Exhibit 10.5
 
 
AMENDED AND RESTATED
1993 SUPPLEMENTAL RETIREMENT PLAN AGREEMENT

THIS AMENDED AND RESTATED 1993 SUPPLEMENTAL RETIREMENT PLAN AGREEMENT
(“Agreement”) was originally made and entered into as of October 27, 1993 and
previously amended and restated as of July 27, 2006 (the “Prior Agreement”) and
is hereby amended and restated as of December 17, 2008, by and between TierOne
Bank, a federally chartered savings bank with its principal office in Lincoln,
Nebraska (the “Bank”), and Gilbert G. Lundstrom, (the “Executive”).

The Agreement is intended to be an unfunded plan qualifying as a “top hat” plan
for purposes of Title I of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”), and for purposes of the Internal Revenue Code of 1986, as
amended (the “Code”).  The Agreement is being amended and restated in order to
comply with the requirements of Section 409A of the Code and the final
regulations issued by the IRS in April 2007.  No benefits payable under this
Agreement shall be deemed to be grandfathered for purposes of Section 409A of
the Code.
 
RECITALS

A.           The Executive is currently employed by the Bank pursuant to the
terms of a separate amended and restated Employment Agreement executed as of
December 17, 2008 (the “Employment Agreement”).

B.           The Bank recognizes the value of the services to be performed by
the Executive and wishes to encourage his continued employment.

C.           The Executive wishes to be assured that he will be entitled to a
certain minimum amount of additional compensation (a) if he becomes Disabled (as
defined in the Employment Agreement) while in the employ of the Bank; (b) for
some definite period of time from and after his Retirement (as defined below)
from active service with the Bank; or (c) that his family will be entitled to
such compensation from and after his death either while in the employ of the
Bank or after his Retirement.

D.           The parties hereto wish to provide the terms and conditions upon
which the Bank shall pay such additional compensation to the Executive after his
Disability or Retirement or to his designated beneficiary in event of his death.

E.           The Bank desires to amend and restate the Prior Agreement in order
to make changes to comply with Section 409A of the Code, as well as certain
other changes;

NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the parties agree as follows:

1.           Separation from Service.  In consideration of the Executive's
remaining in the employ of the Bank until his retirement after age sixty-five
(65), the Bank agrees that, from and after the Executive’s Separation from
Service, the Bank shall thereafter pay to the Executive an
 
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annual Supplemental Benefit (as defined herein) for a period of fifteen (15)
years from and after his Separation from Service, with the annual benefit
payable in twelve (12) equal monthly installments.  The first monthly
installment shall be paid on the first day of the month following the lapse of
six months after the date of his Separation from Service (or, if earlier, upon
the death of the Executive), and shall be followed by 179 monthly payments.  For
purposes of this Agreement, the term “Separation from Service” shall mean a
voluntary termination of the Executive’s services (whether as an employee or as
an independent contractor) to the Bank or TierOne Corporation (the
“Corporation”) (including companies which are deemed to be part of a controlled
group of corporations with the Bank and the Corporation for purposes of Treasury
Regulation §1.409A-1(h)) after age 65 for any reason other than death.  Whether
a Separation from Service has occurred shall be determined in accordance with
the requirements of Section 409A of the Code based on whether the facts and
circumstances indicate that the Bank, the Corporation 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 thirty-six (36) month period.
 
2.           Supplemental Benefit. For purposes of this Agreement, “Supplemental
Benefit” means an amount calculated as follows: (A) the average annual
compensation (excluding bonuses and incentive compensation) received by the
Executive from the Bank during the three years of employment affording the
highest such average; as reduced by (B) the annual amount paid under the Bank’s
qualified defined benefit pension plan or any disability insurance benefits
purchased by the Bank; and (C) multiplying such amount by 50% to determine the
benefit payable hereunder as a Supplemental Benefit.

3.           Death After Separation from Service.  The Bank further agrees that,
in the event of the Executive’s death after his Separation from Service but
prior to completing fifteen (15) years of monthly payments, the Bank will
continue to make Supplemental Benefit payments during the remainder of said
fifteen (15) year period to the Executive’s Beneficiary (as defined in the
Employment Agreement).

