Exhibit No 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “Agreement”), entered into and effective as of
the 1st day of January, 2009 (the “Effective Date”), by and between First
Financial Bank, N.A. (the “Bank”) and Norman L. Lowery (the “Employee”).
WHEREAS, the Employee has heretofore been employed by the Bank as its President
and Chief Executive Officer and has performed valuable services for the Bank;
and
WHEREAS, the Board of Directors of the Bank (the “Board”) believes it is in the
best interest of the Bank to enter into this Agreement with the Employee in
order to assure continuity of management of the Bank to reinforce and encourage
the continued attention and dedication of the Employee to his assigned duties;
and
WHEREAS, the parties desire, by this writing, to set forth the continuing
employment relationship between the Bank and the Employee.
NOW, THEREFORE, in consideration of the premises contained herein and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Employee and the Bank agree as follows:
1. Employment. The Employee is employed as the President and Chief Executive
Officer of the Bank. The Employee shall render such administrative and
management services for the Bank as are currently rendered and as are currently
performed by persons situated in a similar executive capacity. The Employee
shall also promote, by entertainment or otherwise, as and to the extent
permitted by law, the business of the Bank. The Employee’s other duties shall be
such as the Board may, from time to time, reasonably direct, including normal
duties as an officer of the Bank. During the term of this Agreement, the
Employee shall be nominated and elected to serve as a Director of the Bank or of
any successor to the Bank.
2. Base Compensation. The Bank agrees to pay the Employee during the term of
this Agreement a base salary at the rate of $485,508.83 per annum, payable in
cash not less frequently than monthly. Such base salary shall be effective and
calculated commencing as of the Effective Date. The Bank may consider and
declare from time to time increases in the base salary it pays the Employee.
Prior to a Change in Control (as hereinafter defined), the Bank may also declare
decreases in the base salary it pays the Employee if the operating results of
the Bank are significantly less favorable than those for the fiscal year ending
December 31, 2001, and the Bank makes similar decreases in the base salary it
pays to other executive officers of the Bank. After a Change in Control, the
Bank shall consider and declare salary increases in base salary based upon the
following standards:
(a) Inflation;
(b) Adjustments to the base salaries of other senior management personnel;
(c) Past performance of the Employee; and
(d) The contribution which the Employee makes to the business and profits of the
Bank during the term of this Agreement.

 

 

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3. Bonuses. The Employee shall participate in any year end bonus granted to
other employees by the Board. The Employee shall further participate in an
equitable manner with all other senior management employees of the Bank in any
discretionary bonuses that the Board may award from time to time to the Bank’s
senior management employees. No other compensation provided for in this
Agreement shall be deemed a substitute for the Employee’s right to participate
in such discretionary bonuses.
4. Benefits.
(a) Participation in Retirement, Medical and Other Benefit Plans. During the
term of this Agreement, the Employee shall be eligible to participate in the
following benefit plans; group hospitalization, disability, health, dental, sick
leave, retirement, supplemental retirement, pension, 401(k), employee stock
ownership plan, and all other present or future qualified and/or nonqualified
plans provided by the Bank generally, or to executive officers of the Bank,
which benefits, taken as a whole, must be at least as favorable as those in
effect on the Effective Date, unless the continued operation of such plans or
changes in the accounting, legal or tax treatment of such plans would adversely
affect the Bank’s operating results or financial condition in a material way,
and the Board concludes that modifications to such plans are necessary to avoid
such adverse effects and such modifications apply consistently to all employees
of the Bank participating in the affected plans. In addition, the Employee shall
be eligible to participate in any fringe benefits which are or may become
available to the Bank’s senior management employees, including, for example, any
stock option or incentive compensation (including, but not limited to the First
Financial Corporation 2001 Long-Term Incentive Plan and 2005 Long-Term Incentive
Plan (“LTIP”)) or performance-based plans, any insurance programs (including,
but not limited to, any group and executive life insurance programs), and any
other benefits which are commensurate with the responsibilities and functions to
be performed by the Employee under this Agreement. All the employee benefits
referenced in this subsection 4(a) are collectively referred to hereinafter as
“Employee Benefits.”
(b) Benefits After Retirement. Upon retirement of the Employee during the term
of this Agreement, the Bank agrees to continue, at no greater cost to Employee
than is generally allocated to all employees, full coverage for the Employee,
his spouse and his children living in his household under the health, life and
disability plans as adopted by the Bank which shall be no less favorable than
those in effect on the Effective Date of this Agreement. The Bank agrees to
continue such health coverage until both the Employee and his spouse are
eligible for coverage by Medicare. When both the Employee and his spouse become
eligible for Medicare coverage, the Bank agrees to pay for supplemental coverage
for both the Employee and his spouse until the death of the Employee and his
spouse. The Employee shall be entitled to a life insurance policy on his life in
the maximum amount established by the group life insurance plan from time to
time which amount shall be no less than the limit on the Effective Date of three
times his annual salary (subject to a $350,000 maximum), provided at the Bank’s
cost. The Employee shall also be entitled to a life insurance policy on his life
in the amount established by the Bank’s insurance program for executive officers
from time to time. The Bank shall continue to pay to the Employee the annual
premiums, which are required to keep the life insurance policy in force, on
behalf of the Employee pursuant to the Bank’s insurance program for executive
officers.

 

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(c) Expenses and Membership. The Employee shall be reimbursed for all reasonable
out-of-pocket business expenses which he shall incur in connection with his
services under this Agreement, upon substantiation of such expenses in
accordance with the policies of the Bank. In addition, the Employee shall be
reimbursed for all reasonable out-of-pocket expenses incurred by him to satisfy
his continuing legal education requirements for his license to practice law in
the State of Indiana. So long as the Employee is employed by the Bank pursuant
to this Agreement, the Employee shall be entitled to continue his memberships in
the American, Indiana and Terre Haute Bar Associations, the American Association
for Justice and the Indiana Trial Lawyers Association and the Country Club of
Terre Haute, and Bank shall continue to pay or reimburse the Employee for the
dues and assessments for such memberships.
(d) Automobile. So long as the Employee is employed by the Bank pursuant to this
Agreement, the Employee shall be entitled to continue to use a Bank-owned
automobile of commensurate quality and value as that presently used by him on
the same terms and conditions in effect with respect to such use on the
Effective Date of this Agreement. The Bank shall provide and pay the premiums
for full insurance coverage on the automobile. Such insurance coverage shall be
no less than the coverage provided on the Effective Date of this Agreement. The
Bank shall also pay for the cost of maintenance and repair of the automobile.
All benefits referenced in this subsection 4(d) are collectively referred to
hereinafter as “Automobile Benefits.”
(e) Vacation, Sick Leave and Disability. The Employee shall be entitled to 30
days vacation annually and shall be entitled to the same sick leave and
disability leave as other employees of the Bank.
The Employee shall not receive any additional compensation from the Bank on
account of his failure to take a vacation or sick leave, and the Employee shall
not accumulate unused vacation or sick leave from one fiscal year to the next,
except in either case to the extent authorized by the Board or permitted for
other employees of the Bank.
In addition to the aforesaid paid vacations, the Employee shall be entitled,
without loss of pay, to absent himself voluntarily from the performance of his
employment with the Bank for such additional periods of time and for such valid
and legitimate reasons as the Board may in its discretion determine and to
attend the continuing legal education seminars contemplated by subsection 4(c)
hereof. Further, the Board may grant to the Employee a leave or leaves of
absence, with or without pay, at such time or times and upon such terms and
conditions as such Board in its discretion may determine.
(f) Other Policies. All other matters relating to the employment of the Employee
by the Bank not specifically addressed in this Agreement shall be subject to the
general policies regarding employees of the Bank as in effect from time to time.

