Exhibit 10.2
 
 
 
EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of this 7th
day of January, 2008, by and between Mutual Federal Savings Bank (hereinafter
referred to as the "Bank"), MutualFirst Financial, Inc. (the "Company") and
Charles J. Viater (the "Employee").
 
WHEREAS, the Employee is currently serving as the President and Chief Executive
Officer of MFB Corp. and MFB Financial; and
 
WHEREAS, it is proposed that the Company and MutualFirst Acquisition Corp., a
newly formed wholly owned subsidiary of the Company, enter into an Agreement and
Plan of Merger (together  with the attachments and exhibits thereto, the "Merger
Agreement") with MFB Corp., pursuant to which, among other things, (i) MFB Corp.
will merge with and into MutualFirst Acquisition Corp., (the "Merger") and (ii)
MFB Financial, a wholly owned subsidiary of MFB Corp., will merge with and into
the Bank (the "Bank Merger"); and
 
WHEREAS, the Board of Directors of the Bank believes it is in the best interests
of the Bank to enter into this Agreement in connection with the Bank Merger with
the Employee in order to assure continuity of management of the Bank and to
reinforce and encourage the continued attention and dedication of the Employee;
and
 
WHEREAS, the Board of Directors of the Company has approved and authorized the
execution of this Agreement for the purpose of the Company making the guarantee
set forth in Section 17; and
 
WHEREAS, the Board of Directors of the Bank has approved and authorized the
execution of this Agreement with the Employee to take effect as stated in
Section 2 hereof.
 
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
 
1.            Definitions.
 
(a)            For purposes of this Agreement, a “Change in Control” shall mean
any of the following:
 
(i)            a change in the ownership of the Bank or the Company, which shall
occur on the date that any one person, or more than one person acting as a
group, acquires ownership of stock of the Bank or the Company that, together
with stock held by such person or group, constitutes more than fifty percent
(50%) of the total fair market value or total voting power of the stock of the
Bank or the Company. Such acquisition may occur as a result of a merger of the
Company or the Bank into another entity which pays consideration for the shares
of capital stock of the merging Company or Bank. However, if any one person, or
more than one person acting as a group, is considered to own more than fifty
percent (50%) of the total fair market value or total voting power of the stock
of the Bank or the Company, the acquisition of additional stock by the same
person or persons is not considered to cause a change in the ownership of the
Bank or the Company (or to cause a change in the effective control of the Bank
or the Company (within
 

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the meaning of subsection (ii)).  An increase in the percentage of stock owned
by any one person, or persons acting as a group, as a result of a transaction in
which the Bank or the Company acquires its stock in exchange for property will
be treated as an acquisition of stock for purposes of this subsection.  This
subsection applies only when there is a transfer of stock of the Bank or the
Company (or issuance of stock of the Bank or the Company) and stock in the Bank
or the Company remains outstanding after the transaction.
 
(ii)            a change in the effective control of the Bank or the Company,
which shall occur only on either of the following dates:
 
1)            the date any one person, or more than one person acting as a group
acquires (or has acquired during the 12 month period ending on the date of the
most recent acquisition by such person or persons) ownership of stock of the
Bank or the Company possessing thirty percent (30%) or more of the total voting
power of the stock of the Bank or the Company.
 
2)            the date a majority of members of the Company’s board of directors
is replaced during any 12 month period by directors whose appointment or
election is not endorsed by a majority of the members of the Company’s board of
directors before the date of the appointment or election; provided, however,
that this provision shall not apply if another corporation is a majority
shareholder of the Company.
 
If any one person, or more than one person acting as a group, is considered to
effectively control the Bank or the Company, the acquisition of additional
control of the Bank or the Company by the same person or persons is not
considered to cause a change in the effective control of the Bank or the Company
(or to cause a change in the ownership of the Bank or the Company within the
meaning of subsection (i) of this section).
 