4.           Death Prior to Separation from Service.  The Bank agrees that, in
the event of the Executive’s death prior to his Separation from Service, the
Bank will make Supplemental Benefit payments for a fifteen (15) year period to
the Executive’s Beneficiary (as defined in the Employment Agreement), with the
monthly benefits determined as set forth in Sections 1 and 2 above and
commencing as of the first day of the month following his death.

5.           Noncompetition.  In consideration of the foregoing agreements of
the Bank and of the payments to be made by the Bank pursuant hereto, the
Executive hereby agrees that, so long as he remains in the active employ of 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.

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6.           Termination.  In the event that the employment of the Executive is
terminated for any reason other than Cause (as defined in the Employment
Agreement), the Bank agrees to fund a separate split dollar policy pursuant to
the Executive’s Split Dollar Agreement with the Bank dated January 2, 1994, as
amended (the “Split Dollar Agreement”) to the point of “N-Pay” and cause
ownership of such policy to be transferred if the policy is purchased in
accordance with the terms of the Split Dollar Agreement.  This payment is to be
made in one lump sum on the first day of the month following the lapse of six
months after the date the Executive’s employment terminates.  For purposes
hereof, “N-Pay” means that the cash value of dividend additions within the
policy, together with projected further dividends, are estimated to be
sufficient to pay all remaining additional premiums required by the terms of the
policy; provided, however, that if the future dividends actually paid are less
than the assumed dividends, the Bank will not be required to pay any deficiency.

7.           Other Benefits and Programs.  It is expressly understood by the
parties hereto that this Agreement relates exclusively to additional
compensation for the Executive’s services and any benefits payable under this
Agreement shall be independent of, and in addition to, any other benefits or
compensation payable under the Employment Agreement of even date herewith or as
may hereinafter be amended from time to time.  This Agreement does not involve a
reduction in salary or foregoing of an increase in future salary by the
Executive, nor does the Agreement in any way affect or reduce the proposed or
future compensation of the Executive.

8.           Benefits Not Funded.  This Agreement represents a contractual
promise to pay by the Bank, assuming satisfaction by the Executive of the
requirements herein, and that said promise to pay is not represented by notes or
secured or funded in any way.  If the Bank, solely at its own discretion, shall
acquire a life insurance or annuity contract or any other asset in connection
with the liabilities assumed by it hereunder, it is expressly agreed that
neither the Executive nor any Beneficiary hereunder shall have any right with
respect to, or claim against, such contract or other asset.  Such contract or
other asset shall not be held in any way as collateral security for the
fulfilling of the obligations of the Bank under this Agreement.  Such contract
or other asset shall be and remain a general, unpledged and unrestricted asset
of the Bank.  The Executive may unilaterally change the person or persons who
are to receive payments hereunder following his death, including provisions for
payment to a trust or trusts, notwithstanding any other provision hereof, by
written instrument executed by him and delivered to the Bank during the
Executive’s lifetime.

9.           Nonalienation of Benefits.  Neither the Executive, his designated
Beneficiary nor any other beneficiary under this Agreement shall have any power
or right to transfer, assign, anticipate, hypothecate or otherwise encumber any
part or all of the amounts payable by the Bank hereunder, nor shall such amounts
be subject to seizure by any creditor of any such beneficiary, by a proceeding
at law or in equity, and no such benefit shall be transferable by operation of
law in the event of bankruptcy, insolvency or death of the Executive, his
spouse, his designated beneficiary or any other beneficiary hereunder.  Any such
attempted assignment or transfer shall be void and shall terminate this
Agreement, and the Bank shall thereupon have no further liability hereunder.

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10.           Binding Effect.  This Agreement, and any amendment hereto, shall
be binding upon and inure to the benefit of the Bank, its successors and
assigns, and the Executive, and his beneficiaries, heirs, executors,
administrators and legal representatives.

11.           Amendment and Termination of the Agreement.  This Agreement
may  not be amended, altered or modified, except by a written instrument signed
by the parties hereto, or their respective successors or assigns, and may not
otherwise be amended or terminated except as provided in Section
12.  Notwithstanding anything in this Agreement to the contrary, the Board of
Directors of the Bank may amend in good faith any terms of this Agreement,
including retroactively, in order to comply with Section 409A of the Code.

