Document:

seniorleadershipincentiv

  -1-    SENIOR LEADERSHIP INCENTIVE PLAN    Effective Date: July 1, 2022                                    This Plan is proprietary and confidential to HomeTrust Bancshares, Inc. and its employees and should not be shared  outside the organization other than as required by executive or employee compensation reporting and disclosure  requirements.  

 

  -2-  1. Purpose. The purpose of  this Senior  Leadership  Incentive Plan  (“Plan”)  is  to provide  incentives  to  certain senior leaders of HomeTrust Bancshares, Inc. (the “Bank”) who contribute to the growth and  success of the organization. Capitalized terms used herein but not defined shall have the meaning set  forth in the Plan.  This Plan shall be effective for the Performance Period running from July 1, 2022 to  June 30, 2023.    2. Performance Criteria.  (a) General. For the Performance Period, the Participants will have a specified annual incentive award  opportunity (“Target Award”), expressed as a percentage of the Participant’s Base Salary.  (b) Performance Qualifiers.  Participants are eligible to earn annual incentives based upon the Bank,  Division or Line of Business (where applicable) and the Participant meeting certain performance  objectives.  For any payout to occur under the Plan, the Participant must achieve a satisfactory performance  review  based  on  the  manager’s  rating  and  complete  75%  of  their  established  individual  performance  objectives  for  the  Performance  Period.  Furthermore,  the  following  Corporate  Performance Qualifier must be met:  HomeTrust Bank must meet a minimum  (“Threshold”) Adjusted Pre‐Tax, Pre‐Provision  Earnings per board approved plan, for the Performance Period ending June 30th, 2023 as  determined by the Committee.  No incentives will be earned if the above Corporate Performance Qualifier is not met.   If  all  the  Corporate  Performance  Qualifiers  are  met,  incentives  for  each  Participant  will  be  calculated  based  upon  the  Incentive Metrics  and Metric Weightings  established  for  them  as  outlined within their Individual Incentive Summary Sheets.  At a minimum, all individual incentives  will  include  Incentive Metrics  related  the Bank’s Adjusted Pre‐Tax, Pre‐Provision Earnings  and  Efficiency Ratio. For some  individuals,  incentives may also  include  Incentive Metrics  related  to  Division or Line of Business performance relative to stated objectives.   (c) Incentive Metrics.   The Committee will establish corporate goals and other business objectives  each year considered relevant to the Bank’s success (“Bank Goals”). Participants will be assigned  Incentive  Metrics  (“Incentive  Metrics”)  to  support  the  achievement  of  Bank  Goals.  Metric  Weightings  will  be  established  for  each  Incentive Metric  based  upon  each metric’s  relative  importance  to  the  achievement  of  Bank  Goals  (“Metric  Weightings”).    The  Committee  will  determine annually the percentage achievement of the Incentive Metrics (“Metric Achievement  Percentage”).  Incentive Metrics will be established using three performance levels:  ▪ Threshold –  is the minimum  level of performance  in which the Bank would consider  it  reasonable to provide an award. If performance is below Threshold, the payout for that  goal  is  zero.  Performance  at  Threshold  allows  for  payment  equal  to  50%  of  the  Participant’s targeted annual incentive award opportunity.   ▪ Target – is the level of performance that the Bank considers “good” performance. Goals  at this level are challenging but considered reasonably obtainable. Performance at Target  

 

  -3-  allows for payment equal to 100% of the Participant’s targeted annual  incentive award  opportunity.   ▪ Stretch – is the level of performance the Bank considers outstanding performance. Goals  at this level are challenging and considered a best‐case scenario. Performance at Stretch  allows for payment equal to 150% of the Participant’s targeted annual  incentive award  opportunity, which is the highest amount to be paid under the Plan.  Performance between Threshold and Target, and between Target and Stretch, are interpolated to  provide for a range of Metric Achievement Percentage and payouts between 50% to 150% of a  Participant’s  targeted  annual  incentive,  based  on  incremental  results  between  Threshold  and  Stretch  performance.  For  example,  performance  that  falls  two‐thirds  of  the  way  between  Threshold  and Target performance  levels will  result  in  a payout  that  is  two‐thirds of  the way  between Threshold and Target payout levels.     3. Payment.    (a) Calculation.    Incentive  Payments  under  this  Plan  shall  be measured  and  calculated  annually.   Payment is calculated by multiplying the Participant’s Base Salary at the end of the Performance  Period by their Target Award percentage and by each Metric Weighting and Metric Achievement  Percentage. A Participant’s Total Incentive Payment is the sum total of Incentive Payments for each  Incentive  Metric.  Incentive  Payments  may  be  modified  by  the  Administrator  based  on  an  assessment of the Participant’s overall performance. Plan Participants must have been hired prior  to April 1st within the Plan Year and worked at least three months in an eligible position to qualify  for an incentive award. New Hires employed during the performance period are eligible to receive  a pro‐rated award based on the length of time in the position and actual performance results. All  Participants receive a pro‐rated award using full months worked during the Plan year.  (b) Payment Timing.  Incentive Payments, if any, will be paid within 2 1⁄2 months following the end of  the fiscal year.    4. Miscellaneous.    (a) Termination of Employment.  Subject to terms of the Plan, and the discretion of the Administrator:  i. A  Participant must  be  an  active  employee  of  the  Bank  and  have  not  given  notice  of  resignation on or before the date of payment to receive an Incentive Payment (except as  set forth below).    ii. Participants who cease  to be employed by  the Bank due  to Retirement are eligible  to  receive  Incentive  Payments  if  they  are  actively  employed  through March  31st  of  the  Performance Period.  iii. In  the  event  that  a  Participant  ceases  to  be  employed  by  the  Bank  due  to  death  or  Disability, the Participant is eligible to receive an Incentive Payment on a prorated basis  taking  into account the time they were  in active status during the Performance Period,  subject to the terms of the Plan.  In the event of death, the Bank will pay the Participant’s  estate for any Incentive Payment due.  (b) Subject to the Plan.  This Plan and any Incentive Payment are expressly subject to the terms and  conditions of  the Plan,  including, without  limitation,  the provisions  related  to  tax withholding,  

 

  -4-  non‐transferability of Incentive Payments, clawback of Incentive Payments, restrictive covenants,  and preservation of at‐will employment.  (c) Data Privacy Consent.    In order  to  implement, administer, and manage  this Plan,  the Bank,  its  subsidiaries and affiliates and certain agents thereof (together, the “Relevant Companies”) may  process certain personal or professional data and information, including but not limited to Social  Security or other identification number, home address and telephone number, date of birth and  other  information  that  is  necessary  or  desirable  for  the  implementation,  administration,  or  management of the Plan (the “Relevant Information”).  By participating in this Plan, the Participant  (i) expressly consents to the Bank’s collection, processing, use, registration and transfer among  the Relevant Companies of all Relevant  Information;  (ii) expressly consents  to  the storage and  transmission of the Relevant Information in electronic or other form or format; and (iii) expressly  consents  to  the  transfer of  the Relevant  Information  to any  jurisdiction  in which  the Relevant  Companies consider necessary for purposes of implementation, administration, or management  of the Plan.  The Participant shall have access to, and the right to change or correct, the Relevant  Information, and may request additional  information about the storage and processing of their  Relevant Information.  Relevant Information will only be used in accordance with applicable law.  No Advice.  The Bank is not providing any tax, legal, or financial advice to any Participant, nor shall  the Bank be responsible for any taxes imposed on a Participant with respect to a Participant’s  participation in the Plan.    5. Effective Date, Plan and Administrator. The Plan is effective July 1, 2022 and will remain in effect until  such time that HomeTrust Bank adopts a subsequent Plan that by  its terms expressly replaces and  supersedes the Plan  (the "Subsequent Plan"). Upon HomeTrust Bank’s adoption of the Subsequent  Plan, this Plan shall automatically terminate and no Participant in this Plan shall thereafter be eligible  to earn any compensation under this Plan, regardless of whether the Participant executes or otherwise  signifies his or her agreement to the Subsequent Plan. HomeTrust Bank is free to amend or modify  this Plan as it deems appropriate.   This Plan will be approved annually by the Compensation Committee (the “Committee”) of the Board  of Directors.     6. Participation and Eligibility.  Each year, employees are selected for Plan participation (“Participants”):  ▪ CEO participation is determined by the Compensation Committee.   ▪ Annually,  the  CEO  and  CPO will  recommend  participants  in  the  Plan  for  approval  by  the  Committee.   ▪ The CEO and CPO have the authority to approve other employees for participation in the Plan  and  determine  applicable  incentive  metrics  provided  they  meet  the  requirements  of  participation and are not deemed Executive Officers of the Bank.  Participants are subject to meeting the following requirements:  ▪ Awards  under  the  Plan  shall  be  limited  to  individuals  employed  on  a  full‐time  basis  by  HomeTrust on the date of payment, except in the case of disability, death, or retirement.   ▪ Participants  on  a  performance  improvement  plan  or with  an  unsatisfactory  performance  rating at the time of payment or who have given notice of resignation at the time of payment  are not eligible to receive an award.  

