Document:

EX-10.8

 

 Exhibit 10.8

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

FOR

RODERICK H. DILLON, JR.

     This Amended and Restated Employment Agreement (“Agreement”) is entered into this 28th
day of February, 2008, by and between Diamond Hill Investment Group, Inc. (hereinafter referred to
as the “Employer”) and Roderick H. Dillon, Jr. (hereinafter referred to as the “Executive”).

     WHEREAS, the Executive is currently employed as the President and Chief
Executive Officer (“CEO”) of the Employer pursuant to the terms of that certain Employment
Agreement, dated August 10, 2007 (“Prior Agreement”); and

     WHEREAS, the Executive and the Employer previously agreed to amend the Prior
Agreement, and wish to amend and restate the Prior Agreement for purposes of Section 409A of the
Internal Revenue Code effective January 1, 2008; and

     WHEREAS, the Executive desires to continue his employment with the Employer in
such capacity under the terms of this Agreement which shall supersede the terms of the Prior
Agreement; and

     NOW, THEREFORE, and in consideration of the mutual covenants herein contained
and other valuable consideration, the receipt and adequacy of which is agreed to by the parties,
the Employer and the Executive hereby mutually agree as follows:

     1. Employment and Duties. The Employer hereby employs the Executive, and the
Executive hereby accepts continued employment with the Employer upon the terms and conditions
hereinafter set forth. The Executive will continue to serve the Employer as its President and CEO.
In such capacity, the Executive will report directly to the Board of Directors of the Employer
(the “Board”) and have all powers, duties, and obligations as are normally associated with such
positions. Subject to the provisions of Paragraph 5 [“Termination of Employment”], the Executive
will further perform such other duties and hold such other positions related to the business of the
Employer and its Affiliates as may from time to time be reasonably requested of him by the Board;
provided that the Executive shall not be required to perform such services that involve a material
decrease in the level of responsibility currently maintained by the Executive. For purposes of
this Agreement, an “Affiliate” shall mean any corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture, trust, association or
organization which is, directly or indirectly, controlled by, or under common control with, the
Employer. Except as otherwise set forth in this Agreement, the Executive will devote all of his
skills and substantially all of his time and attention to said positions and in furtherance of the
business and interests of the Employer and its Affiliates and will not directly or indirectly
render any services of a business, commercial or professional nature to any person or organization
without the prior written consent of the Board (which consent will not be unreasonably withheld or
delayed); provided, however, that the

 

 

Executive will not be precluded from participation in
community, civic, charitable or similar activities which do not unreasonably interfere with his
responsibilities hereunder.

     2. Term of Employment

          a. Original Term. This Agreement will be effective upon execution by
both parties. The term of employment will begin, or be deemed to have begun, on January 1, 2006
(the “Effective Date”), and to the extent the Executive’s Compensation (as defined in Section 3,
below) is increased, retroactive payments will be made back to the Effective Date within 30 days of
the execution of this Agreement. The Agreement will continue through the five-year period ending
on the day before the fifth anniversary date of the Effective Date, subject, however, to prior
termination or to extension, as herein provided.

          b. Extension of Term. The Employer and the Executive agree that the Board will
review the Executive’s performance with the intent that, if the Executive’s performance so
warrants, the Employer may extend the term of this Agreement for additional time periods to be
determined in the discretion of the Board and as agreed upon by the Executive. By October 1, 2010,
or, in the event that this Agreement is extended as provided for in this Paragraph 2(b), within
ninety (90) days preceding the end of any extension period, the Chairman of the Board (the
“Chairman”) will notify the Executive of the Employer’s decision whether or not to grant an
extension of this Agreement for an additional time period. In the event that the Chairman fails to
notify the Executive, on or before the date described in the preceding sentence, of the decision
regarding the extension of the term of this Agreement, the term of this Agreement will
automatically be extended for an additional one-year period.

     3. Compensation.

          a. Salary. The Executive will receive an initial annual base salary
of a minimum of $360,000, which may be increased on an annual basis, but not decreased without the
Executive’s written consent, by the Board during the term of this Agreement. In the event that the
Board increases the Executive’s initial base salary, the amount of the initial base salary,
together with any increase(s) will be his base salary (hereinafter referred to as the “Base
Salary”). Following the end of each calendar year, and no later than March 15 of each year, the
Board will review the Executive’s Base Salary, and in the event that the Company has met profit and
growth goals agreed upon between the Board and the Executive, the Base Salary will be increased by
a percentage determined by the Board, based upon its review of objective information reflecting the
base salaries of executive officers of similarly sized entities in the same business as the
Employer. The Base Salary will be payable in accordance with the Employer’s regular payroll
payment practices.

          b. Bonus. Each calendar year during which the Employer has in effect a
performance-based compensation plan (the “Performance Plan”) in compliance with the provisions of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), the Executive will be
eligible for bonus compensation equal to a specified percentage of a bonus pool established for
employees of the Employer (the “Bonus”). Such bonus pool will be based upon the attainment of
goals and objectives which may include average assets under management, investment advisory revenue
and target operating profit margin for the relevant

 

 

calendar year. The Executive’s percentage of
the bonus pool will be determined by the Compensation Committee of the Board, based upon his
satisfaction of certain performance criteria, including, but not limited to, investment performance
of client portfolios and his overall contribution to the investment team and to the firm. All
bonus payments to be made pursuant to this Paragraph 3(b) will be made pursuant to the terms and
conditions of the Performance Plan and will be paid to the Executive in either cash or equity
awards under the Employer’s Equity Incentive Plan no later than March 15th of the calendar year
following the calendar year for which such bonus is payable.

     4. Fringe Benefits and Expenses.

          a Fringe Benefits. The Employer will provide the Executive with all
health and life insurance coverages, disability programs, tax-qualified retirement plans, equity
compensation programs, paid holidays, paid vacation, perquisites, and such other fringe benefits of
employment as the Employer may provide from time to time to actively employed senior executives of
the Employer; and consistent with the foregoing the Executive shall be entitled to a minimum of the
following benefits during the term of this Agreement:

	 	(i)	 	standard health insurance of such coverage and term as provided by the Employer to actively
employed senior executives of the Employer;
	 
	 	(ii)	 	a minimum of six (6) weeks paid vacation each year, based on current year Base Salary;
	 
	 	(iii)	 	continued participation in the Employer’s 401(k) retirement savings plan;
	 
	 	(iv)	 	participation in such other health, disability, insurance, pension, profit sharing or other
employee benefit plan that the Employer may establish from time to time in which the Executive is
otherwise eligible to participate.

Notwithstanding any provision contained in this Agreement, the Employer may discontinue or
terminate at any time any employee benefit plan, policy or program, now existing or hereafter
adopted, to the extent permitted by the terms of such plan, policy or program and will not be
required to compensate the Executive for such discontinuance or termination.

          b. Expenses. The Employer shall reimburse the Executive for all reasonable
travel, industry, entertainment, and out-of-pocket and miscellaneous expenses incurred by the
Executive in connection with the performance of his business activities under this Agreement in
accordance with the existing policies and procedures of the Employer pertaining to reimbursement of
such expenses to senior executives. In addition, the Employer agrees to reimburse the Executive
for reasonable legal expenses in connection with the review and analysis of this Agreement by an
attorney selected by the Executive, in an amount not to exceed $10,000.

 

 

     5. Termination of Employment.

     Wherever used in this Paragraph 5, the word “terminate” or “termination” shall mean a
“separation from service” of the Executive from the Employer within the meaning of Section 409A of
the Code and Treasury Regulation § 1.409A-1(h), except in the event of the Executive’s death.

          a. Death of Executive. The Executive’s employment hereunder will terminate upon
his death and the Executive’s beneficiary (as designated by the Executive in writing with the
Employer prior to his death) will be entitled to the following payments and benefits:

               i. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused
(determined by dividing Base Salary by 365 and multiplying such amount by the number of unused
vacation days), and any business expenses that are unreimbursed—all, as of the date of termination
of employment; and

               ii. any rights and benefits (if any) provided under plans and programs of the Employer, determined
in accordance with the applicable terms and provisions of such plans and programs, including but
not limited to a pro rata portion of the Bonus payment specified in Paragraph 3(b), above, and such
payment shall be made no later than March 15th of the calendar year following the calendar year for
which such Bonus is payable.

