Document:

Exhibit
10.9

     

    FINANCIAL
PERFORMANCE INCENTIVE PROGRAM

    

    This document outlines the terms and
conditions of the Smart Balance, Inc. Financial Performance Incentive Program
(“the Program”).  This Program applies to all employees of, and third
party consultants to, Smart Balance, Inc. and its wholly-owned subsidiary GFA
Brands, Inc. (collectively referred to as “Smart Balance” or the “Company”) who
are designated as Eligible Participants by the Compensation Committee of the
Board of Directors, or any subcommittee thereof to which such authority is
delegated (“Compensation Committee”), from time to time pursuant to Section III
hereof.

    

    SECTION
I

    PROGRAM
OBJECTIVES

    

    This Program has been established by
the Compensation Committee to promote the following purposes and
objectives:

    

    
      	
               
      

            	
              ·

            	
              Align
      a significant portion of the compensation of Eligible Participants to key
      financial drivers of the Company’s
business.

            

    

    

    
      	
               
      

            	
              ·

            	
              Stress
      the importance of the growth of the Company’s Net Revenue (or equivalent
      measure) as the key factor that is most closely associated with value
      creation for the Company’s
stockholders.

            

    

    

    
      	
               
      

            	
              ·

            	
              Establish
      other criteria (financial or otherwise) to unify and focus all Eligible
      Participants on the Company’s critical success
  factors.

            

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    To ensure
that the Program continues to meet these objectives, the Company has the sole
discretion and right, through the Compensation Committee, to waive, modify,
amend any portion of this Program or terminate the Program at any
time.

    

    SECTION
II

    EFFECTIVE
DATE

    

    The
Program as set forth herein shall be effective for calendar year 2008 and all
subsequent calendar years (each a Performance Period) until the Program is
modified, amended, or terminated by the Compensation Committee.

    

    SECTION
III

    PARTICIPATION

    

    The
Compensation Committee has complete and sole discretion to determine which of
the Company’s employees or consultants (“Eligible Participants”) shall
participate in the Program with respect to a Performance Period and the amount
of the Individual Bonus Target (“Individual Bonus Target”) of, and Actual Bonus
Amount (“Actual Bonus Amount”), if any, payable to, an Eligible Participant with
respect to such Performance Period.  This list of Eligible
Participants with respect to a Performance Period shall be determined each year
by the Compensation Committee and only Eligible Participants so designated shall
be eligible to participate in the Program for such Performance
Period.  Designation of an employee or consultant as an Eligible
Participant with respect to a Performance Period shall not entitle such employee
or consultant to designation as an Eligible Participant for any other
Performance Period.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

      Except
to the extent the Compensation Committee may otherwise determine, each Eligible
Participant’s Individual Bonus Target shall be the product of the Target Bonus
Percentage for such Eligible Participant’s Tier Grade and his or her base salary
as of the first day of the Performance Period or in the case of third party
consultants such other amount as determined by the Compensation
Committee.

     

    For each
Performance Period there shall be established a bonus Pool (“Bonus Pool”) and
supplemental bonus pool (“Supplemental Bonus Pool”) which in each case shall be
equal to the sum of the Individual Bonus Targets of all Eligible Participants
for such Performance Period.

     

    The
following chart reflects the Tier Grades and Target Bonus Percentages for each
such tier under the Program.

     

    
      
        	
                Tier
      Grade

              	
                Composition/Members

              	
                Target
      Bonus Percentage

              
	 
      	 
      	 
      
	
                1A

              	
                CEO

              	
                100%
      of Base Salary

              
	
                1B

              	
                Vice
      Chair, COO

              	
                80%
      of Base Salary

              
	
                2

              	
                EVPs
      and Marketing Coordinator

              	
                50%
      of Base Salary

              
	
                3

              	
                VPs
      and Regional Bus. Managers

              	
                35%
      of Base Salary

              
	
                4

              	
                Directors

              	
                30%
      of Base Salary

              
	
                5

              	
                Managers

              	
                25%
      of Base Salary

              
	
                6

              	
                Other
      Non-Administrative Staff

              	
                20%
      of Base Salary or Pay

              
	
                7

              	
                Administrative
      Staff

              	
                10%
      of Base Salary or Pay

              

      

    

    

    The Target Bonus Percentage for a tier
grade may be revised by the Compensation Committee from time to
time.  Individual Bonus Targets do not represent guaranteed bonus
amounts, but rather merely serve as guidelines which will be used by the
Compensation Committee as a starting point in determining an Eligible
Participant’s Actual Bonus Amount, if any.  The Compensation Committee
reserves the right, in its sole discretion, to establish a different Individual
Bonus Target for any Eligible Participant.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    SECTION
IV

    BONUS
BENCHMARKS

    

    Each year the Board of Directors will
(i) identify key financial or business criteria to be considered by the
Compensation Committee in determining the Actual Bonus Amount for each Eligible
Participant (“Bonus Criteria”); (ii) establish for each financial or business
Bonus Criteria a threshold, target and maximum benchmark (“Performance Level”);
and (iii) establish any other rules or guidelines to be considered by the
Compensation Committee in determining Actual Bonus Amounts.  The
actual Bonus Criteria for a Performance Period and the percentage of the
Individual Target Bonus to be attributed to each Bonus Criteria will be
communicated to the Eligible Participants in writing.  Currently, the
Board of Directors has identified two Bonus Criteria:  Net Sales
Revenue and EBITDA.  The Board of Directors reserves the right from
year to year to change the Bonus Criteria, to add or eliminate Bonus Criteria,
to change the percentage of the Individual Target Bonus allocated to each Bonus
Criteria and to establish rules governing interpolation between Performance
Levels for each Bonus Criteria.  In the absence of any special
designation by the Board of Directors, there shall be straight line
interpolation between Performance Levels.  In the event the Clawback
provisions of Section VII apply to any Supplemental Bonus and the Board of
Directors modifies the Bonus Criteria for the next Performance Period, an
Eligible Participant’s right to receive such Supplemental Bonus shall be
determined using the Bonus Criteria used to determine the amount of the
Supplemental Bonus, with such modifications as the Compensation Committee deems,
in its discretion, to be reasonable and equitable.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    SECTION
V

    BONUS
CALCULATION

    

    The Committee shall compute a pro forma
Actual Bonus Amount for each Eligible Participant for each Performance Period as
soon as possible after the completion of a Performance Period based on the
Company’s audited financial statements in accordance with this Section
V.   To the extent that achievement of financial Bonus Criteria
cannot be ascertained by reference to the Company’s audited financial
statements, the Committee may refer to the definitions and method of calculating
financial Bonus Criteria as contained in the Company’s first lien credit
facility or by reference to other Company books and
records.  Achievement of any non-financial Bonus Criteria shall be
determined in such manner as the Compensation Committee determines, in its sole
discretion.  The Compensation Committee’s determination of the extent
that Bonus Criteria have been achieved (“Actual Bonus Criteria Results”) and the
pro forma Actual Bonus Amount for each Eligible Participant shall be final and
binding on all parties.

