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                                                                    EXHIBIT 10.4


                                FIRST STATE BANK
                             DEFERRED FEE AGREEMENT


         THIS AGREEMENT is made this _____ day of _____________________, 199___,
by and between FIRST STATE BANK (the "Bank") and ______________ (the
"Director").

                                  INTRODUCTION

         To encourage the Director to )remain a member of the Bank's Board of
Directors, the Bank is willing to provide to the Director a deferred fee
opportunity. The Bank will pay the benefits from its general assets.

                                    AGREEMENT

         The Director and the Bank agree as follows:

                                    Article 1
                                   Definitions

         1.1 Definitions. Whenever used in this Agreement, the following words
and phrases shall have the meanings specified:

                  1.1.1. "Change of Control" means the transfer of 51% or more
         of the Bank's outstanding voting common stock followed within twelve
         (12) months by termination of the Director's status as a member of the
         Bank's Board of Directors.


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                  1.1.2. "Code" means the Internal Revenue Code of 1986, as
         amended. References to a Code Section shall be deemed to be to that
         section as it now exists and to any successor provision.

                  1.1.3. "Disability" means, if the Director is covered by a
         Bank-sponsored disability insurance policy, total disability is defined
         in such policy without regard to any waiting period. If the Director is
         not covered by such a policy, Disability means the Director suffering a
         sickness, accident or injury Which, in the judgment of a physician
         satisfactory to the Bank, prevents the Director from performing
         substantially all of the normal duties of a director. As a condition to
         any benefits, the Bank may require the Director to submit to such
         physical or mental evaluations and tests as the Bank's Board of
         Directors deems appropriate.

                  1.1.4. "Election Form" means the Form attached as Exhibit 1.

                  1.1.5. "Fees" means the total directors fees payable to the
         Director.

                  1.1.6. "Normal Termination Date" means the Director attaining
         age 72.

                  1.1.7. "Termination of Service" means the Director's ceasing
         to be a member of the Bank's Board of Directors for any reason
         whatsoever.


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                  1.1.8. "Years of Service" means the total number of
         twelve-month periods during which the Director serves as a member of
         the Bank's Board of Directors.

                                    Article 2
                                Deferral Election

         2.1 Initial Election. The Director shall make an initial deferral
election under this Agreement by filing with the Bank a signed Election Form
within 30 days after the date of this Agreement. The Election Form shall set
forth the amount of Fees to be deferred and the form of benefit payment. The
Election Form shall be effective to defer only Fees earned after the date the
Election Form is received by the Bank.

         2.2 Election Changes

                  2.2.1 Generally. The Director may modify the amount of Fees,
         to be deferred by filing a subsequent signed Election Form with the
         Bank. The modified deferral shall not be effective until the calendar
         year following the year in which the subsequent Election Form is
         received b- the Bank. The Director may not change the form of benefit
         payment initially elected under Section 2.1.

                  2.2.2. Hardship. If an unforeseeable financial emergency
         arising from the death of a family member, divorce, sickness, injury,
         catastrophe or similar event outside the control of the Director
         occurs, the Director, by written


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         instructions to the Bank may reduce future deferrals under this
         Agreement or may cease deferrals under this Agreement.

                                    Article 3
                                Deferral Account

         3.1 Establishing and Crediting. The Bank shall establish a Deferral
Account on its books for the Director and shall credit to the Deferral Account
the following amounts:

                  3.1.1. Deferrals. The Fees deferred by the Director as of the
         time the Fees would have otherwise been paid to the Director.

                  3.1.2. Interest. On the firs. day of each month and
         immediately prior to the payment of any benefits, interest on the
         account balance since the preceding credit under this Section 3.1.2, if
         any, at an annual rate; compounded monthly, equal to the rate
         determined by the Bank's Board of Directors, in its sole discretion.

         3.2 Statement of Accounts. The Bank shall provide to the Director,
within sixty (60) days after each anniversary of this Agreement, a statement
setting forth the Deferral Account balance.

         3.3 Accountive Device Only. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of" any kind. The Director is a general unsecured creditor of the
Bank for the payment of


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benefits. The benefits represent the mere Bank promise to pay such benefits. The
Director's rights are not subject in any manner to anticipation, alienation,
sale, transfer, assignment., pledge, encumbrance, attachment, or garnishment by
the Director's creditors.

                                    Article 4
                                Lifetime Benefits

         4.1 Normal Termination Benefit. Upon the Director's Termination of
Service, the Bank shall pay to the Director the benefit described in this
Section 4.1.

                  4.1.1. Amount of Benefit. The benefit under this Section 4.1
         is the Deferral Account balance at the Director's Termination of
         Service.

                  4.1.2. Payment of Benefit. The Bank shall pay the benefit to
         the Director in the form elected by the Director in the Election Form.
         The Bank shall continue to credit interest under Section 3.1.2.

