Document:

EXHIBIT 10.(iii)

                 DEFERRED COMPENSATION TRUST FOR MONROE BANCORP

         (a) This Agreement made this ________ day of December, 1998 by and
between Monroe Bancorp (the "Company") and First Merchants Bank, N.A. and its
successors and assigns (the "Trustee");

                                  WITNESS THAT:
         (b) WHEREAS, the Company has promised to compensate the executives and
directors of the Company and its subsidiaries (the "Employees") for services
rendered to the Company or the subsidiaries by means of providing them with
retirement benefits payable as provided under the Monroe Bancorp Directors'
Deferred Compensation Plan and the Monroe Bancorp Executives' Deferred
Compensation Plan (the "Plans");
         (c) WHEREAS, the Company wishes to establish a trust (hereinafter
called "Trust") and to contribute to the Trust assets that shall be held
therein, subject to the claims of the Company's creditors in the event of the
Company's Insolvency, as herein defined, until paid to the Employees and their
beneficiaries in such manner and at such times as specified in the Plans;
         (d) WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plans
as unfunded plans maintained for the purposes of providing deferred compensation
for a "select group of management or highly compensated employees" for purposes
of Title I of the Employee Retirement Income Security Act of 1974;
         (e) WHEREAS, it is the intention of the Company to make contributions
to the Trust to provide itself with a source of funds to assist it in the
meeting of its liabilities under the Plans;
         NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:

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         Section 1.        Establishment of Trust.
         (a) The Company hereby deposits with Trustee in trust $100.00, which
shall become the principal of the Trust to be held, administered and disposed of
by Trustee as provided in this Trust Agreement.
         (b) The Trust hereby established shall be irrevocable by the Company.
         (c) The Trust is intended to be a grantor trust, of which the Company
is the grantor, within the meaning of subpart E, part I, subchapter J, chapter
1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
         (d) The principal of the Trust, and any earnings thereon, shall be held
separate and apart from other funds of the Company and shall be used exclusively
for the uses and purposes of Employees and general creditors as herein set
forth. Employees and their beneficiaries shall have no preferred claim on, or
any beneficial ownership interest in, any assets of the Trust. Any rights
created under the Plans and this Trust Agreement shall be mere unsecured
contractual rights of Employees and their beneficiaries against the Company. Any
assets held by the Trust will be subject to the claims of the Company's general
creditors under federal and state law in the event of Insolvency, as defined in
Section 3(a) herein.
         (e) The Company, in its sole discretion, may at any time, or from time
to time, make additional deposits of cash or other property in trust with
Trustee to augment the principal to be held, administered and disposed of by
Trustee as provided in this Trust Agreement. Neither Trustee nor Employees or
any beneficiaries shall have any right to compel such additional deposits,
pursuant to this Trust Agreement.

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         Section 2.        Payments to Employees and Their Beneficiaries.
         (a) The Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates (i) the amounts payable in respect of the Employees
(or their beneficiaries), reduced by any amount to be withheld for the payment
of any federal, state or local taxes, (ii) the form in which such amount is to
be paid (as provided for or available under the Plans), and (iii) the time of
commencement for payment of such amounts. Except as otherwise provided herein,
Trustee shall make the net payments to Employees and their beneficiaries in
accordance with such Payment Schedule. The Trustee shall distribute the amount
withheld from the Employee's or beneficiary's payment for taxes (as determined
by the Company) to the Company, and the Company shall make provision and be
responsible for the reporting of the withheld taxes and shall pay the withheld
taxes to the appropriate taxing authorities.
         (b) The entitlement of the Employees or their beneficiaries to benefits
under the Plans shall be determined by the Company or such party as it shall
designate under the Plans, and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plans.
         (c) The Company may make payment of benefits directly to Employees or
their beneficiaries as they become due under the terms of the Plans. The Company
shall notify Trustee of its decision to make payment of benefits directly prior
to the time amounts are payable to Employees or their beneficiaries. In
addition, if the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits in accordance with the terms of the
Agreement, the Company shall make the balance of each such amount as it falls
due. Trustee shall notify the Company where principal and earnings are not
sufficient.