     

    Each Eligible Participant’s share of
the Bonus Pool and the Supplemental Bonus Pool shall be allocated among the
various Bonus Criteria based upon the Individual Bonus Target percentage
allocation determined by the Board of Directors (“Individual Bonus Pool” and
“Individual Supplemental Bonus Pool”).  Actual Bonus Criteria Results
shall then be compared to the Performance Levels established for each Bonus
Criteria for each Eligible Participant.  If Actual Bonus Criteria
Results are less than the Threshold established for that Bonus Criteria, then
the Individual Bonus Pool for that Bonus Criteria shall be zero.  If
Actual Bonus Criteria Results are equal to or greater than the Threshold but
equal to or less than the Target established for that Bonus Criteria, then the
Individual Bonus Pool amount available for distribution to such Eligible
Participant shall be a percentage of the Individual Bonus Pool for that Bonus
Criteria determined by using straight line interpolation between the Threshold
percentage amount established by the Board of Directors and the Target with the
Target being 100%.  The amount so determined for any Bonus Criteria is
referred to as the “Target Bonus Pool” and the sum of all such pools is referred
to as the “Target Bonus Pools.”  If Actual Bonus Criteria Results
exceed the Target for any Bonus Criteria, then the Individual Supplemental Bonus
Pool amount available for distribution to Eligible Participants shall be a
percentage of the Individual Supplemental Bonus Pool for that Bonus Criteria
determined by using straight line interpolation between the Target and the
Maximum with the Target at 0% and the Maximum at 100%.  The amount so
determined for any Bonus Criteria is referred to as the “Supplemental Bonus
Pool” and the sum of all such pools is referred to as the “Supplemental Bonus
Pools.”

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    The following Table demonstrates Bonus
Pool calculations:

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  Performance
      Level

                                	 	
                                  Interpolation

                                  Percentage Range

                                	 	
                                  Interpolation
      Calculation

                                
	
                                  Below
      Threshold

                                	 	 	
                                  0%

                                	 	
                                  The
      Interpolation Percentage will be determined by

                                
	
                                  Threshold
      to Target

                                	 	 	
                                  0%-100%*

                                	 
      	
                                  adding
      or subtracting the percentage (from 100%)

                                
	
                                  Target

                                	 	 	
                                  100%

                                	 	
                                  by
      which the Actual Bonus Criteria

                                
	
                                  Target
      to Maximum

                                	 	 	
                                  100%-200%

                                	 	
                                  Results
      exceeds or falls short of the respective

                                
	
                                  Maximum

                                	 	 	
                                  200%

                                	 	
                                  Target,
      relative to the Maximum or
Threshold

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
        	
              	
                *

              	
                The
      Board of Directors may establish a Threshold percentage greater than
      0%.

              

      

    

    
      
        
          
            	
                  	
                    *

                  	
                    Performance
      results will be rounded up or down to the nearest whole percentage
      point.  For example, if the calculated interpolation percentage
      is 89.1%, it will be rounded down to
89%.

                  

          

        

      

       

    

    The Compensation Committee will look to
such pro forma calculation in determining the Actual Bonus Amount, if any,
payable to an Eligible Participant with respect to a Performance
Period.  However, the final Actual Bonus Amount shall be determined by
the Compensation Committee in its sole discretion and may take into
consideration such additional factors as the Compensation Committee deems
reasonable and appropriate.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    All bonus payments under the Program
are completely discretionary and no Eligible Participant shall be deemed to have
a vested interest in any bonus payment based solely on Actual Bonus Criteria
Results or any other facts or circumstances.  Subject to Section X, an
Eligible Participant shall have a right to a bonus under the Program only when
such bonus is finally approved by the Compensation Committee.  The
Compensation Committee may delegate the authority to determine final individual
Bonus amounts to the CEO, COO or EVPs.

    

    SECTION
VI

    CONDITIONS

    

    Financial
Covenants.  Under no circumstances will any Bonus be paid or
accrued under this Program if the accrual or payment of any bonus under this
Program would cause an event of default under any credit agreement or loan
document of the Company.

     

    Maximum
Payments.  In no event may the aggregate Actual Bonus Amounts
awarded by the Compensation Committee under the Program for a Performance Period
exceed the sum of the Bonus Pool and Supplemental Bonus Pool for such
Performance Period.  In addition, in no event may the Actual Bonus
Amount for a Performance Period awarded to any Eligible Participant who is a
"covered employee" (within the meaning of Section 162(m)(3) of the Internal
Revenue Code of 1986, as amended) for such Performance Period exceed such
Eligible Participant's pro forma Actual Bonus Amount.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    SECTION
VII

    PRO
FORMA BONUS CALCULATION EXAMPLES

    

    The
following examples illustrate the application of the preceding rules (as applied
to the 2008 fiscal year):

    

    
      
        
          
            
              
                
                  	 	
                          Net
      Sales

                        	 	
                          Interpolation

                          Percentage

                          (Step
      1)

                        	 	 	
                          EBITDA

                        	 	 	
                          Interpolation

                          Percentage

                          (Step
      2)

                        	 	 	
                          Scaling
      of

                          Net
      Sales

                          Percentage

                          (Step
      3)

                        	 	 	
                          Scaling
      of

                          EBIDTA

                          Percentage

                          (Step
      4)

                        	 	 	
                          Bonus

                          Multiplier

                          (Step
      5)

                        	 	 	
                          Target

                          Bonus

                          Paid*

                        	 
	$	
                          179M

                        	 	 	100	%	 	$	33.7M	 	 	 	100	%	 	 	.60	 	 	 	.40	 	 	 	1.0	 	 	 	100	%
	$	
                           177.5M

                        	 	 	86	%	 	$	33.7M	 	 	 	100	%	 	 	.52	 	 	 	.40	 	 	 	.92	 	 	 	92	%
	$	
                           174.5M

                        	 	 	59	%	 	$	32.9M	 	 	 	0	%	 	 	.35	 	 	 	0.0	 	 	 	.35	 	 	 	0	%
	$	
                           183.5M

                        	 	 	130	%	 	$	34.2M	 	 	 	117	%	 	 	.78	 	 	 	.47	 	 	 	1.25	 	 	 	125	%
	$	
                           192.5M

                        	 	 	200	%	 	$	36.7M	 	 	 	200	%	 	 	1.20	 	 	 	.80	 	 	 	2.00	 	 	 	200	%

                

              

            

          

        

      

    

    
      
        	
              	
                *

              	
                The “Actual Bonus Amount” paid
      would be subject to final determination by the Compensation Committee and
      the provisions of the Program as set forth
  herein.