     In the absence of a beneficiary designation by the Executive, or, if the Executive’s designated
beneficiary does not survive him, payments and benefits described in this subparagraph will be paid
to the Executive’s estate.

          b. Disability. The Executive’s employment hereunder may be terminated by the
Employer upon 45 days written notice from the Employer following the determination, as set forth
immediately below, that he suffers from a Permanent Disability. For purposes of this Agreement,
“Permanent Disability” means a disability that, in the opinion of the Employer, renders, or will
render, the Executive unable to perform his duties under this Agreement by reason of any medically
determinable impairment, which can be expected to result in death, or which has lasted or can be
expected to last, for a continuous period of at least twelve months. If the Executive disagrees
with the Employer’s decision that the Executive’s disability renders or will render him unable to
perform his duties under this Agreement, such dispute shall be resolved by a panel of three
physicians: one physician to be chosen by the Employer, one physician to be chosen by the
Executive, and a third physician to be chose by the first two physicians. Each physician shall
have the opportunity to examine the Executive and the decision of a majority of the physicians on
the panel shall be binding on the Employer and the Executive, and shall be rendered within 45 days
after the third physician is appointed to the panel. The cost of the physicians shall be paid by
the Employer. During any period that the Executive fails to perform his duties hereunder as a
result of a Permanent Disability (“Disability Period”), the Executive will continue to receive his
Base Salary at the rate then in effect for such period until his employment is terminated pursuant
to this subparagraph; provided, however, that payments of Base Salary so made to the Executive will
be reduced by the sum of the amounts, if any, that were payable to the Executive at or before the
time of any such salary payment under any

 

 

disability benefit plan or plans of the Employer and that
were not previously applied to reduce any payment of Base Salary. In the event that the Employer
elects to terminate the Executive’s employment pursuant to this subparagraph, the Executive will be
entitled to the following payments and benefits:

               i. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused
(determined by dividing Base Salary by 365 and multiplying such amount by the number of unused
vacation days), and any business expenses that are unreimbursed—all, as of the date of termination
of employment; and

               ii. any rights and benefits (if any) provided under plans and programs of the Employer, determined
in accordance with the applicable terms and provisions of such plans and programs, including but
not limited to a pro rata portion of the Bonus payment specified in Paragraph 3(b), above, and such
payment shall be made no later than March 15th of the calendar year following the calendar year for
which such Bonus is payable.

          c. Termination of Employment for Cause. The Employer may terminate the
Executive’s employment upon written notice at any time for “Cause” if such Cause is reasonably
determined by the Board (provided the Executive does not fully cure the effect of the event giving
rise to “Cause” to the Employer’s reasonable satisfaction within thirty (30) days following his
receipt of notice of termination from the Employer). For purposes of this Agreement, the term
“Cause” means that the Executive has:

               i. caused the Employer or any of its Affiliates, other than pursuant to the advice of the
Employer’s legal counsel, to violate a law which, in the opinion of the Employer’s legal counsel,
is reasonable grounds for civil penalties in excess of $250,000 or criminal penalties against the
Employer, an Affiliate or the Board;

               ii. engaged in conduct which constitutes a material violation of the established written policies
or procedures of the Employer regarding the conduct of its employees, including policies regarding
sexual harassment of employees and use of illegal drugs or substances in the course of his
employment with Employer;

               iii. committed fraud, or acted with willful misconduct or gross negligence, in carrying out his
duties under this Agreement;

               iv. been convicted of any crime involving moral turpitude or a violation of federal or state
securities or investment adviser laws; or

               vi. committed a breach of any material covenant, provision, term, condition, understanding or
undertaking set forth in this Agreement.

     In the event that the Employer terminates the Executive’s employment for Cause, the Executive will
be entitled to the following payments and benefits:

                    A. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused
(determined by dividing Base Salary by 365 and multiplying

 

 

such amount by the number of unused
vacation days), and any business expenses that are unreimbursed—all, as of the date of termination
of employment; and

                    B. any rights and benefits (if any) provided under plans and programs of the Employer, determined
in accordance with the applicable terms and provisions of such plans and programs.

          d. Termination Without Cause. The Employer may terminate the Executive’s
employment for any reason upon ninety (90) days prior written notice to the Executive. If the
Executive’s employment is terminated by the Employer for any reason other than the reasons set
forth in subparagraphs b or c of this Paragraph 5, subject to the applicable provisions of Section
409A of the Code, the Executive will be entitled to the following payments and benefits:

               i. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused
(determined by dividing Base Salary by 365 and multiplying such amount by the number of unused
vacation days), and any business expenses that are unreimbursed—all, as of the date of termination
of employment;

               ii. any rights and benefits (if any) provided under plans and programs of the Employer, determined
in accordance with the applicable terms and provisions of such plans and programs, including but
not limited to a pro rata portion of the Bonus payment specified in Paragraph 3(b), above, and such
payment shall be made no later than March 15th of the calendar year following the calendar year for
which such Bonus is payable.;

               iii. a single lump sum payment, payable within 15 days following the date of termination of
employment, equal to six (6) months of the Base Salary applicable to the Executive on the date of
termination of employment;

               iv. beginning on the first day of the seventh month following the date of termination of
employment, continuation of the Executive’s Base Salary in effect on the date of his termination of
employment for a period of six (6) months; provided, that these payments will be made in separate,
equal payments no less frequently than monthly over such six-month period; and

               v. a single lump sum payment, payable within fifteen (15) days following the date of termination of
employment, equal to the Bonus paid or payable to the Executive with respect to the most recently
completed fiscal year of the Employer.

          e. Voluntary Termination by Executive. The Executive may resign and terminate
his employment with the Employer for any reason whatsoever upon not less than ninety (90) days
prior written notice to the Employer. In the event that the Executive terminates his employment
voluntarily pursuant to this Paragraph 5(e), the Executive will be entitled to the following
payments and benefits:

               i. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused
(determined by dividing Base Salary by 365 and multiplying

 

 

such amount by the number of unused
vacation days), and any business expenses that are unreimbursed—all, as of the date of termination
of employment; and

               ii. any rights and benefits (if any) provided under plans and programs of the Employer, determined
in accordance with the applicable terms and provisions of such plans and programs.

          f. Good Reason Termination. The Executive may resign and terminate his
employment with the Employer for “Good Reason” upon not less than thirty (30) days prior written
notice to the Employer. For purposes of this Agreement, the Executive will have “Good Reason” to
terminate his employment with the Employer if any of the following events occur (provided the
Employer does not fully cure the effect of such event to the Executive’s reasonable satisfaction
within ten (10) days following its receipt of notice of termination of employment from the
Executive):

               i. the Executive’s Base Salary is reduced for any reason other than in connection with the
termination of his employment;

               ii. without the Executive’s consent, the percentage assigned to the Executive of any bonus pool
created by the Employer for its employees is less than 20%;

               iii. without his consent, the Employer permanently and/or consistently assigns the Executive to
duties that are materially inconsistent in any respect with his position (including, without
limitation, his status, office and title), authority, duties or responsibilities as set forth in
Paragraph 1 (but excluding any other duties related to the business of the Employer or its
Affiliates reasonably requested of him by the Board), or takes any other action that results in a
permanent and/or consistent material diminution in such position, authority, duties, or
responsibilities;

               iv. without his consent, the Employer changes the Executive’s reporting structure within the
organization so that the Executive no longer reports directly to the Board; or

               v. the Employer breaches any material covenant, provision, term, condition, understanding or
undertaking set forth in this Agreement.

     In the event that the Executive terminates his employment for Good Reason pursuant to this
Paragraph 5(f), subject to the applicable provisions of Section 409A of the Code, the Executive
will be entitled to the following payments and benefits:

                    A. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused
(determined by dividing Base Salary by 365 and multiplying such amount by the number of unused
vacation days), and any business expenses that are unreimbursed—all, as of the date of termination
of employment;

                    B. any rights and benefits (if any) provided under plans and programs of the Employer, determined
in accordance with the applicable terms and provisions of such plans and programs, including but
not limited to a pro rata portion of the Bonus payment

 

 

specified in Paragraph 3(b), above, and such
payment shall be made no later than March 15th of the calendar year following the calendar year for
which such Bonus is payable;

                    C. a single lump sum payment, payable within 15 days following the date of termination of
employment, equal to six (6) months’ of the Base Salary applicable to the Executive on the date of
termination of employment;

                    D. beginning on the first day of the seventh month following the date of termination of employment,
continuation of the Executive’s Base Salary in effect on the date of his termination of employment
for a period of six (6) months; provided, that these payments will be made in separate, equal
payments no less frequently than monthly over such six-month period; and

                    E. a single lump sum payment, payable within fifteen (15) days following the date of termination of
employment, equal to the Bonus paid or payable to the Executive with respect to the most recently
completed fiscal year of the Employer.

          g. Failure to Extend Term of Agreement. If the Employer notifies the Executive
that the Employer will not extend the term of this Agreement under the provisions of Paragraph 2(b)
hereof, the Executive’s employment under this Agreement will terminate at the end of such term and
the Executive will be entitled to the following payments and benefits:

               i. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused
(determined by dividing Base Salary by 365 and multiplying such amount by the number of unused
vacation days), and any business expenses that are unreimbursed – all as of the date of termination
of employment; and

               ii. any rights and benefits (if any) provided under plans and programs of the Employer, determined
in accordance with the applicable terms and provisions of such plans and programs, including but
not limited to the Bonus payment specified in Paragraph 3(b), above, and such payment shall be made
no later than March 15th of the calendar year following the calendar year for which such bonus is
payable.