(iii)            a change in the ownership of a substantial portion of the
Bank’s assets, which shall occur on the date that any one person, or more than
one person acting as a group, acquires (or has acquired during the 12 month
period ending on the date of the most recent acquisition by such person or
persons) assets from the Bank that have a total gross fair market value equal to
or more than forty percent (40%) of the total gross fair market value of all of
the assets of the Bank immediately before such acquisition or acquisitions.  For
this purpose, gross fair market value means the value of the assets of the Bank,
or the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets.  No change in control occurs under this
subsection (iii) when there is a transfer to an entity that is controlled by the
shareholders of the Bank immediately after the transfer.  A transfer of assets
by the Bank is not treated as a change in the ownership of such assets if the
assets are transferred to –
 
1)            a shareholder of the Bank (immediately before the asset transfer)
in exchange for or with respect to its stock;
 

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2)            an entity, 50 percent or more of the total value or voting power
of which is owned, directly or indirectly, by the Bank.
 
3)            a person, or more than one person acting as a group, that owns,
directly or indirectly, 50 percent or more of the total value or voting power of
all the outstanding stock of the Bank; or
 
4)            an entity, at least 50 percent of the total value or voting power
of which is owned, directly or indirectly, by a person described in paragraph
(3).
 
For purposes of this subsection (iii) and except as otherwise provided in
paragraph 1) above, a person’s status is determined immediately after the
transfer of the assets.
 
(iv)            For purposes of this section, persons will not be considered to
be acting as a group solely because they purchase or own stock of the same
corporation at the same time, or as a result of the same public offering.
Persons will be considered to be acting as a group if they are owners of a
corporation that enters into a merger, consolidation, purchase or acquisition of
stock, or similar business transaction with the Bank or the Company; provided,
however, that they will not be considered to be acting as a group if they are
owners of an entity that merges into the Bank or the Company where the Bank or
the Company is the surviving corporation.
 
(b)            The term "Commencement Date" means the date of the consummation
of the Bank Merger.
 
(c)            The term "Date of Termination" means the date upon which the
Employee ceases to serve as an employee of the Bank.
 
(d)            The term "Involuntary Termination" means termination of the
employment of Employee without the Employee's express written consent, and shall
include a voluntary termination by the Employee for “good reason.”  For purposes
of this subsection, “good reason” means a material diminution of or interference
with the Employee's duties, responsibilities and benefits as Regional President
of the Bank and Senior Vice President of the Company, including (without
limitation) any of the following actions unless consented to in writing by the
Employee: (1) a change in the principal workplace of the Employee to a location
outside of a 30 mile radius from the Bank's headquarters office as of the date
hereof without the Employee’s consent, (2) a material demotion of the Employee;
(3) a material reduction in the number or seniority of other Bank personnel
reporting to the Employee or a material reduction in the frequency with which,
or in the nature of the matters with respect to which, such personnel are to
report to the Employee, other than as part of a Bank-or Company-wide reduction
in staff, (4) a material adverse change in the Employee's base salary; and (5)
any material breach of this Agreement by the Bank.  The Employee’s voluntary
termination for good reason upon the occurrence of any of the events or
conditions described in the preceding sentence (a “Good Reason Event”) shall be
deemed an “Involuntary Termination” only if such voluntary termination occurs
within two years after the Good Reason Event and after the Employee has provided
the Bank not less than ninety (90) days notice of his intent to terminate
employment
 

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and at least thirty (30) days for the Bank to cure the Good Reason Event. The
term "Involuntary Termination" does not include Termination for Cause or
termination of employment due to retirement, death, disability or suspension or
temporary or permanent prohibition from participation in the conduct of the
Bank's affairs under Section 8 of the Federal Deposit Insurance Act ("FDIA").
 
(e)            The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Employee because of the Employee's personal
dishonesty, incompetence, willful misconduct, breach of a fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. The Employee shall not be deemed to have been
Terminated for Cause unless and until there shall have been 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 of Directors of the
Bank at a meeting of the Board called and held for such 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), stating that in the
good faith opinion of the Board the Employee has engaged in conduct described in
the preceding sentence and specifying the particulars thereof in detail.
 
(f)            The term “Section 409A” means Section 409A of the Code, and any
regulations or other guidance of general applicability issued thereunder.
 