              

      

    

    

    SECTION
VIII

    CLAWBACK
PROVISION

    

    Payment
of any Supplemental Bonus Pool amount awarded to an Eligible Participant in Tier
1 (including both Tier 1A and 1B), Tier 2 or Tier 3 shall be deferred until the
second calendar year following the Performance Period and shall be subject to
forfeiture if the applicable Actual Bonus Criteria Results for the Performance
Period immediately following the Performance Period to which the award relates
(“Bonus Performance Period”) does not equal or exceed the applicable Actual
Bonus Criteria Results for the Bonus Performance Period.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    SECTION
IX

    BONUS
PAYMENTS

    

    Subject
to Section X below, and except as provided in Section VIII above, Actual Bonus
Amount awards shall be paid during the calendar year immediately following the
Performance Period to which they relate and in all events on or before March 15
of such calendar year.  Supplemental Bonus Pool Award subject to
Section VIII above, shall be paid, to the extent not forfeited, in the second
calendar year following the Performance Period to which they relate and in all
events on or before March 15 of such calendar year.

    

    SECTION
X

    EMPLOYMENT
REQUIREMENT

    

    As a
condition to receiving payment of an Actual Bonus Amount award for a Performance
Period, an Eligible Participant must be employed by, or with respect to
consultants actively engaged in providing services to, the Company on the date
when the Bonuses under the Program for such Performance Period are
paid.  An Eligible Participant who is not employed by, or actively
providing services to, the Company on such date will forfeit all right to such
award.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    

    SECTION
XI

    MISCELLANEOUS

    

    Not Deferred
Compensation.  Except with respect to Supplemental Bonuses
subject to Section IX, it is intended that the Bonus payments made under this
Program shall be considered a form of “short-term deferral” under Treasury
Regulation Section 1.409A-1(b)(4) such that the Program is exempt from the
general application of Internal Revenue Code (“Code”) Section
409A.  The Compensation Committee and the Company shall interpret and
administer the Program in a manner which ensures such exemption.

     

    Administrative
Discretion.  The Compensation Committee shall have the sole and
exclusive power and authority to resolve all ambiguities under the Program, to
determine participation rights and Bonus amounts, and to otherwise take such
action as it deems necessary or appropriate to operate this
Program.

     

    Change of
Control.  In the event that the Company experiences a Change of
Control (as defined in the Smart Balance, Inc. Stock and Awards Plan), then all
Eligible Participants with respect to the Performance Period in which such
Change of Control occurs shall be entitled to receive, in lieu of any other
payment under this Program for such Performance Period, the greater
of:  (1) his or her Individual Bonus Target for the Performance Period
in which the Change of Control occurs; (2) his or her actual Bonus (including
any Supplemental Bonus) awarded with respect to the prior Performance Period; or
(3) the pro forma Actual Bonus Amount for the Performance Period in which the
Change of Control occurs determined in accordance with Section V based on the
Actual Bonus Criteria Results for the period from January 1 of the current
Performance Period through the date of the Change of Control (whichever is
greater, the “Change of Control Bonus”).   Each Eligible
Participant’s Change of Control Bonus shall be paid in a lump sum on the earlier
of (i) thirty (30) days following the date of the Eligible Participant’s
Separation from Service (as defined in the Smart Balance, Inc. Stock and Awards
Plan) or March 15 of the calendar year immediately following the Performance
Period in which the Change of Control occurs.  In addition, any
Supplemental Bonus from a prior Performance Period which was not paid due to the
application of Section IX of the Program shall be deemed earned as of the Change
of Control and shall be paid to the Eligible Participant entitled to such
Supplemental Bonus at the same time as the Change of Control Bonus is
paid.  Finally, for purposes of administering Bonus payments related
to any Performance Period which ends prior to the Change of Control, the
Compensation Committee shall consist solely of those individuals who were
members of the Compensation Committee on the day before such Change of
Control.

    
      
         

      

      
        10Unassociated Document

    Exhibit
10.18

     

    FIRST
FEDERAL BANK, A F.S.B.

    EXECUTIVE
SUPPLEMENTAL RETIREMENT INCOME AGREEMENT

    

    THIS EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT (the “AGREEMENT”), made and entered into this
1st
day of October 1996, by and between FIRST FEDERAL BANK, A F.S.B., a banking
corporation organized and existing under the laws of the state of Indiana
(hereinafter referred to as “Bank”) and Bradley M. Rust, a key employee and
executive (hereinafter referred to as “Executive”).

    

    WITNESSETH:

    

    WHEREAS, the Executive is
employed by the Bank; and

    

    WHEREAS, the Bank recognizes
the valuable services heretofore performed for it by the Executive and wishes to
encourage continued employment; and

    

    WHEREAS, the Executive wishes
to be assured that he will be entitled to a certain amount of additional
compensation for some definite period of time from and after his retirement from
active service with the Bank or other termination of his employment and wishes
to provide his beneficiary with benefits from and after his death;
and

    

    WHEREAS, the parties hereto
wish to provide the terms and conditions upon which the Bank shall pay such
additional compensation to the Executive after his retirement or other
termination of his employment and/or death benefits to his beneficiary after his
death; and

    

    WHEREAS, the parties hereto
intend that this Agreement be considered an unfunded arrangement, maintained
primarily to provide supplemental retirement income for the Executive, a member
of a select group of management or highly compensated employees of the Bank, for
purposes of the Employee Retirement Income Security Act of 1975, as amended;
and

    

    WHEREAS, the Bank has adopted
this Executive Supplemental Retirement Income Agreement which controls all
issues relating to the Supplemental Retirement Income Benefit as described
herein; and

    

    NOW, THEREFORE, in
consideration of the mutual promises herein contained, the parties hereto agree
to the following terms and conditions:

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    SECTION
I

    

    DEFINITIONS

    

    When used herein, the following words
shall have the meanings below unless the context clearly indicates
otherwise:

    

    
      	
              1.1

            	
              “Accrued Benefit” means
      that portion of the Supplemental Retirement Income Benefit which is
      required to be expensed and accrued under generally accepted accounting
      principals by any appropriate methodology which the Board may require in
      the exercise of its sole discretion.  Such Accrued Benefit shall
      be annuitized and shall be paid to the Executive in one hundred eighty
      (180) equal monthly installments.  The interest factor used to
      annuitize the Accrued Benefit shall be equal to the average cost of
      deposits of the Bank (as determined by the Board) for the calendar year
      immediately preceding the date on which the Accrued Benefit is
      annuitized.

            

    

     

    
      	
              1.2

            	
              “Act” means the Employee
      Retirement Income Security Act of 1974, as now in effect and as it may be
      amended from time to time.