 

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5. Term of Employment. The Bank hereby employs the Employee, and the Employee
hereby accepts such employment under the terms of this Agreement, for the period
commencing on the Effective Date and ending sixty months thereafter (or such
earlier date as is determined in accordance with Section 8). Additionally, on
each annual anniversary date from the Effective Date, the Employee’s term of
employment shall be extended for an additional one-year period beyond the then
effective expiration date, provided the Board determines in a duly adopted
resolution that this Agreement shall be extended. Only those members of the
Board who have no personal interest in this Agreement shall discuss and vote on
the approval, subsequent review and extension of this Agreement. The initial
term of this Agreement and all extensions thereof are hereinafter referred to
individually and collectively as the “Term.”
6. Covenants.
(a) Loyalty.
(i) During the period of his employment hereunder and except for illnesses,
reasonable vacation periods, and reasonable leaves of absence, the Employee
shall devote all of his full business time, attention, skill and efforts to the
faithful performance of his duties hereunder; provided, however, from time to
time, the Employee may serve on the Boards of Directors of, and hold any other
offices or positions in, companies or organizations, and may perform legal
services either directly or as a result of an of counsel or analogous position
with a law firm for clients which will not present any conflict of interest with
the Bank or any of its subsidiaries or affiliates, or unfavorably affect the
performance of Employee’s duties pursuant to this Agreement, or will not violate
any applicable statute or regulation. “Full business time” is hereby defined as
that amount of time usually devoted to like companies by similarly situated
executive officers. During the term of his employment under this Agreement, the
Employee shall not engage in any business or activity contrary to the business
affairs or interests of the Bank, or be gainfully employed in any other position
or job other than as provided above.
(ii) Nothing contained in this Section shall be deemed to prevent or limit the
Employee’s right to invest in the capital stock or other securities of any
business dissimilar from that of the Bank, or, solely as a passive or minority
investor, in any business.
(b) Nonsolicitation. The Employee hereby understands and acknowledges that, by
virtue of his position with the Bank, he will have advantageous familiarity and
personal contacts with the Bank’s customers, wherever located, and the business,
operations and affairs of the Bank. Accordingly, while the Employee is employed
by the Bank and for a period of one year after termination of the Employee’s
employment with the Bank for any reason (whether with or without cause or
whether by the Bank or the Employee) or the expiration of the Term, the Employee
shall not, directly or indirectly, or individually or jointly, (i) solicit any
non-legal business of any party which is a customer of the Bank at the time of
such termination or any party which was a customer of the Bank during the one
year period immediately preceding such termination, (ii) request or advise any
customers or suppliers of the Bank to terminate, reduce, limit or change their
business or relationship with the Bank, or (iii) induce, request or attempt to
influence any employee of the Bank to terminate his employment with the Bank,
unless such actions are taken in connection with Employee engaging in the
practice of law.

 

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For purposes of this Agreement, the term “solicit” means any direct or indirect
communication of any kind whatsoever, regardless of by whom initiated, which
encourages or requests any person or entity, in any manner, to cease doing
business with the Bank.
(c) Noncompetition. During the period of his employment hereunder, and for a
period of two years following the termination hereof, the Employee shall not,
directly or indirectly:
(i) As owner, officer, director, stockholder, investor, proprietor, organizer or
otherwise, engage in the same trade or business as the Bank, as conducted on the
date hereof, which would conflict with the interests of the Bank or in a trade
or business competitive with that of the Bank, which would conflict with the
interests of the Bank, as conducted on the date hereof; or
(ii) Offer or provide employment (whether such employment is with the Employee
or any other business or enterprise), either on a full-time or part-time or
consulting basis, to any person who then currently is, or who within one
(1) year prior to such offer or provision of employment has been, a
management-level employee of the Bank. This subsection 6(c)(ii) shall only apply
in the event the Employee voluntarily terminates his employment with the Bank.
The restrictions contained in this paragraph upon the activities of the Employee
following termination of employment shall be limited to the following geographic
areas (hereinafter referred to as “Restricted Geographical Area”):
(1) Terre Haute, Indiana; and
(2) The thirty mile radius of Terre Haute, Indiana.
Nothing contained in this Section 6 shall prevent or restrict the Employee from
engaging in the practice of law, including within the Restricted Geographical
Area. In addition, nothing contained in this subsection shall prevent or limit
the Employee’s right to invest in the capital stock or other securities of any
business dissimilar from that of the Bank, or, solely as a passive or minority
investor, in any business.

 

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If the Employee does not comply with the provisions of this Section, the two
year period of non-competition provided herein shall be tolled and deemed not to
run during any period(s) of noncompliance, the intention of the parties being to
provide two full years of non-competition by the Employee after the termination
or expiration of this Agreement.
(d) Nondisclosure. The term “Confidential Information” as used herein shall mean
any and all customer lists, computer hardware, software and related material,
trade secrets (as defined in I.C. 24-2-3-2), know-how, skills, knowledge, ideas,
knowledge of customer’s commercial requirements, pricing methods, sales and
marketing techniques, dealer relationships and agreements, financial
information, intellectual property, codes, research, development, research and
development programs, processes, documentation, or devices used in or pertaining
to the Bank’s business (i) which relate in any way to the Bank’s business,
products or processes; or (ii) which are discovered, conceived, developed or
reduced to practice by the Employee, either alone or with others either during
the Term, at the Bank’s expense, or on the Bank’s premises.
(i) During the course of his services hereunder the Employee may become
knowledgeable about, or become in possession of, Confidential Information. If
such Confidential Information were to be divulged or become known to any
competitor of the Bank or to any other person outside the employ of the Bank, or
if the Employee were to consent to be employed by any competitor of the Bank or
to engage in competition with the Bank, the Bank would be irreparably harmed. In
addition, the Employee has or may develop relationships with the Bank’s
customers which could be used to solicit the business of such customers away
from the Bank. The Bank and the Employee have entered into this Agreement to
guard against such potential harm.
(ii) The Employee shall not, directly or indirectly, use any Confidential
Information for any purpose other than the benefit of the Bank or communicate,
deliver, exhibit or provide any Confidential Information to any person, firm,
partnership, corporation, organization or entity, except as required in the
normal course of the Employee’s service as a consultant or as an employee of the
Bank. The covenant contained in this subsection shall be binding upon the
Employee during the Term and following the termination hereof until either
(i) such Confidential Information becomes obsolete; or (ii) such Confidential
Information becomes generally known in the Bank’s trade or industry by means
other than a breach of this covenant.
(iii) The Employee agrees that all Confidential Information and all records,
documents and materials relating to such Confidential Information, shall be and
remain the sole and exclusive property of the Bank.