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         Section 3.        Trustee Responsibility Regarding Payments to Trust
Beneficiary When Company is Insolvent.
         (a) Trustee shall cease payment of benefits to the Employees and their
beneficiaries if the Company is Insolvent. The Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) The Company is unable to
pay its debts as they become due, or (ii) The Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
         (b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of the Company under federal and state law as set
forth below.
                  (1) The Board of Directors and the Chief Financial Officer of
the Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of the Company alleges in
writing to Trustee that the Company has become Insolvent, Trustee shall
determine whether the Company is Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to the Employees or their
beneficiaries.
                  (2) Unless Trustee has actual knowledge of the Company's
Insolvency, or has received notice from the Company or a person claiming to be a
creditor alleging that the Company is Insolvent, Trustee shall have no duty to
inquire whether the Company is Insolvent. Trustee may in all events rely on such
evidence concerning the Company's insolvency as may be furnished to Trustee and
that provides Trustee with a reasonable basis for making a determination
concerning the Company's solvency.

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                  (3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Employees or their
beneficiaries and shall hold the assets of the Trust for the benefit of the
Company's general creditors. Nothing in this Trust Agreement shall in any way
diminish any rights of Employees or their beneficiaries to pursue their rights
as general creditors of the Company with respect to benefits due under the Plans
or otherwise.
                  (4) Trustee shall resume the payment of benefits to the
Employees or their beneficiaries in accordance with Section 2 of this Trust
Agreement only after Trustee has determined that the Company is not Insolvent
(or is no longer Insolvent).
         (c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to
Employees or their beneficiaries under the terms of the Plans for the period of
such discontinuance, less the aggregate amount of any payments made to Employees
or their beneficiaries by the Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
         Section 4.        Payments to Company.
         Except as provided in Section 3 hereof, after the Trust has become
irrevocable, the Company shall have no right or power to direct Trustee to
return to the Company or to divert to others any of the Trust assets before all
payment of benefits have been made to Employees and their beneficiaries pursuant
to the terms of the Plans.
         Section 5.        Investment Authority.
         (a) Trustee may invest in any kind of property it deems suitable and
proper, except that in no event may Trustee invest in securities (including
stock or rights to acquire stock) or

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obligations issued by the Company, other than a de minimis amount held in common
investment vehicles in which Trustee invests. All rights associated with assets
of the Trust shall be exercised by Trustee or the person designated by Trustee,
and shall in no event be exercisable by or rest with Employees.
         (b) The Company shall have the right, at any time, and from time to
time, in its sole discretion, to substitute assets of equal fair market value
for any asset held by the Trust.
         Section 6.        Disposition of Income.
         During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
         Section 7.        Accounting by Trustee.
         Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between the
Company and Trustee. Within 180 days following the close of each calendar year
and within 90 days after the removal or resignation of Trustee, Trustee shall
deliver to the Company a written account of its administration of the Trust
during such year or during the period from the close of the last preceding year
to the date of such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by it, including a
description of all securities and investments purchased and sold with the cost
or net proceeds of such purchases or sales (accrued interest paid or receivable
being show separately), and showing all cash, securities and other property held
in the Trust at the end of such year or as of the date of such removal, or
resignation, as the case may be.

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         Section 8.        Responsibility of Trustee.
         (a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by the Company which is contemplated by,
and in conformity with, the terms of the Plans or this Trust and is given in
writing by the Company. In the event of a dispute between The Company and a
party, Trustee may apply to a court of competent jurisdiction to resolve the
dispute.
         (b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, the Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If the Company does not pay such costs, expenses and liabilities
in a reasonably timely manner, Trustee may obtain payment from the Trust.
         (c) Trustee may consult with legal counsel (who may also be counsel for
the Company generally) with respect to any of its duties or obligations
hereunder.
         (d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
         (e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of