     6. Change In Control.

     Wherever used in this Paragraph 6, the word “terminate” or “termination” shall mean a
“separation from service” of the Executive from the Employer within the meaning of Section 409A of
the Code and Treasury Regulation § 1.409A-1(h).

          a Occurrence of Change in Control. In the event that during the term of this
Agreement, a Change in Control [as defined under Section 409A of the Code and the regulations
thereunder] occurs and, within twenty-four (24) months following such Change in Control, the
Executive’s employment is terminated by the Employer or its successor for any reason other than the
reasons set forth in subparagraphs b or c of Paragraph 5 or is terminated by the Executive under
subparagraph f of Paragraph 5, then in addition to any other provision of Paragraph 5 of this
Agreement and subject to the applicable provisions of Section 409A of the Code, the Employer or its
successor will pay to the Executive the following payments and benefits:

 

 

               i. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but
unused, (determined by dividing Base Salary by 365 and multiplying such amount by the number of
unused vacation days), and any business expenses that are unreimbursed all, as of the date of
termination of employment;

               ii. any rights and benefits (if any) provided under plans and programs of the Employer, determined
in accordance with the applicable terms and provisions of such plans and programs;

               iii. a single lump sum payment, payable within 30 days following the date of termination of
employment, equal to the total annual Base Salary and Bonus paid or payable to the Executive with
respect to the most recently completed fiscal year of the Employer; and

               iv. a single lump sum payment, payable within 60 days following the date of termination of
employment, equal to twelve (12) months of the premium applicable to the Executive on the date of
termination of employment for the Executive and his family (provided the Executive had family
coverage on such date) under the Employer’s group health plan.

          b. Treatment of Taxes. If payments provided under this Agreement, when combined
with payments and benefits under all other plans and programs maintained by the Employer,
constitute “excess” parachute payments as defined in Section 280G(b) of the Code, the Employer or
its successor will reduce the Executive’s benefits under this Agreement and/or the other plans and
programs maintained by the Employer (in a manner to be mutually agreed upon between the Employer or
its successor and the Executive) so that the Executive’s total “parachute payment” as defined in
Code §280G(b)(2)(A) under this Agreement and all other plans and programs will be One Dollar ($1)
less than the amount that would be an “excess parachute payment.” Treatment of taxes under this
paragraph 6(b) will be made at the time and in the manner mutually agreed to by the parties to this
Agreement. In addition, in the event of any subsequent inquiries regarding the treatment of tax
payments under this Paragraph 6, the parties will agree to the procedures to be followed in order
to deal with such inquiries.

     7. Special Timing Rules for Certain Payments. In the event that the
Executive is a “specified employee” within the meaning of Section 409A of the Code, determined
through the application of the Employer’s specified employee identification procedures, any
payments made pursuant to Paragraph 5 or Paragraph 6 of this Agreement, except any payment made in
the event of the Executive’s death, that constitute deferred compensation subject to Section 409A
of the Code shall be delayed for a period of not less than six months and shall be paid on the
first day of the seventh month following the date of the Executive’s separation from service.

     8. Nonexclusivity of Rights. Nothing in this Agreement will prevent or limit
the Executive’s continuing or future participation in any incentive, fringe benefit, deferred
compensation, or other plan or program provided by the Employer and for which the Executive may
qualify, nor will anything herein limit or otherwise affect such rights as the Executive may have
under any other agreements with the Employer. Amounts that are vested benefits or that the
Executive is otherwise entitled to receive under any plan or program of the Employer at or

 

 

after
the date of termination of employment, will be payable in accordance with such plan or program.

     9. Noncompetition Covenant. The Executive agrees that, during the term of this
Agreement, including any extension thereof, and for a period of one (1) year thereafter following
his termination of employment, he shall not:

          a. call upon or solicit, either for the Executive or for any other person or firm that engages in
competition with any business operation actively conducted by the Employer or any Affiliate during
the term of this Agreement, any customer with whom the Employer or any Affiliate directly conducts
business (including, solely by way of example, intermediaries and corporations that purchase
directly from the Employer or an Affiliate); or interfere with any relationship, contractual or
otherwise, between the Employer or any Affiliate and any customer with whom the Employer or any
Affiliate directly conducts business; or

          b. induce any person who is an employee, officer or agent of the Employer or any Affiliate to
terminate said relationship.

     Nothing in this Paragraph or this Agreement shall be interpreted to (i) limit or reduce the
Executive’s ownership rights in the Dillon Value Model (the “DVM”); (ii) prevent the Executive from
devoting his time and attention to the revision of the DVM; or (iii) limit or preclude the
Executive from licensing the use of the DVM to any individual or entity following his termination
of employment with the Employer.

     In the event of a breach by the Executive of any covenant set forth in this Paragraph 9, the term
of such covenant will be extended by the period of the duration of such breach and such covenant
will survive any termination of this Agreement but only for the limited period of such extension.

     The restrictions on competition provided herein shall supersede any restrictions on competition
contained in any other agreement between the Employer and the Executive and may be enforced by the
Employer and/or any successor thereto, by an action to recover payments made under this Agreement,
an action for injunction, and/or an action for damages. The provisions of this Paragraph 9
constitute an essential element of this Agreement, without which the Employer would not have
entered into this Agreement. Notwithstanding any other remedy available to the Employer at law or
at equity, the parties hereto agree that the Employer or any successor thereto, will have the
right, at any and all times, to seek injunctive relief in order to enforce the terms and conditions
of this Paragraph 9.

     If the scope of any restriction contained in this Paragraph 9 is too broad to permit enforcement of
such restriction to its fullest extent, then such restriction will be enforced to the maximum
extent permitted by law, and the Executive hereby consents and agrees that such scope may be
judicially modified accordingly in any proceeding brought to enforce such restriction.

     10. Confidential Information. The Executive will hold in a fiduciary capacity,
for the benefit of the Employer, all secret or confidential information, knowledge, and data
relating to the Employer and its Affiliates, that shall have been obtained by the Executive during
his employment with the Employer and that is not public knowledge (other than by acts by the

 

 

Executive or his representatives in violation of this Agreement). During and after termination of
the Executive’s employment with the Employer, the Executive will not, without the prior written
consent of the Board, communicate or divulge any such information, knowledge, or data to anyone
other than the Employer or those designated by it, unless the communication of such information,
knowledge or data is required pursuant to a compulsory proceeding in which the Executive’s failure
to provide such information, knowledge, or data would subject the Executive to criminal or civil
sanctions and then only with prior notice to the Employer.

     The restrictions imposed on the release of information described in this Paragraph 10 may be
enforced by the Employer and/or any successor thereto, by an action to recover payments made under
this Agreement, an action for injunction, and/or an action for damages. The provisions of this
Paragraph 10 constitute an essential element of this Agreement, without which the Employer would
not have entered into this Agreement. Notwithstanding any other remedy available to the Employer
at law or at equity, the parties hereto agree that the Employer or any successor thereto, will have
the right, at any and all times, to seek injunctive relief in order to enforce the terms and
conditions of this Paragraph 10.

     If the scope of any restriction contained in this Paragraph 10 is too broad to permit enforcement
of such restriction to its fullest extent, then such restriction will be enforced to the maximum
extent permitted by law, and the Executive hereby consents and agrees that such scope may be
judicially modified accordingly in any proceeding brought to enforce such restriction.

     11. Intellectual Property. The Executive agrees to communicate to the Employer,
promptly and fully, and to assign to the Employer all intellectual property developed or conceived
solely by the Executive, or jointly with others, during the term of his employment, which are
within the scope of either the Employer ’s business or an Affiliate’s business, or which utilized
Employer materials or information. For purposes of this Agreement, “intellectual property” means
inventions, discoveries, business or technical innovations, creative or professional work product,
or works of authorship. The Executive further agrees to execute all necessary papers and otherwise
to assist the Employer, at the Employer ’s sole expense, to obtain patents, copyrights or other
legal protection as the Employer deems fit. Any such intellectual property is to be the property
of the Employer whether or not patented, copyrighted or published. Notwithstanding any provision
contained herein or anywhere else in the Agreement, the provisions of this Paragraph 11 shall not
apply to the DVM.

     12. Assignment and Survivorship of Benefits. The rights and obligations of the
Employer under this Agreement will inure to the benefit of, and will be binding upon, the
successors and assigns of the Employer, if the Employer shall at any time be merged or consolidated
into, or with, any other company, or if substantially all of the assets of the Employer are
transferred to another company, then the provisions of this Agreement will be binding upon and
inure to the benefit of the company resulting from such merger or consolidation or to which such
assets have been transferred, and this provision will apply in the event of any subsequent merger,
consolidation, or transfer.

     13. Notices. Any notice given to either party to this Agreement will be in
writing, and will be deemed to have been given when delivered personally or sent by certified mail,

 

 

postage prepaid, return receipt requested, duly addressed to the party concerned, at the address
indicated below or to such changed address as such party may subsequently give notice of:

	 	 	 	 	 
	 

	 	If to Diamond Hill:
	 	Diamond Hill Investment Group, Inc.
	 

	 	 	 	325 John H. McConnell Blvd.
	 

	 	 	 	Suite 200
	 

	 	 	 	Columbus, Ohio 43215
	 
	 	 	 	 
	 

	 	If to the Executive:
	 	Roderick H. Dillon, Jr.
	 

