Document:

first security 8k 102105 exhibit 10-3

    Exhibit
      10.3

    
 

    SALARY
      CONTINUATION AGREEMENT

     

    THIS
      SALARY CONTINUATION AGREEMENT
      (“Agreement”) is made and entered into on the 19th
      day of
      October, 2005, to be effective as of October 19, 2005, by and between
FIRST
      SECURITY BANK OF LEXINGTON, INC.,
      a
      Kentucky corporation, with its principal office and place of business located
      at
      318 East Main Street, Lexington, Kentucky 40507 (the “Bank”), and DAVID
      A. DONALDSON,
      an
      individual residing at 312 Boone Way, Richmond, Kentucky 40475 (the
“Employee”).

     

    RECITALS

     

    Employee
      is employed by Bank in the position of Senior Vice President - Marketing and
      Retail Banking of the Bank. To provide an element of stability, the Bank desires
      to provide for the continuation of the Employee’s compensation and other
      benefits of employment in the event of a change in control of the Bank coupled
      with the Employee’s actual or constructive termination of employment. The Bank
      and the Employee mutually desire to enter into this Agreement in order to set
      forth the specific terms of the Employee’s severance arrangement in
      consideration of the Employee’s continued employment and general release;
      provided, however, nothing herein shall be construed as a contract of employment
      for a specific term and the Employee remains employed by the Bank “at
      will”.

     

    NOW,
      THEREFORE, for and in consideration of the premises and the mutual covenants,
      agreements and undertakings of the parties hereinafter set forth, the Bank
      and
      the Employee do hereby agree
      as
      follows:

     

    
      	
              1.

            	
              Salary
                Continuation.
                If, within one (1) year after a Change in Control, as such term is
                defined
                in Section 3 of this Agreement, (i) Bank shall terminate Employee’s
                employment with Bank without Good Cause, or (ii) Employee shall
                voluntarily terminate such employment with Good Reason, the following
                provisions shall apply: 

            

    

     

    
      	 	
              a.

            	
              Bank
                shall pay Employee an amount in a single lump sum equal to 1/12 of
                the
                Employee’s annualized base salary (at the rate most recently determined)
                times twelve (12).

            

    

     

    
      	 	
              b.

            	
              The
                amount described in paragraph 1.a. shall be paid no later than 30
                days
                following the Employee’s termination of
                employment.

            

    

     

    
      	 	
              c.

            	
              Employee
                shall receive any and all benefits accrued under each and every benefit
                plan sponsored by Bank. Employee shall be fully vested in each and
                every
                retirement plan, including, but not limited to the Bank’s “401(k)” plan,
                sponsored by Bank. Employee shall be entitled to receive pay for
                each and
                every day of vacation accrued in the preceding year and carried over
                to
                his year of termination of employment that is not used as of the
                date of
                his termination of employment.

            

    

     

    
      	 	
              d.

            	
              Employee
                and his dependents shall continue to be covered by and participate
                in all
                health, dental, and life insurance plans or arrangements made available
                by
                Bank in which Employee or his dependents were participating immediately
                prior

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    to
      the
      date of his termination as if he continued to be an employee of Bank for that
      period of time following his termination of employment that shall end on the
      first to occur of (i) the expiration of the twelve-month period following
      the Employee’s termination of employment, or (ii) the date such coverage is
      available for Employee and his dependents through a subsequent employer (the
      “Period of Coverage”). Employee and his dependents shall participate in such
      coverages on the same terms and conditions as active employees, including,
      contributing the same amount to participate in such coverages as is contributed
      by active employees. If
      participation in any one or more of such plans and arrangements is not possible
      under the terms thereof, Bank will provide substantially identical benefits
      to
      Employee and his dependents, provided, however, the Bank shall not be
      responsible to pay for such coverage to the extent the cost of providing such
      coverage shall exceed 120% of the Bank’s cost of providing like coverage to
      active employees. For purposes of the preceding sentence, the 120% shall be
      measured separately for each benefit provided outside the Bank’s plan.
      Employee’s and his dependents’ rights to continuation of coverage under any
      group health plan of the Bank pursuant to Section 4980B of the Internal Revenue
      Code of 1986, as amended (“Code”) (“COBRA”) shall commence at the end of the
      Period of Coverage, and Employee shall participate in COBRA coverage on the
      same
      terms and conditions as any other qualified beneficiary, including payment
      of
      the full cost. The maximum length of any dependent’s coverage shall be
      determined by the qualifying event that immediately precedes the dependent’s
      commencement of continuation coverage, and any subsequent qualifying
      event.