(g)            The term “Specified Employee” means, for an applicable twelve
(12) month period beginning on April 1, a key employee (as described in Code
Section 416(i), determined without regard to paragraph (5) thereof) during the
calendar year immediately preceding such April 1.
 
(h)            The term “Termination of Employment” shall have the same meaning
as Aseparation from service, as that phrase is defined in Section 409A (taking
into account all rules and presumptions provided for in the Section 409A
regulations).  Any reference to termination of employment herein shall be deemed
to have the same meaning as “Termination of Employment” as herein defined.
 
2.            Term. The term of this Agreement shall be a period of three years
beginning on the Commencement Date, subject to earlier termination as provided
herein. Beginning on the first anniversary of the Commencement Date, and on each
anniversary thereafter, the term of this Agreement shall be extended for a
period of one year in addition to the then-remaining term, provided that (1) the
Bank has not given notice to the Employee in writing at least 90 days prior to
such anniversary that the term of this Agreement shall not be extended further;
and (2) prior to such anniversary, the Board of Directors of the Bank explicitly
reviews and approves the extension. Reference herein to the term of this
Agreement shall refer to both such initial term and such extended terms.
 
3.            Employment. Upon the Commencement Date, the Employee shall be
employed as Regional President of the Bank and Senior Vice President of the
Company as of the Commencement Date. As such, the Employee shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and
 

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shall have such other powers and duties of an officer of the Bank and the
Company as the Board of Directors may prescribe from time to time.
 
4.            Compensation.
 
(a)            Salary. The Bank agrees to pay the Employee during the term of
this Agreement, not less frequently than monthly, the salary established by the
Board of Directors, which shall be at least $250,000 annually. The amount of the
Employee's salary shall be reviewed by the Board of Directors, beginning not
later than the first anniversary of the Commencement Date. Adjustments in salary
or other compensation shall not limit or reduce any other obligation of the Bank
or of the Company under this Agreement. The Employee's salary in effect from
time to time during the term of this Agreement shall not thereafter be reduced.
 
(b)            Discretionary Bonuses. The Employee shall be entitled to
participate in an equitable manner with all other executive officers of the Bank
in discretionary bonuses as authorized and declared by the Board of Directors to
its executive employees. No other compensation provided for in this Agreement
shall be deemed a substitute for the Employee's right to participate in such
bonuses when and as declared by the Board of Directors. A discretionary bonus
declared pursuant to this Section 4(b) shall be paid no later than two and
one-half months after the end of the calendar year in which the bonus is
declared.
 
(c)            Expenses. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in performing
services under this Agreement in accordance with the policies and procedures
applicable to the executive officers of the Bank, provided that the Employee
accounts for such expenses as required under such policies and procedures.
 
5.            Benefits.
 
(a)            Participation in Retirement and Employee Benefit Plans. The
Employee shall be entitled to participate in all plans relating to pension,
thrift, profit-sharing, group life and disability insurance, medical and dental
coverage, education, cash bonuses, and other retirement or employee benefits or
combinations thereof, in which the Bank's executive officers participate.
 
(b)            Fringe Benefits. The Employee shall be eligible to participate
in, and receive benefits under, any fringe benefit plans which are or may become
applicable to the Bank's executive officers, including, without limitation, the
Company's Stock Option Plan the Management Recognition Plan, and the Company’s
Employee Stock Ownership Plan.  So long as Employee is employed by the Bank
pursuant to this Agreement, Employee shall be entitled to an auto allowance of
$1,667 per month to be applied towards the use or lease of an automobile used in
part for Bank business.
 
(c)            Vacations; Leave. The Employee shall be entitled to annual paid
vacation in accordance with the policies established by the Board of Directors
for executive employees and to voluntary leave of absence, with or without pay,
from time to time at such times and upon such conditions as the Board of
Directors may determine in its discretion.
 

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6.            Termination of Employment.
 