 

  -5-  7. Performance Period. The Plan operates on the Bank’s fiscal year schedule – July 1 through June 30.  (“Performance Period”).    8. Incentive Award Opportunities. Each Participant will have a specified target annual  incentive award  opportunity, expressed as a percentage of the Participant’s base salary. Incentive award opportunities  are based on the Participant’s job duties, responsibilities and competitive market practices.    9. Plan Discretion. The Plan provides discretion that allows the Compensation Committee to modify the  final awards in consultation with the CEO and CPO,  provided to Participants, based on a subjective  assessment of performance and contributions to the Bank’s success.    10. Award Distributions. At the end of the fiscal year, performance is measured and award amounts are  calculated. Awards are paid in cash (generally) within two and one‐half months following the end of  the fiscal year or as soon as practical after approval of the award payout by the Committee.  Awards are paid out as a percentage of a Participant’s annual base earnings as of  June 30th. Base  earnings are defined as the base salary in effect on June 30th and excludes referral fees, commissions  and any other previously‐paid performance compensation.  Payments under this Plan are considered taxable income to Participants in the year paid and will be  subject to tax withholding.     11. Risk Mitigation. HomeTrust  seeks  to  appropriately balance  risk with  financial  rewards  in  the Plan  design and implementation. The compensation arrangements in this Plan are designed to be sufficient  to incent Participants to achieve approved strategic and tactical goals while at the same time not be  excessive or lead to material financial loss to the Bank.   Awards  may  be  reduced  or  eliminated  for  credit  quality  and/or  regulatory  action.  Unless  the  Compensation  Committee  deems  otherwise,  awards will  not  be  paid,  regardless  of  Corporate  or  Team/Individual performance, if 1) any regulatory agency issues a formal, written enforcement action,  memorandum of understanding or other negative directive action where the Committee considers it  imprudent to provide awards under this Plan, and/or 2) after a review of the Company’s credit quality  measures the Committee considers it imprudent to provide awards under this Plan.    12. Coordination  with  Other  Incentives.  The  Plan  does  not  inhibit  the  Bank  from  approving  Plan  Participants for inclusion in other Bank plans, bonuses, commissions and/or incentive compensation  arrangements.  The  Board  of  Directors  or  the  Committee  may  make  discretionary  bonuses  to  Participants regardless of their participation in this Plan.  Please see “Terms and Conditions” for further details on the Plan provisions.     Terms and Conditions  The information represented below is subject to change and does not constitute a binding agreement.   Definition of “Plan”  “Plan” refers to the HomeTrust Bancshares, Inc. Senior Leadership Incentive Plan.  Definition of the “Bank”  For  the purposes of  this Plan,  the  “Bank”  refers  to HomeTrust Bancshares,  Inc. and HomeTrust Bank,  collectively.  

 

  -6-  Definition of “Board of Directors”  For  the  purposes  of  this  Plan,  “Board  of  Directors”  refers  to  the  boards  of  directors  of  HomeTrust  Bancshares, Inc. and HomeTrust Bank, collectively.  Definition of “Executive Officers”  For the purpose of this Plan, “Executive Officers” refers to the Bank’s Executive Officers as identified under  Regulation O.  Effective Date  This Plan became effective July 1, 2022. The Plan may be amended from time to time with the approval of  the Compensation Committee of the Board.   Performance Period/Plan Year  The Performance Period is July 1 through June 30 of the Bank’s Fiscal Year and may be referred to in this  document as the Plan year.  Plan Administration  The Plan is authorized by the Board of Directors. Each of the Board and the Compensation Committee has  the authority to make or nullify any rules and procedures, as necessary, for proper administration of the  Plan.   The Plan will be reviewed annually by the Compensation Committee to ensure proper alignment with the  Bank’s business objectives.   The Compensation Committee will approve all  final award distributions paid  to Plan Participants. Any  determination by the Compensation Committee will be final and binding.   Plan Changes or Discontinuance  The Bank has developed  the Plan on  the basis of existing business, market and economic  conditions;  current services; and staff assignments. If substantial changes occur that affect these conditions, services,  assignments,  or  forecasts,  the  Bank may  add  to,  amend, modify  or  discontinue  any  of  the  terms  or  conditions of the Plan at any time. Examples of substantial changes may include mergers, dispositions or  other corporate transactions, changes in laws or accounting principles or other events that would in the  absence of some adjustment, frustrate the intended operation of this arrangement.  The Compensation Committee may, at  its sole discretion, waive, change or amend any of the Plan as  it  deems appropriate.   Plan Interpretation  If there is any ambiguity as to the meaning of any terms or provisions of this Plan or any questions as to  the correct  interpretation of any  information contained therein, the Bank's  interpretation expressed by  the Compensation Committee will be final and binding.  Award Determinations   Plan Participants are eligible for a distribution under the Plan only upon attainment of certain performance  objectives defined under the Plan and after the approval of the award by the Compensation Committee.  Performance  at  Threshold,  Target  and  Stretch  are  interpolated  to  encourage  and  reward  incremental  performance improvement.   Award Distributions  Awards are paid in cash (generally) within two and one‐half months following the end of the fiscal year or  as soon as practical after approval of the award payout by the Compensation Committee.  

 

  -7-  Awards are paid out as a percentage of a Participant’s annual base earnings as of June 30. Base earnings  are defined as base salary in effect as of June 30 and excludes referral fees, commissions and any other  previously paid performance compensation.  Incentive awards are considered taxable income to Participants in the year paid and will be subject to tax  withholding.   New Hires, Reduced Work Schedules, Promotions, and Transfers  New hires that meet the eligibility criteria and are hired prior to April 1 of the Plan year receive a prorated  award based on the number of full months worked during the Plan year. New hires employed by the Bank  on or after April 1 are not eligible to receive an award for the current Plan year.  Participants that are promoted or change roles where the Participant becomes eligible or ineligible for an  award or experience a change in incentive opportunity will receive a prorated award based on their status  and  the  effective date of  the promotion or  role  change. Award  amounts will be  calculated using  the  Participant’s  base  earnings  at  the  end  of  the  Performance  Period  and  their  incentive  targets  for  the  applicable periods.   Participants that have an approved leave of absence are eligible to receive a prorated award calculated  using their time in active status as permitted by the Family Medical Leave Act or other applicable state and  federal laws and regulations.   Termination of Employment  To encourage employee retention, a Participant must be an active employee of the Bank on the date the  incentive award  is paid to receive an award (please see exceptions for death, disability and retirement  below). Participants who terminate employment during the Plan year will not be eligible to receive an  award. Participants who have given notice of resignation during the Plan year and before payout are not  eligible to receive an award.  Death, Disability or Retirement  If a Participant ceases to be employed by the Bank due to disability, his/her cash incentive award for the  Plan year will be prorated to the date of termination.   In the event of death, the Bank will pay to the Participant’s estate the pro rata portion of the cash award  that had been earned by the Participant during his/her period of employment.   Individuals who retire are eligible to receive a cash incentive payout if they are actively employed through  March 31 of the performance period.   Clawback  In  the  event  that  the  Bank  is  required  to  prepare  an  accounting  restatement  due  to  the material  noncompliance  of  the  Bank with  any  financial  reporting  requirement  under  the  securities  laws,  the  Participants shall, unless otherwise determined  in the sole discretion of the Committee, reimburse the  Bank upon receipt of written notification for any excess incentive payment amounts paid under the Plan  calculation(s) which were based on  financial  results  required  to be  restated.  In  calculating  the excess  amount, the Committee shall compare the calculation of the  incentive payment based on the relevant  results reflected in the restated financials compared to the same results reflected in the original financials  that were required to be restated. Participants may write a check payable to the Bank for amounts equal  to  the  written  notification.  In  its  discretion,  the  Compensation  Committee  has  the  right  to  adjust  compensation and/or modify a Participant’s future incentive payments as it deems necessary.       