            

    

     

    
      	
              1.3

            	
              “Bank” means FIRST
      FEDERAL BANK, A F.S.B. and any successor
  thereto.

            

    

     

    
      	
              1.4

            	
              “Beneficiary” means the
      person, persons (and their heirs) or other entity designated as
      Beneficiary in writing to the Bank to whom the benefit(s), the deceased
      Executive would have received had he lived, is (are)
      payable.  If no Beneficiary is so designated, then the
      Executive’s Spouse, if living, will be deemed the
      Beneficiary.  If the Executive’s Spouse is not living, then the
      Children of the Executive will be deemed Beneficiary and take on a per
      stirped basis.  If there are no living Children, then the Estate
      of the Executive will be deemed the
Beneficiary.

            

    

     

    
      	
              1.5

            	
              “Board” means the Board
      of Directors of the Bank.

            

    

     

    
      	
              1.6

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

            

    

     

    
      	
              1.7

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

            

    

     

    
      	
              1.8

            	
              “Code” means the
      Internal Revenue Code of 1986 as now in effect and as amended from time to
      time.

            

    

     

    
      	
              1.9

            	
              “Early Retirement Date”
      means retirement from service, upon meeting certain conditions as
      specified in this Agreement, which is effective prior to the Normal
      Retirement Date.

            

    

     

    
      	
              1.10

            	
              “Effective Date” shall
      be the effective date of this Agreement, October 1,
  1996.

            

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
              1.11

            	
              “Estate” means the
      estate (including, when applicable, any irrevocable trust governing the
      transfer of non-probate assets) of the
  Executive.

            

    

     

    
      	
              1.12

            	
              “Normal Retirement Date”
      means the first day of the month coincident with or next following
      the Executive’s sixty-fifth (65th)
      birthday.

            

    

     

    
      	
              1.13

            	
              “Permanently and Totally
      Disabled” means the Executive has, for at least six (6) months,
      been unable to perform the services incident to his position with the Bank
      as a result of accidental bodily injury or sickness and that the status is
      likely to continue for an indefinite period, as reasonably determined
      subsequent to the expiration of the six (6) month period by a duly
      licensed physician selected in good faith by the
  Bank.

            

    

     

    
      	
              1.14

            	
              “Postponed Retirement Date”
      means the first day of the month coincident with or next following
      the Executive’s termination of employment with the Bank after his Normal
      Retirement Date.

            

    

     

    
      	
              1.15

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

            

    

     

    
      	
              1.16

            	
              “Suicide” means the act
      of intentionally killing oneself.

            

    

     

    
      	
              1.17

            	
              “Supplemental Retirement Income
      Benefit” means an annual amount equal to Twenty-Six Thousand Three
      Hundred Forty Dollars ($26,340).  This total shall be divided by
      twelve (12) and paid in equal monthly installments for a period of one
      hundred eighty (180) months.

            

    

     

    
      	
              1.18

            	
              “Survivor’s Benefit”
      means Twenty-Six Thousand Three Hundred Forty Dollars ($26,340) per
      year to be paid in one hundred eighty (180) equal monthly
      installments.

            

    

     

    
      	
              1.19

            	
              “Vested” means the
      non-forfeitable portion of the benefit to which the Executive is
      entitled.

            

    

     

    
      	
              1.20

            	
              “Vested Accrued Benefit”
      means that portion of the Executive’s Accrued Benefit in which he
      is vested.  It is computed by multiplying the Accrued Benefit by
      the vesting percentage specified in Subsection 3.5.  Such Vested
      Accrued Benefit shall be paid to the Executive in one hundred eighty (180)
      equal monthly installments.

            

    

     

    
      	
              1.21

            	
              “Years of Service” means
      the total number of complete years of employment (including employment
      before the Effective Date and authorized leaves of
    absence).

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    SECTION
II

     

    PRE-RETIREMENT AND POST
RETIREMENT DEATH BENEFITS

     

    
      	
              2.1

            	
              Death Prior to
      Termination of Employment.  It the Executive dies prior
      to termination of employment with the Bank, his Beneficiary shall be
      entitled to be paid the Survivor’s Benefit, commencing within thirty (30)
      days of the Executive’s death.

            

    

     

    
      	
              2.2

            	
              Death After
      Termination of Employment.  In the event of the
      Executive’s death after his termination of employment, the Executive’s
      Beneficiary shall be paid a monthly benefit for a period of one hundred
      eighty (180) months, commencing within thirty (30) days of the Executive’s
      death and the benefit payment shall be determined as
    follows:

            

    

     

    (a)           Voluntary or Involuntary
Termination of Employment Prior to Normal Retirement Date.  In
the event the Executive’s death occurs after his voluntary termination of
employment with the Bank but before his Normal Retirement Date, the Executive’s
Beneficiary shall be entitled to be paid the Executive’s Vested Accrued Benefit
in one hundred eighty (180) equal monthly installments.  If the
Executive dies while he is receiving benefits, the Executive’s Beneficiary shall
be entitled to receive those benefits which the Executive would have been paid
had he lived the entire distribution period.

    

    In the
event the Executive’s death follows his involuntary termination (not for Cause
by the Board), the Executive’s Beneficiary shall be entitled to receive the
Executive’s Supplemental Retirement Income Benefit, with payments commencing
within thirty (30) days of the Executive’s death.  In the event the
Executive dies while he is receiving his supplemental retirement income
benefits, the Executive’s Beneficiary shall be entitled to receive the balance
of payments that the Executive would have received had he lived.

    

    (b)           Termination of Service at
Normal Retirement Age.  In the event of the Executive’s death
following the termination of service on or after his Normal Retirement Date, the
Executive’s Beneficiary shall be paid those benefits which the Executive would
have been paid had he lived for the entire retirement distribution
period.  Benefits shall be paid to the Executive’s Beneficiary in the
same manner they would have been paid to the Executive had he lived; that is, a
total of one hundred eighty (180) equal monthly installments shall be paid to
the Executive and/or his Beneficiary.

    

    
      	
              2.3

            	
              Death by Reason of
      Suicide.  In the event the Executive dies by reason of
      suicide within two (2) years of the date of execution of this Agreement,
      the Bank shall be under no obligation to provide any benefits to the
      Executive’s Beneficiary.

            

    

     

    
      	
              2.4

            	
              Additional Death
      Benefit – Burial Expenses.  In addition to the
      above-described death benefits, upon his death, the Executive’s
      Beneficiary shall be entitled to receive a one-time lump sum death benefit
      in the amount of Ten Thousand ($10,000.00) Dollars; provided, however,
      that if the Executive terminates his employment with the Bank before July
      1, 1998 for reasons other than his death or due to his becoming
      Permanently and Totally Disable, the one-time lump sum death benefit
      otherwise provided in this Section shall not be
  payable.