 

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(e) Remedies. The Employee agrees that the Bank will suffer irreparable damage
and injury and will not have an adequate remedy at law in the event of any
breach by the Employee of any provision of this Section. Accordingly, in the
event the Bank seeks, under law or in equity, a temporary restraining order,
permanent injunction or a decree of specific performance of the provisions of
this Section, no bond or other security shall be required. The Bank shall be
entitled to recover from the Employee, reasonable attorneys’ fees and expenses
incurred in any action wherein the Bank successfully enforces any of the
provisions of this Section against the breach or threatened breach of those
provisions by the Employee. The remedies described in this Section are not
exclusive and are in addition to all other remedies the Bank may have at law, in
equity, or otherwise.
(i) The Employee and the Bank acknowledge and agree that in the event of
termination of the Employee’s employment for any reason whatsoever, the Employee
can obtain other engagements or employment of a kind and nature similar to that
contemplated herein outside the Restricted Geographical Area and that the
issuance of an injunction to enforce the provisions of this Section will not
prevent him from earning a livelihood.
(ii) The covenants on the part of the Employee contained in this Section are
essential terms and conditions to the Bank entering into this Agreement, and
shall be construed as independent of any other provision in this Agreement.
(f) Surrender of Records. Upon termination of the Employee’s employment for any
reason, the Employee shall immediately surrender to the Bank any and all
computer hardware, software and related materials, records, notes, documents,
forms, manuals, photographs, instructions, lists, drawings, blueprints,
programs, diagrams or other written or printed material (including any and all
copies made at any time whatsoever) in his possession or control which pertain
to the business of the Bank or its affiliates including any Confidential
Information in the Employee’s personal notes, address books, calendars,
rolodexes, personal data assistants, etc.
7. Standards. The Employee shall perform his duties under this Agreement in
accordance with such reasonable standards as the Board may establish from time
to time. The Bank will provide the Employee with the working facilities and
staff commensurate with his position or positions and necessary or advisable for
him to perform his duties.
8. Termination and Termination Pay. Subject to Section 10 hereof, the Employee’s
employment hereunder may be terminated under the following circumstances:
(a) Death. The Employee’s employment shall terminate upon his death during the
Term of this Agreement, in which event the Employee’s estate or designated
beneficiaries shall be entitled to receive the base salary, bonuses, vested
rights, and Employee Benefits due the Employee through the last day of the
calendar month in which his death occurred. Any benefits payable under
insurance, health, retirement, bonus, incentive (including, but not limited to,
the LTIP), performance or other plans as a result of the Employee’s
participation in such plans through such date shall be paid when and as due
under those plans.

 

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(b) Disability.
(i) The Bank may terminate the Employee’s employment, as a result of the
Employee’s Disability, in a manner consistent with the Bank’s and the Employee’s
rights and obligations under the Americans with Disabilities Act or other
applicable state and federal laws concerning disability. For the purpose of this
Agreement, “Disability” means the Employee is:
(1) Unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, or
(2) By reason of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan covering
employees of the Employer.
(ii) During any period that the Employee shall receive disability benefits and
to the extent that the Employee shall be physically and mentally able to do so,
he shall furnish such information, assistance and documents so as to assist in
the continued ongoing business of the Bank.
(iii) In the event of Employee’s termination of employment by the Bank due to
Disability, the Employee shall be entitled to receive the base salary, bonuses,
vested rights, and Employee Benefits due the Employee through his date of
termination. Any benefits payable under insurance, health, retirement, bonus,
incentive (including, but not limited to, the LTIP), performance or other plans
as a result of Employee’s participation in such plans through such date of
termination shall be paid when and as due under those plans.
(c) Just Cause. The Board may, by written notice to the Employee, immediately
terminate his employment at any time, for Just Cause. The Employee shall have no
right to receive any base salary, bonuses or other Employee Benefits, except as
provided by law, whatsoever for any period after his termination for Just Cause.
However, the vested rights of the Employee as of his date of termination shall
not be affected. Any benefits payable under insurance, health, retirement,
bonus, incentive (including, but not limited to, the LTIP), performance or other
plans as a result of Employee’s participation in such plans through such date of
termination shall be paid when and as due under those plans. Termination for
“Just Cause” shall mean termination because of:

 

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(i) An intentional act of fraud, embezzlement, theft, or personal dishonesty;
willful misconduct, or breach of fiduciary duty involving personal profit by the
Employee in the course of his employment or director service. No act or failure
to act shall be deemed to have been intentional or willful if it was due
primarily to an error in judgment or negligence. An act or failure to act shall
be considered intentional or willful if it is not in good faith and if it is
without a reasonable belief that the action or failure to act is in the best
interest of the Bank;
(ii) Intentional wrongful damage by the Employee to the business or property of
the Bank, causing material harm to the Bank;
(iii) Breach by the Employee of any confidentiality or non-disclosure agreement
in effect from time to time with the Bank;
(iv) Gross negligence or insubordination by the Employee in the performance of
his duties; or
(v) Removal or permanent prohibition of the Employee from participating in the
conduct of Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of
the Federal Deposit Insurance Act, 12 USC 1818(e)(4) and (g)(1).
Notwithstanding the foregoing, in the event of termination for Just Cause there
shall be delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Employee and an opportunity for the Employee, together
with the Employee’s counsel, to be heard before the Board), such meeting and the
opportunity to be heard to be held prior to, or as soon as reasonably
practicable following, termination, but in no event later than 60 days following
such termination, finding that in the good faith opinion of the Board the
Employee was guilty of conduct constituting Just Cause and specifying the
particulars thereof in detail. If, following such meeting, the Employee is
reinstated, he shall be entitled to receive the base salary, bonuses, all
Employee Benefits, and all other fringe benefits provided for under this
Agreement for the period following termination and continuing through
reinstatement as though he was never terminated.
(d) Without Just Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time for a reason other than Just
Cause, in which event the Employee shall be entitled to receive the following
compensation and benefits (unless such termination occurs within the time period
set forth in subsection 10(a) hereof, in which event the benefits and
compensation provided for in Section 10 shall apply):
(i) The base salary provided pursuant to Section 2 hereof as in effect on the
date of termination, through the Expiration Date of this Agreement as determined
pursuant to Section 5 hereof (including any renewal or extension of this
Agreement) (the “Expiration Date”);

 