	 	 	 	At the last address on file
	 

	 	 	 	with the Employer

     14. Indemnification. The Executive shall be indemnified by the Employer to the
extent provided in the case of officers under the Employer’s Articles of Incorporation or
Regulations, to the maximum extent permitted under applicable law. The Employer shall use
commercially reasonable efforts to continue its Director and Officer Liability Insurance
(“DOL Insurance”) under substantially similar terms and in substantially similar
amounts as in existence prior to the termination of employment. The DOL Insurance shall be
maintained for at least seven (7) years from termination of employment and without limiting the
foregoing, the Executive shall not be excluded from coverage under such DOL Insurance during such
period.

     15. Taxes. Anything in this Agreement to the contrary notwithstanding, all
payments required to be made hereunder by the Employer to the Executive will be subject to
withholding of such amounts relating to taxes as the Employer may reasonably determine that it
should withhold pursuant to any applicable law or regulations. In lieu of withholding such
amounts, in whole or in part, however, the Employer may, in its sole discretion, accept other
provision for payment of taxes, provided that it is satisfied that all requirements of the law
affecting its responsibilities to withhold such taxes have been satisfied.

     16. Arbitration; Enforcement of Rights. Any controversy or claim arising out
of, or relating to this Agreement, or the breach thereof, except with respect to Paragraphs 9, 10
and 11, will be settled by arbitration in the city of Columbus, Ohio, in accordance with the Rules
of the American Arbitration Association, and judgment upon the award rendered by the arbitrator or
arbitrators may be entered in any court having jurisdiction thereof.

     All legal and other fees and expenses, including, without limitation, any arbitration expenses,
incurred by the Executive in connection with seeking in good faith to obtain or enforce any right
or benefit provided for in this Agreement, or in otherwise pursuing any right or claim, will be
paid by the Employer, to the extent permitted by law, provided that the Executive is successful in
whole or in part as to such claims as the result of litigation, arbitration, or settlement.

     In the event that the Employer refuses or otherwise fails to make a payment when due and is
ultimately decided that the Executive is entitled to such payment, such payment will be increased
to reflect an interest equivalent for the period of delay, compounded annually, equal to the prime
or base lending rate used by Bank of America, and in effect as of the date the payment was first
due.

 

 

     17. Governing Law/Captions/Severance. This Agreement will be construed in
accordance with, and pursuant to, the laws of the State of Ohio. The captions of this Agreement
will not be part of the provisions hereof, and will have no force or effect. The invalidity or
unenforceability of any provision of this Agreement will not affect the validity or enforceability
of any other provision of this Agreement. Except as otherwise specifically provided in this
paragraph, the failure of either party to insist in any instance on the strict performance of any
provision of this Agreement or to exercise any right hereunder will not constitute a waiver of such
provision or right in any other instance.

     18. Entire Agreement/Amendment. This instrument contains the entire agreement
of the parties relating to the subject matter hereof, and the parties have made no agreement,
representations, or warranties relating to the subject matter of this Agreement that are not set
forth herein. This Agreement may be amended only by mutual written agreement of the parties.
However, by signing this Agreement, the Executive agrees without any further consideration, to
consent to any amendment necessary to avoid penalties under Code §409A.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.

	 	 	 	 	 	 	 
	 	 	DIAMOND HILL INVESTMENT GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Roderick
	 	H. Dillon, Jr.EX-10.1

 

EXHIBIT 10.1

HORIZON BANCORP

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Amended and Restated as of January 1, 1997

2/98

84

 

HORIZON BANCORP SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	ARTICLE	 	 	 	 	 	PAGE
	 	 	INTRODUCTION	 	1
	 
	 	 	 	 	 	 
	I.	 	DEFINITIONS 	 	1
	 
	 	 	 	 	 	 
	 
	 	1.1	 	Adjustment	 	1
	 
	 	1.2	 	Adjustment Factor	 	2
	 
	 	1.3	 	Board	 	2
	 
	 	1.4	 	Code	 	2
	 
	 	1.5	 	Committee	 	2
	 
	 	1.6	 	Company	 	2
	 
	 	1.7	 	Compensation	 	2
	 
	 	1.8	 	Effective Date	 	2
	 
	 	1.9	 	Employee	 	2
	 
	 	1.10	 	Excess Matching Contributions	 	3
	 
	 	1.11	 	Excess Matching Contributions Account	 	3
	 
	 	1.12	 	Employer Supplemental Contributions	 	3
	 
	 	1.13	 	Employer Supplemental
Contributions Account	 	3
	 
	 	1.14	 	Excess Salary Redirection Contributions	 	3
	 
	 	1.15	 	Excess Salary Redirection
Contributions Account	 	3
	 
	 	1.16	 	Individual Account	 	3
	 
	 	1.17	 	Matching Contributions	 	3
	 
	 	1.18	 	Matching Contributions Account	 	4
	 
	 	1.19	 	Participant	 	4
	 
	 	1.20	 	Plan	 	4
	 
	 	1.21	 	Plan Year	 	4
	 
	 	1.22	 	Salary Redirection Contributions	 	4
	 
	 	1.23	 	Salary Redirection Contributions Account	 	4
	 
	 	1.24	 	Thrift Plan	 	4
	 
	 	1.25	 	Total and Permanent Disability	 	4
	 
	 	 	 	 	 	 
	II.	 	ELIGIBILITY AND PARTICIPATION	 	4
	 
	 	 	 	 	 	 

i

85

 

	 	 	 	 	 	 	 
	ARTICLE	 	 	 	 	 	PAGE
	III.	 	CONTRIBUTIONS AND ALLOCATIONS	 	5
	 
	 	 	 	 	 	 
	 
	 	3.1	 	Excess Salary Redirection Contributions	 	5
	 
	 	3.2	 	Excess Matching Contributions	 	7
	 
	 	3.3	 	Employer Supplemental Contributions	 	7
	 
	 	3.4	 	Allocation of Adjustments	 	8
	 
	 	3.5	 	Allocation of Forfeitures	 	9
	 
	 	 	 	 	 	 
	IV.	 	FUNDING OF BENEFITS	 	9
	 
	 	 	 	 	 	 
	 
	 	4.1	 	Unsecured Contractual Rights	 	9
	 
	 	4.2	 	Trust	 	9
	 
	 	4.3	 	Change in Control	 	10
	 
	 	 	 	 	 	 
	V.	 	DISTRIBUTIONS	 	10
	 
	 	 	 	 	 	 
	 
	 	5.1	 	Forfeitures on Termination of Service	 	10
	 
	 	5.2	 	Year of Service	 	11
	 
	 	5.3	 	Time of Payment of Benefits	 	11
	 
	 	5.4	 	Method of Payment	 	11
	 
	 	5.5	 	Death of the Participant and
Beneficiary Designation	 	11
	 
	 	5.6	 	Payment Form Elections	 	12
	 
	 	 	 	 	 	 
	VI.	 	PLAN ADMINISTRATION	 	12
	 
	 	 	 	 	 	 
	 
	 	6.1	 	Company	 	12
	 
	 	6.2	 	Benefits Committee	 	13
	 
	 	6.3	 	Claims Procedure	 	13
	 
	 	6.4	 	Records	 	15
	 
	 	6.5	 	No Liability	 	15
	 
	 	6.6	 	Indemnity of Committee Members	 	15
	 
	 	6.7	 	Discretionary Powers and Authority
of the Company and Committee	 	15
	 
	 	 	 	 	 	 
	VII.	 	AMENDMENT AND TERMINATION OF THE PLAN	 	15
	 
	 	 	 	 	 	 
	 
	 	7.1	 	Amendment of the Plan	 	15
	 
	 	7.2	 	Termination of the Plan	 	15
	 
	 	 	 	 	 	 
	VIII.	 	MISCELLANEOUS	 	16
	 
	 	 	 	 	 	 
	 
	 	8.1	 	Governing Law	 	16
	 
	 	8.2	 	Headings and Gender	 	16

ii

86

 

	 	 	 	 	 	 	 
	ARTICLE	 	 	 	 	 	PAGE
	 
	 	8.3	 	Administration Expenses	 	16
	 
	 	8.4	 	Participant's Rights; Acquittance	 	16
	 
	 	8.5	 	Spendthrift Clause	 	16
	 
	 	8.6	 	Counterparts	 	16
	 
	 	8.7	 	No Enlargement of Employment Rights	 	16
	 
	 	8.8	 	Limitations on Liability	 	16
	 
	 	8.9	 	Incapacity of Participant or Beneficiary	 	17
	 
	 	8.10	 	Corporate Successors	 	17
	 
	 	 	 	 	 	 
	 	 	SIGNATURES	 	17

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INTRODUCTION

     Effective January 1, 1997, Horizon Bancorp (the “Company”) adopts the Horizon Bancorp
Supplemental Executive Retirement Plan (the “Plan”) as set forth herein. This Plan constitutes a
complete amendment and restatement of the Plan which was originally effective January 1, 1993. The
provisions of this amended and restated Plan shall be effective for Plan Years commencing on and
after January 1, 1997, unless otherwise specified herein or required by applicable law. The rights
and benefits, if any, of individuals who were employed by the Company prior to the Effective Date
shall be determined in accordance with the provisions of the Plan, if any, in effect on the date
their employment terminated.