     

    
      	 	
              e.

            	
              No
                payments to or with respect to Employee under this Agreement during
                the
                twelve (12) months following the Employee’s termination of employment
                shall be reduced by any amount Employee or his dependents, spouse
                or
                beneficiary may earn or receive from employment with another employer
                or
                from any other source.

            

    

     

    
      	
              2.

            	
              Term
                of Agreement.
                This Agreement shall terminate upon the later to occur of (i) the
                second anniversary of the effective date of the Agreement, or
                (ii) the first anniversary of a Change in
                Control.

            

    

     

    
      	
              3.

            	
              Change
                in Control Provisions.
                

            

    

     

    
      	 	
              a.

            	
              Except
                for 3.e.(ii)(B), “Company” shall mean, with respect to a particular
                transaction, one of the following: (i) the Bank; (ii) any
                entity
                that owns more than fifty percent (50%) of the total fair market
                value and
                total voting power of the Bank (“Majority
                Shareholder”);
                or (iii) any entity in a chain of entities in which each entity
                is a
                Majority Shareholder of the next entity in the chain, with one entity
                in
                the chain ultimately being a Majority Shareholder of the Bank. For
                purposes of 3.e.(ii)(B), the Company shall mean, of the entities
                listed in
                the immediately preceding sentence, only that entity that has no
                corporate
                Majority Shareholder.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	 	
              b.

            	
              For
                purposes of this Section 3, “Person” shall mean (i) any person, or
                (ii) a group of more than one person where the surrounding
                circumstances demonstrate that the persons are acting as a group.
                Without
                limiting the generality of the foregoing, persons shall be considered
                to
                be acting as a group if they are owners of an entity that enters
                into a
                merger, consolidation, purchase or acquisition of stock, or similar
                business transaction with the
                Company.

            

    

     

    
      	 	
              c.

            	
              For
                the purposes of this Section 3, “Gross Fair Market Value” shall mean the
                value of an asset (or assets) determined without regard to any liabilities
                associated with the asset (or
                assets).

            

    

     

    
      	 	
              d.

            	
              For
                purposes of this Agreement, “Change in Control” shall be interpreted and
                applied in accordance with Code section 409A and any and all guidance
                issued, now or hereafter, with respect thereto by the United States
                Department of the Treasury. To the extent that the definition of
                Change in
                Control in this Agreement is more liberal than the definition set
                forth in
                any regulations proposed or finalized under Code section 409A or
                guidance
                in such after the date of this Agreement, such regulation or guidance
                shall control.

            

    

     

    
      	 	
              e.

            	
              For
                purposes of this Agreement, a “Change in Control” shall occur when:
                

            

    

     

    
      	 	
              (i)

            	
              There
                is a change in ownership in the Company. A “change in ownership” shall
                occur when a Person acquires ownership of more than fifty percent
                (50%) of
                the fair market value or voting power of the Company, provided:
                (A) the fifty percent (50%) ownership calculation takes into
                consideration stock previously held by the Person; (B) if
                a Person
                already owns more than fifty percent (50%) of the fair market value
                or
                voting power of the Company, the Person’s acquisition of more stock shall
                not trigger a change in ownership; and (C) a change in ownership
                shall not occur if there is no stock in the Company outstanding after
                the
                transaction that results in the transfer of stock; or
                

            

    

     

    
      	 	
              (ii)

            	
              There
                is a change in the effective control of the Company. A “change in
                effective control” shall occur when, within a twelve month period:
                (A) a Person who does not already own thirty-five percent
                (35%) of
                the Company acquires thirty-five percent (35%) or more of the total
                voting
                power of the Company; or (B) the majority of the Company’s directors
                are replaced, but only if the replacement is hostile—that is, the change
                in the majority is not endorsed by a majority of the corporate directors
                in place immediately prior to the replacement; or
                

            

    

     

    
      	 	
              (iii)

            	
              There
                is a transfer of a substantial portion of corporate assets. A “transfer of
                a substantial portion of corporate assets” occurs when a Person acquires,
                within a twelve-month period, Company assets having a Gross Fair
                Market
                Value equal to forty percent (40%) or more of the total Gross Fair
                Market
                Value of Company assets owned prior to such acquisition(s); provided,
                however, a transfer of a substantial portion of corporate
                assets