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the policy to a different form) other than to a successor Trustee, or to loan to
any person the proceeds of any borrowing against such policy.
         (f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
         Section 9.        Compensation and Expenses of Trustee.
         The Trustee, and any successor corporate Trustee hereunder, shall be
entitled to receive compensation for its services in accordance with its
published schedule of charges in effect at the time such services are rendered.
In addition to the foregoing fees, compensation may be paid to any Authorized
Party (as defined in Section 13) and to any special Trustee in accordance with
the provisions of this Agreement. Any Authorized Party shall also be entitled to
receive and retain from any money market fund or similar entity payments as
authorized under Rule 12b-1 of the Investment Company Act, in connection with
the distribution of such fund's or entity's securities.
         The Company may pay all administrative and Trustee's fees and expenses
at its sole discretion. If not so paid, the fees and expenses shall be paid from
the Trust.
         Section 10.       Resignation and Removal of Trustee.
         (a) Trustee may resign at any time by written notice to the Company,
which shall be effective 90 days after receipt of such notice unless the Company
and Trustee agree otherwise.
         (b) Trustee may be removed by the Company on 90 days notice or upon
shorter notice accepted by Trustee.

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         (c) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within 90 days after receipt of notice
of resignation, removal or transfer, unless the Company extends the time limit.
         (d) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraph(s) (a) or (b) of this section. If no such appointment
has been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee may
apply to a court of competent jurisdiction for appointment of a successor or for
instructions. All expenses of Trustee in connection with the proceeding shall be
allowed as administrative expenses of the Trust.
         Section 11.       Appointment of Successor.
         (a) If Trustee resigns (or is removed) in accordance with Section 10(a)
or (b) hereof, the Company may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under
state law, as a successor to replace Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new Trustee, who
shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably required by the Company or the successor
Trustee to evidence the transfer.
         (b) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
the Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior

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Trustee or from any other past event, or any condition existing at the time it
becomes successor Trustee.
         Section 12.       Amendment or Termination.
         (a) This Trust Agreement may be amended by a written instrument
executed by Trustee and the Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Agreement or shall make the Trust
revocable.
         (b) The Trust shall not terminate until the date on which Employees and
their beneficiaries are no longer entitled to benefits pursuant to the terms of
the Plans. Upon termination of the Trust any assets remaining in the Trust shall
be returned to the Company.
         (c) Upon written approval of the Employees or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plans, the Company may
terminate this Trust prior to the time all benefit payments under the Plans have
been made. All assets in the Trust at termination shall be returned to the
Company.
         Section 13.       Miscellaneous.
         (a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
         (b) Benefits payable to Employees and their beneficiaries under this
Trust Agreement may not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subject to attachment, garnishment, levy,
execution or other legal or equitable process.
         (c) This Trust Agreement shall be governed by and construed in
accordance with the laws of Indiana.

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         Section 14.       Effective Date.
         The effective date of this Trust Agreement shall be January 1, 1999.

                                      * * *

         IN WITNESS WHEREOF, the Company and Trustee have caused this Trust
Agreement to be signed on their behalf by their respective officers the day and
year first above written.

                                         MONROE BANCORP

                                         By

ATTEST:                                  Its

Its

                                         FIRST MERCHANTS BANK, N.A.

                                         By

ATTEST:                                  Its

Its

                                     Page 11EXHIBIT 10.(iv)

                               MONROE COUNTY BANK
                        AGREEMENT FOR SUPPLEMENTAL DEATH
                             OR RETIREMENT BENEFITS

         AGREEMENT, effective January 1, 1988 by and between Monroe County Bank,
an Indiana state banking institution ("Bank), and David D. Baer ("Employee").
                              W I T N E S S E T H:
         WHEREAS, the Bank desires to guarantee Employee increased death or
retirement benefits in order to retain Employee as an officer and employee of
the Bank for the financial benefit and the long-range growth and welfare of the
Bank, and
         WHEREAS, the parties wish to enter into an agreement with respect to
the aforementioned benefits without committing either party to continuation of
the employment arrangement or otherwise affecting any terms of Employee's
employment except as expressly set forth herein.
         NOW, THEREFORE, for mutual consideration the parties agree:
                                    ARTICLE I
                                   Definitions
         Section 1.01. "Agreement" shall mean this Agreement for Supplemental
Death or Retirement Benefits.
         Section 1.02. "Board" shall mean the Board of Directors of Bank.
         Section 1.03. "Change in Control" shall mean an event involving the
Corporation or Bank of a nature that would be required to be reported to the
appropriate Federal Banking Agency pursuant to the Change in the Bank Control
Act of 1978, as amended (12 U.S.C. Section 1817(j)), 12 U.S.C. Section1828(c),
or the Bank Holding Company Act (12 U.S.C. Section1841 et seq.) and