     The purpose of this Plan is to permit a select group of management or highly compensated
employees of the Company or its subsidiaries who participate in the Horizon Bancorp Employees’
Thrift Plan (the “Thrift Plan”) to elect to defer compensation from the Company or receive
contributions from the Company without regard to the limitations imposed by the Internal Revenue
Code of 1986, as amended (the “Code”) on the benefits which may accrue to such employees under the
Thrift Plan. It is the intention of the Company that the Plan shall constitute an unfunded
arrangement maintained for the purpose of providing deferred compensation for a select group of
management or highly compensated employees for federal income tax purposes and for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

ARTICLE I

DEFINITIONS

     Whenever the initial letter of a word or phrase is capitalized herein, the following words and
phrases shall have the meanings stated below unless a different meaning is plainly required by the
context:

     1.1 “Adjustment” means the amounts of earnings or losses credited to a Participant’s
Individual Account pursuant to Section 3.4 for each Plan Year. The amount of interest credited
shall be determined based on the investment earnings under the funding method(s) used by the
Company pursuant to Section 4.2. However, if no such method is used, interest shall be credited to
a Participant’s Individual Account at a rate equal to the average twenty-six (26) week U.S.
Treasury Bill rate published in the Wall Street Journal as in effect as of the first
business day of each calendar month. Effective January 1, 1997, Adjustments made to each
Participant’s Individual Account shall be determined as if the amounts credited to such Individual
Account were invested in hypothetical investments designated by the Committee to be used to measure
increases or decreases in the Individual Account over time.

     1.2 “Adjustment Factor” means the cost of living adjustment factor prescribed by the Secretary
of the Treasury under Section 415(d) of the Code, as applied to such items and in such manner as
the Secretary of the Treasury shall provide.

     1.3 “Board” means the Board of Directors of the Company.

     1.4 “Code” means the Internal Revenue Code of 1986, as amended from time to time. References
to a section of the Code shall include that section and any comparable section or sections of any
future legislation that amends, supplements or supersedes said section.

     1.5 “Committee” means the Benefits Committee described in Section 6.2 of the Plan.

88

 

     1.6 “Company” means Horizon Bancorp.

     1.7 “Compensation” means a Participant’s wages, salaries and fees for professional services
and other amounts received (without regard to whether or not an amount is paid in cash) paid during
a Plan Year for personal services actually rendered in the course of employment with the Company to
the extent that the amounts are includable in gross income including, but not limited to,
commissions paid salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits, reimbursements, overtime and
expense allowances. Compensation shall include (i) elective contributions to the Plan or any other
plan maintained by the Company on the Employee’s behalf, (ii) compensation deferred under an
eligible deferred compensation plan within the meaning of Section 457(b) (relating to deferred
compensation plans maintained by state and local governments and tax-exempt organizations), and
(iii) employee contributions (under governmental plans) described in Section 141(h)(2) of the Code
that are picked up by the employing unit and thus are treated as company contributions. “Elective
contributions” are amounts excludable from the Employee’s gross income under Section 402(a)(8) of
the Code (relating to an arrangement under Section 401(k)), Section 402(h) of the Code (relating to
a simplified employee pension plan), Section 125 of the Code (relating to a cafeteria plan),
Section 403(b) of the Code (relating to a tax-sheltered annuity), or under this Plan. Compensation
taken into account for all purposes under the Plan shall not be limited as provided in Section
401(a)(17) of the Code to the first Two Hundred Thousand Dollars ($200,000), as adjusted by the
Adjustment Factor, of any Participant’s Compensation. Effective January 1, 1997, Compensation
shall not include wages received upon the exercise by a Participant of a stock appreciation right
(“SAR”) received under any plan provided by the Company or its subsidiaries.

     1.8 “Effective Date” means January 1, 1997.

     1.9 “Employee” means any person who is employed by the Company or any of its “afffiliates” as
defined under Code Sections 414(b), 414(c), 414(m) or 414(o).

     1.10 “Excess Matching Contributions” means contributions made to the Plan by the Company for
the Plan Year, at the discretion of the Company, and allocated to a Participant’s Individual
Account by reason of the Participant’s Excess Salary Redirection Contributions contributed to the
Plan pursuant to Section 3.1(a).

     1.11 “Excess Matching Contributions Account” means that portion of a Participant’s Individual
Account attributable to (a) Excess Matching Contributions allocated to such Participant pursuant to
Section 3.2 and (b) the Participant’s proportionate share, attributable to his Excess Matching
Contribution Account, of the Adjustments, reduced by any distributions from such account pursuant
to Article V.

     1.12 “Employer Supplemental Contributions” means contributions made to the Plan by the Company
for the Plan Year, at the discretion of the Company, pursuant to Section 3.3.

     1.13 “Employer Supplemental Contributions Account” means that portion of a Participant’s
Individual Account attributable to (a) Employer Supplemental Contributions allocated to such
Participant pursuant to Section 3.3 and (b) the Participant’s proportionate
share, attributable to his Employer Supplemental Contributions Account, of the Adjustments, reduced
by any distributions from such account pursuant to Article V.

89

 

     1.14 “Excess Salary Redirection Contributions” means contributions made to the Plan pursuant
to Section 3.1 by the Company, at the election of the Participant, and at the discretion of the
Company, in lieu of cash Compensation under a Participation Agreement between the Participant and
the Company.

     1.15 “Excess Salary Redirection Contributions Account” means that portion of a Participant’s
Individual Account attributable to (a) Excess Salary Redirection Contributions allocated to such
Participant pursuant to Section 3.1 and (b) the Participant’s proportionate share, attributable to
his Excess Salary Redirection Contributions Account, of the Adjustments, reduced by any
distributions from such account pursuant to Article V.

     1.16 “Individual Account” means the detailed record kept of the amounts credited or charged to
each Participant in accordance with the terms of the Plan. Such Individual Account is comprised of
whichever of the following are applicable to a particular Participant: Excess Matching
Contributions Account, Excess Salary Redirection Contributions Account and Employer Supplemental
Contributions Account and any earnings (or losses) with respect thereto.

     1.17 “Matching Contributions” means the matching contributions made to the Thrift Plan by the
Company for the Plan Year and allocated to a Participant’s Matching Contributions Account under the
Thrift Plan by reason of the Participant’s Salary Redirection Contributions made thereunder.

     1.18 “Matching Contributions Account” means the account established for a Participant under
the Thrift Plan to which Matching Contributions are made.

     1.19 “Participant” means a salaried Employee of the Company or its subsidiaries who is a
Participant under the Thrift Plan and who becomes a Participant pursuant to the provisions of
Article II of the Plan.

     1.20 “Plan” means the Horizon Bancorp Supplemental Executive Retirement Plan.

     1.21 “Plan Year” means the twelve (12) month period beginning January 1 and ended December 31.

     1.22 “Salary Redirection Contributions” means a Participant’s contributions made to the Thrift
Plan by the Company at the election of the Participant, in lieu of cash Compensation, pursuant to a
salary redirection agreement between the Participant and the Company and allocated to a
Participant’s Salary Redirection Contributions Account under the Thrift Plan.

     1.23 “Salary Redirection Contributions Account” means the account established for a
Participant under the Thrift Plan to which Salary Redirection Contributions are allocated.

     1.24 “Thrift Plan” means the Horizon Bancorp Employees’ Thrift Plan, as amended from time to
time.

     1.25 “Total and Permanent Disability” or “Totally and Permanently Disabled” means a disability
as determined for purposes of the Federal Social Security Act which qualifies the Participant for
permanent disability insurance payments in accordance with such Act. Disability

90

 

for purposes of the Plan shall not include any disability which is incurred while the Participant
is on leave of absence because of military or similar service and for which a governmental pension
is payable. The Committee may require subsequent proof of continued disability, prior to the
Participant’s sixty-fifth (65th) birthday, at intervals of not less than six (6) months. A minimal
level of earnings in restricted activity during any period of disability shall not disqualify a
Participant from receiving disability benefits for such period if the disabled Participant receives
disability benefits under the Social Security Act for the same period.

ARTICLE II

ELIGIBILITY AND PARTICIPATION

     A management or highly compensated Employee of the Company or its subsidiaries is eligible to
participate in the Plan provided such Employee is designated as a Participant by the Board in
writing.