(a)            Involuntary Termination.The Board of Directors may terminate the
Employee's employment at any time, but, except in the case of Termination for
Cause, termination of employment shall not prejudice the Employee's right to
compensation or other benefits under this Agreement. In the event of Involuntary
Termination other than in connection with or within twelve (12) months after a
Change in Control, (1) the Bank shall pay to the Employee during the remaining
term of this Agreement, the Employee's salary at the rate in effect immediately
prior to the Date of Termination, payable in such manner and at such times as
such salary would have been payable to the Employee under Section 4 if the
Employee had continued to be employed by the Bank, and (2) the Bank shall
provide to the Employee during the remaining term of this Agreement
substantially the same benefits as the Bank maintained for its executive
officers immediately prior to the Date of Termination, including Bank-paid
dependent medical and dental coverage.  If and to the extent involuntary
termination payments under this Section 6 constitute deferred compensation
within the meaning of Section 409A (“Involuntary Termination Deferred
Compensation”), and the Employee is a Specified Employee, then the payment of
such Involuntary Termination Deferred Compensation shall comply with Code
Section 409A(a)(2)(B)(i) and the regulations thereunder, which generally
provides that distributions of deferred compensation (within the meaning of
Section 409A) to a Specified Employee that are payable on account of Termination
of Employment may not commence prior to the six (6) month anniversary of the
Employee’s Termination of Employment (or, if earlier, the date of the Employee’s
death). Amounts that would otherwise be distributed to the Employee during such
six (6) month period but for the preceding sentence shall be paid to the
Employee on the 185th day following the date of the Employee’s Termination of
Employment.  To the extent permitted by Section 409A, Involuntary Termination
Deferred Compensation payments shall be deemed to be made after any other
payments provided for in this Section 6(a).
 
(b)            Termination for Cause. In the event of Termination for Cause, the
Bank shall pay the Employee the Employee's salary and benefits through the Date
of Termination, and the Bank shall have no further obligation to the Employee
under this Agreement.
 
(c)            Voluntary Termination. The Employee's employment may be
voluntarily terminated by the Employee at any time upon 90 days written notice
to the Bank or upon such shorter period as may be agreed upon between the
Employee and the Board of Directors. In the event of such voluntary termination,
the Bank shall be obligated to continue to pay to the Employee the Employee's
salary and benefits only through the Date of Termination, at the time such
payments are due, and the Bank shall have no further obligation to the Employee
under this Agreement.
 
(d)            Change in Control. In the event of Involuntary Termination in
connection with or within 12 months after a Change in Control which occurs at
any time while the Employee is employed under this Agreement, the Bank shall,
subject to Section 7 of this Agreement, (1) pay to the Employee in a lump sum in
cash within 25 business days after the Date of Termination an amount equal to
299% of the Employee's "base amount" as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"); and (2) provide to the Employee
during the remaining term of this Agreement substantially the same health
(including, without limitation, health, dental and vision) and disability
benefits as the Bank maintained for its executive officers immediately prior to
the Change in Control.
 

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(e)            Death; Disability. In the event of the death of the Employee
while employed under this Agreement and prior to any termination of employment,
the Employee's estate, or such person as the Employee may have previously
designated in writing, shall be entitled to receive from the Bank the salary and
benefits of the Employee through the last day of the calendar month in which the
Employee died. If the Employee becomes disabled as defined in the Bank's then
current disability plan, if any, or if the Employee is otherwise unable to serve
in his current capacity, this Agreement shall continue in fall force and effect,
except that the salary paid to the Employee shall be reduced by any disability
insurance payments made to Employee on policies of insurance maintained by the
Bank at its expense.
 
(f)            Temporary Suspension or Prohibition. If the Employee is suspended
and/or temporarily prohibited from participating in the conduct of the Bank's
affairs by a notice served under Section 8(e)(3) or (g)(1) of the FDIA, 12
U.S.C. § 1818(e)(3) and (g)(1), the Bank's obligations under this Agreement
shall be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may in its
discretion (i) pay the Employee all or part of the compensation withheld while
its obligations under this Agreement were suspended and (ii) reinstate in whole
or in part any of its obligations which were suspended.
 