            

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    SECTION
III

    

    SUPPLEMENTAL RETIREMENT
INCOME BENEFIT

    AND DISABILITY
BENEFIT

    

    
      	
              3.1

            	
              Normal Retirement
      Benefit.  If the Executive retires on his Normal
      Retirement Date, the Bank shall commence payment of the Supplemental
      Retirement Income Benefit.  Such payments shall commence on the
      first day of the month next following the Executive’s retirement date and
      shall be payable monthly thereafter until all payments have been
      made.

            

    

     

    
      	
              3.2

            	
              Early Retirement
      Benefit.  If the Executive terminates his employment with
      the Bank on or after reaching age sixty (60) and if he remains in
      continuous service from the date of this Agreement through his employment
      termination date, the Executive shall be entitled to receive the
      Supplemental Retirement Income Benefit specified in Subsection 1.17,
      reduced by six (6) percent per year for each year (or fraction thereof)
      that the Early Retirement Date precedes the Normal Retirement
      Date.  Payment of this early retirement benefit shall commence
      with thirty (30) days after Executive’s Early Retirement
    Date.

            

    

     

    
      	
              3.3

            	
              Postponed Retirement
      Benefit.  If the Executive continues his employment with
      the Bank beyond his Normal Retirement Date, the postponed retirement
      benefit of the Executive shall be the Supplemental Retirement Income
      Benefit as set forth in Subsection 1.17.  However, the Board, in
      the exercise of its sole discretion, may, but is not required to, increase
      benefits if retirement is postponed past the Normal Retirement
      Date.  The postponed retirement benefit shall not commence until
      the Postponed Retirement Date.

            

    

     

    
      	
              3.4

            	
              Disability.  If
      the Executive becomes Permanently and Totally Disabled prior to reaching
      his retirement, while covered by the provisions of this Agreement, the
      Executive shall be entitled to his Accrued Benefit at the time he becomes
      Permanently and Totally Disabled.  Payments shall begin within
      thirty (30) days after the Executive becomes Permanently and Totally
      Disabled.

            

    

    

    At the
Executive’s death, if the total amount of disability payments received under the
provisions of this Subsection is less than the total amount of payments that
would have been received under the Survivor’s Benefit section (has it applied
instead), the Bank shall pay the Executive’s Beneficiary a lump sum payment to
make the total benefits equal to the amount allowable under the Survivor’s
Benefit section.  Such a lump sum payment would be in full
satisfaction of the Bank’s obligations under this Agreement.

     

    
      	
              3.5

            	
              Vesting.  Vested
      Accrued Benefits, as described in Subsection 1.20, shall be determined
      according to the following
schedule:

            

    

       

    
      
        
          
            	 
      	 	
                    Percentage
      of

                  	 
	 
      	 	
                    Total
      Benefit

                  	 
	
                    Years of Service

                  	 	
                    Vested

                  	 
	 
      	 	 	 
	
                    Less
      than 5 years

                  	 	 	0	%
	
                    5
      years or more

                  	 	 	100	%

          

        

      

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    SECTION
IV

    

    EXECUTIVE’S RIGHT TO
ASSETS

    

    The rights of the Executive, any
Beneficiary of the Executive, or any other person claiming through the Executive
under this Agreement, shall be solely those of an unsecured general creditor of
the Bank.  The Executive, the Beneficiary of the Executive, or any
other person claiming through the Executive, shall only have the right to
receive from the Bank those payments which are specified under this
Agreement.  The Executive agrees that he, his Beneficiary, or any
other person claiming through him shall have no rights or interests whatsoever
in any asset of the Bank, including any insurance policies or contracts which
the Bank may possess or obtain to informally fund this Agreement.  Any
asset used or acquired by the Bank in connection with the liabilities it has
assumed under this Agreement, except as expressly provided, shall not be deemed
to be held under any trust for the benefit of the Executive or his
Beneficiaries, nor shall it be considered security for the performance of the
obligations of the Bank.  It shall be and remain, a general,
unpledged, and unrestricted asset of the Bank.

    

    SECTION
V

    

    RESTRICTIONS UPON
FUNDING

    

    The Bank
shall have no obligation to set aside, earmark or entrust any fund or money with
which to pay its obligations under this Agreement.  The Executive, his
Beneficiaries or any successor in interest to him, shall be and remain simply a
general creditor of the Bank in the same manner as any other creditor having a
general claim for matured and unpaid compensation.  The Bank reserves
the absolute right, at its sole discretion, to either fund the obligations
undertaken by the Agreement or to refrain from funding the same and to determine
the extent, nature, and method of such informal funding.  Should the
Bank elect to fund this Agreement, in whole or in part, through the purchase of
life insurance, mutual funds, disability policies or annuities, the Bank
reserves the absolute right, in its sole discretion, to terminate such funding
at any time, in whole or in part.  At no time shall the Executive be
deemed to have any lien nor right, title or interest in or to any specific
funding investment or to any assets of the Bank.  If the Bank elects
to invest in a life insurance, disability or annuity policy upon the life of the
Executive, then the Executive shall assist the Bank by freely submitting to a
physical examination and supplying such additional information necessary to
obtain such insurance or annuities.

    

    SECTION
VI

    

    ALIENABILITY AND ASSIGNMENT
PROHIBITION

    

    Neither the Executive nor any
Beneficiary under this Agreement shall have any power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber
in advance any of the benefits payable hereunder, nor shall any of said benefits
be subject to seizure for the payment of any debts, judgments, alimony or
separate maintenance owed by the Executive or his Beneficiary, nor be
transferable by operation of law in the event of bankruptcy, insolvency or
otherwise.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    SECTION
VII

    

    TERMINATION OF
EMPLOYMENT

    

    
      	
              7.1

            	
              Termination of Service
      Prior to Retirement Date.  If, prior to Executive’s Early
      Retirement Date, the Executive is terminated without Cause by the Bank,
      the Bank shall pay to the Executive an amount equal to the Executive’s
      Supplemental Retirement Income Benefit, commencing within thirty (30) days
      of the Executive’s Normal Retirement Date.  However, it the
      Executive’s termination of employment with the Bank before his Early
      Retirement Date is voluntary, he shall only be entitled to his Vested
      Accrued Benefit existing at the date of termination.  Payment of
      the Vested Accrued Benefit shall commence within thirty (30) days after
      his attainment of his Normal Retirement
Date.

            

    

     

    
      	
              7.2

            	
              Termination of Service
      for Cause.  Should the Executive’s employment by the Bank
      be terminated for Cause before his Normal Retirement Date, his Benefits,
      including any death benefits, under this Agreement shall be forfeited and
      this Agreement shall become null and
void.