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    does
      not
      occur if the Company transfers ownership of assets to (A) a Person who
      is a
      shareholder of the Company immediately prior to the asset transfer in exchange
      for or with respect to the shareholder’s stock; (B) an entity of which
      Company owns, directly or indirectly, fifty percent (50%) or more of the total
      value or voting power; (C) a Person who owns fifty percent (50%) or
      more of
      the total value or voting power of the Company; or (D) an entity of
      which
      fifty percent (50%) or more of the total value or voting power is owned,
      directly or indirectly, by a Person who owns 50% or more of the total value
      or
      voting power of the Company. For purposes of this Section 3.e.(iii), except
      as
      otherwise provided, a Person’s status is determined immediately after the
      transfer of the assets.

     

    
      	
              4.

            	
              Definition
                of Good Cause.
                “Good Cause” shall mean:

            

    

     

    
      	 	
              a.

            	
              Employee’s
                conviction of any felony whatsoever or any other criminal violation
                involving dishonesty, fraud, or breach or
                trust;

            

    

     

    
      	 	
              b.

            	
              Employee’s
                willful engagement in any misconduct in the performance of his duty
                that
                materially injures Bank;

            

    

     

    
      	 	
              c.

            	
              Employee’s
                performance of any act which, if known to the customers or clients
                of Bank
                would materially and adversely impact on the business of Bank;
                

            

    

     

    
      	 	
              d.

            	
              Employee’s
                willful and substantial nonperformance of assigned duties; provided
                that
                such nonperformance has continued more than five (5) calendar days
                after
                Bank has given written notice of such nonperformance and of its intention
                to terminate Employee’s employment because of such nonperformance;
                

            

    

     

    
      	 	
              e.

            	
              Employee’s
                failure or refusal to follow the lawful instructions of the President
                and
                Chief Executive Officer of the Bank, if such failure or refusal continues
                for five (5) calendar days after the Bank delivers to Employee a
                written
                notice stating the instructions which Employee has failed or refused
                to
                follow; 

            

    

     

    
      	 	
              f.

            	
              Inability
                of the Bank to secure a bond covering Employee or a directive to
                the Bank
                by any governmental regulatory agency to terminate Employee’s employment
                or remove Employee from his current
                position.

            

    

     

    
      	
              5.

            	
              Definition
                of Good Reason.
                “Good Reason” shall exist if, without Employee’s express written
                consent:

            

    

     

    
      	 	
              a.

            	
              Bank
                shall assign to Employee duties of a nonexecutive nature or for which
                Employee is not reasonably equipped by his skills and
                experience;

            

    

     

    
      	 	
              b.

            	
              Bank
                shall reduce the salary of Employee, or materially reduce the amount
                of
                paid vacation to which he is entitled, or his fringe benefits and
                perquisites;

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
      	 	
              c.

            	
              Bank
                shall require Employee to relocate his principal business office
                or his
                principal place of residence outside the Lexington, Kentucky Metropolitan
                Statistical Area (the “Area”) or assign Employee duties that would
                reasonably require such relocation;

            

    

     

    
      	 	
              d.

            	
              Bank
                shall require Employee, or assign duties to Employee which would
                reasonably require him, to spend more than fifteen (15) normal working
                days away from the Area during any consecutive twelve-month period;
                

            

    

     

    
      	 	
              e.

            	
              Bank
                shall fail to provide office facilities, secretarial services, and
                other
                administrative services to Employee which are substantially equivalent
                to
                the facilities and services provided to Employee immediately prior
                to the
                Change in Control; or

            

    

     

    
      	 	
              f.

            	
              Bank
                shall terminate bonus and benefit plans or arrangements, or reduce
                or
                limit Employee’s participation therein relative to the level of
                participation of other executives of similar rank, to such an extent
                as to
                materially reduce the aggregate value of Employee’s bonus compensation and
                benefits below their aggregate value as of the date immediately prior
                to
                the Change in Control.

            

    

     

    
      	
              6.

            	
              Employee’s
                Release.
                

            

    

     

    
      	 	
              a.