(g)            Permanent Suspension or Prohibition. If the Employee is removed
and/or permanently prohibited from participating in the conduct of the Bank's
affairs by an order issued under Section 8(e)(4) or (g)(1) of the 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
contracting parties shall not be affected.
 
(h)            Default of the Bank. 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 this provision shall not affect any
vested rights of the contracting parties.
 
(i)            Termination by Regulators. All obligations of the Bank under this
Agreement shall be terminated, except to the extent determined that continuation
of this Agreement is necessary for the continued operation of the Bank: (1) by
the Director of the Office of Thrift Supervision (the "Director") or his or her
designee, at the time the Federal Deposit Insurance Corporation enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of the FDIA; or (2) by the Director or his or her
designee, at the time the Director or his or her designee approves a supervisory
merger to resolve problems related to operation of the Bank or when the Bank is
determined by the Director to be in an unsafe or unsound condition. Any rights
of the parties that have already vested, however, shall not be affected by any
such action.
 
Payments due under the Agreement that are suspended in accordance with
Paragraphs 6(f) through 6(i) of the Agreement, but are later determined by the
applicable regulatory authority to be payable, shall be paid at the earliest
date the Company or the Bank reasonably anticipates that the payment would be
permissible.
 
7.            Certain Reduction of Payments by the Bank.
 
(a)            Notwithstanding any other provision of this Agreement, if
payments under this Agreement, together with any other payments received or to
be received by the Employee in
 

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connection with a Change in Control would cause any amount to be nondeductible
for federal income tax purposes pursuant to Section 280G of the Code, then
benefits under this Agreement shall be reduced (not less than zero) to the
extent necessary so as to maximize payments to the Employee without causing any
amount to become nondeductible. The Employee shall determine the allocation of
such reduction among payments to the Employee.
 
(b)            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. §
1828(k) and any regulations promulgated thereunder.
 
8.            Confidential Information; Loyalty; Non-competition.
 
(a)            During the term of the Employee's employment hereunder and for
three years thereafter, the Employee shall not, except as may be required to
perform his duties hereunder or as required by law, disclose to others or use,
whether directly or indirectly, any Confidential Information. "Confidential
Information" means information about the Bank and the Bank’s clients and
customers which is not available to the general public and was or shall be
learned by the Employee in the course of his employment by the Bank, including
without limitation any data, formulae, information, proprietary knowledge, trade
secrets, and credit reports and analyses owned, developed and used in the course
of the business of the Bank, including client and customer lists and information
related thereto; and all papers, resumes, records and other documents (and all
copies thereof) containing such Confidential Information. The Employee
acknowledges that such Confidential Information is specialized, unique in nature
and of great value to the Bank. The Employee agrees that upon the expiration of
the Employee's term of employment hereunder or in the event the Employee's
employment hereunder is terminated prior thereto for any reason whatsoever, the
Employee will promptly deliver to the Bank all documents (and all copies
thereof) containing any Confidential Information.
 
(b)            The Employee shall devote his full time to the performance of his
employment under this Agreement; provided, however, that the Employee may serve,
without compensation, with charitable, community and industry organizations and
to serve, with compensation, as a director of any business corporation to the
extent such directorships do not inhibit the performance of his duties
thereunder or conflict with the business of the Bank. During the term of the
Employee's employment hereunder, the Employee shall not engage in any business
or activity contrary to the business affairs or interests of the Bank.
 
(c)            Upon the expiration of the term of the Employee's employment
hereunder or in the event the Employee's employment hereunder terminates prior
thereto for any reason whatsoever, the Employee shall not, for a period of one
year after the occurrence of such event, for himself, or as the agent of, on
behalf of, or in conjunction with, any person or entity, solicit or attempt to
solicit, whether directly or indirectly: (i) any employee of the Bank to
terminate such employee's employment relationship with the Bank; or (ii) any
savings and loan, banking or similar business from any person or entity that is
or was a client, employee, or customer of the Bank and had dealt with the
Employee or any other employee of the Bank under the supervision of the
Employee.
 