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regulations issued thereunder, or an event which would create a presumption of
control of Bank or Corporation pursuant to any of such regulations.
         Section 1.04. "Committee" shall mean the Executive Committee of the
Board of Bank. If there is no such Executive Committee the term "Committee"
shall mean the Board.
         Section 1.05. "Corporation" shall mean Monroe Bancorp, an Indiana
corporation and the bank holding corporation owning all of the issued and
outstanding stock of the Bank.
         Section 1.06. "Disability" shall mean a physical or mental condition
which renders Employee unable to perform the duties associated with any gainful
occupation for which he is reasonably fitted by training, education or
experience.
         Section 1.07. "Pre-Retirement Disability" shall mean Disability which
occurs prior to Employee's Normal Retirement Date, Early Involuntary Retirement
or Early Voluntary Retirement.
         Section 1.08. "Early Involuntary Retirement" shall mean the termination
of Employee's employment with the Bank prior to his Normal Retirement Date due
to (1) any reason other than his death or his Disability prior to Employee's
Normal Retirement Date during the two (2) year period following a Change of
Control of Bank or Corporation, or (2) a substantial change in Employee's
employment conditions which in the opinion of a psychologist or physician
requires Employee to terminate his employment in order to preserve his health
and well-being or (3) any reason if the Bank terminates Employee's employment
with the Bank.
         Section 1.09. "Early Involuntary Retirement Date" shall mean the first
day of the month following the month in which Employee's Early Involuntary
Retirement Occurs.

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         Section 1.10. "Early Voluntary Retirement" shall mean Employee's
termination of Employee's employment with the Bank prior to his Normal
Retirement Date for any reason other than his Early Involuntary Retirement,
Death or Disability.
         Section 1.11. "Early Voluntary Retirement Date" shall mean the first
day of the month following the month in which Employee's Early Voluntary
Retirement occurs.
         Section 1.12. "Event of Eligibility" means that event which under
Section 2.01 herein will entitle Employee or his designated beneficiary to
receive supplemental retirement or death benefits, respectively, hereunder.
         Section 1.13. "Normal Retirement Date" shall mean the first day of the
month following the month in which Employee attains sixty-five (65) years of
age.
         Section 1.14. "Plan Administrator" shall mean the Committee.

                                   ARTICLE II
                    Supplemental Death or Retirement Benefits
         Section 2.01. Event of Eligibility. Subject to the provisions of
Section 2.05, Employee or his designated beneficiary shall receive supplemental
retirement or death benefits, respectively, in the manner and time as provided
below upon the occurrence of the first of the following events:
         (a)      Normal Retirement.  The attainment by Employee as an employee
                  of Bank of his Normal Retirement Date.
         (b)      Death.  The death of Employee prior to his Normal Retirement
                  Date.
         (c)      Pre-Retirement Disability.  Employee sustaining
                  Pre-Retirement Disability.

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         (d)      Early Involuntary Retirement.  Employee's Early Involuntary
                  Retirement as an employee of Bank as of Employee's Early
                  Involuntary Retirement Date.
         (e)      Early Voluntary Retirement.  Employee's Early Voluntary
                  Retirement as an employee of Bank as of Employee's Early
                  Voluntary Retirement Date.

