that any one
person, or more than one person acting as a group, acquires ownership of stock
of the Bank or the Holding Company that, together with stock held by such person
or group, constitutes more than fifty percent (50%) of the total fair market
value or total voting power of the stock of the Bank or the Holding Company.
Such acquisition may occur as a result of a merger of the Holding Company or the
Bank into another entity which pays consideration for the shares of capital
stock of the merging Holding Company or Bank.  However, if any one person, or
more than one person acting as a group, is considered to own more than fifty
percent (50%) of the total fair market value or total voting power of the stock
of the Bank or the Holding Company, the acquisition of additional stock by the
same person or persons is not considered to cause a change in the ownership of
the Bank or the Holding Company (or to cause a change in the effective control
of the Bank or the Holding Company (within the meaning of subsection (b)).  An
increase in the percentage of stock owned by any one person, or persons acting
as a group, as a result of a transaction in which the Bank or the Holding
Company acquires its stock in exchange for property will be treated as an
acquisition of stock for purposes of this subsection.  This subsection applies
only when there is a transfer of stock of the Bank or the Holding Company (or
issuance of stock of the Bank or the Holding Company) and stock in the Bank or
the Holding Company remains outstanding after the transaction.

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

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

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

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

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

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

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

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

 
For purposes of this subsection (c) and except as otherwise provided in
paragraph (c)(i) above, a person’s status is determined immediately after the
transfer of the assets.
 
 
(d)
For purposes of this section, persons will not be considered to be acting as a
group solely because they purchase or own stock of the same corporation at the
same time, or as a result of the same public offering.  Persons will be
considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the Bank or the Holding Company; provided,
however, that they will not be considered to be acting as a group if they are
owners of an entity that merges into the Bank or the Holding Company where the
Bank or the Holding Company is the surviving corporation.

 
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1.23
“Separation from Service” means with respect to a Director who is not also an
employee of the Bank the good faith and complete termination of such Director’s
relationship with the Bank as a member of its board of directors.  A Director
who is also an employee of the Bank shall incur a “Separation from Service” only
if he both incurs a good faith and complete termination of his relationship with
the Bank as a member of its board of directors and has a “termination of
employment;” provided, however, that the Director shall not be required to have
a “termination of employment” if this Plan is not required to be aggregated with
any other nonqualified deferred compensation plan of the Bank in which the
Director participates as an employee under Section 409A of the Code.  For
purposes of this section, a “termination of employment” means the termination of
the individual’s employment with the Bank for reasons other than death or
disability.  Whether a “termination of employment” takes place as determined
based on the facts and circumstances surrounding the termination of the
individual’s employment.  A “termination of employment” will be considered to
have occurred if it is reasonably anticipated that:  (a) the individual will not
perform any services for the Bank after the termination of employment, or (b)
the individual will continue to provide services to the Bank at an annual rate
that is less than fifty percent (50%) of the bona fide services rendered during
the immediately preceding twelve months of employment.

 
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SECTION II
 
DEFERRED COMPENSATION
 
Commencing on the Effective Date, and continuing through the end of the Deferral
Period, the Director and the Bank agree that the Director shall defer into his
Elective Contribution Account up to one hundred (100%) percent of the monthly
fees that the Director would otherwise be entitled to receive from the Bank for
each month of the Deferral Period, with the total deferral during the term of
the Deferral Period not to exceed the Director’s Projected Deferral.  The
specific amount of the Director’s monthly Deferred Compensation shall be
designated in the Director’s Joinder Agreement and shall apply only to
compensation attributable to services not yet performed.
 
Except as otherwise provided below, a Director may elect to defer a portion of
his Director Fees to be earned in a year by making an irrevocable election to do
so before January 1 of that year.  If a Director is not otherwise eligible to
participate in another individual account non-qualified deferred compensation
plan, and he or she first becomes eligible to participate in this Agreement
after January 1, 2005, the Director may irrevocably elect to defer a portion of
his Director Fees to be earned by the Director in the same year (and after
making the election) as long as the election is made within 30 days following
the date the individual first becomes eligible to participate.  Thereafter, the
timing of future deferral elections is governed by the second sentence of this
paragraph.
 