 

  -8-  Ethics Statement  The altering,  inflating, and/or inappropriate manipulation of performance/financial results or any other  infraction of recognized ethical business standards, will subject the employee to disciplinary action up to  and  including termination of employment.  In addition, any  incentive compensation as provided by this  Plan to which the employee would otherwise be entitled will be revoked or if paid, be obligated to repay  any incentive award earned during the award period in which the wrongful conduct occurred regardless  of employment status.  Miscellaneous  Any Participant awards shall not be subject  to assignment, pledge or other disposition, nor shall such  amounts be subject to garnishment, attachment, transfer by operation of law, or any legal process.  Participation in the Plan does not confer rights to participation in other Bank Plans, including annual or  long‐term incentive Plans, non‐qualified retirement or deferred compensation Plans or perquisite Plans.  The Plan will not be deemed to give any Participant the right to be retained in the employ of the Bank, nor  will the Plan interfere with the right of the Bank to discharge any Participant at any time for any reason.  In the absence of an authorized, written employment contract, the relationship between employees and  the Bank is one of at‐will employment. The Plan does not alter the relationship.  This Plan and the transactions and payments hereunder shall, in all respect, be governed by, and construed  and enforced in accordance with the laws of the state in which the Participant is employed.  Each provision in this Plan is severable, and if any provision is held to be invalid, illegal, or unenforceable,  the validity,  legality and enforceability of the remaining provisions shall not,  in any way, be affected or  impaired thereby.        

 

  -9-  Schedule A1: Individual Incentive Summary Sheet*      Schedule A2: Individual Incentive Summary Sheet*      * For illustration purposes only.  In the event of a conflict or inconsistency between the terms of the Plan  and these calculations, such conflict will be resolved by the Administrator in its sole discretion.        Employee Name / Role: Example Group Executive Employee Base Salary Incentive Payment @ Stretch 60% 171,000$     Incentive Payment @ Target 40% 114,000        Incentive Payment @ Threshold 20% 57,000          Relative  Weighting 50% HTB Adjusted Pre‐tax Pre‐Provision Earnings Goal Payout Stretch TBD 85,500$   Target TBD 57,000     Threshold TBD 28,500     25% Efficiency Ratio Goal Payout Stretch TBD 42,750$   Target TBD 28,500     Threshold TBD 14,250     25% Division Profitability Goal Payout Stretch TBD 42,750$   Target TBD 28,500     Threshold TBD 14,250     $285,000 Goal Title and Description Incentive Goals and Payouts Employee Name / Role: Example C‐Suite Executive Employee Base Salary Incentive Payment @ Stretch 45% 112,500$     Incentive Payment @ Target 30% 75,000          Incentive Payment @ Threshold 15% 37,500          Relative  Weighting 75% HTB Adjusted Pre‐tax Pre‐Provision Earnings Goal Payout Stretch TBD 84,375$   Target TBD 56,250     Threshold TBD 28,125     25% Efficiency Ratio Goal Payout Stretch TBD 28,125$   Target TBD 18,750     Threshold TBD 9,375       $250,000 Goal Title and Description Incentive Goals and Payouts 

 

  -10-  Schedule B: Fiscal 2023 Executive Officer Target Awards and Incentive Metric Summary    Participant  Title  Target  Award %  HTBI Adjusted  Pre‐Tax, Pre‐ Provision  Earnings  HTBI  Efficiency  Ratio  Division  Profitability vs  Plan  Hunter Westbrook  CEO  50%  75%  25%  ‐‐  Tony VunCannon  CFO  30%  75%  25%  ‐‐  Marty Caywood  CIO  30%  75%  25%  ‐‐  Keith Houghton  CCO  30%  75%  25%  ‐‐  Parrish Little  CRO  30%  75%  25%  ‐‐  Megan Pelletier  CPO  30%  75%  25%  ‐‐  Kristin Powell  Consumer and  Business Banking  Group Executive  40%  50%  25%  25%  Mark DeMarcus  Commercial  Banking Group  Executive  40%  50%  25%  25%htbi-2022x06x30xxex102st

AMENDED AND RESTATED EMPLOYMENT AND TRANSITION AGREEMENT  OF  DANA L. STONESTREET  THIS AMENDED AND RESTATED EMPLOYMENT AND TRANSITION  AGREEMENT (“Agreement”) is made and entered into as of this 15th day of June 2022, by and  between HomeTrust Bancshares, Inc, Asheville, North Carolina (hereinafter referred to as the  “Company”) and Dana L. Stonestreet (the “Employee”).  WHEREAS, the Company and the Employee previously entered into an employment  agreement on July 10, 2012, as amended and restated on November 25, 2013 and as further  amended and restated on September 11, 2018 and May 23, 2022 (the “Prior Agreement”);  WHEREAS, the Employee currently serves as the Chairman and Chief Executive Officer  of the Company and Chairman of HomeTrust Bank, Asheville, North Carolina (the “Bank”),  having previously voluntarily relinquished the titles of President of the Company and President  and Chief Executive Officer of the Bank;   WHEREAS, the Compensation Committee of the Board of Directors of the Company  believes it is in the best interests of the Company and the Bank to enter into this Agreement with  the Employee, which amends and restates the Prior Agreement in its entirety, in order to delete  Section 7(g) of the Prior Agreement; and    WHEREAS, the Compensation Committee of the Board of Directors has approved and  authorized the execution of this Agreement with the Employee;  NOW, THEREFORE, in consideration of the foregoing and of the respective covenants  and agreements of the parties herein contained, it is AGREED as follows:  1. Definitions.  (a)  The term “Cash Compensation” shall mean the highest annual base salary  rate paid to the Employee at any time during his employment by the Company and its  Consolidated Subsidiaries, plus the higher of (i) the Employee’s annual bonus paid for the fiscal  year immediately preceding the Date of Termination, or (ii) the Employee’s target bonus for the  fiscal year in which the Date of Termination occurs, in each case including any salary or bonus  amounts deferred by the Employee.      (b) The term "Change in Control" means any of the following events: (1) any  person or persons acting as a group (within the meaning of Section 409A of the Code) acquires  (or has acquired during the 12-month period ending on the date of the most recent acquisition by  such person or persons) ownership of stock of the Company or the Bank possessing 30% or more  of the total voting power of the outstanding stock of the Company or the Bank; (2) individuals  who are members of the Board of Directors of the Company on the date hereof (the "Incumbent  Board") cease for any reason during any 12-month period to constitute at least a majority thereof,  provided that any person becoming a director subsequent to the date hereof whose election was  

 

2  approved by a vote of at least a majority of the directors comprising the Incumbent Board, or  whose nomination for election by the Company’s stockholders was approved by the nominating  committee serving under an Incumbent Board, shall be considered a member of the Incumbent  Board; (3) any person or persons acting as a group (within the meaning of Section 409A of the  Code) acquires (or has acquired during the 12-month period ending on the date of the most  recent acquisition by such person or persons) assets of the Company or the Bank that have a  gross fair market value of 40% or more of the total gross fair market value of all of the assets of  the Company or the Bank immediately before such acquisition or acquisitions; or (4) any other  event which is not covered by the foregoing subsections but which the Board of Directors  determines to affect control of the Company or the Bank and with respect to which the Board of  Directors adopts a resolution that the event constitutes a Change in Control for purposes of this  Agreement; provided that with respect to each of the events covered by clauses (1) through (4)  above, the event must also be deemed to be either a change in the ownership of the Company or  the Bank, a change in the effective control of the Company or the Bank or a change in the  ownership of a substantial portion of the assets of the Company or the Bank within the meaning  of Section 409A of the Code.      (c) The term “Code” means the Internal Revenue Code of 1986, as amended,  or any successor code thereto.  (d) The term “Consolidated Subsidiaries” means any subsidiary or  subsidiaries of the Company (or its successors) that are part of the consolidated group of the  Company (or its successors) for federal income tax reporting.  (e) The term “Date of Termination” means the date upon which the  Employee's employment with the Company and its Consolidated Subsidiaries ceases, as  specified in a notice of termination pursuant to Section 8 of this Agreement or automatically on  the Separation Date, provided that all references in this Agreement to a Date of Termination that  results in the payment of severance pursuant to Sections 7(a) or 7(b) of this Agreement shall  mean the date of the Executive’s involuntary Separation from Service.  (f) The term “Effective Date” means the date first written above.  (g) The term “Health Insurance Benefits” shall mean the benefits to be  provided pursuant to Section 7(a), 7(b) or 7(c) of this Agreement to the Employee and his  dependents who are covered by the Company or any of its Consolidated Subsidiaries at the time  of the Employee’s Date of Termination (each such person, including the Employee, a “Covered  Person” and collectively the “Covered Persons”) for the time period set forth in Section 7(a),  7(b) or 7(c) of this Agreement as applicable (the “Coverage Period”), which benefits shall  consist of the Company or the Bank paying 100% of the premium costs (including any Medicare  income-related monthly adjustment amount) for such person’s Medicare coverage (including  each part of Medicare in which such person participates, including but not limited to Parts A, B  and D of Medicare, Medicare advantage plans and Medigap plans) until the earlier of  the  expiration of the Coverage Period or the death of such person; provided, however, that in the  event that the payment of such premiums would trigger the payment of an excise tax under  Section 4980D of the Code, then the Company or the Bank shall pay to the Employee within 30  days following the Date of Termination a lump sum cash amount equal to the projected cost to  the Company and the Bank of providing continued coverage to the Covered Person until the  