ARTICLE III

CONTRIBUTIONS AND ALLOCATIONS

     3.1 Excess Salary Redirection Contributions.

	 	(a)	 	Amount of Contribution. The Company shall credit, as
of each pay period, Excess Salary Redirection Contributions on behalf of each
executive who is a Participant under the Plan for the Plan Year, such
percentage (or dollar amount) of such Participant’s Compensation as mutually
agreed upon between the Participant and the Company pursuant to the terms of a
Participation Agreement meeting the requirements of Section 3.1(d) prior to the
beginning of each Plan Year. The Participant will elect in the Participation
Agreement to defer an overall percentage (or dollar amount) of the
Participant’s Compensation which shall represent the total amount of deferrals
to both the Thrift Plan and this Plan. The percentage (or dollar amount) of
the Participant’s Excess Salary Redirection Contributions shall be the
percentage (or dollar amount) remaining of the total percentage (or dollar
amount) elected on the Participation Agreement after the maximum percentage (or
dollar amount) of Salary Redirection Contributions made to the Thrift Plan are
taken into account. Such percentage (or dollar amount) shall remain in effect
for each Plan Year thereafter until or unless another percentage (or dollar
amount) is agreed upon by the Participant and the Company prior to the
beginning of the applicable Plan Year or until the Company notifies the
Participant, prior to the beginning of such Plan Year, that the Participant is
no longer eligible for contributions under this Section 3.1.
	 
	 	(b)	 	The maximum percentage of a Participant’s Compensation that may
constitute Excess Salary Redirection Contributions for a Plan Year shall not,
when added to a Participant’s Salary Redirection Contributions under the Thrift
Plan, exceed twenty-five percent (25%) of such Participant’s Compensation for
such Plan Year.
	 
	 	(c)	 	Timing of Contributions. Excess Salary Redirection
Contributions made for the benefit of a Participant for any Plan Year shall be
made to a Participant’s Excess Salary Redirection Contributions Account within
the

91

 

	 	 	 	time prescribed for making Salary Redirection Contributions under the Thrift
Plan.
	 
	 	(d)	 	Participation Agreement. As a condition to the
Company’s obligation to make an Excess Salary Redirection Contribution for the
benefit of a Participant pursuant to subsection (a), the Participant must
execute a Participation Agreement with the Company on such forms as prescribed
by the Committee in which it is agreed that the Company will redirect a portion
of the Participant’s Compensation, as specified in the Participation Agreement,
during each pay period. The Participation Agreement for any Plan Year must be
executed and delivered by the Participant and the Company prior to the January
1 of the calendar year to which the Participation Agreement relates. Provided,
however, in the case of a Participant who has not previously elected to have
Excess Salary Redirection Contributions made under the Plan on his behalf, such
Participant may elect to have such contributions made after January 1 of the
calendar year to which the Participation Agreement relates, so long as the
Participant has executed and delivered an Excess Salary Redirection Agreement
prior to the date the Participant renders services for the Company with respect
to which the Excess Salary Redirection Contributions shall relate.

     The Participant’s election to defer a portion of his Compensation each
year shall be irrevocable once made, except that the Committee, in its sole
discretion, may waive the Participant’s election to defer compensation if
the Participant has suffered an unforeseeable emergency which results in
severe financial hardship. Such waiver shall apply to the portion of the
calendar year remaining after the Committee’s determination that the
Participant has suffered a severe financial hardship. The effective date of
the waiver shall be fixed by the Committee after application by the
Participant under such procedures as may be fixed by the Committee. The
Participant’s application shall include a signed statement of the facts
causing financial hardship and any other facts required by the Committee in
its discretion.

     For purposes of this Section 3.1, an unforeseeable emergency is a
severe financial hardship to a Participant resulting from a sudden and
unexpected illness or accident of the Participant or a dependent of the
Participant (as defined in Section 152(a) of the Code), loss of the
Participant’s property due to casualty, or other similar extraordinary and
unforeseen circumstances arising as a result of events beyond the control of
the Participant. The circumstances that will constitute an unforeseeable
emergency will depend upon the facts of each case; however, the Committee
shall not grant any waiver of a Participant’s deferral election to the
extent that his hardship may be relieved (i) through reimbursement or
compensation by insurance or otherwise; (ii) by liquidation of the
Participant’s assets, to the extent liquidation of such assets would not
itself cause severe financial hardship; or (iii) by cessation of Salary
Redirection Contributions under the Thrift Plan. An unforeseeable emergency
shall not include the need to send a Participant’s child to college or the
desire to purchase a home.

92

 

     3.2 Excess Matching Contributions.

	 	(a)	 	Amount of Contribution. The Company may, but shall not
be required to, make Excess Matching Contributions under the Plan. Excess
Matching Contributions to be made by the Company for the benefit of a
Participant for any Plan Year shall consist of two parts. The first part shall
be in an amount, as determined by the Board, which does not exceed the
difference between (i) and (ii) below:

	 	(i)	 	The Matching Contributions which would have
been allocated to the Participant’s Matching Contributions Account
under the Thrift Plan for the Plan Year without giving effect to the
limitations on Compensation imposed by Section 401(a)(17) of the Code,
the reductions applicable to highly compensated employees due to the
discrimination tests set forth in Section 401(k) and (m) of the Code,
the limitations on Salary Redirection Contributions imposed by Section
402(g) of the Code or the limitations on annual additions imposed by
Section 415 of the Code.
	 
	 	(ii)	 	The amount of Matching Contributions actually
allocated to the Participant’s Matching Contributions Account under the
Thrift Plan for the Plan Year.

	 	(b)	 	In addition to the Excess Matching Contributions specified in
subsection (a), the Company may, as determined by the Board, make an additional
Excess Matching Contribution in such amount as shall be determined by the Board
in its discretion.
	 
	 	(c)	 	Timing of Contributions. Excess Matching Contributions
made for the benefit of a Participant for any Plan Year shall be credited to a
Participant’s Excess Matching Contributions Account within the time prescribed
for making Matching Contributions under the Thrift Plan.

     3.3 Employer Supplemental Contributions. In addition to the Excess Matching
Contributions provided for in Section 3.2, the Employer may make Employer Supplemental
Contributions under the plan in accordance with the provisions of subsections (a) and (b).

	 	(a)	 	Amount of Contribution. The Company may, but shall not
be required to, contribute on behalf of a Participant such amounts as the Board
may in its discretion determine from time to time to be advisable, which
amounts shall constitute the Employer Supplemental Contributions under the
Plan.
	 
	 	(b)	 	Timing of Contributions. Employer Supplemental
Contributions may be made by the Company at any time.

93

 

     3.4 Allocation of Adjustments.

	 	(a)	 	Individual Accounts. The Committee shall establish and
maintain an Individual Account in the name of each Participant to which the
Committee shall credit all amounts allocated to each such Participant pursuant
to this Article III. Each Individual Account shall be comprised of whichever
of the following are applicable to a particular Participant: Excess Matching
Contributions Account, Excess Salary Redirection Contributions Account and
Employer Supplemental Contributions Account.
	 
	 	(b)	 	Determination of Adjustments. Following the
allocations made pursuant to Sections 3.1, 3.2, and 3.3, the Committee shall
determine the Adjustments for December 31 of the applicable Plan Year (and, in
the event a Participant is eligible for a distribution as provided in Article
V, for the last day of the month immediately preceding the month the
Participant terminates service for any reason), and on such other dates as the
Committee deems advisable, by adding together all income received, and realized
and unrealized gains and any realized and unrealized losses since the most
recent allocation of Adjustments to Participants’ Individual Accounts.
	 
	 	(c)	 	Allocation of Adjustments Prior to January 1, 1997.
For all Plan Years ending prior to January 1, 1997, the Adjustments shall be
allocated as of the end of the Plan Year to the Individual Accounts of
Participants who maintain a credit balance in their Individual Accounts as of
such date in the same proportion that the balance of each Participant’s
Individual Account as of such date bears to the balance of all Individual
Accounts of Participants in the Plan on such date. Provided, however, in the
event any Participant is entitled to a distribution of his Individual Account
under Article V, the Adjustments shall be allocated as of the last day of the
month immediately preceding the month in which the Participant’s termination of
service occurs.
	 
	 	(d)	 	Allocation of Adjustments Commencing on January 1,
1997. Effective as of January 1, 1997, Adjustments shall be determined for
each Participant’s Individual Account under Section 3.4(b) above, and then
credited to each Participant’s Individual Account under this subsection (d) as
of the last day of the Plan Year and on such other dates as the Committee deems
advisable. Provided, however, in the event any Participant is entitled to a
distribution of this Individual Account under Article V, the Adjustments shall
be allocated as of the last day of the month immediately preceding the month in
which the Participant’s termination of service occurs. No provision of the
Plan shall impose or be deemed to impose any obligation upon the Company, other
than an unsecured contractual obligation to make a cash payment to Participants
and their beneficiaries in accordance with the terms of the Plan. Benefits
payable under the Plan shall be paid directly by the Company from the Company’s
general assets.

94

 

     3.5 Allocation of Forfeitures. The amount, if any, of a Participant’s Excess Matching
Contributions and Employer Supplemental Contributions Accounts forfeited under Section 5.1 shall be
allocated to the Excess Matching Contributions Accounts or the Employer Supplemental Contributions
Accounts, as the case may be, of all other Participants eligible to receive Excess Matching
Contributions under Section 3.2 and Employer Supplemental Contributions under Section 3.3 for the
Plan Year in which the forfeiture occurs. Such allocation shall be allocated in the proportion
that the Participant’s Compensation for the Plan Year bears to the total Compensation of all
Participants for such Plan Year. If, however, there are no Participants under the Plan who are
eligible to receive an allocation of forfeitures for the Plan Year in which a forfeiture occurs,
then, once the Company has satisfied all obligations to Participants under the Plan, such
forfeiture shall revert to the Company.