            

    

     

    
      	
              7.3

            	
              Termination or
      Suspension Resulting from Regulatory Actions.  Pursuant
      to 12 C.F.R. § 563.39 (b), the following conditions shall apply to this
      Agreement:

            

    

    
    

    (1)          The
Board may terminate the Executive’s employment at any time, but any termination
by the Board other than termination for Cause, shall not prejudice the
Executive’s right to compensation or other benefits under the
contract.  The Executive’s shall have no right to receive compensation
or other benefits for any period after termination for Cause.

    

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

    

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

    

    

    
      (4)          If the
Bank is in default (as defined in Section 3 (x) (1) of the Federal Deposit
Insurance Act), all obligations under the contract shall terminate as of the
date of default, but this paragraph shall not affect any vested rights of the
contracting parties.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

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

    

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

    

    

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

    

    

    
      Any
rights of the parties that have already vested, however, shall not be affected
by such action.

    

    

    SECTION
VIII

    

    ACT
PROVISIONS

    

    
      	
              8.1

            	
              Named Fiduciary and
      Administrator.  The Bank shall be the named fiduciary and
      administrator of this Agreement.  As administrator, the Bank
      shall be responsible for the management, control and administration of the
      Agreement as established herein.  It may delegate to others
      certain aspects of the management and operation responsibilities of the
      Agreement including the employment of advisors and the delegation of
      ministerial duties to qualified
individuals.

            

    

     

    
      	
              8.2

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

            

    

    

    If
claimants desire a second review, they shall notify the Bank in writing within
sixty (60) days of the first claim denial.  Claimants may review the
Agreement or any documents relating thereto and submit any written issues and
comments they may feel appropriate.  In its sole discretion, the Bank
shall then review the second claim and provide a written decision within sixty
(60) days of receipt of such claim.  This decision shall likewise
state the specific reasons for the decision and shall include reference to
specific provisions of the Agreement upon which the decision is
based.  If claimants disagree with the decision of the Bank, nothing
herein shall serve to preclude them from seeking any and all remedies available
at law.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    SECTION
IX

    

    MISCELLANEOUS

    

    
      	
              9.1

            	
              No Effect on
      Employment Rights.  Nothing contained herein shall confer
      upon the Executive the right to be retained in the service of the Bank nor
      limit the right of the Bank to discharge or otherwise deal with the
      Executive without regard to the existence of this
    Agreement.

            

    

     

    
      	
              9.2

            	
              Disclosure.  Each
      Executive shall receive a copy of his Agreement and the Bank will make
      available, upon request, a copy of the rules and regulations that govern
      this type of Agreement.

            

    

     

    
      	
              9.3

            	
              State
      Law.  The Agreement is established under, and will be
      construed according to, the laws of the State of Indiana, to the extent
      that such laws are not preempted by the Act and valid regulations
      published thereunder.

            

    

     

    
      	
              9.4

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

            

    

     

    
      	
              9.5

            	
              Incapacity of
      Recipient.  In the event the Executive is declared
      incompetent and a conservator or other person legally charged with the
      care of his person or of his estate is appointed, any benefits under the
      Agreement to which such Executive is entitled shall be paid to such
      conservator or other person legally charged with the care of his person or
      his Estate.

            

    

     

    
      	
              9.6

            	
              Recovery of Estate
      Taxes.  If the Executive’s gross Estate for federal
      estate tax purposes includes any amount determined by reference to and on
      account of this Executive Supplemental Retirement Income Agreement, and if
      the Beneficiary is other than the Executive’s Estate, then the Executive’s
      Estate shall be entitled to recover from the Beneficiary receiving such
      benefit under the terms of the Deferred Compensation Benefit an amount by
      which the total estate tax due by the Executive’s Estate, exceeds the
      total estate tax which would have been payable if the value of such
      benefit had not been included in the Executive’s gross Estate. If there is
      more than on person receiving such benefit, the right of recovery shall be
      against each such person in proportion to the benefits received by each
      such person.  In the event any Beneficiary has a liability
      hereunder, such Beneficiary may petition the Bank for a lump sum payment
      in an amount not to exceed the Beneficiary’s liability
      hereunder.

            

    

     

    
      	
              9.7

            	
              Unclaimed
      Benefit.  The Executive shall keep the Bank informed of
      his current address and the current address of his
      Beneficiaries.  The Bank shall not be obligated to search for
      the whereabouts of any person.  If within three years after the
      actual death of the Executive the Bank is unable to locate any Beneficiary
      of the Executive, then the Bank may fully discharge its obligation by
      payment to the Estate.

            

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      	
              9.8

            	
              Limitations on
      Liability.  Notwithstanding any of the preceding
      provisions of the Agreement and except for the benefits otherwise payable
      under this Agreement, neither the Bank, nor any individual acting as an
      employee or agent of the Bank or as a member of the Board shall be liable
      to the Executive or any other person for any claim, loss, liability or
      expense incurred in connection with the
  Agreement.

            

    

     

    
      	
              9.9

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

            

    

     

    
      	
              9.10

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

            

    

     

    
      	
              9.11

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

            

    

    

    SECTION
X

    

    NON-COMPETITION

    

    
      	
              10.1

            	
              Non-Compete
      Clause.  The Executive expressly agrees that, as
      consideration for the agreements of the Bank contained herein and as a
      condition to the performance by the Bank of its obligations hereunder,
      throughout the entire period beginning at the time of termination of
      employment until the final payment is made to Executive, as provided
      herein, he will not, without the prior written consent of the Board,
      engage in, become interested, directly or indirectly, as a sole
      proprietor, as a partner in a partnership, or as a 5% or greater
      shareholder in a corporation, nor become associated with, in the capacity
      of an employee, director, officer, principal, agent, trustee or in any
      other capacity whatsoever, any enterprise conducted in the trading area of
      the business of the Bank which may be deemed to be competitive with any
      business earned on by the Bank as of the date of the termination of the
      Executive’s employment or his
retirement.

            

    

    

    
      	
              10.2

            	
              Breach.  In
      the event of any breach by the Executive of the agreements and covenants
      contained herein, the Board shall direct that any unpaid balance of any
      payments to the Executive under this Agreement be suspended, and shall
      thereupon notify the Executive of such suspensions, in
      writing.  Thereupon, if the Board shall determine that said
      breach by the Executive has continued for a period of one (1) month
      following notification of such suspension, all rights of the Executive and
      his Beneficiaries under this Agreement, including rights to further
      payments hereunder, shall thereupon
terminate.

            

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    SECTION
XI

    

    
      AMENDMENT/REVOCATION

    

    

    This Agreement shall not be amended,
modified, or revoked at any time, in whole or part, without the mutual written
consent of the Executive and the Bank, and such mutual consent shall be required
even if the Executive is no longer employed by the Bank.