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SECTION III
 
ADJUSTMENT OF DEFERRAL AMOUNT
 
Deferral of the specific amount of fees designated in the Director’s Joinder
Agreement shall continue in effect pursuant to the terms of this Agreement
unless and until the Director amends his Joinder Agreement by filing with the
Bank and the Administrator a Notice of Adjustment of Deferral Amount (Exhibit
13, of the Joinder Agreement). If the Bank increases the amount of fees earned
by the Director, the Director can include such additional amounts in his monthly
deferral, provided approval from the Board of Directors is obtained, by filing a
Notice of Adjustment of Deferral Amount. A Notice of Adjustment of Deferral
Amount shall be effective if filed with the Bank and the Administrator, at least
thirty (30) days prior to any January 1st during the Director’s Deferral Period.
Such Notice of Adjustment of Deferral Amount shall be effective commencing with
the January 1st following its filing and shall be applicable only to
compensation attributable to services not yet performed by the Director.
 
SECTION IV
 
RETIREMENT BENEFIT
 
4.1
Retirement Benefit. Subject to Subsections 4.3 and 5.1 (or 5.2) of this
Agreement, the Bank agrees to pay the Director the Deferred Compensation Benefit
commencing on the Director’s Benefit Eligibility Date. Such payments will be
made over the term of the Payout Period. In the event of the Director’s death
after commencement of the Deferred Compensation Benefit, but prior to completion
of all such payments due and owing hereunder, the Bank shall pay to the
Director’s Beneficiary a continuation of the annuity for the remainder of the
Payout Period.

 
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4.2
Disability Benefit.  Notwithstanding any other provision hereof, if requested by
the Director and approved by the Board, the Director shall be entitled to
receive the Disability Benefit hereunder, in any case in which it is determined
by a duly licensed physician selected by the Association, that the Director has
a medically determinable physical or mental impairment which can be expected to
result in death or to last for a continuous period of not less than 12 months
and which (1) renders Director unable to engage in any substantial gainful
activity or (2) entitles Director to income replacement benefits for a period of
not less than three months under an accident and health plan covering employees
of the Association.  If the Director's service is terminated pursuant to this
paragraph and Board approval is obtained, the Director shall begin receiving the
Disability Benefit annuity in lieu of any Deferred Compensation Benefit which is
not available prior to the Director's Benefit Eligibility Date.  The annuity
shall begin not more than thirty (30) days following the above-mentioned
disability determination.  The amount of the monthly benefit shall be the
annuitized value of the Director's Elective Contribution Account, measured upon
such determination and payable over the Payout Period.  The Interest Factor
shall be used to annuitize the Elective Contribution Account.  In the event the
Director dies while receiving payments pursuant to this Subsection, or after
becoming eligible for such payments but before the actual commencement of such
payments, his Beneficiary shall be entitled to receive those benefits provided
for in Subsection 5.l(a) or 5.2(a) and the Disability Benefits provided for in
this Subsection shall terminate upon the Director's death.

 
4.3
Financial Hardship Benefit. In the event the Director incurs a Financial
Hardship, the Director may request a Financial Hardship Benefit. Such request
shall be either approved or rejected by the Bank in the exercise of its sole
discretion. The Director will be required to demonstrate to the satisfaction of
the Bank that a Financial Hardship has occurred and that the Director is
otherwise entitled to a Financial Hardship Benefit in accordance with
Subsections 1.14 and 1.15. If a Financial Hardship Benefit is approved, it shall
be paid in a lump sum within thirty (30) days of the event which triggers
payment. The balance of the Director’s Elective Contribution Account shall be
reduced for any Financial Hardship Benefit distribution. Also, any subsequent
Deferred Compensation Benefit annuity, Survivor’s Benefit annuity or Disability
Benefit annuity shall be actuarially adjusted to reflect such distribution.

 
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4.4
Removal For Cause. In the event the Director is removed for Cause at any time
prior to reaching his Benefit Age, he shall be entitled to receive the balance
of his Elective Contribution Account, measured as of the date of removal. Such
amount shall be paid in a lump sum within thirty (30) days of the Director’s
date of removal. All other benefits provided for the Director or his Beneficiary
under this agreement shall be forfeited and the Agreement shall become null and
void.