         Section 2.02.  Supplemental Retirement Income Benefit.
         (a)      Upon the occurrence of an Event of Eligibility because of (1)
                  Normal Retirement or (2) Pre-Retirement Disability followed by
                  Employee attaining the age of sixty-five (65) years prior to
                  death, Bank shall pay an annual supplemental retirement income
                  of Fifty Thousand Dollars ($50,000).
         (b)      Such annual supplemental retirement income shall be paid to
                  Employee or his designated beneficiary for a period of fifteen
                  (15) years in one-hundred and eighty (180) equal monthly
                  payments with the first payment to commence on Employee's
                  Normal Retirement Date and shall continue to be paid to
                  Employee or his designated beneficiary on the first day of
                  each consecutive month thereafter for the succeeding
                  one-hundred and seventy-nine (179) months.
         Section 2.03.  Supplemental Early Involuntary Retirement Income
Benefit.
         (a)      Upon the occurrence of an Event of Eligibility because of
                  Early Involuntary Retirement, Bank shall pay an annual
                  supplemental retirement income of Fifty Thousand Dollars
                  ($50,000) less Four Hundred and Fifty Dollars ($450) for
                  each month that Employee's Early Involuntary Retirement
                  Date precedes his Normal Retirement Date.

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         (b)      Such annual supplemental early involuntary retirement income
                  shall be paid to Employee or his designated beneficiary for a
                  period of fifteen (15) years in one-hundred and eighty (180)
                  equal monthly payments with the first payment to commence on
                  Employee's Early Involuntary Retirement Date and shall
                  continue to be paid to Employee or his designated beneficiary
                  on the first day of each consecutive month thereafter for the
                  succeeding one--hundred and seventy--nine (179) months.
         (c)      Notwithstanding the above provisions of Subsections 2.03 (a)
                  and (b), if Employee's Early Voluntary Retirement is the
                  result of a Change in Control of Bank, then each of the
                  required one-hundred and eighty (180) equal monthly payments
                  to Employee or his designated beneficiary shall be further
                  reduced by that amount, if any, of such payments which
                  represents the forfeited tax benefit to Bank attributable to
                  each such payment.
                  (1)      The term "forfeited tax benefit to Bank" as used in
                           this Subsection 2.03 (c) shall mean the tax cost to
                           Bank attributable to that portion, if any, of each
                           monthly payment hereunder to Employee or his
                           designated beneficiary which constitutes a parachute
                           payment.
                  (2)      The term "tax cost to Bank" as used in this
                           Subsection 2.03 (c) shall mean the tax reduction
                           which the Bank would have obtained related to that
                           portion, if any, of each monthly payment hereunder to
                           Employee or his designated beneficiary which would
                           constitute a parachute payment assuming that (A) all
                           monthly payments were made in an amount and

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                           when required hereunder without consideration of
                           Subsection 2.03 (c), and (B) the Bank received a tax
                           reduction equal to the tax on the portion of each
                           payment which constituted a parachute payment by
                           applying the highest federal income tax rate
                           potentially applicable to Bank as actually in effect
                           at the time of the required monthly payment.
                  (3)      The term "parachute payment" as used in this
                           Subsection 2.03 (c) shall mean that portion, if any,
                           of each monthly payment required hereunder without
                           consideration of Subsection 2.03 (c) to be paid to
                           Employee or his designated beneficiary which would
                           cause the present value of all such monthly payments
                           and any other payments to Employee or his designated
                           beneficiary to exceed three (3.0) times Employee's
                           annualized includable compensation paid to him or his
                           designated beneficiary by the Corporation and the
                           Bank for the five (5) most recent taxable years
                           ending before the date on which the Change in Control
                           occurs. The definition, interpretation and
                           calculation of the dollar amount described as a
                           parachute payment in the immediately preceding
                           sentence shall be in a manner consistent with and as
                           required by the provisions of section 280G of the
                           Internal Revenue Code of 1986, as amended ("Code"),
                           and the regulations and rulings of the Internal
                           Revenue Service promulgated thereunder. The sole
                           purpose of the reduction imposed by this Subsection
                           2.03 (c) is to reduce the amount payable by Bank
                           pursuant to Section 2.03 to compensate Bank for the
                           loss of the federal income tax deduction related to
                           the amount of each payment