 

3  expiration of the Coverage Period. Any insurance premiums payable by the Company or the  Bank as specified above shall be payable at such times and in such amounts as imposed by  Medicare or the insurance company, and the amount of insurance premiums required to be paid  by the Company or the Bank in any taxable year shall not affect the amount of insurance  premiums required to be paid by the Company or the Bank in any other taxable year.       (h) The term “Involuntary Termination” means a termination of the  employment of the Employee prior to the Separation Date (i) by the Company without his  express written consent; or (ii) by the Employee by reason of a material diminution of or  interference with his duties, titles, responsibilities or benefits, including any of the following  actions unless consented to in writing by the Employee:  (1) a requirement that the Employee be  based at any place other than Asheville, North Carolina, or within 20 miles thereof, except for  reasonable travel on Company or Bank business; (2) a material demotion of the Employee, other  than the change in titles set forth in Section 3 of this Agreement effective September 1, 2022; (3)  a material reduction in the number or seniority of Company or Bank personnel reporting to the  Employee or a material reduction in the frequency with which, or in the nature of the matters  with respect to which, such personnel are to report to the Employee, other than as part of a  Company- or Bank-wide reduction in staff and other than in connection with the change in titles  set forth in Section 3 of this Agreement effective September 1, 2022; (4) a material reduction in  the Employee’s salary or a material adverse change in the Employee’s perquisites, benefits,  contingent benefits or paid time off, other than prior to a Change in Control as part of an overall  program applied uniformly and with equitable effect to all members of the senior management of  the Company or the Bank and other than as set forth in Sections 4 and 5 of this Agreement  effective September 1, 2022; (5) a material permanent increase in the required hours of work or  the workload of the Employee; or (6) prior to September 1, 2022, the failure of the Board of  Directors (or a board of directors of a successor of the Company) to elect him as Chief Executive  Officer of the Company (or a successor of the Company) or any action by the Board of Directors  of the Company (or a board of directors of a successor of the Company) removing him from such  office; provided in each case that Involuntary Termination shall mean a cessation or reduction in  the Employee’s services for the Company and the Bank (and any other affiliated entities that are  deemed to constitute a “service recipient” as defined in Treasury Regulation §1.409A-1(h)(3))  that constitutes a “Separation from Service” as determined under Section 409A of the Code,  taking into account all of the facts, circumstances, rules and presumptions set forth in Treasury  Regulation §1.409A-1(h) and that also constitutes an involuntary Separation from Service under  Treasury Regulation §1.409A-1(n).    In addition, before the Employee terminates his  employment pursuant to clauses (1) through (6) of the preceding sentence, the Employee must  first provide written notice to the Company within ninety (90) days of the initial existence of the  condition, describing the existence of such condition, and the Company shall thereafter have the  right to remedy the condition within thirty (30) days following the date it received the written  notice from the Employee.  If the Company remedies the condition within such thirty (30) day  cure period, then the Employee shall not have the right to terminate his employment as the result  of such event. If the Company does not remedy the condition within such thirty (30) day cure  period, then the Employee may terminate his employment as the result of such event at any time  within sixty (60) days following the expiration of such cure period. All references in this  Agreement to an Involuntary Termination that results in the payment of severance shall mean an  involuntary Separation from Service under Treasury Regulation §1.409A-1(n). The term  “Involuntary Termination” does not include Termination for Cause, termination of employment  

 

4  due to death pursuant to Section 7(g) of this Agreement, termination of employment due to  Disability pursuant to Section 7(h) of this Agreement, or suspension or temporary or permanent  prohibition from participation in the conduct of the affairs of a depository institution under  Section 8 of the Federal Deposit Insurance Act.    (i) The term “Other Insurance Benefits” shall mean the group life insurance,  key man life insurance and long-term disability insurance benefits to be provided pursuant to  Section 7(a), 7(b) or 7(c) of this Agreement for the benefit of the Employee and his dependents  and beneficiaries in the event such benefits were provided immediately prior to the Date of  Termination, with (i) such benefits to be provided on the same terms as if the Employee had  continued to remain employed as an executive officer of the Company and the Bank, (ii) such  benefits to be provided until the expiration of the time period set forth in Section 7(a), 7(b) or  7(c) of this Agreement as applicable (the “Coverage Period”) or the Employee’s death,  whichever occurs first, and (iii) the Company or the Bank to pay 100% of the premiums for such  continued insurance coverage; provided, however, that in the event that the continued  participation of the Employee in any insurance plan specified above is barred, or during the  Coverage Period any such insurance plan is discontinued, then the Company and the Bank shall  at their election either (A) arrange to provide the Employee with alternative benefits substantially  similar to those which the Employee was entitled to receive under such insurance plan  immediately prior to the Date of Termination, or (B) in the event such continued coverage is  unable to be provided by the Company or the Bank, pay to the Employee within 30 days  following the Date of Termination (or within 30 days following the discontinuation of the  benefits if later) a lump sum cash amount equal to the projected cost to the Company and the  Bank of providing continued coverage to the Employee until the expiration of the Coverage  Period, with the projected cost to be based on the costs being incurred immediately prior to the  Date of Termination (or the discontinuation of the benefits if later), as increased by 15% on each  scheduled renewal date. Any insurance premiums payable by the Company or the Bank as  specified above shall be payable at such times and in such amounts (except that the Company or  the Bank shall also pay any employee portion of the premiums) as if the Employee was still an  employee of the Company or its Consolidated Subsidiaries, subject to any increases in such  amounts imposed by the insurance company, and the amount of insurance premiums required to  be paid by the Company or the Bank in any taxable year shall not affect the amount of insurance  premiums required to be paid by the Company or the Bank in any other taxable year.    (j) The term “Section 409A” means Section 409A of the Code and the  regulations and guidance of general applicability issued thereunder.  (k) The term “Separation Date” means the date of the Company’s 2023 annual  meeting of shareholders, unless the parties hereto mutually agree to an earlier date.  (l) The term “Separation Payment” means (a) the amount of Cash  Compensation that would have been paid to the Employee pursuant to Section 7(a)(i) of this  Agreement as if he had experienced an Involuntary Termination on September 1, 2022, minus  (b) the sum of the salary and any cash bonus paid to the Employee after August 31, 2022,  including any amounts deferred by the Employee and excluding any bonus for services  performed during the fiscal year ending June 30, 2022.   

 

5  (m) The term “Transition Period” means the period beginning on September 1,  2022 and ending on the Separation Date.  (n) The terms “Termination for Cause” and “Terminated for Cause” mean any  of the following: (i) the commission by the Employee of a willful act (including, without  limitation, a dishonest or fraudulent act) or a grossly negligent act, or the willful or grossly  negligent omission to act by the Employee, which is intended to cause, does cause or is  reasonably likely to cause material harm to the Company or any of its Consolidated Subsidiaries  (including harm to its business reputation); (ii) the indictment of the Employee for the  commission or perpetration by the Employee of any felony or any crime involving dishonesty,  moral turpitude or fraud; (iii) the material breach by the Employee of this Agreement; (iv) the  receipt of any formal written notice that any regulatory agency having jurisdiction over the  Company or the Bank intends to institute any formal regulatory action against the Employee, the  Company or the Bank (provided that the Board determines in good faith, with the Employee  abstaining from participating in the vote on the matter, that the subject matter of such action  involves acts or omissions by the Employee); (v) the exhibition by the Employee of a standard of  behavior within the scope of his employment that is materially disruptive to the orderly conduct  of the business operations of the Company or any of its Consolidated Subsidiaries (including,  without limitation, substance abuse or sexual misconduct) to a level which, in the Board’s good  faith and reasonable judgment, with the Employee abstaining from participating in the vote on  the matter, is materially detrimental to the best interests of the Company or any of its  Consolidated Subsidiaries; (vi) the failure of the Employee to devote his full business time and  attention to his employment as provided under this Agreement; or (vii) the failure of the  Employee to adhere to any policy or code of conduct of the Company or any of its Consolidated  Subsidiaries which causes, or is reasonably likely to cause, material harm to the Company or any  of its Consolidated Subsidiaries; provided that, if the Board of Directors determines in its good  faith discretion that the breach, behavior or failure specified in clauses (iii), (v), (vi) or (vii)  above is capable of being cured by the Employee, then Cause shall not be deemed to exist with  respect to such matter if the Employee cures the breach, behavior or failure to the satisfaction of  the Board of Directors within 10 days following written notice to the Employee of such breach,  behavior or failure.  No act or failure to act by the Employee shall be considered willful unless  the Employee acted or failed to act with an absence of good faith and without a reasonable belief  that his action or failure to act was in the best interest of the Company or the Bank. The  Employee shall not be deemed to have been Terminated for Cause unless and until there shall  have been delivered to the Employee a copy of a resolution, duly adopted by the affirmative vote  of not less than a majority of the entire membership of the Board of Directors at a meeting of the  Board duly called and held for such purpose (after reasonable notice to the Employee and an  opportunity for the Employee to present his views on the matter to the Board either in person  without counsel or in writing), stating that in the good faith opinion of the Board of Directors the  Employee has engaged in conduct described in the preceding sentence and specifying the  particulars thereof in detail.  The opportunity of the Employee to be heard before the Board shall  not affect the right of the Employee to arbitration as set forth in Section 18 of this Agreement.  The Board of Directors reserves the right to suspend the Employee with pay pending the  determination of Cause under this Section 1(n), as appropriate.    2. Term. The term of this Agreement shall continue until August 31, 2024, subject to  earlier termination as provided herein. The following provisions of this Agreement shall survive  