 
4.5
Change in Control.  If a Change in Control occurs prior to the Director’s
Benefit Eligibility Date and the Director incurs a Separation from Service as of
such Change in Control, Director shall be paid his Accrued Benefit hereunder in
one lump sum on the effective date of the Change in Control.

 
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SECTION V
 
DEATH BENEFITS
 
(Note that Subsection 5.1 and 5.2 are alternative Subsections. Only one (1) of
these Subsections shall be applicable to the Director. The Director’s Joinder
Agreement shall identify which of the two (2) Subsections is applicable to the
Director.)
 
5.1
Death Benefit Prior to Commencement of Deferred Comnensation Benefit. In the
event of the Director’s death prior to commencement of the Deferred Compensation
Benefit, the Bank shall pay the Director’s Beneficiary a monthly amount for the
Payout Period, commencing within thirty (30) days of the Director’s death. The
amount of such benefit payments shall be determined as follows:

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

 
If the total dollar amount of Disability Benefit payments received by the
Director under Subsection 4.2 is less than the total dollar amount of payments
that would have been received had the Survivor’s Benefit been paid in lieu of
the Disability Benefit during the Director’s life, the Bank shall pay the
Director’s Beneficiary a lump sum payment for the difference. This lump sum
payment shall be made within thirty (30) days of the Director’s death.
 
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(b)
In the event death occurs while the Director is (i) in the service of the Bank,
(ii) deferring fees pursuant to Section II and (iii) prior for to any reduction
or discontinuance, via an effective filing of a Notice of Adjustment of Deferral
Amount, in the level of deferrals reflected in the Director’s initial Joinder
Agreement, for any period during the Deferral Period, the Director’s Beneficiary
shall be paid the Survivor’s Benefit.

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

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

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

 
5.2
Death Benefit Prior to Commencement of Deferred Compensation Benefit. In the
event of the Director’s death prior to commencement of the Deferred Compensation
Benefit, the Bank shall pay the Director’s Beneficiary a monthly amount
determined as follows:

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

 
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If the total dollar amount of Disability Benefit payments received,
collectively, by the Director under Subsection 4.2 and by the Director’s
Beneficiary under this Subsection is less than the total dollar amount of
payments that would have been received had the Survivor’s Benefit been paid in
lieu of the Disability Benefit to such Director and to such Beneficiary,
collectively, the Bank shall pay the Director’s Beneficiary a lump sum payment
for the difference. This lump sum payment shall be made within thirty (30) days
of the subsequent death of any other Director electing to participate in this
agreement.
 
 
(b)
In the event death occurs while the Director is (i) in the service of the Bank,
(ii) deferring fees pursuant to Section II and (iii) prior for to any reduction
or discontinuance, via an effective filing of a Notice of Adjustment of Deferral
Amount, in the level of deferrals reflected in the Director’s initial Joinder
Agreement, for any period during the Deferral Period, the Director’s Beneficiary
shall be paid the Survivor’s Benefit. Such Survivor’s Benefit shall be paid for
the Payout Period and shall commence within thirty (30) days of the subsequent
death of any other Director electing to participate in this Agreement.

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

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

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

 
5.3
Additional Death Benefit - Burial Expense. In addition to the above-described
death benefits, within thirty (30) days of the Director’s death, the Director’s
Beneficiary shall be entitled to receive a one-time lump hum death benefit in
the amount of Ten Thousand ($10,000.00) Dollars.

 
SECTION VI
 
BENEFICIARY DESIGNATION
 
The Director shall make an initial designation of primary and secondary
Beneficiaries upon execution of his Joinder 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 A to the Joinder
Agreement, a written designation of primary and secondary Beneficiaries. Any
Beneficiary designation made subsequent to execution of the Joinder Agreement
shall become effective only when receipt thereof is acknowledged in writing by
the Administrator.
 