            	
              In
                consideration of the payments made herein, and not until all such
                payments
                are made, the sufficiency of which consideration is hereby acknowledged,
                Employee hereby releases and forever discharges the Bank, and its
                directors, affiliates, officers, agents and employees, from any and
                all
                causes of action or claims of any type that Employee might have from
                the
                beginning of the world through the date of Employee’s execution of this
                Agreement, arising or which could have arisen out of Employee’s employment
                relationship with the Bank, including but not limited to causes of
                action
                or claims of any type arising under the Age Discrimination In Employment
                Act of 1967, 29 USC §626 et seq. (“ADEA”), Title VII of the Civil Rights
                Act of 1964, 42 USC §2000e et seq. (“Title VII”), the Civil Rights Act of
                1866, 42 USC §1981, the National Labor Relations Act, 29 USC §151 et seq.,
                the Fair Labor Standards Act, 29 USC §201 et seq., the Americans With
                Disabilities Act, 42 USC §12101 et seq. (“ADA”), the Employee Retirement
                Income Security Act of 1974, 29 USC §1001 et seq., the Kentucky Human
                Rights Act, and any other Federal, state or local statute, law, ordinance,
                regulation or order that may give rise to any cause of action including,
                but not limited to, claims of age or sex discrimination or breach
                of
                contract and claims for back pay, earned or accrued vacation pay,
                bonus,
                earned commissions, damages and any other relief or remedy at law
                or at
                equity. Employee further covenants and agrees never to institute
                directly
                or indirectly or to participate in (unless otherwise required by
                law) any
                action or proceeding of any kind against the Bank, its directors,
                affiliates, officers, agents and employees, based on or related to
                his
                employment relationship with the Bank, including, but not limited
                to, an
                action asserting that the Bank discriminated against him on the basis
                of
                age or sex or an action asserting breach of contract, it being understood
                that there is no intent

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    herein
      to
      interfere with the Equal Employment Opportunity Commission’s right to enforce
      Title VII, the ADA, or the ADEA.

     

    
      	 	
              b.

            	
              The
                Agreement is a full, complete and final settlement by Employee of
                any and
                all claims, actions, causes of action, damages or costs against the
                Bank
                resulting from or pertaining to Employee’s employment the
                Bank.

            

    

     

    
      	 	
              c.

            	
              The
                Agreement shall supersede and replace any and all prior written or
                oral
                agreements previously entered into between the Employee and the Bank
                and
                such prior agreements shall be null and void and of no
                consequence.

            

    

     

    
      	 	
              d.

            	
              Employee
                shall have up to twenty one (21) days from the date the Agreement
                is
                presented to Employee to sign the Agreement. If Employee signs the
                Agreement, Employee shall have seven (7) days from the date Employee
                signs
                the Agreement to revoke the Agreement. Employee shall not be entitled
                to
                any benefits contained herein until the seven (7) day revocation
                period
                has expired. This Agreement was presented to Employee on September
                28,
                2005.

            

    

     

    
      	 	
              e.

            	
              Except
                to the extent required to be disclosed by state or federal securities
                law,
                the Agreement and all its terms and provisions are strictly confidential
                and shall not be divulged or disclosed in any way to any person other
                than
                Employee’s spouse and legal counsel if Employee so desires, and Employee
                will protect the confidentiality of the Agreement in all regards.
                Should
                Employee choose to divulge the terms and conditions of the Agreement
                to
                Employee’s spouse or legal counsel, Employee shall ensure that they will
                be similarly bound to protect its confidentiality and that a breach
                of
                this paragraph by Employee’s spouse or legal counsel shall be considered a
                breach of this paragraph by
                Employee.

            

    

     

    
      	 	
              f.

            	
              Employee
                and the Bank have executed the Agreement voluntarily, with full knowledge
                of its significance. Both parties have had full opportunity to consult
                their respective legal counsel, as well as other persons of their
                choosing, before executing the Agreement. Employee acknowledges that
                he
                has carefully read the entire Agreement, that a copy of the Agreement
                was
                available to him prior to execution, that he knows and understands
                the
                provisions of the Agreement, and that he has signed the Agreement
                as his
                own free act and deed.

            

    

     

    
      	
              7.