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(ii) An amount equal to the bonuses received by or payable to the Employee in
the calendar year prior to the calendar year in which the Employee is
terminated, for each year remaining through the Expiration Date; and
(iii) Cash reimbursement to the Employee in an amount equal to the cost to the
Employee (demonstrated by submission to the Bank of invoices, bills, or other
proof of payment by the Employee) of (A) all health insurance premiums for the
Employee, his spouse and child living in the Employee’s household and Medicare
supplement insurance, and life insurance (all as described in subsection 4(b));
(B) all other Employee Benefits (all as defined in subsection 4(a) excluding
payments under the LTIP which will be made in accordance with the terms and
conditions of the LTIP); and (C) professional and club dues, the cost of
Employee’s continuing legal education requirements (as described in subsection
4(c)), all Automobile Benefits (as defined in subsection 4(d)) and other
benefits which the Employee would otherwise have been eligible to participate in
or receive, through the Expiration Date, based upon the benefit levels
substantially equal to those that the Bank provided for the Employee at the date
of the Employee’s termination of employment. The Employee shall also be entitled
to receive an amount necessary to provide any cash payments received under this
subsection 8(d)(iii) net of all income and payroll taxes that would not have
been payable by the Employee had he continued participation in the benefit plan
or program instead of receiving cash reimbursement.
Notwithstanding the foregoing, but only to the extent required under federal
banking law, the amount payable under subsection 8(d) shall be reduced to the
extent that on the date of the Employee’s termination of employment, the present
value of the benefits payable under subsections 8(d)(i), (ii) and (iii) exceed
any limitation on severance benefits that is imposed by the Office of the
Comptroller of the Currency (the “OCC”) on such benefits.
All amounts payable to the Employee under subsections 8(d)(i) and (ii) shall be
paid in one lump sum within ten days of such termination. All amounts payable to
the Employee under subsection 8(d)(iii) shall be paid on the first day of each
month following the Employee’s termination of employment, in an amount equal to
the total reimbursable amount (demonstrated by invoices, bills or other proof of
payment submitted by the Employee). Such amounts must be submitted for
reimbursement no later than the earlier of (i) six months after the date such
amounts are paid by the Employee; or (ii) March 15th of the year following the
year in which the Employee paid the amount.
(e) Voluntary for Good Reason. The Employee may voluntarily terminate his
employment under this Agreement for Good Reason, and the Employee shall
thereupon be entitled to receive the same amount payable under subsections 8(d)
(i) and (ii) hereof, within 30 days following his date of termination and under
subsection 8(d)(iii) as provided in subsection 8(d). For purposes of this
Agreement, “Good Reason” means the occurrence of any of the following events,
which has not been consented to in advance by the Employee in writing (unless
such voluntary termination occurs within the time period set forth in subsection
10(b) hereof, in which event the benefits and compensation provided for in
Section 10 shall apply):

 

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(i) The requirement that the Employee move his personal residence;
(ii) A reduction of ten percent or more in the Employee’s base salary, unless
part of an institution-wide reduction and similar to the reduction in the base
salary of all other executive officers of the Bank;
(iii) The removal of the Employee from participation in any incentive
compensation (including, but not limited to, the LTIP) or performance-based
compensation plans or bonus plans unless the Bank terminates participation in
the plan or plans with respect to all other executive officers of the Bank;
(iv) The failure by the Bank to continue to provide the Employee with the base
salary, bonuses or benefits provided for under subsections 4(a), (c), (d) and
(e) of this Agreement, as the same may be increased from time to time, or with
benefits substantially similar to those provided to him under those Sections or
under any benefit plan or program in which the Employee now or hereafter becomes
eligible to participate, or the taking of any action by the Bank which would
directly or indirectly reduce any such benefits or deprive the Employee of any
such benefit enjoyed by him, unless part of an institution-wide reduction and
applied similarly to all other executive officers of the Bank:
(v) The assignment to the Employee of duties and responsibilities materially
different from those normally associated with his position as referenced in
Section 1;
(vi) A failure to elect or re-elect the Employee to the Board or a failure on
the part of First Financial Corporation to honor its obligation to nominate
Employee to the Board of Directors of First Financial Corporation;
(vii) A material diminution or reduction in the Employee’s responsibilities or
authority (including reporting responsibilities) in connection with his
employment with the Bank; or
(viii) A material reduction in the secretarial or administrative support of the
Employee.
Notwithstanding the foregoing, but only to the extent required under federal
banking law, the amount payable under this subsection shall be reduced to the
extent that on the date of the Employee’s termination of employment, the present
value of the benefits payable under subsections 8(d)(i), (ii) and (iii) exceed
any limitation on severance benefits that is imposed by the OCC on such
benefits.

 

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(f) Voluntary Termination by Employee. Subject to subsection 4(b) and Section
10, the Employee may voluntarily terminate employment with the Bank during the
term of this Agreement, upon at least 90 days’ prior written notice to the Board
of Directors, in which case the Employee shall receive only his base salary,
bonuses, vested rights and benefits up to the date of his termination, such
benefits to be paid when and as due under those plans (unless such termination
occurs pursuant to subsection 10(b) hereof, in which event the benefits, bonuses
and base salary provided for in subsection 10(a) shall apply).
(g) Termination or Suspension Under Federal Law.
(i) If the Employee is removed and/or permanently prohibited from participating
in the conduct of the Bank’s affairs by an order issued under Sections 8(e)(4)
or 8(g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1818(e)(4)
and (g)(1)), all obligations of the Bank under this Agreement shall terminate,
as of the effective date of the order, but vested rights of the Employee shall
not be affected.
(ii) If the Bank is in default (as defined in Section 3(x)(1) of the FDIA), all
obligations under this Agreement shall terminate as of the date of default; but
the vested rights of the Employee shall not be affected.
(iii) All obligations under this Agreement shall terminate, except to the extent
it is determined that the continuation of this Agreement is necessary for the
continued operation of the Bank; (A) by the OCC or its designee, at the time
that the Federal Deposit Insurance Corporation (“FDIC”) enters into an agreement
to provide assistance to or on behalf of the Bank under the authority contained
in Section 13(c) of FDIA; or (B) by the OCC, or its designee, at the time that
the OCC or its designee approves a supervisory merger to resolve problems
related to operation of the Bank or when the Bank is determined by the OCC to be
in an unsafe or unsound condition. Such action shall not affect any vested
rights of the Employee.
(iv) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA suspends
and/or temporarily prohibits the Employee from participating in the conduct of
the Bank’s affairs, the Bank’s obligations under this Agreement shall be
suspended as of the date of such service, unless stayed by appropriate
proceedings. However, the vested rights of the Employee as of the date of
suspension will not be affected. If the charges in the notice are dismissed, the
Bank may in its discretion (A) pay the Employee all or part of the compensation
withheld while its contract obligations were suspended, and (B) reinstate (in
whole or in part) any of its obligations which were suspended.
(h) Separation from Service. If the Employee qualifies as a Key Employee (as
defined in subsection 8(h)(i)) at the time of his Separation from Service (as
defined in subsection 8(h)(ii)), the Bank may not make a payment pursuant to
subsections 8(d) (disregarding subsection 8(d)(iii)(A)) and 8(e) and Section 10
(disregarding subsection 10(a)(1)(ii)(B)) earlier than six months following the
date of the Employee’s Separation from Service (or, if earlier, the date of the
Employee’s death). Payments to which the Key Employee would otherwise be
entitled during the first six months following the date of his Separation from
Service will be accumulated and paid to the Employee on the first day of the
seventh month following the Employee’s Separation from Service.