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SECTION VII
 
DIRECTOR’S RIGHT TO ASSETS
 
The rights of the Director, any Beneficiary, or any other person claiming
through the Director under this Agreement, shall be solely those of an unsecured
general creditor of the Bank. The Director, the Beneficiary, or any other person
claiming through the Director, shall only have the right to receive from the
Bank those payments so specified under this Agreement. The Director agrees that
he, his Beneficiary, or any other person claiming through him shall have no
rights or interests whatsoever in any asset of the Bank, including any insurance
policies or contracts which the Bank may possess or obtain to informally fund
this Agreement. Any asset used or acquired by the Bank in connection with the
liabilities it has assumed under this Agreement, unless expressly provided
herein, shall not be deemed to be held under any trust for the benefit of the
Director or his Beneficiaries, nor shall any asset be considered security for
the performance of the obligations of the Bank. Any such asset shall be and
remain, a general, unpledged, and unrestricted asset of the Bank.
 
SECTION VIII
 
RESTRICTIONS UPON FUNDING
 
The Bank shall have no obligation to set aside, earmark or entrust any fund or
money with which to pay its obligations under this Agreement. The Director, his
Beneficiaries or any successor in interest to him shall be and remain simply a
general unsecured creditor of the Bank in the same manner as any other creditor
having a general claim for matured and unpaid compensation. The Bank reserves
the absolute right in its sole discretion to either purchase assets to meet its
obligations undertaken by this Agreement or to refrain from the same and to
determine the extent, nature, and method of such asset purchases. Should the
Bank decide to purchase assets such as life insurance, mutual funds, disability
policies or annuities, the Bank reserves the absolute right, in its sole
discretion, to terminate such assets at any time, in whole or in part. At no
time shall the Director be deemed to have any lien, right, title or interest in
or to any specific investment or to any assets of the Bank. If the Bank elects
to invest in a life insurance, disability or annuity policy upon the life of the
Director, then the Director shall assist the Bank by freely submitting to a
physical examination and by supplying such additional information necessary to
obtain such insurance or annuities.
 
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SECTION IX
 
ALIENABILITY AND ASSIGNMENT PROHIBITION
 
Neither the Director nor any Beneficiary under this Agreement shall have any
power or right to transfer, assign, anticipate, hypothecate, mortgage, commute,
modify or otherwise encumber in advance any of the benefits payable hereunder,
nor shall any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by the Director or his
Beneficiary, nor be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Director or any Beneficiary attempts
assignment, communication, hypothecation, transfer or disposal of the benefits
hereunder, the Bank’s liabilities shall forthwith cease and terminate.
 
SECTION X
 
ACT PROVISIONS
 
10.1
Named Fiduciary and Administrator. Financial Institution Consulting Corporation,
a Tennessee Corporation (“FICC”) shall be the Named Fiduciary and Administrator
(the “Administrator”) of this Agreement. As Administrator, FICC shall be
responsible for the management, control and administration of the Agreement as
established herein. The Administrator may delegate to others certain aspects of
the management and operational responsibilities of the Agreement, including the
employment of advisors and the delegation of ministerial duties to qualified
individuals.

 
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10.2
Claims Procedure and Arbitration. In the event that benefits under this
Agreement are not paid to the Director (or to his Beneficiary in the case of the
Director’s death) and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Administrator within sixty
(60) days from the date payments are refused. The Bank and its Board shall
review the written claim and, if the claim is denied, in whole or in part, they
shall provide in writing, within ninety (90) days of receipt of such claim,
their specific reasons for such denial, reference to the provisions of this
Agreement or the Joinder Agreement upon which the denial is based, and any
additional material or information necessary to perfect the claim. Such writing
by the Bank and its Board shall further indicate the additional steps which must
be undertaken by claimants if an additional review of the claim denial is
desired.

 
If claimants desire a second review, they shall notify the Administrator in
writing within sixty (60) days of the first claim denial. Claimants may review
this Agreement, the Joinder Agreement or any documents relating thereto and
submit any issues and comments, in writing, they may feel appropriate. In its
sole discretion, the Administrator shall then review the second claim and
provide a written decision within sixty (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 or the Joinder Agreement upon
which the decision is based.
 