         4.2 Early Termination Benefit. If the Director terminates service as a
director before the Normal Termination Date, and for reasons other than death or
Disability, the Bank shall pay to the Director the benefit described in this
Section 4.2.


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                  4.2.1. Amount of Benefit. The benefit under this Section 4.2
         is calculated by recomputing the Deferral Account balance from its
         inception.

                  4.2.2. Payment of Benefit. The Bank shall pay the benefit to
         the Director in the form elected by the Director on the Election Form.
         The Bank shall continue to credit interest under Section 3.1.2.

         4.3 Disability Benefit. If the Director terminates service as a
director for Disability prior to the Normal Retirement Date, the Bank shall pay
to the Director the benefit described in this Section 4.3.

                  4.3.1. Amount of Benefit. The benefit under this Section 4.3
         is the Deferral Account balance at the Director's Termination of
         Service.

                  4.3.2. Payment of Benefit. The Bank shall pay the benefit to
         the Director in the form elected by the Director on the Election Form.
         The Bank shall continue to credit interest under Section 3.1.2.

         4.4 Change of Control Benefit. Upon a Change of Control while the
Director is in the active service of the Bank., the Bank shall pay to the
Director the benefit described in this Section 4.4 in lieu of any other benefit
under this Agreement.



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                  4.4.1. Amount of Benefit. The benefit under this Section 4.4
         is the Deferral Account balance at the date of the Director's
         Termination of Service.

                  4.4.2. Payment of Benefit. The Bank shall pay the benefit to
         the Director in a lump sum within sixty (60) days after the Director's
         Termination of Service.

         4.5 Hardship Distribution. Upon the Bank's determination (following
petition by the Director) that the Director has suffered an unforeseeable
financial emergency as described in Section 2.2.2. the Bank shall distribute to
the Director all or a portion of the Deferral Account balance as determined by
the Bank, but in no event shall the distribution be greater than is necessary to
relieve the financial hardship.

                                    Article 5
                                 Death Benefits

         5.1 Death During Active Service. If the Director dies while in the
active service of the Bank, the Bank shall pay to the Director's beneficiary,
the benefit described in this Section 5.1.

                  5.1.1. Amount of Benefit. The benefit under section 5.1 is
         $22,960 per year for ten (10) years.

                  5.1.2. Payment of Benefit. The Bank shall pay the benefit to
         the beneficiary within sixty (60) days following


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         the Director's death. The Bank shall continue to credit interest under
         Section 3.1.2.

         5.2 Death During Benefit Period. If the Director dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Bank shall pay the remaining benefits to the Director's
beneficiary at the same time and in the same amounts they would have been paid
to the Direct had the Director survived.

                                    Article 6
                                  Beneficiaries

         6.1 Beneficiary Designations. The Director shall designate a
beneficiary by filing a written designation with the Bank. The Director may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Director and
accepted by the Bank during the Director's lifetime. The Director's beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases
the Director, or if the Director names a spouse as beneficiary and the marriage
is subsequently dissolved. If the Director dies without a valid beneficiary
designation, all payments shall be made to the Director's surviving spouse, if
any, and if none, to the Director's surviving children and the descendants of
any deceased child by right of representation, and if no children or descendants
survive, to the Director's estate.



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         6.2 Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Bank may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person. The Bank may require proof of
incompetency, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Such distribution shall completely discharge the
Bank from all liability with respect to such benefit.

                                    Article 7
                               General Limitations

         Notwithstanding any provision of this Agreement to the contrary, the
Bank shall not pay any benefit under this Agreement that is attributable to the
Bank's matching contribution or the interest earned on such contributions.

         7.1 Excess Parachute Payment. To the extent the benefit would be an
excess parachute payment under Section 280G of the Code.

         7.2 Termination for Cause. If the Bank terminates the Director's
service as a director for:

                  7.2.1. Gross negligence or gross neglect of duties.



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                  7.2.2. Commission of a felony or of a gross misdemeanor
         involving moral turpitude; or

                  7.2.3. Fraud, disloyalty, dishonesty or willful violation of
         any law or significant Bank policy committed in connection with the
         director's service and resulting in an adverse financial effect on the
         Bank.

         7.3 Suicide. If the Director commits suicide within two years after the
date of this Agreement, or if the Director has made any material misstatement of
fact on any application for life insurance purchased by the Bank.