12.           Effect of Amendment or Termination.

(a)           General.          No amendment or termination of the Agreement
shall directly or indirectly reduce the Executive’s benefit held hereunder as of
the effective date of such amendment or termination.  A termination of the
Agreement will not be a distributable event, except in the three circumstances
set forth in Section 12(b) below.

(b)           Termination.  Under no circumstances may the Agreement permit the
acceleration of the time or form of any payment under the Agreement prior to the
payment events specified herein, except as provided in this Section 12(b).  The
Bank may, in its discretion, elect to terminate the Agreement in any of the
following three circumstances and accelerate the payment of the entire unpaid
balance of the Participant’s vested benefits as of the date of such payment in
accordance with Section 409A of the Code, provided that in each case the action
taken complies with the applicable requirements set forth in Treasury Regulation
§1.409A-3(j)(4)(ix):

(i) 
 the Agreement is irrevocably terminated within the 30 days preceding a Change
in Control (as defined in the Employment Agreement) and (1) all arrangements
sponsored by the Bank and/or the Corporation and any successors immediately
following the Change in Control that would be aggregated with the Agreement
under Treasury Regulation §1.409A-1(c)(2) are terminated with respect to each
participant that experienced the Change in Control event, and (2) the Executive
and all participants under the other aggregated arrangements receive all of
their benefits under the terminated arrangements within 12 months of the date
that all necessary action to irrevocably terminate the Agreement and the other
aggregated arrangements is taken,

(ii) 
 the Agreement is irrevocably terminated at a time that is not prominate to a
downturn in the financial health of the Bank or the Corporation and (1) all
arrangements sponsored by the Bank and/or the Corporation that would be
aggregated with the Agreement under Treasury Regulation §1.409A-1(c) if the
Executive participated in such arrangements are terminated, (2) no payments are
made within 12 months of the date the Bank or the Corporation take all necessary
action to irrevocably terminate

 
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the arrangements, other than payments that would be payable under the terms of
the arrangements if the termination had not occurred, (3) all payments are made
within 24 months of the date the Bank and the Corporation take all necessary
action to irrevocably terminate the arrangements, and (4) neither the Bank nor
the Corporation adopts a new arrangement that would be aggregated with the
Agreement under Treasury Regulation §1.409A-1(c) if the Executive participated
in both arrangements, at any time within three years following the date the Bank
takes all necessary action to irrevocably terminate the Agreement, or

(iii)  
the Agreement is terminated within 12 months of a corporate dissolution taxed
under Section 331 of the Code, or with the approval of a bankruptcy court
pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred by the
Executive under the Agreement are included in the Executive’s gross income in
the later of (1) the calendar year in which the termination of the Agreement
occurs, or (2) the first calendar year in which the payment is administratively
practicable.

13.           Scope of Claims Procedures.  This Section is based on final
regulations issued by the Department of Labor and published in the Federal
Register on November 21, 2000 and codified at 29 C.F.R. Section 2560.503-1.  If
any provision of this Section conflicts with the requirements of those
regulations, the requirements of those regulations will prevail.

13.1          Initial Claim.  The Executive or any beneficiary who believes he
or she is entitled to any benefit under the Plan (a “Claimant”) may file a claim
with the Bank.  The Bank shall review the claim itself or appoint an individual
or an entity to review the claim.

(a)   Initial Decision.  The Claimant shall be notified within ninety (90) days
after the claim is filed whether the claim is allowed or denied, unless the
Claimant receives written notice from the Bank or appointee of the Bank prior to
the end of the ninety (90) day period stating that special circumstances require
an extension of the time for decision, with such extension not to extend beyond
the day which is one hundred eighty (180) days after the day the claim is filed.