 

6  the expiration of the term of this Agreement: (a) Section 5(d) (Director Emeritus), (b) Section  7(c) (Separation Payment), (c) Section 7(e) (Certain Reduction of Payments by the Company or  the Bank), (d) Section 9 (Attorneys Fees), (e) Section 10 (Non-Disclosure, Non-Competition and  Non-Solicitation Provisions), (f) Section 16 (Severability), (g) Section 17 (Governing Law), (h)  Section 18 (Arbitration), (i) Section 19 (Equitable and Other Judicial Relief), and (j) Section 21  (Changes in Statutes or Regulations).    3. Employment. The Employee is employed as the Chairman and Chief Executive  Officer of the Company and Chairman of the Bank through and including August 31, 2022.  Effective September 1, 2022, the Employee will become Executive Chairman of both the  Company and the Bank and will voluntarily relinquish his title as Chief Executive Officer of the  Company, without any further action by either of the parties to this Agreement. As such, the  Employee shall render administrative and management services as are customarily performed by  persons situated in similar executive capacities, and shall have such other powers and duties as  the Board of Directors or the board of directors of the Bank may prescribe from time to time.  The Employee shall also render services to any Consolidated Subsidiary as requested by the  Company or the Bank from time to time consistent with his executive position. The Employee  shall devote his best efforts and reasonable time and attention to the business and affairs of the  Company and the Bank to the extent necessary to discharge his responsibilities hereunder. The  Employee may (i) serve on corporate or charitable boards or committees, and (ii) manage  personal investments, so long as such activities do not interfere materially with performance of  his responsibilities hereunder. The Company and the Employee acknowledge and agree that the  Employee will retire as Executive Chairman and as a director of both the Company and the Bank  effective as of the Separation Date.  4. Cash Compensation.  (a) Salary. Through and including August 31, 2022, the Company agrees to  pay the Employee a base salary (the “Company Salary”) the annualized amount of which shall be  not less than the annualized aggregate amount of the Employee’s base salary from the Company  and its Consolidated Subsidiaries in effect as of the Effective Date, with such Company Salary to  be reduced to $420,000 per annum beginning September 1, 2022 and continuing for the  remainder of the Transition Period, with the Company Salary to be pro-rated for the month in  which the Separation Date occurs; provided in each case that any amounts of salary actually paid  to the Employee by any Consolidated Subsidiaries shall reduce the amount to be paid by the  Company to the Employee.  The Company Salary shall be paid no less frequently than monthly  and shall be subject to customary tax withholding. The amount of the Employee’s Company  Salary may be increased (but shall not be decreased other than as set forth above and other than  prior to a Change in Control as part of an overall program applied uniformly and with equitable  effect to all members of senior management of the Company or the Bank) from time to time in  accordance with the amounts of salary approved by the Board of Directors or the board of  directors of any of the Consolidated Subsidiaries after the Effective Date, or by the compensation  committee of the Board of Directors of any of the foregoing entities.   (b) Bonuses. The Employee shall be entitled to receive his earned bonus for  the fiscal year ending June 30, 2022 and shall be eligible for consideration to participate in an  equitable manner with all other executive officers of the Company and the Bank for the fiscal  year ending June 30, 2023 in such performance-based and discretionary bonuses, if any, as are  

 

7  authorized and declared by the Board of Directors for executive officers of the Company and by  the board of directors of the Bank for executive officers of the Bank, or by the compensation  committee of the Board of Directors of any of the foregoing entities.  Any discretionary bonus  shall be paid not later than 21⁄2 months after the year in which the Employee obtains a legally  binding right to the bonus. If the discretionary bonus cannot be paid by that date, then it shall be  paid on the next following April 15, or such other date during the year as permitted under  Section 409A.   (c) Expenses. The Employee shall be entitled to receive prompt  reimbursement for all reasonable expenses incurred by the Employee in performing services  under this Agreement in accordance with the policies and procedures applicable to the executive  officers of the Company and the Bank, provided that the Employee accounts for such expenses  as required under such policies and procedures.  5. Benefits.  (a) Participation in Benefit Plans. The Employee shall be entitled to  participate, to the same extent as executive officers of the Company and the Bank generally, in  all plans of the Company and the Bank relating to pension, retirement, thrift, profit-sharing,  savings, group or other life insurance, hospitalization, medical and dental coverage (except to the  extent covered by Medicare), travel and accident insurance, education, and other retirement or  employee benefits or combinations thereof.  In addition, the Employee shall be entitled to be  considered for benefits under all of the stock and stock option related plans in which the  Company's or the Bank's executive officers are eligible or become eligible to participate,  although no further equity grants after the Effective Date are guaranteed.   (b)  Fringe Benefits. The Employee shall be eligible to participate in, and receive  benefits under, any other fringe benefit plans or perquisites which are or may become generally  available to the Company’s or the Bank’s executive officers and other such benefits as the Board  of Directors may provide in its discretion.   (c)  Non-Qualified Deferred Compensation Plans. The parties agree that the  termination of the Employee’s employment and service as a director on the Separation Date shall  constitute a “Separation from Service” under Section 409A of the Code and Treasury Regulation  §1.409A-1(h) with respect to each non-qualified deferred compensation plan in which the  Employee participates.   (d)  Director Emeritus. Effective immediately following the Separation Date, the  Company shall appoint the Employee as a director emeritus, on the same terms as other persons  who serve as a director emeritus of the Bank. The Employee hereby acknowledges and agrees  that he waives any right to participate in the Bank’s Director Emeritus Plan.  6. Paid Time Off. The Employee shall be entitled to paid time off each year in  accordance with the policies established by the Board of Directors and the board of directors of  the Bank for executive officers. The Employee shall also be eligible for voluntary leaves of  absence, with or without pay, from time to time at such times and upon such conditions as the  Board of Directors may determine in its discretion.  

 

8  7. Termination of Employment.    (a) Involuntary Termination. If the Employee experiences an Involuntary  Termination prior to the Separation Date, such termination of employment shall be subject to the  Company’s obligations under this Section 7. In the event of an Involuntary Termination of the  Employee prior to the Separation Date (other than an Involuntary Termination at the time of or  within 12 months following a Change in Control), the Company or the Bank shall, subject to the  Employee executing and not revoking a general release of claims pursuant to Section 7(d) below,  (i) pay to the Employee monthly one-twelfth of the greater of (A) his Cash Compensation until  the expiration of the remaining term of this Agreement or (B) the Separation Payment until the  expiration of the remaining term of this Agreement, with such payments to commence effective  as of the first business day of the month following the Involuntary Termination, provided that the  initial installment(s) shall be delayed and paid on the first business day of the month following  the date the general release of claims is executed and the revocation period expires without the  release being revoked, except as otherwise set forth below or in Section 7(d) below, (ii) provide  Health Insurance Benefits to each Covered Person until the expiration of the remaining term of  this Agreement or such Covered Person’s death, whichever first occurs, and (iii) provide Other  Insurance Benefits until the expiration of the remaining term of this Agreement or the  Employee’s death, whichever first occurs. If the Employee is a “Specified Employee” (as  defined in Section 409A) at the time of his Separation from Service, then payments under this  Section 7(a) which are not covered by the separation pay plan exemption from Section 409A set  forth in Treasury Regulation §1.409A-1(b)(9)(iii) and which would otherwise be paid within the  first six months following the Separation from Service, and as such constitute deferred  compensation under Section 409A, shall not be paid until the 185th day following the  Employee’s Separation from Service, or his earlier death.  Any payments deferred on account of  the preceding sentence shall be accumulated without interest and paid with the first payment that  is payable in accordance with the preceding sentence and Section 409A. To the extent permitted  by Section 409A, amounts payable under this Section 7(a) which are considered deferred  compensation shall be treated as payable after amounts which are not considered deferred  compensation (i.e., which are considered payable on account of an involuntary Separation from  Service as herein defined pursuant to a separation pay plan).     (b) Change in Control. In the event that the Employee experiences an  Involuntary Termination prior to the Separation Date at the time of or within 12 months  following a Change in Control, then in lieu of the Company’s obligations under Section 7(a) of  this Agreement, the Company or the Bank shall, subject to the Employee executing and not  revoking a general release of claims pursuant to Section 7(d) below, (i) pay to the Employee a  lump sum cash amount equal to three times the Employee’s Cash Compensation, with such lump  sum payment to be made within 10 business days following the date the general release of claims  is executed and the revocation period expires without the release being revoked, except as  otherwise set forth in Section 7(d) below, (ii) provide Health Insurance Benefits to each Covered  Person until the three-year anniversary of the Date of Termination or such Covered Person’s  death, whichever first occurs, and (iii) provide Other Insurance Benefits until the three-year  anniversary of the Date of Termination or the Employee’s death, whichever first occurs.  The  lump sum cash payment pursuant to this Section 7(b) is intended to be, and shall be construed as,  exempt from Section 409A of the Code in reliance upon the short-term deferral exemption set  forth in Treasury Regulation §1.409A-1(b)(4).  