 

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(i) Key Employee means an employee who is:
(1) An officer of the Bank or First Financial Corporation having annual
compensation greater than $140,000;
(2) A five percent owner of the Bank or First Financial Corporation; or
(3) A one percent owner of the Bank or First Financial Corporation having an
annual compensation from the employer of more than $150,000. The $140,000 amount
in subsection 8(h)(i)(1) will be adjusted at the same time and in the same
manner as under Code Section 415(d), except that the base period shall be the
calendar quarter beginning July 1, 2001, and any increase under this sentence
which is not a multiple of $5,000 shall be rounded to the next lower multiple of
$5,000.
(ii) Separation from Service means the date on which the Employee dies, retires
or otherwise experiences a Termination of Employment with the Bank. Provided,
however, a Separation from Service does not occur if the Employee is on military
leave, sick leave or other bona fide leave of absence if the period of such
leave does not exceed six months, or if longer, so long as the Employee retains
a right to reemployment with the Bank under an applicable statute or by
contract. For purposes of this subsection 8(h)(ii), a leave of absence
constitutes a bona fide leave of absence only if there is a reasonable
expectation that the Employee will return to perform services for the Bank or
First Financial Corporation. If the period of leave exceeds six months and the
Employee does not retain the right to reemployment under an applicable statute
or by contract, the employment relationship is deemed to terminate on the first
date immediately following such six-month period. Notwithstanding the foregoing,
where a leave of absence is due to any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than six months, where such impairment
causes the Employee to be unable to perform the duties of his position of
employment or any substantially similar position of employment, a 29-month
period of absence may be substituted for such six-month period. The Employee
shall incur a “Termination of Employment” for purposes of this subsection
8(h)(ii) when a termination of employment has occurred under Treasury Regulation
1.409A-1(h)(ii).

 

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9. No Mitigation. The Employee shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.
10. Change in Control.
(a) Change in Control; Involuntary Termination.
(1) Notwithstanding any provision herein to the contrary, if the Employee’s
employment under this Agreement is terminated by the Bank, without the
Employee’s prior written consent and for a reason other than Just Cause, in
connection with or within 12 months after a Change in Control, as defined in
subsection 10(a)(4), the Employee shall be paid the greater of:
(i) The total amount payable under subsection 8(d); or
(ii) The product of 2.99 times the sum of: (A) his base salary in effect as of
the date of the Change in Control; (B) an amount equal to the bonuses received
by or payable to the Employee in the calendar year prior to the year in which
the Change in Control occurs; and (C) cash reimbursement to the Employee in an
amount equal to the cost to the Employee (demonstrated by submission to the Bank
of invoices, bills or other proof of payment by the Employee) of obtaining all
Employee Benefits (all as defined in subsection 4(a) excluding payments under
the LTIP which will be made in accordance with the terms and conditions of the
LTIP), health insurance premiums for the Employee, his spouse and child living
in the Employee’s household, Medicare supplement insurance, life insurance (all
as described in subsection 4(b)), professional and club dues, the cost of
Employee’s continuing legal education requirements (all as described in
subsection 4(c)), all Automobile Benefits (as defined in subsection 4(d)) and
other benefits which the Employee would otherwise have been eligible to
participate in or receive, through the Expiration Date, based upon the benefit
levels substantially equal to those that the Bank provided for the Employee at
the date of the Employee’s termination of employment. The Employee shall also be
entitled to receive an amount necessary to provide any cash payments received
under this subsection 10(a)(ii) net of all income and payroll taxes that would
not have been payable by the Employee had he continued participation in the
benefit plan or program instead of receiving cash reimbursement.
(2) To the extent payments received based on the Employee’s termination of
employment in connection with a Change in Control, or within 12 months after a
Change in Control are considered “excess parachute payments” pursuant to the
Code Section 280G, the provisions of “Internal Revenue Code Section 280G
Gross-Up” below shall apply.

 

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(3) Internal Revenue Code Section 280G Gross-Up.
(i) Additional Payment to Account for Excise Taxes. If, as a result of a
termination of employment in connection with a Change in Control, or with
12 months after a Change in Control, the Employee becomes entitled to the amount
payable under subsection 10(a), or under any other benefit, compensation, or
incentive plan (including, but not limited to, the LTIP) or arrangement of or
with the Bank or First Financial Corporation (collectively, the “Total
Benefits”), and if any part of the Total Benefits is subject to the Excise Tax
under Code Sections 280G and 4999 (the “Excise Tax”), the Bank or First
Financial Corporation shall pay to the Employee the following additional
amounts, consisting of (A) a payment equal to the Excise Tax payable by the
Employee on the Total Benefits under Code Section 4999 (the “Excise Tax
Payment”), and (B) a payment equal to the amount necessary to provide the Excise
Tax Payment net of all income, payroll and excise taxes. Together, the
additional amounts described in clauses (A) and (B) are referred to herein as
the “Gross-Up Payments.”
(ii) Calculating the Excise Tax. Determination of whether any of the Total
Benefits will be subject to the Excise Tax and the determination of the amount
of the Excise Tax shall be made in accordance with the following:
(A) Determination of Parachute Payments Subject to the Excise Tax. Any payments
or benefits received or to be received by the Employee in connection with a
Change in Control or the Employee’s termination of employment in connection with
a Change in Control, or within 12 months after a Change in Control (whether
under the terms of this Agreement or any benefit plan or arrangement with First
Financial Corporation or the Bank) shall be treated as “parachute payments”
within the meaning of Code Section 280G(b)(2), and all “excess parachute
payments” within the meaning of Code Section 280G(b)(1) shall be treated as
subject to the Excise Tax, unless in the opinion of the nationally-recognized
certified public accounting firm, retained by the Bank or First Financial
Corporation as of the date immediately before the Change in Control (the
“Accounting Firm”), such payments or benefits do not constitute, in whole or in
part, parachute payments, or such excess parachute payments represent, in whole
or in part, reasonable compensation for services actually rendered within the
meaning of Code Section 280G(b)(4) or are otherwise not subject to the Excise
Tax.