    

    ARTICLE
XII

    

    EXECUTION

    

    
      	
              12.1

            	
              This
      Agreement sets forth the entire understanding of the parties hereto with
      respect to the transactions contemplated hereby, and any previous
      agreements or understandings between the parties hereto regarding the
      subject matter hereof are merged into and superseded by this
      Agreement.

            

    

    

    
      	
              12.2

            	
              This
      agreement shall be executed in triplicate, each copy of which, when so
      executed and delivered, shall be an original, but all three copies shall
      together constitute one and the same
instrument.

            

    

    

    IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed on this 2 day of January,
1997.

    

    
      
        	
                By/s/Bradley M. Rust

              
	
                Bradley
      M. Rust, Executive

              
	 
      
	
                FIRST
      FEDERAL BANK, A F.S.B.

              
	 
      
	
                By/s/Frank D. Baracani

              
	
                Frank
      D. Baracani

              
	
                President

              
	
                (Title)

              

      

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    German
American Bancorp

    
      Executive
Supplemental Retirement Income Agreement

      
        

        

      

    

    FIRST
AMENDMENT

    TO
THE

    EXECUTIVE
SUPPLEMENTAL RETIREMENT INCOME AGREEMENT

    DATED
OCTOBER 1, 1996

    FOR

    BRADLEY
M. RUST

    

    THIS FIRST AMENDMENT is adopted this
30th
day of December, 2008, effective as of January 1, 2005, by and between German
American Bancorp (“GABC”) (the successor to First American Bank f/k/a First
Federal Bank, a banking corporation located in Vincennes, Indiana (the “Bank”)),
and Bradley M. Rust (the “Executive”).

    

    The Bank and the Executive executed the
Executive Supplemental Retirement Income Agreement effective as of October 1,
1996 (the “Agreement”).  This amendment shall apply to all amounts
deferred or vested under the Agreement after 2004, and any earnings with respect
to such amounts.  The amendment shall not apply to any amount deferred
and vested as of December 31, 2004, or any earnings credited under the Agreement
with respect to such amounts (“Grandfathered Amounts”).  Such
Grandfathered Amounts shall continue to be governed by the terms and conditions
of the Agreement in effect prior to January 1, 2005, and without regard to this
amendment to the extent necessary to preserve the exemption of Grandfathered
Amounts from the application of Code Section 409A.  The Agreement
shall be deemed two agreements, one for Grandfathered Amounts and one for
Non-Grandfathered Amounts.

    

    The undersigned hereby amend the
Agreement for the purpose of bringing the Agreement into compliance with Section
409A of the Internal Revenue Code.  Therefore, the following changes
shall be made:

    

    Section 1.13 of the Agreement shall be
deleted in its entirety and replaced by the following:

    

    
      	
              1.13

            	
              “Permanently and Totally
      Disabled” means the Executive: (i) is 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 twelve
      (12) months; or (ii) is, 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 twelve (12)
      months, receiving income replacement benefits for a period of not less
      than three (3) months under an accident and health plan covering employees
      of GABC.  Medical determination of Disability may be made by
      either the Social Security Administration or by the provider of an
      accident or health plan covering employees of GABC.  Upon the
      request of the plan administrator, the Executive must submit proof to the
      plan administrator of the Social Security Administration’s or the
      provider’s determination.

            

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    German
American Bancorp

    
      Executive
Supplemental Retirement Income Agreement

      
        

        

      

    

    The following Sections 1.14a shall be
added to the Agreement immediately following Section 1.14:

    

    
      	
              1.14a

            	
              “Specified Employee”
      means any individual who, at any time during the twelve (12) month
      period ending on the identification date (as determined by GABC or its
      delegate), is a specified employee under Section 409A of the Code, as
      determined by GABC (or its delegate).  The determination of
      “specified employees,” including the number and identity of persons
      considered “specified employees” and identification date, shall be made by
      GABC (or its delegate) in accordance with the provisions of Sections
      416(i) and 409A of the Code.

            

    

    

    The following Sections 1.18a shall be
added to the Agreement immediately following Section 1.18:

    

    
      	
              1.18a

            	
              “Termination of
      Employment” means a “separation from service” with the meaning of
      section 409A of the Code and the guidance
  thereunder.

            

    

    

    Section 3.2 of the Agreement shall be
deleted in its entirety and replaced by the following:

    

    
      	
              3.2

            	
              Early Retirement
      Benefit.  If the Executive remains in continuous service
      to the GABC from the date of this Agreement through Termination of
      Employment, then upon Termination of Employment on or after reaching age
      sixty (60) and before the Normal Retirement Date, then the Executive shall
      be entitled to receive the Supplemental Retirement Income Benefit reduced
      by six percent (6%) per year for each year (or fraction thereof) that the
      Early Retirement Date precedes the Normal Retirement
      Date.  Payment shall commence on the first day of the month next
      following Termination of Employment and shall continue monthly until all
      payments have been made.

            

    

    

    Section
3.3 of the Agreement shall be deleted in its entirety and replaced by the
following:

    

    
      	
              3.3

            	
              Postponed Retirement
      Benefit.  If the Executive remains in continuous service
      to GABC after the Normal Retirement Date, the postponed retirement benefit
      shall be the Supplemental Retirement Income Benefit.  Prior to
      Termination of Employment, the Board, in its sole discretion, may, but is
      not required to, increase the postponed retirement benefit if retirement
      is postponed past the Normal Retirement Date.  Payment shall
      commence on the first day of the month next following Termination of
      Employment and shall continue monthly until all payments have been
      made.

            

    
   

    The
following Sections 3.6, 3.7 and 3.8 shall be added to the Agreement immediately
following Section 3.5:

    

    
      	
              3.6

            	
              Restriction on Timing
      of Distributions.  Notwithstanding any provision of this
      Agreement to the contrary, if the Executive is considered a Specified
      Employee at Termination of Employment, the provisions of this Section 3.6
      shall govern all distributions hereunder.  Benefit distributions
      that are made due to a Termination of Employment occurring while the
      Executive is a Specified Employee shall not be made during the first six
      (6) months following Termination of Employment, rather any distribution
      which would otherwise be paid to the Executive during such period shall be
      accumulated and paid to the Executive in a lump sum on the first day of
      the seventh month following the Termination of Employment.  All
      subsequent distributions shall be paid in the manner
      specified.