(b)   Manner and Content of Denial of Initial Claims.  If the Bank denies a
claim, it must provide to the Claimant, in writing or by electronic
communication:

(i) 
The specific reasons for the denial;

(ii) 
A reference to the provision of the Agreement upon which the denial is based;

(iii) 
A description of any additional information or material that the Claimant must
provide in order to perfect the claim;

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(iv) 
An explanation of why such additional material or information is necessary;

(v) 
Notice that the Claimant has a right to request a review of the claim denial and
information on the steps to be taken if the Claimant wishes to request a review
of the claim denial; and

(vi) 
A statement of the Claimant’s right to bring a civil action under Section 502(a)
of ERISA following a denial on review of the initial denial.

13.2          Review Procedures.

(a)   Request For Review.  A request for review of a denied claim must be made
in writing to the Bank within sixty (60) days after receiving notice of
denial.  The decision upon review will be made within sixty (60) days after the
Bank’s receipt of a request for review, unless special circumstances require an
extension of time for processing, in which case a decision will be rendered not
later than one hundred twenty (120) days after receipt of a request for
review.  A notice of such an extension must be provided to the Claimant within
the initial sixty (60) day period and must explain the special circumstances and
provide an expected date of decision.

The reviewer shall afford the Claimant an opportunity to review and receive,
without charge, all relevant documents, information and records and to submit
issues and comments in writing to the Bank.  The reviewer shall take into
account all comments, documents, records and other information submitted by the
Claimant relating to the claim regardless of whether the information was
submitted or considered in the initial benefit determination.

(b)   Manner and Content of Notice of Decision on Review.  Upon completion of
its review of an adverse claim determination, the Bank will give the Claimant,
in writing or by electronic notification, a notice containing:

(i) 
its decision;

(ii) 
the specific reasons for the decision;

(iii) 
the relevant provisions of the Agreement on which its decision is based;

(iv) 
a statement that the Claimant is entitled to receive, upon request and without
charge, reasonable access to, and copies of, all documents, records and other
information in the Bank’s files which are relevant to the Claimant’s claim for
benefits;

 
(v)
a statement describing the Claimant’s right to bring an action for judicial
review under Section 502(a) of ERISA; and

 
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(vi) 
if an internal rule, guideline, protocol or other similar criterion was relied
upon in making the adverse determination on review, a statement that a copy of
the rule, guideline, protocol or other similar criterion will be provided
without charge to the Claimant upon request.

13.3          Calculation of Time Periods.  For purposes of the time periods
specified in this Section, the period of time during which a benefit
determination is required to be made begins at the time a claim is filed in
accordance with the procedures herein without regard to whether all the
information necessary to make a decision accompanies the claim.  If a period of
time is extended due to a Claimant’s failure to submit all information
necessary, the period for making the determination shall be tolled from the date
the notification is sent to the Claimant until the date the Claimant responds.

13.4          Legal Action.  If the Bank fails to follow the claims procedures
required by this Section, a Claimant shall be deemed to have exhausted the
administrative remedies available under the Agreement and shall be entitled to
pursue any available remedy under Section 502(a) of ERISA on the basis that the
Agreement has failed to provide a reasonable claims procedure that would yield a
decision on the merits of the claim.  A Claimant’s compliance with the foregoing
provisions of this Section is a mandatory requisite to a Claimant’s right to
commence any legal action with respect to any claims for benefits under the
Agreement.

13.5          Review by the Bank.  Notwithstanding anything in this Agreement to
the contrary, the Bank may determine, in its sole and absolute discretion, to
review any claim for benefits submitted by a Claimant under this Agreement.

14.           Notice.  Any notice, consent or demand required or permitted to be
given under the provisions of this Agreement shall be in writing, and shall be
signed by the party giving or making the same.  If such notice, consent or
demand is mailed to a party hereto, it shall be sent by United States mail,
postage prepaid, addressed to such party’s last known address as shown on the
records of the Bank.  The date of such mailing shall be deemed the date of
notice, consent or demand.

15.           Applicable Law.  This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws of the
State of Nebraska.
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
duplicate, as of the 17th day of December 2008.
 
ATTEST:
TIERONE BANK
 
 
 
 
 
 
/s/ Judith A. Klinkman
By: /s/  James. A. Laphen
Judith A. Klinkman
Name: James A. Laphen
Assistant Secretary
Title President & COO
 
 
 
 
 
/s/ Gilbert G. Lundstrom
 
Gilbert G. Lundstrom, Executive
 
 

 
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