ARTICLE IV

FUNDING OF BENEFITS

     4.1 Unsecured Contractual Rights. The Plan at all times shall be unfunded and shall
constitute a mere promise by the Company to make benefit payments in the future. Notwithstanding
any other provision of this Plan or any trust created in connection with the Plan, neither a
Participant nor his designated beneficiary shall have any preferred claim on, or any beneficial
ownership interest in, any assets of the Company prior to the time benefits are paid as provided in
Article V, including any Compensation deferred hereunder by the Participant. All rights created
under this Plan shall be mere unsecured contractual rights of the Participant against the Company.

     4.2 Trust. Notwithstanding the provisions of Section 4.1, the Committee may, in its
discretion, satisfy all or any part of the Company’s obligations under the Plan from a trust
established by the Company in connection with the Plan or from an insurance contract, annuity or
similar vehicle owned by the Company or by setting aside and investing amounts deferred under the
Plan as an asset of the Company. Any such trust or other vehicle shall constitute solely a means
to assist the Company in meeting its promised obligations under the Plan and shall not constitute a
funded account within the meaning of ERISA or the Code, nor shall it create a security interest for
the benefit of any Participant or beneficiary. Any trust created hereunder shall conform in all
respects to the terms of the Model Trust, as described in Revenue Procedure 92-64.

     4.3 Change in Control.

	 	(a)	 	Establishment of a Trust Due to Change in Control of the
Company. Notwithstanding the provisions of Sections 4.1 and 4.2, upon a
Change in Control of the Company, as defined in Section 4.3(b), the Company
shall, as soon as possible, but in no event later than ninety (90) days
following the Change in Control, establish a trust that shall substantially
conform to the model trust, as described in Revenue Procedure 92-64. Upon the
creation of such trust, the Company shall make an irrevocable lump sum
contribution to the trust in an amount that is sufficient to pay all Plan
Participants and beneficiaries the benefits to which Plan Participants or their
beneficiaries would be entitled pursuant to the terms of the Plan as of the
date on which the Change in Control occurred.
	 
	 	(b)	 	Definition of Change in Control. “Change in Control”
means a change in control of a nature that would be required to be reported in
response to

95

 

	 	 	 	Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended, or if Item 6(e) is no longer in effect,
any regulations issued by the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934 which serve similar purposes; provided
that, without limitation, a Change in Control shall be deemed to have
occurred if and when (i) any “person” (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes a
beneficial owner, directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined voting power
of the Company’s then outstanding securities or (ii) individuals who were
members of the Board of Directors of the Company immediately prior to a
meeting of the shareholders of the Company involving a contest for the
election of directors shall not constitute a majority of the Board of
Directors following such election. Notwithstanding the foregoing, a Change
in Control of the Company shall not occur as a result of the issuance of
stock by the Company in connection with any public offering or private
placement of its stock.

ARTICLE V

DISTRIBUTIONS

     5.1 Forfeitures on Termination of Service. A Participant’s Excess Salary Redirection
Contributions Account shall not be subject to forfeiture or reversion to the Company hereunder.
Provided, however, to the extent specified by the Board at the time an Employee becomes a
Participant, the Participant’s Excess Matching Contributions Account and Employer Supplemental
Contributions Account under the Plan shall be subject to forfeiture upon the Participant’s
termination of employment, prior to his completion of such number of Years of Service as shall be
determined by the Board at the time he became a Participant, under circumstances other than any one
of the following: (i) the death of the Participant while still employed; (ii) the Committee’s
determination that the Participant is Totally and Permanently Disabled; or (iii) a Participant’s
retirement on or after attaining age sixty-five (65).

     Notwithstanding the foregoing provisions of this Section 5.1, the Participant shall not have
any preferred claim on, or any beneficial ownership interest in, any assets of the Company or any
trust created in connection with the Plan and any such assets shall be and remain subject to the
claims of the Company’s creditors until the time such assets are actually paid to the Participant
as provided in Article V.

     5.2 Year of Service. For purposes of this Article V, a Year of Service means each
Plan Year (commencing on and after the Effective Date) during which the Employee has completed one
thousand (1,000) Hours of Service for the Company, as defined in Section 1.23 of the Thrift Plan.

     5.3 Time of Payment of Benefits. All nonforfeitable amounts credited to a
Participant’s Individual Account, including any Adjustments credited in accordance with Section
3.5, shall be distributed to a Participant (or his designated beneficiary) within thirty (30) days
after the earliest of a Participant’s termination of service following death, Total and Permanent
Disability, retirement on or after attaining age sixty-five (65) or other separation from service
with the Company.

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     5.4 Method of Payment. Benefits shall be distributed in a single lump sum payment or
in substantially equal annual installments over a period of not less than three (3) nor more than
twelve (12) years, or in a combination of those two (2) methods, as elected by a Participant in
accordance with the provisions of Section 5.6.

     5.5 Death of the Participant and Beneficiary Designation. If a Participant dies
before the distribution of his benefits under the Plan commences, the Participant’s benefits shall
be distributed to the Participant’s designated beneficiary or beneficiaries in a single lump sum or
in substantially equal annual installments or in a combination of those two methods, as elected by
the Participant in accordance with the provisions of Section 5.6, as soon as reasonably practicable
after the Participant’s death. Installment payments under this Section 5.5 shall be made over a
period which is not less than three (3) nor more than twelve (12) years. If a Participant dies
after distribution of his benefits under the Plan has begun, the balance of the Participant’s
benefits yet to be distributed (if any) shall continue to be distributed to the Participant’s
designated beneficiary or beneficiaries in the manner in which such benefits were being distributed
on the date of the Participant’s death.

     The Participant may designate a primary and contingent beneficiary or beneficiaries on forms
provided by the Committee, which for this purpose may include the Participation Agreement. Such
designation may be changed at any time for any reason by the Participant. If the Participant fails
to designate a beneficiary, or if such designation shall for any reason be illegal or ineffective,
or if the designated beneficiary shall not survive the Participant, his benefits under the Plan
shall be paid: (i) to his surviving spouse; (ii) if there is no surviving spouse, to his
descendants (including legally adopted children or their descendants) per stirpes;
(iii) if there is neither a surviving spouse nor surviving descendants, to the duly appointed and
qualified executor or other personal representative of the Participant to be distributed in
accordance with the Participant’s wills or applicable intestacy law; or (iv) in the event that
there shall be no such representative duly appointed and qualified within thirty (30) days after
the date of death of the Participant, then to such persons as, at the date of his death, would be
entitled to share in the distribution of the Participant’s estate under the provisions of the
applicable statute then in force governing the descent of intestate property, in the proportions
specified in such statute. The Committee may determine the identity of the distributees, and in so
doing may act and rely upon any information it may deem reliable upon reasonable inquiry, and upon
any affidavit, certificate, or other paper believed by it to be genuine, and upon any evidence
believed by it to be sufficient.

     5.6 Payment Form Elections. A Participant shall designate the method of payment to
be used under Sections 5.4 and 5.5 at the time he becomes a Participant in this Plan on the form
authorized by and filed with the Committee. A Participant may change such designation by
completing and filing a new election form with the Committee at any time but in no event later than
six (6) months prior to the date on which his benefits first become distributable under Section
5.3. If no election is in effect or if the Participant’s election has not been timely or properly
made at the time distributions are to commence under either Section 5.4 or 5.5, distribution shall
be made in five (5) substantially equal annual installments.

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ARTICLE VI

PLAN ADMINISTRATION

     6.1 Company.

	 	(a)	 	The Company, in establishing and maintaining the Plan, of
necessity retains control of the operation and administration of the Plan. The
Company, in accordance with specific provisions of the Plan, has, as herein
indicated, delegated certain of these rights and obligations to the Committee
which, in turn, shall be solely responsible for those, and only those,
delegated rights and obligations.
	 
	 	(b)	 	The Company shall supply such full and timely information for
all matters relating to the Plan as (i) the Committee, (ii) the trustee of any
trust established in connection with the Plan, or (iii) the attorneys,
accountants and investment manager(s) engaged on behalf of the Plan by the
Company may require for the effective discharge of their respective duties.

     6.2 Benefits Committee.

	 	(a)	 	The Company shall appoint a committee of not less than three
(3) persons, who are members of the Board but who are not Employees, to hold
office at the pleasure of the Company, such committee to be known as the
Benefits Committee (“Committee”). No Compensation shall be paid to members of
the Committee from the trust for service on such Committee. The Committee
shall choose from among its members a chairman and a secretary. Any action of
the Committee shall be determined by the vote of a majority of its members.
Either the chairman or the secretary may execute any certificate or written
direction on behalf of the Committee. If the Company shall fail to appoint the
Committee, then the Company shall constitute the plan administrator of the Plan
and all references to the Committee under the Plan shall be deemed for all
purposes to refer to the Company.
	 