 

9  (c) Separation Payment. If the Employee remains employed as Executive  Chairman of both the Company and the Bank until his Separation Date, then the Company or the  Bank shall, subject to the Employee executing and not revoking a general release of claims  pursuant to Section 7(d) below, (i) pay to the Employee monthly one-twelfth of his Separation  Payment until the expiration of the remaining term of this Agreement, with such payments to  commence effective as of the first business day of the month following the Involuntary  Termination, provided that the initial installment(s) shall be delayed and paid on the first  business day of the month following the date the general release of claims is executed and the  revocation period expires without the release being revoked, except as otherwise set forth below  or in Section 7(d) below, (ii) provide Health Insurance Benefits to each Covered Person until the  expiration of the remaining term of this Agreement or such Covered Person’s death, whichever  first occurs, and (iii) provide Other Insurance Benefits until the expiration of the remaining term  of this Agreement or the Employee’s death, whichever first occurs. If the Employee is a  “Specified Employee” (as defined in Section 409A) at the time of his Separation from Service,  then payments under this Section 7(c) which would otherwise be paid within the first six months  following the Separation from Service shall not be paid until the 185th day following the  Employee’s Separation from Service, or his earlier death. Any payments deferred on account of  the preceding sentence shall be accumulated without interest and paid with the first payment that  is payable in accordance with the preceding sentence and Section 409A.  (d) The  obligations of the Company and the Bank to make payments or  provide benefits under either Section 7(a), 7(b) or 7(c) above are expressly conditioned upon the  Employee executing a general release of claims within the time period set forth in the release to  be provided to him by the Company and not revoking such release, with such general release to  release any and all claims, charges and complaints which the Employee may have against the  Company and its Consolidated Subsidiaries, as well as the directors, officers and employees of  such entities, in connection with the Employee’s employment with the Company and its  Consolidated Subsidiaries and the termination of such employment.  Notwithstanding any other  provision contained in this Agreement, in the event the time period that the Employee has to  consider the terms of such general release (including any revocation period under such release)  commences in one calendar year and ends in the succeeding calendar year, then the payments  shall not commence or be paid until the succeeding calendar year.  (e) Certain Reduction of Payments by the Company or the Bank.  (i)  In the event that the aggregate payments or benefits to be provided  to the Employee pursuant to this Agreement, together with other payments and benefits which  the Employee has a right to receive from the Company or its Consolidated Subsidiaries or any  their successors are deemed to be parachute payments as defined in Section 280G of the Code or  any successor thereto (the “Severance Benefits”), then the net-after-tax benefit of the Severance  Benefits without reduction shall be compared to the net-after-tax benefit of the Severance  Benefits if such Severance Benefits were reduced to an amount (the “Non-Triggering Amount”),  the value of which is one dollar ($1.00) less than an amount equal to three times the Employee’s  “base amount,” as determined in accordance with Section 280G of the Code.  If the Non- Triggering Amount less the product of the Non-Triggering Amount and the Tax Rate (as defined  below) would be greater than the aggregate value of the Severance Benefits (without such  reduction) minus (i) the amount of the excise tax required to be paid by the Employee thereon by  

 

10  Section 4999 of the Code and further minus (ii) the product of the Severance Benefits (without  such reduction) and the Tax Rate, then the Severance Benefits shall be reduced to the Non- Triggering Amount; otherwise, the Employee shall be entitled to receive the full amount of the  Severance Benefits and shall be responsible for paying the excise tax imposed by Section 4999  of the Code. For purposes of this section, “Tax Rate” shall mean the sum of (a) the highest  marginal federal, state and local income tax rates applicable to the Employee, and (b) the Social  Security and Medicare tax rates applicable to such payment, as adjusted for any phase out of  federal tax deductions and any benefit associated with state or local tax deductions. If the  Severance Benefits are required to be reduced to the Non-Triggering Amount, then the cash  severance shall be reduced first, followed by a reduction in the fringe benefits to be provided in  kind. Nothing contained in this Section 7(e)(i) shall result in a reduction of any payments or benefits  to which the Employee may be entitled upon termination of employment under any circumstances  other than as specified in this Section 7(e)(i), or a reduction in the payments and benefits specified  in Section 7(b) below zero.      (ii) All determinations required to be made under this Section 7(d)  related to the application of Section 280G of the Code shall be made by the Company’s  independent auditors or by such other firm with recognized expertise as may be selected by the  Company (such auditors or, if applicable, such other firm are hereinafter referred to as the  “Advisory Firm”). The Advisory Firm shall, within ten business days of the Date of Termination  or at such earlier time as is requested by the Company, provide to both the Company and the  Employee detailed supporting calculations showing both the net-after-tax benefit of the  Severance Benefits if the Employee receives the full amount of such benefits and the net-after- tax benefit of the Severance Benefits if such benefits are reduced to the Non-Triggering Amount,  together with an opinion that if the Severance Benefits are required to be reduced to the Non- Triggering Amount, then the Company will have substantial authority to deduct for purposes of  Section 280G of the Code (before taking into account any amount not deductible under Section  162(m) of the Code) the amount of the reduced Severance Benefits and that the Employee will  have substantial authority not to report on his federal income tax return any excise tax imposed  by Section 4999 of the Code with respect to the reduced Severance Benefits.  Any such  determination and opinion by the Advisory Firm shall be binding upon the Company and the  Employee. The Company and the Employee shall cooperate fully with the Advisory Firm,  including without limitation providing to the Advisory Firm all information and materials  reasonably requested by it, in connection with the making of the determinations required under  this Section 7(e).       (iii) As a result of uncertainty in the application of Section 280G of the  Code at the time of the initial determination by the Advisory Firm hereunder, it is possible that  Severance Benefits will have been made by the Company which should not have been made  (“Overpayment”) or that additional Severance Benefits will not have been made by the Company  which should have been made (“Underpayment”), in each case, consistent with the calculations  required to be made hereunder.  In the event that the Advisory Firm, based upon the assertion by  the Internal Revenue Service against the Employee of a deficiency which the Advisory Firm  believes has a high probability of success, determines that an Overpayment has been made, any  such Overpayment paid or distributed by the Company to or for the benefit of the Employee shall  be repaid by the Employee to the Company together with interest at the applicable federal rate  provided for in Section 1274 of the Code, with such repayment to be made within 60 days  

 