            	
              Nondisclosure
                of Confidential Information.
                Employee shall not at any time or in any manner, directly or indirectly,
                use or disclose to any party any confidential information or proprietary
                data of Bank, or any of its affiliates, learned or obtained by Employee
                while an employee of Bank, except (i) as required by judicial
                or
                administrative
                process; (ii) after the confidential information has become
                generally
                available to the public through no breach of this Agreement by Employee;
                or (iii) with the prior written consent of Bank. In the event
                Employee violates this Section 7, and such violation is detrimental
                to the
                Bank, Bank shall be entitled to pursue all remedies at law or in
                equity in
                any action or proceeding to enforce this Section 7. For purposes
                of this
                Agreement, “confidential information” means material information of Bank,
                or its affiliates, disclosed to or known by Employee as a consequence
                of
                Employee’s employment with Bank and not
                generally

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    known
      in
      the financial services industry, that directly relates to Bank’s business and
      that is detrimental to the Bank. Employee has carefully read and considered
      the
      provisions of this Section 7, and, having done so, agrees that the restriction
      set forth in this Section 7 is fair and reasonable and reasonably required
      for
      the protection of Bank’s interests. 

     

    
      	
              8.

            	
              Compliance
                with FDIC Regulations.
                It is the intention of the parties that none of the payments to which
                Employee is entitled under this Agreement will constitute a “golden
                parachute payment” within the meaning of 12 USC Section 1828(k)(3) or
                implementing regulations of the FDIC, the payment of which is prohibited.
                Any payments made by Bank or any holding company of Bank to or for
                the
                benefit of Employee pursuant to this Agreement, or otherwise, are
                subject
                to and conditioned upon their compliance with 12 USC Section 1828(k)
                and
                any regulations promulgated thereunder.

            

    

     

    
      	
              9.

            	
              Springing
                Rabbi Trust.
                Notwithstanding anything in this Agreement (or the Trust Agreement)
                to the
                contrary, upon a Change in Control, if Employee is a “key employee” (as
                defined in Code section 416(i)) and the Employee’s termination of
                employment is not involuntary, so that his payout (as described in
                Section
                1.a. of this Agreement) is delayed as described in Section 18.e.
                of this
                Agreement, the Bank shall (i) establish a trust (if not already
                established) as described in subsection b. below, and (ii) maintain
                in the Trust an amount of money which is at all times at least equal
                to
                its obligations under this Agreement to Employee (as well as any
                other key
                employee with a similar agreement), by making sufficient contributions
                to
                the Trust, immediately upon such Change in Control in an amount equal
                to
                the Bank’s total liabilities to such Employee and all other key
                employees.

            

    

     

    The
      obligation of the Bank to provide benefits pursuant to this Agreement shall
      be
      the sole unsecured promise of the Bank with respect to this Agreement.
      Notwithstanding the foregoing, prior to any Change in Control, the Bank may
      establish a trust, pursuant to a Trust Agreement, for the purpose of setting
      aside funds to provide for the payment of benefits under this Agreement.
      However, the assets of the Trust shall at all time remain subject to the claims
      of the general creditors of the Bank, and the Employee shall not have any claim
      or right with respect to the assets held in the Trust, except to the extent
      that
      the Employee is a general creditor of the Bank.

     

    For
      purposes of this Section 9, the following words and phrases shall have the
      following meanings:

     

    
      	 	
              a.

            	
              Trust:
                The revocable grantor/rabbi trust established by the Bank for purposes
                of
                making payments under certain of the Bank’s nonqualified plans of deferred
                compensation. The Bank shall have the discretion to determine whether
                or
                not a Trust shall be established in connection with any agreement
                or
                nonqualified plan, including this Agreement; provided, however, in
                the
                event of a Change in Control, such discretion shall be removed from
                the
                Bank, and a Trust shall be established (if not already in existence)
                and
                fully funded in accordance with this Section
                9.

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
      	 	
              b.

            	
              Trust
                Agreement:
                An agreement entered into between the Trustee and the Bank providing
                for
                trust services in connection with a grantor trust that may be established
                in connection with this Agreement. As of the effective date of this
                Agreement, the Trust Agreement is First Security Bancorp, Inc. Key
                Employee Trust, and as may be amended from time to time.
                

            

    

     

    
      	 	
              c.

            	
              Trustee:
                That corporate entity having trust powers that is appointed by the
                Bank
                prior to a Change in Control to perform trust services in connection
                with
                the Agreement, whose responsibilities shall be governed by the Agreement
                and by the Trust Agreement.

            

    

     

    
      	
              10.