	 	(b)	 	The Committee shall hold meetings upon such notice, at such
place or places and at such time or times as the Committee may from time to
time determine. A majority of the members of the Committee at the time in
office shall constitute a quorum for the transaction of business.
	 
	 	(c)	 	The Committee may employ such counsel, accountants, and other
agents as it shall deem advisable. The Company shall pay, or cause to be paid,
the reasonable compensation of such counsel, accountants, and other agents and
any other reasonable expenses incurred by the Committee in the administration
of the Plan and trust.
	 
	 	(d)	 	All members of the Committee shall serve until their
resignation or dismissal by the Board and vacancies shall be filled in the same
manner as the original appointments. The Board may dismiss any member of the
Committee with or without cause.

98

 

     6.3 Claims Procedure.

	 	(a)	 	The Committee shall receive all applications for benefits.
Upon receipt by the Committee of such an application, it shall determine all
facts which are necessary to establish the right of an application to benefits
under the provisions of the Plan and the amount thereof as herein provided.
Upon request, the Committee shall afford the applicant the right of a hearing
with respect to any finding of fact or determination. The applicant shall be
notified in writing of any adverse decision with respect to his claim within
sixty (60) days after its submission. The notice shall be written in a manner
calculated to be understood by the applicant and shall include:

	 	(i)	 	The specific reason or reasons for the denial;
	 
	 	(ii)	 	Specific references to the pertinent Plan
provisions on which the denial is based;
	 
	 	(iii)	 	A description of any additional material or
information necessary for the applicant to perfect the claim and an
explanation why such material or information is necessary; and
	 
	 	(iv)	 	An explanation of the Plan’s claim review
procedures.

	 	(b)	 	If special circumstances require an extension of time for
processing the initial claim, a written notice of the extension and the reason
therefor shall be furnished to the claimant before the end of the initial sixty
(60) day period. In no event shall such extension exceed sixty (60) days.
	 
	 	(c)	 	In the event a claim for benefits is denied or if the applicant
has had no response to such claim within sixty (60) days of its submission (in
which case the claim for benefits shall be deemed to have been denied), the
applicant or his duly authorized representative, at the applicant’s sole
expense, may appeal the denial to the Committee within sixty (60) days of the
receipt of written notice of denial or sixty (60) days from the date such claim
is deemed to be denied. In pursuing such appeal the applicant or his duly
authorized representative:

	 	(i)	 	May request in writing that the Committee
review the denial;
	 
	 	(ii)	 	May review pertinent documents; and
	 
	 	(iii)	 	May submit issues and comments in writing.

	 	(d)	 	The decision on review shall be made within sixty (60) days of
receipt of the request for review, unless special circumstances require an
extension of time for processing, in which case a decision shall be rendered as
soon as possible, but not later than one hundred twenty (120) days after
receipt of request for review. If such an extension of time is required,
written notice of the extension shall be furnished to the claimant before the
end of the original sixty (60) day period. The decision on review shall be
made in writing, shall be written in a manner calculated to be understood by
the claimant, and shall include specific references to the provisions of

99

 

	 	 	 	the Plan on which such denial is based. If the decision on review is not
furnished within the time specified above, the claims shall be deemed denied
on review.

     6.4 Records. All acts and determinations of the Committee shall be duly recorded by
the secretary thereof and all such records together with such other documents as may be necessary
in exercising its duties under the Plan shall be reserved in the custody of such secretary. Such
records and documents shall at all times be open for inspection and for the purpose of making
copies by any person designated by the Company.

     6.5 No Liability. The Company assumes no obligation or responsibility to any of its
Employees, Participants or beneficiaries for any act of, or failure to act, on the part of the
Committee (unless the Company is the Committee).

     6.6 Indemnity of Committee Members. The Company shall indemnify and save harmless the
members of the Committee, and each of them, from and against any and all loss resulting from
liability to which the Committee, or the members of the Committee, may be subjected by reason of
any act or conduct (except willful misconduct or gross negligence) in their official capacities in
the administration of the Plan, including all expenses reasonably incurred in their defense, in
case the Company fails to provide such defense. The Committee members and the Company may execute
a letter agreement further delineating the indemnification agreement of this Section 6.6.

     6.7 Discretionary Powers and Authority of the Company and Committee. The Company and
the Committee shall have any and all power and authority (including discretion with respect to the
exercise of that power and authority) which shall be necessary, properly advisable, desirable or
convenient to enable them to carry out their responsibilities under the Plan. By way of
illustration and not limitation, the Company and Committee are empowered and authorized to (a) make
rules and regulations with respect to the Plan which are not inconsistent with the provisions of
the Plan or the Code; (b) determine, consistently therewith, all questions that may arise
concerning eligibility, benefits, status and rights of any person claiming particular status under
the Plan, including without limitation Participants, beneficiaries and the spouses and
beneficiaries thereof; and (c) subject to and consistent with the Code, to construe and interpret
the Plan and correct any defect, supply any omissions or reconcile any inconsistencies in the Plan.
Subject to the provisions of Section 6.3, such action shall be final, conclusive and binding upon
all persons, whether or not claiming benefits under the Plan.

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ARTICLE VII

AMENDMENT AND TERMINATION OF THE PLAN

     7.1 Amendment of the Plan. The Company shall have the right at any time by action of
the Board, to modify, alter or amend the Plan in whole or in part.

     7.2 Termination of the Plan. The Company reserves the right at any time by action of
its Board to terminate the Plan by resolution of the Board or to reduce or cease contributions at
any time.

ARTICLE VIII

MISCELLANEOUS

     8.1 Governing Law. The Plan shall be construed, regulated and administered according
to the laws of the State of Indiana, except in those areas preempted by the laws of the United
States of America in which case such laws will control.

     8.2 Headings and Gender. The headings and subheadings in the Plan have been inserted
for convenience of reference only and shall not affect the construction of the provisions hereof.
In any necessary construction the masculine shall include the feminine and the singular the plural,
and vice versa.

     8.3 Administration Expenses. The expenses of administering the Plan shall be paid by
the Company.

     8.4 Participant’s Rights; Acquittance. No Participant in the Plan shall acquire any
right to be retained in the Company’s employ by virtue of the Plan, nor, upon his dismissal, or
upon his voluntary termination of employment, shall he have any right or interest in and to any
assets of the Company other than as specifically provided herein. Unless a trust is established in
connection with the Plan, the Company shall be liable for the payment of any benefit provided for
herein.

     8.5 Spendthrift Clause. No benefit or interest available hereunder will be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment
or garnishment by creditors of the Participant or the Participant’s designated beneficiary, either
voluntarily or involuntarily.

     8.6 Counterparts. The Plan may be executed in any number of counterparts, each of
which shall constitute but one and the same instrument and may be sufficiently evidenced by any one
counterpart.

     8.7 No Enlargement of Employment Rights. Nothing contained in the Plan shall be
construed as a contract of employment between the Company and any person, nor shall the Plan be
deemed to give any person the right to be retained in the employ of the Company or limit the right
of the Company to employ or discharge any person with or without cause, or to discipline any
Employee.

     8.8 Limitations on Liability. Notwithstanding any of the preceding provisions of the
Plan, neither the Company, the Committee nor any individual acting as an employee or agent of
either of them shall be liable to any Participant, Employee or beneficiary for any claim, loss,

101

 

liability or expense incurred in connection with the Plan, except when the same shall have been
judicially determined to be due to the gross negligence or willful misconduct of such person.

     8.9 Incapacity of Participant or Beneficiary. If any person entitled to receive a
payment under the Plan is physically or mentally incapable of personally receiving and giving a
valid receipt for any payment due (unless prior claim therefor shall have been made by a duly
qualified guardian or other legal representative), then, unless and until claim therefor shall have
been made by a duly appointed guardian or other legal representative of such person, the Company
may provide for such payment or any part thereof to be made to any other person or institution then
contributing toward or providing for the care and maintenance of such person. Any such payment
shall be a payment for the account of such person and a complete discharge of any liability of the
Company and the Plan therefor.

     8.10 Corporate Successors. The Plan shall not be automatically terminated by a
transfer or sale of assets of the Company or by the merger or consolidation of the Company into or
with any other corporation or other entity, but the Plan shall be continued after such sale, merger
or consolidation only if and to the extent that the transferee, purchaser or successor entity
agrees to continue the Plan. In the event that the Plan is not continued by the transferee,
purchaser or successor entity, then the Plan shall terminate in accordance with the provisions of
Section 7.2.

SIGNATURES

     IN WITNESS WHEREOF, the Company has caused this Amended and Restated Supplemental Executive
Retirement Plan to be executed by its duly authorized officers, this day of 
                    , 1998, but effective as of January 1, 1997.

	 	 	 	 	 	 	 
	 	 	HORIZON BANCORP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 
	ATTEST: [SEAL]	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 

SS-2313-2

102

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