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                           which is characterized as a "parachute payment" under
                           section 280G of the Code based upon the assumed
                           federal tax rates and payments expressed above. The
                           parties hereto agree that any dispute as to the
                           amount of the reduction required under this
                           Subsection 2.03 (c) shall be resolved by an opinion
                           of competent counsel selected by and acceptable to
                           such parties. Counsel's fee for the opinion required
                           herein shall be paid by the Bank.
         Section 2.04.  Supplemental Early Voluntary Retirement Income Benefit.
         (a)      Upon the occurrence of an Event of Eligibility because of
                  Early Voluntary Retirement, Bank shall pay an annual
                  supplemental retirement income as follows:
                  (1)      Forty Thousand Dollars ($40,000) if Employee's Early
                           Voluntary Retirement Date follows his attainment of
                           the age of sixty-four (64) years and precedes his
                           attainment of the Normal Retirement Date;
                  (2)      Thirty Thousand Dollars ($30,000) if Employee's Early
                           Voluntary Retirement Date follows his attainment of
                           the age of sixty-three (63) years and precedes his
                           attainment of the age of sixty-four (64) years;
                  (3)      Twenty Thousand Dollars ($20,000) if Employee's Early
                           Voluntary Retirement Date follows his attainment of
                           the age of sixty-two (62) years and precedes his
                           attainment of the age of sixty-three (63) years;
                  (4)      Ten Thousand Dollars ($10,000) if Employee's Early
                           Voluntary Retirement Date follows his attainment of
                           the age of sixty-one (61) years and precedes his
                           attainment of the age of sixty-two (62) years; and

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                  (5)      No annual payment if Employee's Early Voluntary
                           Retirement Date precedes his attainment of the age of
                           sixty-one (61) years.
         (b)      Such annual supplemental early voluntary retirement income
                  shall be paid to Employee or his designated beneficiary for a
                  period of fifteen (15) years in one-hundred and eighty (180)
                  equal monthly payments with the first payment to commence on
                  Employee's Early Voluntary Retirement Date and shall continue
                  to be paid to Employee or his designated beneficiary on the
                  first day of each consecutive month thereafter for the
                  succeeding one-hundred and seventy-nine (179) months.
         Section 2.05.  Supplemental Death Benefit Income.
         (a)      Upon the occurrence of an Event of Eligibility because of
                  Employee's death prior to his Normal Retirement Date, Early
                  Involuntary Retirement Date, Early Voluntary Retirement Date
                  or because of his Pre-Retirement Disability followed by
                  Employee's death prior to his attaining the age of
                  sixty-five (65) years, Bank shall pay Employee's designated
                  beneficiary an annual supplemental death benefit equal to
                  the greater of (1) Thirty Thousand Dollars ($30,000) for a
                  fifteen (15) year period or (2) Employee's supplemental early
                  retirement income benefit (described in Section 2.03 of this
                  Agreement) calculated as though Employee involuntarily
                  retired from employment with Bank on his date of death.
         (b)      The annual supplemental death benefit determined in (a) of
                  this Section shall be paid to Employee's designated
                  beneficiary for a period of fifteen (15) years in one-hundred
                  and eighty (180) equal monthly payments with the first payment
                  to

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                  commence on the first day of the month following Employee's
                  death and shall continue to be paid to Employee's designated
                  beneficiary on the first day of each consecutive month
                  thereafter for the succeeding one--hundred and seventy--nine
                  (179) months.
         Section 2.06. Payment Upon Death. Upon the execution of this Agreement,
Employee may designate a beneficiary and contingent beneficiaries to receive the
death or retirement benefits hereunder in the event of Employee's death.
Designated contingent beneficiaries shall receive the payments and benefits
hereunder in the order stated in the written designation in the event of the
death of the designated primary beneficiary. The Employee may change the
beneficiary or contingent beneficiary at any time by delivering to the Committee
a duly executed change of beneficiary form in the form prescribed by the
Committee. The Committee shall pay over benefits according to Employee's
beneficiary designation upon proof of identity or authority, without further
liability to any party as a result of said payment. Beneficiaries may be changed
without notice to or consent of any prior or future beneficiaries. In the case
of Employee's failure to designate a beneficiary, or the death of a designated
beneficiary without a designated contingent beneficiary, such benefits shall be
paid to the first of the following persons who survive Employee: (1) Employee's
spouse; (2) Employee's surviving children and children of Employee's deceased
children all of whom shall be paid such benefits in equal shares by way of
representation; and (3) the personal representative of Employee's estate. The
person or persons entitled to such payments designated in the preceeding
sentence shall each be deemed a "designated beneficiary" for the purposes of
this Agreement.