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If claimants continue to dispute the benefit denial based upon completed
performance of this Agreement and the Joinder Agreement or the meaning and
effect of the terms and conditions thereof, then claimants may submit the
dispute to a Board of Arbitration for final arbitration. Said Board shall
consist of one member selected by the claimant, one member selected by the Bank,
and the third member selected by the first two members. The Board shall operate
under any generally recognized set of arbitration rules. The parties hereto
agree that they, their heirs, personal representatives, successors and assigns
shall be bound by the decision of such Board with respect to any controversy
properly submitted to it for determination.
 
SECTION XI
 
MISCELLANEOUS
 
11.1
No Effect on Directorship Rights. Nothing contained herein will confer upon the
Director the right to be retained in the service of the Bank nor limit the right
of the Bank to discharge or otherwise deal with the Director without regard to
the existence of the Agreement. Pursuant to 12 C.F.R. § 563.39(b), the following
conditions shall apply to this Agreement:

 
 
(1)
The Bank’s Board of Directors may remove the Director at any time, but any
removal by the Bank’s Board of Directors other than removal for Cause shall not
prejudice the Director’s vested right to compensation or other benefits under
the contract. As provided in Section 4.4, the Director shall be paid the balance
of his Elective Contribution Account in a lump sum within thirty (30) days of
his removal in the event he is removed for Cause. He shall have no right to
receive additional compensation or other benefits for any period after removal
for Cause.

 
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(2)
If the Director is suspended and/or temporarily prohibited from participating in
the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or
(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1))
the Bank’s obligations under the contract shall be suspended (except vested
rights) as of the date of termination of service unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may in its
discretion (i) pay the Director all or part of the compensation withheld while
its contract obligations were suspended and (ii) reinstate (in whole or in part)
any of its obligations which were suspended.

 
 
(3)
If the Director is removed and/or permanently prohibited from participating in
the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or
(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) or (g)(1)),
all non-vested obligations of the Bank under the contract shall terminate as of
the effective date of the order, but vested rights of the Director shall not be
affected.

 
 
(4)
If the Bank is in default (as defined in Section 3(x)(1) of the Federal Deposit
Insurance Act), all non-vested obligations under the contract shall terminate as
of the date of default.

 
 
(5)
All non-vested obligations under the contract shall be terminated, except to the
extent determined that continuation of the contract is necessary for the
continued operation of the Bank:

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

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

 
Any rights of the parties that have already vested, (i.e., the balance of his
Elective Contribution Account), however, shall not be affected by such action.
 
11.2
State Law. The Agreement is established under, and will be construed according
to, the laws of the State of Indiana.

 
11.3
Severability. In the event that any of the provisions of this Agreement or
portion thereof, are held to be inoperative or invalid by any court of competent
jurisdiction, then: (1) insofar as is reasonable, effect will be given to the
intent manifested in the provisions held invalid or inoperative, and (2) the
validity and enforceability of the remaining provisions will not be affected
thereby.

 
11.4
Incapacity of Recipient. In the event the Director is declared incompetent and a
conservator or other person legally charged with the care of his person or
Estate is appointed, any benefits under the Agreement to which such, Director is
entitled shall be paid to such conservator or other person legally charged with
the care of his person or Estate. Except as provided above in this paragraph,
when the Bank’s Board of Directors, in its sole discretion, determines that the
Director is unable to manage his financial affairs, the Board may direct the
Bank to make distributions to any person for the benefit of the Director.

 
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11.5
Recovery of Estate Taxes. If the Director’s gross estate for federal estate tax
purposes includes any amount determined by reference to and on account of this
Agreement, and if the Beneficiary is other than the Director’s estate, then the
Director’s estate shall be entitled to recover from the Beneficiary receiving
such benefit under the terms of the Agreement, an amount by which the total
estate tax due by Director’s estate, exceeds the total estate tax which would
have been payable if the value of such benefit had not been included in the
Director’s gross estate.  If there is more than one person receiving such
benefit, the right of recovery shall be against each such person.  To the extent
permitted under Section 409A of the Code, in the event the Beneficiary has a
liability hereunder, the Beneficiary may petition the Association for a lump sum
payment in an amount not to exceed the Beneficiary’s liability hereunder.