 

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(B) Calculation of Benefits Subject to Excise Tax. The amount of the Total
Benefits that shall be treated as subject to the Excise Tax shall be equal to
the lesser of (1) the total amount of the Total Benefits reduced by the amount
of such Total Benefits that in the opinion of the Accounting Firm are not
parachute payments, or (2) the amount of excess parachute payments within the
meaning of Code Section 280G(b)(1) (after applying clause (A), above).
(C) Value of Non-cash Benefits and Deferred Payment. The value of any non-cash
benefits or any deferred payment or benefit shall be determined by the
Accounting Firm in accordance with the principles of Code Sections 280G(d)(3)
and (4).
(iii) Assumed Marginal Income Tax Rate. For purposes of determining the amount
of the Gross-Up Payments, the Employee shall be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation in the calendar
years in which the Gross-Up Payments are to be made and state and local income
taxes at the highest marginal rate of taxation in the state and locality of the
Employee’s residence on the date on which such gross up payments are to be made,
net of the reduction in federal income taxes that can be obtained from deduction
of such state and local taxes (calculated by assuming that any reduction under
Code Section 68 in the amount of itemized deductions allowable to the Employee
applies first to reduce the amount of such state and local income taxes that
would otherwise be deductible by the Employee, and applicable federal FICA and
Medicare withholding taxes.)
(iv) The Accounting Firm Shall Determine Whether a Gross-Up Payment is Required.
Subject to paragraphs (i) through (iii) above, all determinations required to be
made under paragraphs (i) through (viii), including whether and when a Gross-Up
Payment is required, the amount of the Gross-Up Payment and the assumptions to
be used to arrive at the determination (collectively, the “Determination”),
shall be made by the Accounting Firm. The Accounting Firm shall provide detailed
supporting calculations both to the Bank or First Financial Corporation and to
the Employee within 15 business days after the Determination has been made, or
such earlier time as is requested by the Bank, First Financial Corporation or
the Employee.
(v) Fees and Expenses of the Accounting Firm and Agreement with the Accounting
Firm. All fees and expenses of the Accounting Firm shall be borne solely by the
Bank or First Financial Corporation.

 

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(vi) Accounting Firm’s Opinion. If the Accounting Firm determines that no Excise
Tax is payable by the Employee, the Accounting Firm shall furnish the Employee
with a written opinion to that effect, and to the effect that failure to report
Excise Tax, if any, on the Employee’s applicable federal income tax return will
not result in the imposition of a negligence or similar penalty.
(vii) Accounting Firm’s Determination is Binding. The Determination by the
Accounting Firm shall be binding on the Bank, First Financial Corporation and
the Employee.
(viii) Underpayment and Overpayment. Because of the uncertainty in determining
whether any of the Total Benefits will be subject to the Excise Tax at the time
of the Determination, it is possible that Gross-Up Payments that should have
been made will not have been made by the Bank or First Financial Corporation
(“Underpayment”), or that Gross-Up Payments will be made that should not have
been made by the Bank or First Financial Corporation (“Overpayment”).
If, after a Determination by the Accounting Firm, the Employee is required to
make a payment of additional Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred. The Underpayment (together with
any interest and penalties imposed by the Internal Revenue Service shall be paid
promptly by the Bank or First Financial Corporation to or for the benefit of the
Employee.
If the amount of the Gross-Up Payments exceeds the amount necessary to reimburse
the Employee for his Excise Tax, the Accounting Firm shall determine the amount
of the Overpayment that has been made. The Overpayment shall be repaid promptly
by the Employee. Provided that his expenses are reimbursed by the Bank or First
Financial Corporation, the Employee shall cooperate with any reasonable requests
by the Bank or First Financial Corporation in any contests or disputes with the
Internal Revenue Service relating to the Excise Tax.
(ix) Accounting Firm Conflict of Interest. If the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control, the Employee may appoint another nationally recognized certified
public accounting firm to make the Determinations required hereunder (in which
case the term “Accounting Firm” as used herein shall be deemed to refer to the
accounting firm appointed by the Employee under this paragraph). The Bank or
First Financial Corporation shall pay all fees and expenses of the Accounting
Firm appointed by the Employee.

 

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(4) “Change in Control” shall be deemed to have occurred if one of the following
events takes place:
(i) Change in Ownership. A change in the ownership of the Bank or First
Financial Corporation occurs on the date that any person, or group of persons,
as defined below, acquires ownership of stock of the Bank or First Financial
Corporation that, together with stock held by the person or group, constitutes
more than 50 percent of the total fair market value or total voting power of the
stock of the Bank or First Financial Corporation. However, if any person or
group is considered to own more than 50 percent of the total fair market value
or total voting power of the stock, the acquisition of additional stock by the
same person or group is not considered to cause a change in the ownership of the
Bank or First Financial Corporation (or to cause a change in the effective
control of the Bank or First Financial Corporation as defined in subsection
10(a)(4)(ii)). An increase in the percentage of stock owned by any person or
group, as a result of a transaction in which the Bank or First Financial
Corporation acquires its stock in exchange for property will be treated as an
acquisition of stock for purposes of this subsection. This subsection only
applies when there is a transfer of stock of the Bank or First Financial
Corporation (or issuance of stock of a corporation) and stock in the Bank or
First Financial Corporation remains outstanding after the transaction.
For purposes of subsections 10(a)(4)(i) and (ii), persons will not be considered
to be acting as a group solely because they purchase or own stock of the Bank or
First Financial Corporation at the same time, or as a result of the same public
offering. However, 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 First
Financial Corporation. If a person, including an entity, owns stock in both
corporations that enter into a merger, consolidation, purchase or acquisition of
stock or similar transaction, such shareholder is considered to be acting as a
group with other shareholders only with respect to the ownership in that
corporation before the transaction giving rise to the change and not with
respect to the ownership interest in the other corporation.
(ii) Change in the Effective Control. A change in the effective control of the
Bank or First Financial Corporation will occur when: (i) any person or group (as
defined in subsection 10(a)(4)(i)) acquires, or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person(s),
ownership of stock of the Bank or First Financial Corporation possessing
30 percent or more of the total voting power; or (ii) a majority of members of
the Board is replaced during any 12-month period by Directors whose appointment
or election is not endorsed by a majority of the members of the Bank’s or First
Financial Corporation’s Board prior to the date of the appointment or election.
However, if any person or group is considered to effectively control the Bank or
First Financial Corporation, the acquisition of additional control of the Bank
or First Financial Corporation by the same person(s) is not considered to cause
a change in the effective control.

 

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(iii) Change in the Ownership of a Substantial Portion of the Bank’s or First
Financial Corporation’s Assets. A change in the ownership of a substantial
portion of the Bank’s or First Financial Corporation’s assets occurs on the date
that any person or group acquires, or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person(s), assets from
the Bank or First Financial Corporation that have a total gross fair market
value equal to or more than 40 percent of the total gross fair market value of
all of the assets of the Bank or First Financial Corporation immediately prior
to such acquisition(s). Gross fair market value means the value of the assets of
the Bank or First Financial Corporation, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets.
However, there is no Change in Control under this subsection when there is a
transfer to an entity that is controlled by the shareholders of the Bank or
First Financial Corporation immediately after the transfer. A transfer of assets
by the Bank or First Financial Corporation is not treated as a change in the
ownership of such assets if the assets are transferred to: (i) a shareholder of
the Bank or First Financial Corporation (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 or First Financial Corporation; (iii) a person, or group of persons,
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 First Financial
Corporation 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 (iii).
For purposes of this subsection, except as otherwise provided, a person’s status
is determined immediately after the transfer of the assets. For example, a
transfer to a company in which the Bank or First Financial Corporation has no
ownership interest before the transaction, but which is a majority-owned
subsidiary of the Bank or First Financial Corporation after the transaction, is
not treated as a change in the ownership of the assets of the transferor Bank or
First Financial Corporation.
For purposes of this subsection 10(a)(4)(iii), persons will not be considered to
be acting as a group solely because they purchase assets of the Bank or First
Financial Corporation at the same time. However, 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 assets, or similar business
transaction with the Bank or First Financial Corporation. If a person, including
an entity shareholder, owns stock in both corporations that enter into a merger,
consolidation, purchase or acquisition of assets, or similar transaction, such
shareholder is considered to be acting as a group with other shareholders in a
corporation only to the extent of the ownership in that corporation before the
transaction giving rise to the change and not with respect to the ownership
interest in the other corporation.