11  following the date the amount of the Overpayment has been communicated to the Employee. In  the event that the Advisory Firm, based upon controlling precedent or other substantial authority,  determines that an Underpayment has occurred, any such Underpayment shall be promptly paid  by the Company to or for the benefit of the Employee together with interest at the applicable  federal rate provided for in Section 1274 of the Code, with such payment to be made within 60  days following the date the amount of the Underpayment has been communicated to the  Company.    (iv) Any payments made to the Employee pursuant to this Agreement,  or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. 1828(k) and  any regulations promulgated thereunder.   (f) Termination for Cause. In the event of Termination for Cause, the  Company shall have no further obligation to the Employee under this Agreement after the Date  of Termination.  (g) Death. In the event of the death of the Employee while employed under  this Agreement and prior to any termination of employment, the Company shall pay to the  Employee’s estate, or such person or beneficiary as the Employee may have previously  designated in writing, (i) a lump sum equal to the greater of (A) the Employee’s Cash  Compensation for the remainder of the term of this Agreement, reduced by the proceeds of any  life insurance plan or policy from the Company or the Bank covering the Employee, regardless if  the premium is or was paid by the Company, the Bank and/or the Employee, or (B) if the  Employee died while employed under this Agreement within six months prior or 12 months  following a Change in Control, the Change in Control payment set forth in Section 7(b); and (ii)  the amounts of any benefits or awards which, pursuant to the terms of any applicable plan or  plans, were earned with respect to the fiscal year in which the Employee died and which the  Employee would have been entitled to receive if he had continued to be employed, and the  amount of any bonus or incentive compensation for such fiscal year which the Employee would  have been entitled to receive if he had continued to be employed, pro-rated in accordance with  the portion of the fiscal year prior to his death, provided that the amounts covered by clause (ii)  of this Section 7(g) shall be payable when and as ordinarily payable under the applicable plans.  The lump sum payable pursuant to clause (i) of this Section 7(g) shall be payable within 30 days  following the date of death, provided that if the Employee died while employed under this  Agreement within six months prior to a Change in Control, any additional payment required  pursuant to clause (i)(B) of this Section 7(g) shall be payable within 30 days following the date  of the Change in Control.    (h) Permanent Disability. One of the benefits currently provided by the Bank  (which benefit will be continued through and including the Separation Date by the Company or  the Bank) is disability insurance for the benefit of the Employee (either pursuant to a disability  program sponsored by the Bank (or the Company after the date hereof) for employees generally  or a related “carve out” or similar disability income policy owned by the Employee that is  established in conjunction with the disability program sponsored by the Bank (or the Company  after the date hereof), regardless if the premium is paid by the Company, the Bank or the  Employee, or a combination of them (the "Disability Plan"). For purposes of this Agreement, the  term “Disability” shall mean the Employee is either (i) unable to engage in any substantial  

 

12  gainful activity by reason of any medically determinable physical or mental impairment which  can be expected to result in death or can be expected to last for a continuous period of not less  than 12 months, or (ii) by reason of any medically determinable physical or mental impairment  which can be expected to result in death or can be expected to last for a continuous period of not  less than 12 months, receiving income replacement benefits for a period of not less than three  months under a Disability Plan covering employees of the Company or any of the Consolidated  Subsidiaries. The Company may terminate the employment of the Employee after having  established that the Employee has incurred a Disability. After exhaustion of all Paid Time Off  days allocated for a calendar year pursuant to Section 6, the Company will pay to the Employee  monthly one-twelfth of his Cash Compensation for the remainder of the term of this Agreement,  reduced by the proceeds of any Disability Plan then in effect. If the Employee’s employment is  terminated on account of Disability (as defined above) during the one year commencing on the  effective date of a Change in Control, then he shall receive the Change in Control payment and  benefits described in Section 7(b), payable at the same time and in the same manner as provided  for under Section 7(b) of this Agreement, in lieu of any payment under this Section 7(h).    8. Notice of Termination. In the event that the Company desires to terminate the  employment of the Employee prior to the Separation Date, the Company shall deliver to the  Employee a written notice of termination, stating whether such termination constitutes  Termination for Cause or Involuntary Termination or is due to Disability, setting forth in  reasonable detail the facts and circumstances that are the basis for the termination, and  specifying the date upon which employment shall terminate, which date shall be at least 30 days  after the date upon which the notice is delivered, except in the case of Termination for Cause.  In  the event that the Employee determines in good faith that he has experienced an event giving rise  to an Involuntary Termination of his employment prior to the Separation Date if not cured, he  shall send a written notice to the Company in accordance with Section 1(h) of this Agreement. In  the event that the Employee desires to affect a Voluntary Termination prior to the Separation  Date, he shall deliver a written notice to the Company, stating the date upon which employment  shall terminate, which date shall be at least 30 days after the date upon which the notice is  delivered, unless the parties agree to a date sooner.   9. Attorneys Fees. The Company shall pay all legal fees and related expenses  (including the costs of experts, evidence and counsel) incurred by the Employee as a result of (i)  the Employee’s contesting or disputing any termination of employment prior to the Separation  Date, or (ii) the Employee’s seeking to obtain or enforce any right or benefit provided by this  Agreement or by any other plan or arrangement maintained by the Company (or its successors)  or any of the Consolidated Subsidiaries under which the Employee is or may be entitled to  receive benefits; provided that the Company’s obligation to pay such fees and expenses is subject  to the Employee prevailing with respect to the matters in dispute in any action initiated by the  Employee or the Employee having been determined to have acted reasonably and in good faith  with respect to any action initiated by the Company. The Company agrees to pay such legal fees  and related expenses to the extent permitted by law within 60 days following the date the  Executive provides notice to the Company with respect to such amounts, and in the event it is  subsequently determined that the Employee is not entitled to such payments as a result of the  proviso clause in the preceding sentence, the Employee shall repay to the Company within 60  days following such determination any payments for legal fees and related expenses as to which  the Employee was not entitled.  

 

13    10. Non-Disclosure, Non-Competition and Non-Solicitation Provisions.      (a) Non-Disclosure. The Employee acknowledges that he has acquired, and  will continue to acquire while employed by the Company and/or performing services for the  Consolidated Subsidiaries, special knowledge of the business, affairs, strategies and plans of the  Company and the Consolidated Subsidiaries which has not been disclosed to the public and  which constitutes confidential and proprietary business information owned by the Company and  the Consolidated Subsidiaries, including but not limited to, information about the customers,  customer lists, software, data, formulae, processes, inventions, trade secrets, marketing  information and plans, and business strategies of the Company and the Consolidated  Subsidiaries, and other information about the products and services offered or developed or  planned to be offered or developed by the Company and/or the Consolidated Subsidiaries  (“Confidential Information”).  The Employee agrees that, without the prior written consent of the  Company, he shall not, during the term of his employment or at any time thereafter, in any  manner directly or indirectly disclose any Confidential Information to any person or entity other  than the Company and the Consolidated Subsidiaries. Notwithstanding the foregoing, if the  Employee is requested or required (including but not limited to by oral questions, interrogatories,  requests for information or documents in legal proceeding, subpoena, civil investigative demand  or other similar process) to disclose any Confidential Information, the Employee shall provide  the Company with prompt written notice of any such request or requirement so that the Company  and/or a Consolidated Subsidiary may seek a protective order or other appropriate remedy and/or  waive compliance with the provisions of this Section 10(a). If, in the absence of a protective  order or other remedy or the receipt of a waiver from the Company, the Employee is nonetheless  legally compelled to disclose Confidential Information to any tribunal or else stand liable for  contempt or suffer other censure or penalty, the Employee may, without liability hereunder,  disclose to such tribunal only that portion of the Confidential Information which is legally  required to be disclosed, provided that the Employee exercise his best efforts to preserve the  confidentiality of the Confidential Information, including without limitation by cooperating with  the Company and/or a Consolidated Subsidiary to obtain an appropriate protective order or other  reliable assurance that confidential treatment will be accorded the Confidential Information by  such tribunal.  Notwithstanding anything to the contrary herein, the parties hereto agree that  nothing contained in this Agreement limits the Employee’s ability to report information to or file  a charge or complaint with the Equal Employment Opportunity Commission, the Securities and  Exchange Commission, the Federal Deposit Insurance Corporation, the Board of Governors of  the Federal Reserve System or any other federal, state or local governmental agency or  commission that has jurisdiction over the Company or any Consolidated Subsidiary (the  “Government Agencies”). The Employee further understands that this Agreement does not limit  his ability to communicate with any Government Agencies or otherwise participate in any  investigation or proceeding that may be conducted by any Government Agency, including  providing documents or other information, without notice to the Company and/or any  Consolidated Subsidiary. This Agreement does not limit the Employee’s right to receive an  award for information provided to any Government Agencies. In addition, pursuant to the  Defend Trade Secrets Act of 2016, the Employee understands that an individual may not be held  criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade  secret that (i) is made (A) in confidence to a federal, state or local government official, either  directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or  

 