            	
              Out-of-Pocket
                Expenses.
                Bank shall pay to Employee all out-of-pocket expenses, including
                attorneys’ fees, incurred by Employee in connection with the successful
                enforcement by Employee of this
                Agreement.

            

    

     

    
      	
              11.

            	
              Survival.
                This Agreement is not assignable; however, it shall be binding upon
                and
                shall inure to the benefits of the parties hereto and their respective
                personal representatives, heirs, successors and
                assigns.

            

    

     

    
      	
              12.

            	
              No
                Employment Contract.
                Nothing
                herein shall be construed as a contract of employment for a specific
                term
                and the Employee remains employed by the Bank “at
                will”.

            

    

     

    
      	
              13.

            	
              Applicable
                Law.
                This Agreement is entered into in, and shall be governed by and construed
                in accordance with the laws of, the Commonwealth of
                Kentucky.

            

    

     

    
      	
              14.

            	
              Severability.
                If any clause, phrase, provision or portion of this Agreement or
                the
                application thereof to any person or circumstance shall be invalid
                or
                unenforceable under any applicable law, such event shall not affect
                or
                render invalid or unenforceable the remainder of this Agreement and
                shall
                not affect the application of any clause, provision, or portion hereof
                to
                other person or circumstances.

            

    

     

    
      	
              15.

            	
              Headings.
                The headings in this Agreement are inserted for reference and convenience
                only, are not to be considered in the construction of the provisions
                hereof, and shall not in any way limit the scope or modify the substance
                or context of any section hereof.

            

    

     

    
      	
              16.

            	
              Amendment.
                No modification, amendment or alteration of the terms of this Agreement
                shall be binding or effective unless the same be in writing, dated
                subsequent to the date hereof, and duly executed by or on behalf
                of both
                of the parties to this Agreement.

            

    

     

    
      	
              17.

            	
              Notices.
                Any notice required or permitted to be given by any provision of
                this
                Agreement shall be in writing and shall be delivered personally or
                sent by
                registered or certified mail to the Employee or to the Chairman of
                the
                Board of the Bank, as the case may be, to the address of the Employee
                or
                of the Bank, as the case may be, at the address set forth in the
                introductory paragraph of this Agreement, or to such other address
                as
                either party hereto may from time to time specify to the other party
                by
                written notice given as herein provided. Any such notice shall be
                deemed
                to be delivered, given and received for all purposes as of the date
                so delivered,
                if delivered personally, or as of
                the

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    date
      on
      which the name was properly deposited in a regularly maintained receptacle
      for
      deposit of United States Mail, postage and charges prepaid, if sent by
      registered or certified mail. 

     

    
      	
              18.

            	
              Intent
                to Comply with American Jobs Creation Act.
                To the extent that this Agreement is considered a deferred compensation
                plan, as contemplated by Code section 409A, this Section 18 shall
                apply.
                To the extent necessary, and to the extent payments made hereunder
                are not
                “separation pay” that is exempt from coverage under Code section 409A, it
                is intended that this Agreement shall comply with Code section 409A
                and
                all provisions contained herein shall be read and construed to so
                comply.
                

            

    

     

    
      	 	
              a.

            	
              All
                deferrals of compensation with respect to Employee’s service performed
                after December 31, 2004, and as described in this Agreement, shall
                be
                governed by the terms of this Agreement.

            

    

     

    
      	 	
              b.

            	
              To
                the extent so required, any deferral election made by Employee or
                deemed
                to be made by Employee, with respect to compensation payable on services
                performed in a calendar year shall be made before the end of the
                preceding
                calendar year; provided, that in the case of performance based
                compensation, the deferral election may be made not later than 6
                months
                before the end of the performance period. Employee shall be considered
                to
                have made all deferral elections under this Agreement in accordance
                with
                the preceding sentence, and shall not be permitted nor deemed to
                be
                permitted to modify any deferral election.

            

    

     

    
      	 	
              c.

            	
              Bank
                will not accept transfers under this Agreement from any other nonqualified
                deferred compensation plan in which Employee might participate.
                

            

    

     

    
      	 	
              d.