                                    Article 8
                          Claims and Review Procedures

         8.1 Claims Procedure. The Bank shall notify the Director's beneficiary
in writing, within forty-five (45) days of his or her written application for
benefits, of his or her eligibility or noneligibility for benefits under the
Agreement. If the Bank determines that the beneficiary is not eligible for
benefits or full benefits, the notice shall set forth (1) the specific reasons
for such denial, (2) a specific reference to the provisions of the Agreement on
which the denial is based, (3) a description of any additional information or
material necessary for the claimant to perfect his or her claim, and a
description of why it is needed, and (4) an explanation of the Agreement's
claims review procedure and other appropriate information as to the steps to be
taken if the beneficiary wishes to have the claim reviewed. If the Bank


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determines that there are special circumstances requiring additional time to
make a decision, the Bank shall notify the beneficiary of the special
circumstances and the date by which a decision is expected to be made, and
may extend the time f or Lip to an additional forty-five (45) day period.

         8.2 Review Procedure. If the beneficiary is determined by the Bank not
to be eligible for benefits, or if the beneficiary believes that he or she is
entitled to greater or different benefits, the beneficiary shall have the
opportunity to have such claim reviewed by the Bank by filing a petition for
review with the Bank within sixty (60) days after receipt of the notice issued
by the Bank. Said petition shall state the specific reasons which the
beneficiary believes entitle him or her to benefits or to greater or different
benefits. Within sixty, (60) days after receipt by the Bank of the petition, the
Bank shall afford the beneficiary (and counsel, if any) an opportunity to
present his or her position to the Bank orally or in writing, and the
beneficiary (or counsel) shall have the right to review th pertinent documents.
The Bank shall notify the beneficiary of its decision in writing within the
sixty-day period, stating specifically the basis of its decision, written in a
manner calculated to be understood by the beneficiary and the specific
provisions of the Agreement on which the decision is based. If, because of the
need for a hearing, the sixty-day period is not sufficient, the decision may be
deferred for up to another sixty day period at the election of the Bank, but
notice of this deferral shall be given to the beneficiary.


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                                    Article 9
                           Amendments and Termination

         The Bank may amend or terminate this Agreement at any time prior to the
Director's Termination of Service by written notice to the Director. In no event
shall this Agreement be terminated without payment to the Director of the
Deferral Account balance attributable to the Director's deferrals and interest
credited on such amounts.

                                   Article 10
                                  Miscellaneous

         10.1 Binding Effect. This Agreement shall bind the Director and the
Bank, and their beneficiaries, survivors, executors, administrators and
transferees.

         10.2 No Guaranty of Employment. This Agreement is not a contract for
services. It does not give the Director the right to remain a director of the
Bank, nor does it interfere with the shareholders' rights to replace the
Director. It also does not require the Director to remain a director nor
interfere with the Director's right to terminate services at any time.

         10.3 Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner.



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         10.4 Tax Withholding. The Bank shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

         10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of Indiana, except to the extent preempted by the laws of
the United States of America.

         10.6 Unfunded Arrangement. The Director and beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent that mere promise by the Bank to pay such
benefits. The rights to benefits are not subject in any manner to antiCiPELtion,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors. Any insurance on the Director's life is a general
asset of the Bank to which the Director and beneficiary have no preferred or
secured claim.

         IN WITNESS WHEREOF, the Director and a duly authorized Bank officer
have signed this Agreement.

DIRECTOR:                               BANK:

                                        FIRST STATE BANK


                                        By
-----------------------------------       -------------------------------------




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                                    EXHIBIT 1

                                       TO

                         DEFERRED COMPENSATION AGREEMENT

                                FIRST STATE BANK

                                Deferral Election

I elect to defer compensation under my Deferred Compensation Agreement with the
Bank, as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
            AMOUNT OF DEFERRAL                   FREQUENCY OF DEFERRAL                 DURATION
-----------------------------------------------------------------------------------------------------------
<S>                                             <C>                           <C>
      I elect to defer $      of fees                    Monthly                      For 10 years
  ---                   -----                       ---                          ---
-----------------------------------------------------------------------------------------------------------
</TABLE>


I understand that I may change the amount, frequency and duration of my
deferrals by filing a new election form with the Bank; provided, however, that
any subsequent election will not be effective until the calendar year following
the year in which the new election is received by the Bank.

                                 FORM OF BENEFIT

I elect to receive benefits under the Agreement in the following form:

(Initial One)

       Lump Sam
-----
       Equal monthly installments for 120 months
-----


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I understand that I may not change the form of benefit elected, even if I later
change the amount of my deferrals under the Agreement.





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                             Beneficiary Designation

I designate the following as beneficiary under the Deferred Compensation
Agreement payable following my death:

Primary:
        ----------------------------------------------------
Contingent:
           -------------------------------------------------


         Note:    To name a trust as beneficiary, please provide the name of the
                  Trustee and the exact date of the trust agreement.

I understand that I may change these beneficiary designations by filing a new
written designation with the Bank. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.

Signature:
          ------------------------------------

Date:
     -----------------------------------------


Accepted by the Bank this _____ day of __________________, 19___.


By
  -----------------------------------------
                       , President



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