14  investigating a suspected violation of law; or (ii) is made in a complaint or other document that is  filed under seal in a lawsuit or other proceeding.  Further, an individual who files a lawsuit for  retaliation by an employer for reporting a suspected violation of law may disclose the employer's  trade secrets to the attorney and use the trade secret information in the court proceeding if the  individual (y) files any document containing the trade secret under seal; and (z) does not disclose  the trade secret, except pursuant to court order. On the Date of Termination, the Employee shall  promptly deliver to the Company all copies of documents or other records (including without  limitation electronic records) containing any Confidential Information that is in his possession or  under his control, and shall retain no written or electronic record of any Confidential  Information.       (b) Non-Competition. As partial consideration for the severance payments and  benefits to be provided to the Employee pursuant to Section 7 of this Agreement, the Employee  agrees that during the two-year period next following the Date of Termination (the “Non- Competition Period”), the Employee shall not engage in, become interested in, directly or  indirectly, as a sole proprietor, as a partner in a partnership, or as a shareholder in a corporation,  or become associated with, in the capacity of employee, director, officer, principal, agent,  consultant, trustee or in any other capacity whatsoever, any enterprise or entity with an office  located within 50 miles of any office of the Company or any Consolidated Subsidiary during the  Non-Competition Period, which proprietorship, partnership, corporation, enterprise or other  entity is engaged in any line of business conducted by the Company or any banking subsidiary of  the Company during the Non-Competition Period, including but not limited to entities which  lend money and take deposits (in each case, a “Competing Business”), provided, however, that  this provision shall not prohibit the Employee from owning bonds, non-voting preferred stock or  up to five percent (5%) of the outstanding common stock of any Competing Business if such  common stock is publicly traded.      (c) Non-Solicitation. As partial consideration for the severance payments and  benefits to be provided to the Employee pursuant to Section 7 of this Agreement, the Employee  agrees that during the three-year period next following the Date of Termination, the Employee  shall not directly or indirectly (i) solicit or induce, or cause others to solicit or induce, any  employee of the Company or any Consolidated Subsidiary to leave the employment of such  entities, or (ii) solicit (whether by mail, telephone, personal meeting or any other means,  excluding general solicitations of the public that are not based in whole or in part on any list of  customers of the Company or any Consolidated Subsidiary) any customer of the Company or any  Consolidated Subsidiary to transact business with any Competing Business, or to reduce or  refrain from doing any business with the Company or any Consolidated Subsidiary, or interfere  with or damage (or attempt to interfere with or damage) any relationship between the Company  or any Consolidated Subsidiary and any such customers.   The provisions of this Section 10 shall survive any termination of the Employee’s  employment and any termination of this Agreement.  11. No Assignments.  (a) This Agreement is personal to each of the parties hereto, and neither party  may assign or delegate any of its rights or obligations hereunder without first obtaining the  

 

15  written consent of the other party; provided, however, that the Company shall require any  successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise)  by an assumption agreement in form and substance satisfactory to the Employee, to expressly  assume and agree to perform this Agreement in the same manner and to the same extent that the  Company would be required to perform it if no such succession or assignment had taken place.   Failure of the Company to obtain such an assumption agreement prior to the effectiveness of any  such succession or assignment shall be a breach of this Agreement and shall entitle the Employee  to compensation and benefits from the Company in the same amount and on the same terms as  provided for upon an Involuntary Termination under Section 7(b) hereof. For purposes of  implementing the provisions of this Section 11(a), the date on which any such succession  becomes effective shall be deemed the Date of Termination.  (b) This Agreement and all rights of the Employee hereunder shall inure to the  benefit of and be enforceable by the Employee’s personal and legal representatives, executors,  administrators, successors, heirs, distributees, devisees and legatees.   12. No Mitigation. The Employee shall not be required to mitigate the amount of any  salary or other payment or benefit provided for in this Agreement by seeking other employment  or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be  reduced by any compensation earned by the Employee as the result of employment by another  employer, by retirement benefits after the Date of Termination or otherwise.  13. Notice. For the purposes of this Agreement, notices and all other communications  provided for in this Agreement shall be in writing and shall be deemed to have been duly given  when personally delivered or sent by certified mail, return receipt requested, postage prepaid, to  the Company at its principal office, to the attention of the Board of Directors with a copy to the  Secretary of the Company, or, if to the Employee, to such home or other address as the  Employee has most recently provided in writing to the Company.  14. Amendments. No amendments or additions to this Agreement shall be binding  unless in writing and signed by both parties, except as herein otherwise provided.   15. Headings. The headings used in this Agreement are included solely for  convenience and shall not affect, or be used in connection with, the interpretation of this  Agreement.  16. Severability. The provisions of this Agreement shall be deemed severable and the  invalidity or unenforceability of any provision shall not affect the validity or enforceability of the  other provisions hereof.  17. Governing Law. This Agreement shall be governed by the laws of the State of  North Carolina.  18. Arbitration. Any dispute or controversy arising under or in connection with this  Agreement (other than relating to the enforcement of the provisions of Section 10) shall be  settled exclusively by arbitration before a single arbitrator in Asheville, North Carolina under the  commercial arbitration rules of the American Arbitration Association (the “AAA”) then in effect.  Judgment may be entered on the arbitrator's award in any court having jurisdiction. The  

 

16  arbitrator shall be selected by the mutual agreement of the parties within ten (10) business days  of the date when the parties shall first have the opportunity to select an arbitrator (the “Selection  Period”); provided, however, that if the parties fail to agree upon an arbitrator by the expiration  of the Selection Period, each party shall, within five (5) business days after the expiration of the  Selection Period, select an arbitrator from the list of arbitrators provided by the AAA and the two  arbitrators so selected by each party, acting independently, shall, as soon as practicable and  within thirty (30) days of both being selected, agree upon the selection of the arbitrator to  arbitrate the controversy or claim.  19. Equitable and Other Judicial Relief.   (a) It is the intention of the parties hereto that the provisions of this  Agreement shall be enforced to the fullest extent permissible under all applicable laws and public  policies, but that the unenforceability or the modification to conform with such laws or public  policies of any provision hereof shall not render unenforceable or impair the remainder of this  Agreement. The covenants in Section 10(b) with respect to the geographic area surrounding each  office shall be deemed to be separate covenants with respect to each office, and should any court  of competent jurisdiction conclude or find that this Agreement or any portion is not enforceable  with respect to a particular office, such conclusion or finding shall in no way render invalid or  unenforceable the covenants herein with respect to any other office.  Accordingly, if any  provision shall be determined to be invalid or unenforceable either in whole or in part, including  without limitation the geographic scope or duration of such provision, the parties hereto agree  that the court or authority making such determination shall have the power to reduce the scope or  duration of such provision or to delete specific words or phrases as necessary (but only to the  minimum extent necessary) to cause such provision or part to be valid and enforceable. If such  court or authority does not have the legal authority to take the actions described in the preceding  sentence, the parties agree to negotiate in good faith a modified provision that would, in so far as  possible, reflect the original intent of this Agreement, including without limitation Section 10  hereof, without violating applicable law.     (b) The Employee acknowledges that any breach of Section 10 will result in  irreparable damage to the Company for which the Company will not have an adequate remedy at  law, especially in light of the impossibility of ascertaining exact money damages. In addition to  any other remedies and damages available to the Company, the Employee further acknowledges  that the Company shall be entitled to seek a temporary restraining order as well as preliminary  and permanent injunctive relief hereunder to enjoin any breach or threatened breach of Section  10 of this Agreement, and the Employee hereby consents to any restraining order or injunction  issued in favor of the Company by any court of competent jurisdiction, without prejudice to any  other right or remedy to which the Company may be entitled.  In addition, in the event of a  breach of Section 10 of this Agreement by the Employee, the Employee acknowledges that in  addition to or in lieu of the Company seeking injunctive relief, the Company may also seek a  forfeiture of the cash severance payments paid or payable to the Employee pursuant to Section 7  of this Agreement with respect to the period of the breach in an amount equal to (i) the value  ascribed to the non-competition or non-solicitation provision in Section 10 that was breached,  multiplied by (ii) a fraction, the numerator of which is the period of time that the Employee was  in breach of such provision and the denominator of which is the total duration of such provision  in Section 10.  The Employee represents and acknowledges that, in light of the Employee’s  

 

17  experience and capabilities, the Employee can obtain employment with an entity other than a  Competing Business or in a business engaged in other lines of business and/or of a different  nature than those engaged in by the Company or its Consolidated Subsidiaries, and that the  enforcement of a remedy by way of a temporary restraining order or injunction will not prevent  the Employee from earning a livelihood.  Each of the remedies available to the Company in the  event of a breach by the Employee shall be cumulative and not mutually exclusive.    20. Counterparts. This Agreement may be executed in one or more counterparts, each  of which shall be deemed to be an original and all of which together will constitute the same  instrument.    21. Changes in Statutes or Regulations. If any statutory or regulatory provision  referenced herein is subsequently changed or re-numbered, or is replaced by a separate  provision, then the references in this Agreement to such statutory or regulatory provision shall be  deemed to be a reference to such section as amended, re-numbered or replaced.    22. Entire Agreement. This Agreement embodies the entire agreement between the  Company and the Employee with respect to the matters agreed to herein. All prior agreements  between the Company and the Employee with respect to the matters agreed to herein, including  the Prior Agreement, are hereby superseded and shall have no force or effect.  

 

18  IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and  year first written above.  THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH  MAY BE ENFORCED BY THE PARTIES.  HOMETRUST BANCSHARES, INC.    /s/ Craig C. Koontz   By: Craig C. Koontz  Its:  Chairperson, Compensation Committee    EMPLOYEE    /s/ Dana L. Stonestreet    Dana L. Stonestreet                                                               G:\1192\2000\Stonestreet agreement-6-15-22.doc

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