            	
              No
                rabbi trust that might be used to pay amounts due under this Agreement,
                nor the assets held by such trust, shall be located outside the United
                States. In addition, no such trust shall provide for the assets thereof
                to
                become restricted to the provision of benefits under the Agreement,
                or
                distributed to Employee, as a result of a change in the financial
                health
                or condition of the Bank. Nothing herein shall be construed to require
                the
                Bank or entitle Employee to have amounts due him under this Agreement
                paid
                from a rabbi trust. 

            

    

     

    
      	 	
              e.

            	
              In
                the event that Employee is considered to be a key employee (as defined
                in
                §416(i) of the Code without regard to paragraph (5) thereof), distribution
                to Employee may not be made earlier than the date which is 6 months
                after
                Employee’s termination of employment. The preceding sentence shall not
                apply (i) to the extent that none of the stock of the Bank
                is
                publicly traded on an established securities market or otherwise,
                or
                (ii) the payments made under this Agreement are paid as the
                result of
                an involuntary termination of employment, provided that all such
                payments
                are paid no later than the December 31 of the second calendar year
                following the year of such Employee’s
                termination.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    
      	 	
              f.

            	
              The
                timing of any distributions pursuant to Employee’s deferral election, if
                any, shall not be accelerated. Notwithstanding anything contained
                in this
                Section 18, Employee shall not be permitted to alter the payment
                of his
                severance pay.

            

    

     

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

     

    EMPLOYEE:

     

     

       
      /s/ David A.
      Donaldson                     
      

                                            DAVID
      A.
      DONALDSON

     

    
    

    BANK:

     

     

    BY:   
      /s/ R. Douglas Hutcherson         
      

     

    
    

    TITLE:
      President & Chief Executive Officer

     

     

    ATTEST:

     

    BY:    
      /s/ Cortney M.
      Rich                   

     

    TITLE:    
      /s/ Credit
      Officer                   
      

     

    

     

    30377886.3

    

      10<PAGE>
                                                                     Exhibit 4.1

NUMBER                               [LOGO]                               SHARES
  SFN

                           Saifun Semiconductors Ltd.                      CUSIP

               INCORPORATED UNDER THE LAWS OF THE STATE OF ISRAEL

                                                                 SEE REVERSE FOR
                                                             CERTAIN DEFINITIONS

THIS CERTIFIES that

is the Registered Holder of

    FULLY PAID AND NON-ASSESSABLE ORDINARY SHARES OF NIS 0.01 PAR VALUE EACH

of Saifun Semiconductors Ltd. transferable on the books of the Company by the
holder hereof in person or by duly authorized attorney only upon surrender of
this Certificate properly endorsed or with an appropriate instrument of
transfer. This Certificate and the shares represented hereby are issued and
shall be held subject to all the provisions of the Memorandum of Association and
Articles of Association and amendments thereto of the Company, to all of which
the holder by the acceptance hereof assents. This certificate is not valid
unless countersigned and registered by the Transfer Agent and Registrar.

          IN WITNESS WHEREOF, the Company has caused this Certificate to be
issued under the facsimile seal of the Company.

          Dated: _______________

     Saifun Semiconductors Ltd.
     CORPORATE SEAL
     ISRAEL

                             Chief Executive Officer     Chief Financial Officer
<PAGE>
     The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT _____ Custodian _____
TEN ENT - as tenants by the entireties                     (Cust)        (Minor)
JT TEN  - as joint tenants with right              under Uniform Gifts to Minors
          of survivorship and not as                    Act ____________________
          tenants in common                                 (State)

     Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, ________________________ HEREBY SELLS, ASSIGNS AND TRANSFERS
UNTO

PLEASE INSERT SOCIAL SECURITY OR OTHER
   IDENTIFYING NUMBER OF ASSIGNEE

________________________________________________________________________________

________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________

________________________________________________________________________________

_________________________________________________________________________ SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND SO HEREBY IRREVOCABLY CONSTITUTES AND
APPOINTS _______________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
ATTORNEY TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN-NAMED
CORPORATION AND FULL POWER OF SUBSTITUTION IN THE PREMISES.

DATED ____________________

_____________________________________   ________________________________________
                                        NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
                                        MUST CORRESPOND WITH THE NAME AS WRITTEN
                                        UPON THE FACE OF THE CERTIFICATE, IN
                                        EVERY PARTICULAR, WITHOUT ALTERATION OR
                                        ENLARGEMENT, OR ANY CHANGE, WHATSOEVER.

Signature(s) Guaranteed:

_____________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17 Ad-15.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}]]