                                        9
<PAGE>

                                   ARTICLE III
                                 Administration
         Section 3.01. The books and records to be maintained for the purposes
of this Agreement shall be maintained by the officers and employees of the Bank
at its expense and subject to the supervision and control of the Committee. All
expenses of administering this Agreement shall be paid by the Bank.
         Section 3.02. To the extent permitted by law, the right of Employee or
any beneficiary to benefit or payment hereunder shall not be subject in any
manner to attachment or other legal process for the debts of Employee or his
designated beneficiary; and any such benefit or payment shall not be subject to
anticipation, alienation, sale, transfer assignment or encumbrance.
         Section 3.03. No member of the Board or of the Committee and no officer
or employee of the Bank shall be personally liable to any person for any action
taken or omitted in connection with the administration of this Agreement unless
attributable to his own fraud or willful misconduct.
                                   ARTICLE IV
                                     Funding
         Section 4.01. Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Bank and
Employee, his designated beneficiary or any other person. Any funds which may be
invested under the provisions of this Agreement shall continue for all purposes
to be a part of the general funds of the Bank and no person other than the Bank
shall by virtue of the provisions of this Agreement have any interest in such
funds. To the extent

                                       10
<PAGE>

that any person acquires a right to receive payments from the Bank under this
Agreement, such right shall be no greater than the right of any unsecured
general creditor of the Bank.
                                    ARTICLE V
              Incapacity of Employee or his Designated Beneficiary
         Section 5.01. If the Committee shall determine that any person to whom
any payment is payable under this Agreement is unable to care for his affairs
because of illness or accident, or is a minor, any payment due (unless a prior
claim therefor shall have been made by a duly appointed guardian, committee or
other legal representative) may be paid to the spouse, a child, a parent, or a
brother or sister, or to any person deemed by the Committee to have incurred
expense for such person otherwise entitled to payment, in such manner and
proportions as the Committee may determine. Any such payment shall be a complete
discharge of the liabilities of the Bank under this Agreement.
                                   ARTICLE VI
                                Claims Procedure
         Section 6.01. Claims Procedure. All payments hereunder shall be due and
paid at the times specified. However, in the event a substantial question arises
relating to the propriety of such payments the Committee may decide whether any
person is entitled to such payments hereunder and may approve or deny all claims
made for such payments. If a claim is wholly or partially denied, notice of the
decision shall be furnished to the claimant no later than thirty (30) days after
receipt of the claim by the Committee. Such notice shall be in writing, setting
forth in a manner calculated to be understood by the claimant, without legal or
actuarial counsel:
         (a)      the specific reason or reasons for denial;

                                       11
<PAGE>

         (b)      specific reference to the provisions of this Agreement on
                  which the denial is based;
         (c)      a description of any additional material or information
                  necessary for the claimant to perfect the claim and an
                  explanation why such material or information is
                  necessary; and
         (d)      an explanation of the Agreement's claim review procedure.
Upon denial of a claim, or discontinuance of benefit, in whole or in part, a
claimant shall have the opportunity to:
         (a)      request a review upon written application to the Committee;
         (b)      review pertinent documents; and
         (c)      submit issues and comments in writing.
Such request for review shall be made to the Committee and shall be made no
later than seventy-five (75) days after denial. The Committee shall appoint a
person or persons to review the claim. Such reviewer shall render a decision in
writing not later than sixty (60) days after the Committee's receipt of a
request for review, unless special circumstances require an extension of time
for processing, in which case a decision shall be rendered as soon as possible,
but not later than one hundred twenty (120) days after receipt of the request
for review. The decision after review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant and including specific references to the pertinent
provisions of this Agreement on which the decision is based. A copy of the
written decision shall be sent to the claimant promptly after it is rendered.