(d)            In the event the Employee's employment hereunder is terminated
for any reason whatsoever, the Employee shall not, for a period of two years
from the date of termination, directly or indirectly, own, manage, operate or
control, or participate in the
 

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ownership, management, operation or control of, or be employed by or connected
in any manner with, any financial institution having an office located within 25
miles of any office of the Bank as of the date of termination.
 
(e)            The provisions of Paragraphs 8(b) and 8(d) of the Agreement shall
not prevent the Employee from purchasing, solely for investment, not more than 5
percent of any financial institution's stock or other securities which are
traded on any national or regional securities exchange or are actively traded in
the over-the-counter market and registered under Section 12(g) of the Securities
Exchange Act of 1934.
 
(f)            The provisions of this Paragraph 8 shall survive the termination
of the Employee’s employment hereunder whether by expiration of the term thereof
or otherwise.
 
9.            No Mitigation. The Employee shall not be required to mitigate the
amount of any salary or other payment or benefit provided for in this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation earned by
the Employee as the result of employment by another employer, by retirement
benefits after the Date of Termination or otherwise.
 
10.            Attorneys Fees. In the event the Bank exercises its right of
Termination for Cause, but it is determined by a court of competent jurisdiction
or by an arbitrator pursuant to Section 16 that cause did not exist for such
termination, or if in any event it is determined by any such court or arbitrator
that the Bank has failed to make timely payment of any amounts owed to the
Employee under this Agreement, the Employee shall be entitled to reimbursement
for all reasonable costs, including attorneys' fees, incurred in challenging
such termination or collecting such amounts. Such reimbursement shall be in
addition to all rights to which the Employee is otherwise entitled under this
Agreement.
 
11.            No Assignments.
 
(a)            This Agreement is personal to each of the parties hereto, and no
party may assign or delegate any of its rights or obligations hereunder without
first obtaining the written consent of the other party; provided, however, that
the Bank shall require any successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Bank, by an assumption agreement in form and
substance satisfactory to the Employee, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Bank would be
required to perform it if no such succession or assignment had taken place.
Failure of the Bank to obtain such an assumption agreement prior to the
effectiveness of any such succession or assignment shall be a breach of this
Agreement and shall entitle the Employee to compensation from the Bank in the
same amount and on the same terms as the compensation pursuant to Section 6(d)
hereof. For purposes of implementing the provisions of this Section 11(a), the
date on which any such succession becomes effective shall be deemed the Date of
Termination.
 
(b)            This Agreement and all rights of the Employee hereunder shall
inure to the benefit of and be enforceable by the Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Employee should die while any amounts would still
be payable to the Employee hereunder if the Employee had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
 

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with the terms of this Agreement to the Employee's devisee, legatee or other
designee or if there is no such designee, to the Employee's estate.
 
12.            Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and, shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, to the Bank or Company at its
home office, to the attention of the Board of Directors with a copy to the
Secretary, or, if to the Employee, to such home or other address as the Employee
has most recently provided in writing to the Bank.
 
13.            Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
 
14.            Headings. The headings used in this Agreement are included solely
for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
 
15.            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.
 
16.            Governing Law. This Agreement shall be governed by the laws of
the United States to the extent applicable and otherwise by the laws of the
State of Indiana.
 
17.            Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
 
18.            Company Guarantee. The Company hereby guarantees the obligations
of the Bank to the Employee under the Employment Agreement. This guarantee shall
be subject to the provisions of 12 U.S.C. Section 1828(k) and regulations
thereunder.
 
19.            Supersedes Prior Agreements. This Agreement supersedes any and
all prior employment agreements entered into by and between the Employee, the
Bank or the Company.
 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
 
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
 
 
Attest:
 
MUTUAL FEDERAL SAVINGS BANK
                /s/ Rosalie A. Peters   /s/ David W. Heeter
Secretary
 
By:
David W. Heeter
   
Its:
Chief Executive Officer
                           
MUTUALFIRST FINANCIAL, INC.
                /s/ Rosalie A. Peters   /s/ David W. Heeter
Secretary
 
By:
David W. Heeter
   
Its:
President and Chief Executive Officer
                           
EMPLOYEE
            /s/ Charles J. Viater      
Charles J. Viater

 
 
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