 

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Notwithstanding the foregoing, the acquisition of Bank or First Financial
Corporation stock by any retirement plan sponsored by the Bank or an affiliate
of the Bank will not constitute a Change in Control. Additionally,
notwithstanding the foregoing, but only to the extent required under federal
banking law, the amount payable under subsection 10(a) shall be reduced to the
extent that on the date of the Employee’s termination of employment, the amount
payable under subsection 10(a) exceeds any limitation on severance benefits that
is imposed by the OCC.
(b) Change in Control; Voluntary Termination. Notwithstanding any other
provision of this Agreement to the contrary, the Employee may voluntarily
terminate his employment under this Agreement within 12 months following a
Change in Control of the Bank or First Financial Corporation, as defined in
subsection 10(a)(4), and the Employee shall thereupon be entitled to receive the
payment described in subsections 10(a)(1), (2) and (3) of this Agreement, within
30 days following the occurrence of any of the following events, which has not
been consented to in advance by the Employee in writing. During such 30-day
period, the Bank shall not allow the Employee’s participation in any Employee
Benefits to lapse and shall continue to provide the Employee with the Automobile
Benefits described in subsection 4(d), reimbursement or payment of professional
and club dues, and the cost of the Employee’s continuing legal education
requirements as described in subsection 4(c). In the event subsection 8(h)
applies at the time of the Employee’s termination, the six-month suspension
period shall not prevent the Employee from continuing to receive reimbursement
of health insurance premiums for himself, his spouse and child living in the
Employee’s household, Medicare supplement insurance and life insurance (all as
described in subsection 4(b)) immediately following his termination of
employment, without regard to the six-month suspension applicable to cash
payments and other benefit amounts.
(i) The requirement that the Employee perform his principal executive functions
more than 30 miles from his Terre Haute, Indiana office.
(ii) A reduction of ten percent or more in the Employee’s base salary as in
effect on the date of the Change in Control or as the same may be changed by
mutual agreement from time to time, unless part of an institution-wide reduction
and similar to the reduction in the base salary of all other executive officers
of the Bank;
(iii) The removal of the Employee from participation in any incentive
(including, but not limited to, the LTIP) or performance-based compensation
plans or bonus plans unless the Bank terminates participation in the plan or
plans with respect to all other executive officers of the Bank;

 

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(iv) The failure by the Bank to continue to provide the Employee with the base
salary, bonuses or benefits provided for under subsections 4(a), (c), (d) and
(e) of this Agreement, as the same may be increased from time to time, or with
benefits substantially similar to those provided to him under those subsections
or under any benefit plan or program in which the Employee now or hereafter
becomes eligible to participate, or the taking of any action by the Bank which
would directly or indirectly reduce any such benefits or deprive the Employee of
any such benefit enjoyed by him, unless part of an institution-wide reduction
and applied similarly to all other executive officers of the Bank;
(v) The assignment to the Employee of duties and responsibilities materially
different from those normally associated with his position as referenced in
Section 1;
(vi) A failure to elect or re-elect the Employee to the Board or a failure on
the part of First Financial Corporation or its successor to honor any obligation
to nominate Employee to the Board of Directors of First Financial Corporation or
its successor;
(vii) A material diminution or reduction in the Employee’s responsibilities or
authority (including reporting responsibilities) in connection with his
employment with the Bank; or
(viii) A material reduction in the secretarial or administrative support of the
Employee.
(c) Compliance with 12 U.S.C. Section 1828(k). Any payments made to the Employee
pursuant to this Agreement, or otherwise, are subject to and conditioned upon
their compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder.
(d) Trust.
(1) Within five business days before or after a Change in Control which was not
approved in advance by a resolution of a majority of the Directors of First
Financial Corporation, the Bank or First Financial Corporation shall
(i) deposit, or cause to be deposited, in a grantor trust (the “Trust”),
designed to conform with Revenue Procedure 93-64 (or any successor) and having a
trustee independent of the Bank, an amount equal to the amounts which would be
payable in a lump sum under subsections 10(a)(1), (2) and (3) hereof if those
payment provisions become applicable, and (ii) provide the trustee of the Trust
with a written direction to hold said amount and any investment return thereon
in a segregated account for the benefit of the Employee, and to follow the
procedures set forth in the next paragraph as to the payment of such amounts
from the Trust.

 

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(2) During the 12 consecutive month period following the date on which the Bank
makes the deposit referred to in the preceding paragraph, the Employee may
provide the trustee of the Trust with a written notice requesting that the
trustee pay to the Employee, in a single sum, the amount designated in the
notice as being payable pursuant to subsections 10(a)(1), (2) and (3). Within
three business days after receiving said notice, the trustee of the Trust shall
send a copy of the notice to the Bank via overnight and registered mail, return
receipt requested. On the tenth business day after mailing said notice to the
Bank, the trustee of the Trust shall pay the Employee the amount designated
therein in immediately available funds, unless prior thereto the Bank provides
the trustee with a written notice directing the trustee to withhold such
payment. In the latter event, the trustee shall submit the dispute, within ten
days of receipt of the notice from the Bank, to non-appealable binding
arbitration for a determination of the amount payable to the Employee pursuant
to subsections 10(a)(1), (2) and (3), and the party responsible for the payment
of the costs of such arbitration (which may include any reasonable legal fees
and expenses incurred by the Employee) shall be determined by the arbitrator.
The trustee shall choose the arbitrator to settle the dispute, and such
arbitrator shall be bound by the rules of the American Arbitration Association
in making his or her determination. The Employee, the Bank and the trustee shall
be bound by the results of the arbitration and, within three days of the
determination by the arbitrator, the trustee shall pay from the Trust the
amounts required to be paid to the Employee and/or the Bank, and in no event
shall the trustee be liable to either party for making the payments as
determined by the arbitrator.
(3) Upon the earlier of (i) any payment from the Trust to the Employee, or (ii)
the date twelve months after the date on which the Bank makes the deposit
referred to in the first paragraph of this subsection 10(d)(1), the trustee of
the Trust shall pay to the Bank the entire balance remaining in the segregated
account maintained for the benefit of the Employee, if any. The Employee shall
thereafter have no further interest in the Trust pursuant to this Agreement.
However, the termination of the Trust shall not operate as a forfeiture or
relinquishment of any of the Employee’s rights under the terms of this
Agreement. Furthermore, in the event of a dispute under subsection 10(d)(2), the
trustee of the Trust shall continue to hold, in trust, the deposit referred to
in subsection 10(b)(1) until a final decision is rendered by the arbitrator
pursuant to subsection 10(b)(2).
(e) In the event that any dispute arises between the Employee and the Bank as to
the terms or interpretation of this Agreement or the obligations thereunder,
including this Section, whether instituted by formal legal proceedings or
submitted to arbitration pursuant to subsection 10(d)(2), including any action
that the Employee takes to enforce the terms of this Section or to defend
against any action taken by the Bank, the Employee shall be reimbursed for all
costs and expenses, including reasonable attorneys’ fees, arising from such
dispute, proceedings or actions, provided that the Employee shall obtain a final
judgment by a court of competent jurisdiction in favor of the Employee or, in
the event of arbitration pursuant to subsection 10(d)(2), a determination is
made by the arbitrator that the expenses should be paid by the Bank. Such
reimbursement shall be paid within ten days of Employee’s furnishing to the Bank
written evidence, which may be in the form, among other things, of a canceled
check or receipt, of any costs or expenses incurred by the Employee.