            

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    German
American Bancorp

    
      Executive
Supplemental Retirement Income Agreement

      
        

        

      

    

    
      	
              3.7

            	
              Distributions Upon
      Income Inclusion Under Section 409A of the Code.  If any
      amount is required to be included in income by the Executive prior to
      receipt due to a failure of this Agreement to meet the requirements of
      Code Section 409A and related Treasury guidance or Regulations, the
      Executive may petition the Plan Administrator for a distribution of that
      portion the Accrued Benefit that is required to be included in the
      Executive’s income.  Upon the grant of such a petition, which
      grant shall not be unreasonably withheld, GABC shall distribute to the
      Executive immediately available funds in an amount equal to the portion of
      the Accrued Benefit required to be included in income as a result of the
      failure of this Agreement to meet the requirement of Code Section 409A and
      related Treasury guidance or Regulations, within ninety (90) days of the
      date when the Executive’s petition is granted.  Such a
      distribution shall affect and reduce the Executive’s benefits to be paid
      under this Agreement.

            

    

    

    
      	
              3.8

            	
              Change in Form or
      Timing of Distributions.  All changes in the form or
      timing of distributions hereunder must comply with the requirements of
      Code Section 409A, which generally provide that such
    changes:

            

    

    

    
      	
               
      

            	
              (a)

            	
              may
      not accelerate the time or schedule of any distribution, except as
      provided in Section 409A of the Code and the regulations
      thereunder;

            

    

     

    
      	
               
      

            	
              (b)

            	
              must,
      for benefits distributable under Sections 3.1, 3.2, 3.3 and 7.1, delay the
      commencement of distributions for a minimum of five (5) years from the
      date the first distribution was originally scheduled to be made; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              must
      take effect not less than twelve (12) months after the election is
      made.

            

    

    

    Section
7.1 of the Agreement shall be deleted in its entirety and shall be replaced by
the following:

    

    
      	
              7.1

            	
              Termination of
      Employment Prior to Age Sixty.  If, prior to age sixty
      (60), the Executive is terminated without Cause by GABC, GABC shall pay to
      the Executive an amount equal to the Executive’s Supplemental Retirement
      Income Benefit, commencing within thirty (30) days of the Executive’s
      Normal Retirement Date.  However, if the Executive’s Termination
      of Employment with GABC before age sixty (60) is voluntary, he shall only
      be entitled to his Vested Accrued Benefit existing at the Termination of
      Employment.  Payment of the Vested Accrued Benefit shall
      commence within thirty (30) days after his attainment of Normal Retirement
      Date.

            

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    German
American Bancorp

    
      Executive
Supplemental Retirement Income Agreement

      
        

        

      

    

    Section 9.6 of the Agreement shall be
deleted in its entirety and shall be replaced by the following:

    

    
      	
              9.6

            	
              Compliance with
      Section 409A.

            

    

    

    (a)           The
parties hereto intend that all benefits and payments to be made to the Executive
hereunder will be provided or paid to him in compliance with al applicable
provisions of section 409A of the Code and the regulations issued thereunder,
and the rulings, notices and other guidance issued by the Internal Revenue
Services interpreting the same, and this Agreement shall be construed and
administered in accordance with such intent.  The parties also agree
that this Agreement may be modified, as reasonably requested by either party, to
the extent necessary to comply with all applicable requirements of, and to avoid
the imposition of any additional tax, interest and penalties under, the section
409A of the Code in connection with, the benefits and payments to be provided or
paid to the Executive hereunder.  Any such modification shall maintain
the original intent and benefit to GABC and the Executive of the applicable
provision of this Agreement, to the maximum extent possible without violating
section 409A of the Code.

    

    (b)           All
payments to be made upon a termination of employment under this Agreement may
only be made upon a “separation from service” under section 409A of the
Code.  For purposes of section 409A of the Code, the right to receive
a series of installment payments under this Agreement shall be treated as a
right to a series of separate payments.  Further, for purposes of the
limitations on nonqualified deferred compensation under section 409A of the
Code, each payment of compensation under this Agreement shall be treated as a
separate payment.  In no event may the Executive, directly or
indirectly, designate the calendar year of a payment.

    

    Section
XI of the Agreement shall be deleted in its entirety and replaced by the
following:

    

    Section
XI

    Amendments and
Termination

    

    
      	
              11.1

            	
              Amendments.  This
      Agreement may be amended only by a written agreement signed by GABC and
      the Executive.  However, GABC may unilaterally amend this
      Agreement to conform with written directives to GABC from its auditors or
      banking regulators or to comply with legislative changes or tax law,
      including without limitation Section 409A of the Code and any and all
      Treasury regulations and guidance promulgated
  thereunder.

            

    

     

    
    

    
      	
              11.2

            	
              Plan Termination
      Generally.  GABC and the Executive may terminate this
      Agreement at any time.  The benefit hereunder shall be the
      Accrued Benefit as of the date the Agreement is
      terminated.  Except as provided in Section 11.3, the termination
      of this Agreement shall not cause a distribution of benefits under this
      Agreement.  Rather, after such termination benefit distributions
      will be made at the earliest distribution event permitted under Section
      II, Section III and Section
VII.

            

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    German
American Bancorp

    
      Executive
Supplemental Retirement Income Agreement

      
        

        

      

    

    
      	
              11.3

            	
              Plan Terminations
      Under Section 409A.  Notwithstanding anything to the
      contrary in Section 11.2, if this Agreement terminates in the following
      circumstances:

            

    

    

    
      	
               
      

            	
              (a)

            	
              Within
      thirty (30) days before or twelve (12) months after a change in the
      ownership or effective control of GABC, or in the ownership of a
      substantial portion of the assets of GABC as described in Section
      409A(2)(A)(v) of the Code, provided that all distributions are made no
      later than twelve (12) months following such termination of the Agreement
      and further provided that all GABC’s arrangements which are substantially
      similar to the Agreement are terminated so the Executive and all
      participants in the similar arrangements are required to receive all
      amounts of compensation deferred under the terminated arrangements within
      twelve (12) months of the termination of the
  arrangements;

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

            	
              Upon
      GABC’s termination of this and all other non-account balance plans (as
      referenced in Section 409A of the Code or the regulations thereunder),
      provided that all distributions are made no earlier than twelve (12)
      months and no later than twenty-four (24) months following such
      termination, and GABC does not adopt any new non-account balance plans for
      a minimum of five (5) years following the date of such termination (or
      such lesser period permitted under Code Section
  409A);

            

    

    

    GABC may
distribute the Accrued Benefit, determined as of the date of the termination of
the Agreement, to the Executive in a lump sum subject to the above
terms.

    

    IN WITNESS OF THE ABOVE, GABC
and the Executive hereby consent to this First Amendment.

    

    
      
        
          
            
              	
                      Executive:

                    	 
      	
                      German
      American Bancorp

                    
	 
      	 
      	 
      
	
                      By/s/Bradley M. Rust

                    	 
      	
                      By/s/Mark A.
      Schroeder

                    
	
                      Bradley
      M. Rust

                    	 
      	
                      Title
      President/CEO

                    

            

          

        

      

    

    
      
         

      

      
        16

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