                                       12
<PAGE>

         Section 6.02. Other Remedies. Nothing herein shall be construed to
preclude Employee or a claimant from pursuing all available legal remedies to
enforce this Agreement.
         Section 6.03. Attorney Fees and Expenses. If a claimant or Employee
successfully pursues a claim under section 6.01 hereunder, successfully settles
his or her claim against the Bank prior to the rendering of a judgment by a
court of competent jurisdiction or obtains a final judgment substantially in his
or her favor against the Bank in such a court, all reasonable legal fees and
expenses incurred by the claimant related to that portion of the claimant's
claim which was resolved, settled or adjudged in claimant's favor shall be paid
by Bank to claimant.
                                   ARTICLE VII
                                  Miscellaneous
         Section 7.01. Neither Employee nor any other person shall have any
claim or right to be granted a payment or other benefit under this Agreement
prior to the occurrence of an Event of Eligibility.
         Section 7.02. Nothing contained herein shall be construed as conferring
upon Employee the right to continue in the employ of the Bank as an executive
officer or in any other capacity.
         Section 7.03. Any supplemental retirement or death benefit payable
under this Agreement shall not be deemed salary or other compensation to
Employee for the purpose of computing benefits to which he may be entitled under
any pension plan or other arrangement of the Bank for the benefit of its
employees.
         Section 7.04. This Agreement shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors and assigns of the
parties. Notwithstanding the foregoing, the right to receive payment hereunder
is hereby expressly declared to be personal, nonassignable

                                       13
<PAGE>

and nontransferrable except by will or intestacy, if applicable, and any
attempted assignment or transfer of such rights contrary to the provisions
hereof shall be null and void and of no effect.
         Section 7.05. If any of the provisions of this Agreement shall be held
invalid, the remainder of this Agreement shall not be affected thereby.
         Section 7.06. This instrument contains the entire Agreement between the
parties, and shall be governed by the laws of the State of Indiana.
         Section 7.07. The rights and obligations of the parties hereto shall be
in addition to any rights and obligations contained in any other agreement
between such parties, and nothing contained herein shall be construed to limit
Employee's rights under any such other agreement.
         Section 7.08. The parties agree that this Agreement will not result in
any adverse income tax consequences to Employee prior to him or his designated
beneficiary becoming entitled to receive supplemental retirement or death
benefits hereunder; however, if Employee is finally determined by any taxing
authority to be taxable upon any prospective benefits under this Agreement in a
year prior to the year he becomes entitled to or receives such benefits, then
Bank shall pay Employee a bonus in an amount which will compensate Employee for
the federal and state income taxes and any interest and penalty thereon which he
incurs on (1) the taxable income he is required to report on his income tax
returns by reason of such prospective benefits under this Agreement, and (2) the
bonus described in this sentence. For purposes of the preceding sentence, the
taxes incurred by the Employee shall be based upon his marginal federal and
state income tax rates for the year in which he is determined to be taxable on
such prospective benefits hereunder. Employee shall be entitled to such bonus
for each year which he is determined to be taxable on such prospective benefits
hereunder, which bonus shall be paid to Employee within a

                                       14
<PAGE>

reasonable time after Employee provides Bank evidence satisfactory to the Bank
of the determination of his taxability upon prospective benefits and his
applicable marginal tax rates. Any contrary provision in this Agreement
notwithstanding, nothing in this Agreement shall be construed to obligate Bank
to compensate Employee or his designated beneficiary for any income tax
consequences resulting from becoming entitled to or receiving supplemental death
or retirement benefits hereunder.
                                  ARTICLE VIII
                             Amendment of Agreement
         Section 8.01. This Agreement may only be amended by a written amendment
executed by the parties hereto or, if Employee is deceased, the party designated
to receive the benefits hereof may likewise agree to amendments. No notice of
such amendment shall be required to be given to any other beneficiary or
contingent beneficiary herein.
         IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective the day and year first above written.

                                       -----------------------------------
                                       David D. Baer

                                       MONROE COUNTY BANK
                                       BY MEMBERS OF ITS EXECUTIVE COMMITTEE
                                       OTHER THAN DAVID D. BAER

                                       -----------------------------------
                                       Paul W. Mobley

                                       15
<PAGE>

                                       -----------------------------------
                                       Richard P. Rechter

                                       -----------------------------------
                                       Dr. Joseph F. Milan

                                       16

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