 

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Should the Employee fail to obtain a final judgment in favor of the Employee and
a final judgment or arbitration decision is entered in favor of the Bank and if
decided by arbitration, the arbitrator, pursuant to subsection 10(d)(2),
determines the Employee to be responsible for the Bank’s expenses, then the Bank
shall be reimbursed for all costs and expenses, including reasonable attorneys’
fees arising from such dispute, proceedings or actions. Such reimbursement shall
be paid within ten days of the Bank furnishing to the Employee written evidence,
which may be in the form, among other things, of a canceled check or receipt, of
any costs or expenses incurred by the Bank.
11. Stock Options. First Financial Corporation will permit the Employee or his
personal representative(s) or heirs, during a period of three months following
Employee’s termination of employment by the Bank for the reasons set forth in
subsections 8(d), 8(e), 10(a) or 10(b), to require First Financial Corporation,
upon written request, to purchase all outstanding, unexpired stock options
previously granted to the Employee under any stock option plan then in effect to
the extent the options are vested at a cash purchase price equal to the amount
by which the aggregate “Fair Market Value” of the shares subject to such options
exceeds the aggregate option price for such shares. For purposes of this
Agreement, the term Fair Market Value shall mean the higher of (a) the average
of the highest asked prices for shares in the over-the-counter market as
reported on the NASDAQ system or other exchange if the shares are traded on such
system for the 30 business days preceding such termination, or (b) the average
per share price actually paid for the most highly priced one percent of the
shares acquired in connection with the Change of Control by any person or group
acquiring such control.
12. Federal Income Tax Withholding. The Bank may withhold all federal and state
income or other taxes from any benefit payable under this Agreement as shall be
required pursuant to any law or governmental regulation or ruling.
13. Successors and Assigns.
(a) Bank. This Agreement shall not be assignable by the Bank or First Financial
Corporation, provided that this Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Bank or First Financial
Corporation which shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the assets or
stock of the Bank or First Financial Corporation.
(b) Employee. Because the Bank is contracting for the unique and personal skills
of the Employee, the Employee shall be precluded from assigning or delegating
his rights or duties hereunder without first obtaining the written consent of
the Bank; provided, however, that nothing in this paragraph shall preclude
(i) the Employee from designating a beneficiary to receive any benefit payable
hereunder upon his death, or (ii) the executors, administrators, or other legal
representatives of the Employee or his estate from assigning any rights
hereunder to the person or persons entitled thereunto.

 

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(c) Attachment. Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation or to exclusion,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
14. Amendments. No amendments or additions to this Agreement shall be binding
unless made in writing and signed by the Bank, First Financial Corporation and
the Employee, except as herein otherwise specifically provided.
15. Applicable Law. Except to the extent preempted by federal law, the laws of
the State of Indiana, without regard to that State’s choice of law principles,
shall govern this Agreement in all respects, whether as to its validity,
construction, capacity, performance or otherwise.
16. Severability. The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. Should any particular
covenant, provision or clause of this Agreement be held unreasonable or
unenforceable for any reason, including without limitation, the time period,
geographic area and/or scope of activity covered by such covenant, provision or
clause, the Bank and Employee acknowledge and agree that such covenant,
provision or clause shall be given effect and enforced to whatever extent would
be reasonable and enforceable under applicable law.
17. Entire Agreement. This Agreement: (a) supersedes all other understandings
and agreements, oral or written, between the parties with respect to the subject
matter of this Agreement; and (b) constitutes the sole agreement between the
parties with respect to this subject matter.
18. Construction. The rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement.
19. Headings. The headings in this Agreement have been inserted solely for ease
of reference and shall not be considered in the interpretation, construction or
enforcement of this Agreement.

 

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20. Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been given (a) if hand delivered, upon delivery to the party, or (b) if
mailed, two days following deposit of the notice or communication with the
United States Postal Service by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

         
 
  If to the Employee:   Norman L. Lowery
93 Allendale
Terre Haute, Indiana 47802
 
       
 
  If to the Bank:   First Financial Bank, N.A.
Attn: Chief Financial Officer
One First Financial Plaza
P.O. Box 540
Terre Haute, Indiana 47808-0540
 
       
 
  If to First Financial Corporation:   First Financial Corporation
Attn: President
One First Financial Plaza
P.O. Box 540
Terre Haute, Indiana 47808-0540

or to such other address as either party hereto may have furnished to the other
party in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
21. Waiver. The waiver by either party of a breach of any provision of this
Agreement, or failure to insist upon strict compliance with the terms of this
Agreement, shall not be deemed a waiver of any subsequent breach or
relinquishment of any right or power under this Agreement.
22. Review and Consultation. Employee acknowledges and agrees he (a) has read
this Agreement in its entirety prior to executing it, (b) understands the
provisions and effects of this Agreement and (c) has consulted with such
attorneys, accountants and financial or other advisors as he has deemed
appropriate in connection with the execution of this Agreement. Employee
understands, acknowledges and agrees that he has not received any advice,
counsel or recommendation with respect to this Agreement from Employer’s
attorneys.
* * *

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on this 25th day of
March, 2009.

     
ATTEST
  FIRST FINANCIAL BANK, N.A.
 
   
(s) Leticia E. Wright
  (s) Michael A. Carty      
Title: Sr. Executive Assistant
  Michael A. Carty, Secretary/Treasurer
 
   
 
  EMPLOYEE
 
   
 
  (s) Norman L. Lowery      
 
  Norman L. Lowery

The undersigned, First Financial Corporation, sole shareholder of the Bank,
agrees that if it shall be determined for any reason that any obligation on the
part of the Bank is unenforceable for any reason or if the Bank fails to
perform, First Financial Corporation agrees to honor the terms of this Agreement
and continue to make any such payments due hereunder to Employee or to satisfy
any such obligation pursuant to the terms of this Agreement. The undersigned
further agrees to nominate Employee to the Board of Directors of First Financial
Corporation during the term of this Agreement.

     
ATTEST
  FIRST FINANCIAL CORPORATION
 
   
(s) Michael A. Carty
  (s) Donald E. Smith      
Title: Secretary
  Donald E. Smith, President

 

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