 
11.6
Unclaimed Benefit. The Director shall keep the Bank informed of his current
address and the current address of his Beneficiaries. If the location of the
Director is not made known to the Bank within three (3) years after the date on
which any payment of the Deferred Compensation Benefit may be made, payment may
be made as though the Director had died at the end of the three (3) year period.
If, within one (1) additional year after such three (3) year period has elapsed,
or, within three (3) years after the actual death of the Director, whichever
occurs first, the Bank is unable to locate any Beneficiary of the Director, the
Bank may fully discharge its obligation by payment to the Estate.

 
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11.7
Limitations on Liability. Notwithstanding any of the preceding provisions of the
Agreement, neither the Bank, nor any individual acting as an employee or agent
of the Bank, or as a member of the Board of Directors shall be liable to the
Director or any other person for any claim, loss, liability or expense incurred
in connection with the Agreement.

 
11.8
Gender. Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the, masculine, feminine or
neuter gender, whenever they should so apply.

 
11.9
Affect on Other Corporate Benefit Agreements. Nothing contained in this
Agreement shall affect the right of the Director to participate in or be covered
by any qualified or non qualified pension, profit sharing, group, bonus or other
supplemental compensation or fringe benefit agreement constituting a part of the
Bank’s existing or future compensation structure.

 
11.10
Suicide. Notwithstanding anything to the contrary in this Agreement, the
benefits otherwise provided herein shall not be payable if the Director’s death
results from suicide, whether sane or insane, within twenty-six (26) months
after the execution of this Agreement. If the Director dies during this
twenty-six (26) month period due to suicide, the balance of his Elective
Contribution Account will be paid to the Director’s Beneficiary in a single
payment. Payment is to be made within thirty (30) days after the Director’s
death is declared a suicide by competent legal authority. Credit shall be given
to the Bank for payments made prior to determination of suicide.

 
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11.11
Headings. Headings and sub-headings in this Agreement are inserted for reference
and convenience only and shall not be deemed a part of this Agreement.

 
11.12
Reference to Controlled Group.  With respect to any benefit payable as a result
of termination of or separation from employment, termination of or separation
from employment shall be determined by reference to the Association and all
members of any controlled group (determined under Section 414(b) of the Code) or
trades or businesses under common control (determined under Section 414(c) of
the Code) that includes the Association.

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

 
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SECTION XII
 
AMENDMENT/REVOCATION
 
This Agreement shall not be amended, modified or revoked at any time, in whole
or part, without the mutual written consent of the Director and the Bank, and
such mutual consent shall be required even if the Director is no longer serving
the Bank as a member of the Board.  Notwithstanding anything to the contrary in
this Section XII, the present value of each Director’s benefit shall be
distributed immediately in a lump sum if this Agreement terminates in the
following circumstances:
 
 
(a)
Within thirty (30) days before or twelve (12) months after a change in the
ownership or effective control of the Bank, or in the ownership of a substantial
portion of the assets of the Bank as described in Section 409A(2)(A)(v) of the
Code, provided that termination of this Agreement was effected through an
irrevocable action taken by the Bank and provided further that all distributions
are made no later than twelve (12) months following such termination of the
Agreement and that all the Bank's arrangements which are substantially similar
to the Agreement are terminated so all Directors and any participants in the
similar arrangements are required to receive all amounts of compensation
deferred under the terminated arrangements within twelve (12) months of the
termination of the arrangements;

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

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

 
For purposes of this Article XII, “present value” shall be calculated in
accordance with Section 280G(d)(4) of the Code.
 
SECTION XIII
 
EXECUTION

13.1
This Agreement sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby, and any previous agreements or
understandings

 
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between the parties hereto regarding the subject matter hereof are merged into
and superseded by this Agreement.

 
13.2
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.

 
IN WITNESS WHEREOF, the Bank has caused this Agreement to be amended and
restated this 20th day of November, 2007.
 
 

   
RIVER VALLEY FINANCIAL BANK
                   
By:
/s/ Matthew P. Forrester             President, CEO    
(Title)

 
 
 

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