IMPORTANT NOTICE ON CODE SECTION 409A COMPLIANCE

“ Beneficiary ” means each designated person, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive determined pursuant to Article 4.

“ Beneficiary Designation Form ” means the form established from time to time by the Plan Administrator that the Executive completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.

“ Board ” means the Board of Directors of the Bank as from time to time constituted.

“ Change in Control ” means a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as such change is defined in Section 409A of the Code and regulations thereunder.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Distribution Election Form ” means the form established from time to time by the Plan Administrator that the Executive completes, signs and returns to the Plan Administrator to designate the time and form of distribution.

“ Early Termination ” means Separation from Service before Normal Retirement Age for reasons other than death, Termination for Cause, or following a Change in Control.

“ Effective Date ” means January 1, 2008.

“ Normal Retirement Age ” means the Executive attaining age sixty-five (65).

“ Normal Retirement Date ” means the later of Normal Retirement Age or Separation from Service.

“ Plan Administrator ” means the plan administrator described in Article 6.

“ Plan Year ” means each twelve-month period commencing on January 1 and ending on December 31 of each year. The initial Plan Year shall commence on the Effective Date of this Agreement and end on the following December 31.

“ Schedule A ” means the schedule attached to this Agreement and made a part hereof. Schedule A shall be updated upon a change in any of the benefits under Articles 2 or 3.

“ Separation from Service ” means the termination of the Executive’s employment with the Bank for reasons other than death. Whether a Separation from Service takes place is determined based on the facts and circumstances surrounding the termination of the Executive’s employment and whether the Bank and the Executive intended for the Executive to provide significant services for the Bank following such termination. A termination of employment will not be considered a Separation from Service if:

the Executive continues to provide services as an employee of the Bank at an annual rate that is twenty percent (20%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or, if employed less than three years, such lesser period) and the annual remuneration for such services is twenty percent (20%) or more of the average annual remuneration earned during the final three full calendar years of employment (or, if less, such lesser period), or

the Executive continues to provide services to the Bank in a capacity other than as an employee of the Bank at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or if employed less than three years, such lesser period) and the annual remuneration for such services is fifty percent (50%) or more of the average annual remuneration earned during the final three full calendar years of employment (or if less, such lesser period).

“ Specified Employee ” means a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Bank if any stock of the Bank is publicly traded on an established securities market or otherwise.

“ Termination for Cause ” means Separation from Service for:

Gross negligence or gross neglect of duties to the Bank as determined in good faith by the Board following two weeks’ written notice of such gross negligence or gross neglect and a reasonable opportunity for Executive to cure; or

Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Bank; or

Fraud, disloyalty, dishonesty or willful violation of any law or significant Bank policy committed in connection with the Executive’s employment and resulting in a material adverse effect on the Bank.

Normal Retirement Benefit . Upon the Normal Retirement Date, the Bank shall distribute to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Article.

Amount of Benefit . The annual benefit under this Section 2.1 is Fifty-Four Thousand Six Hundred Sixty-Three Dollars ($54,663).

Distribution of Benefit . The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Separation from Service. The annual benefit shall be distributed to the Executive for fifteen (15) years.

Early Termination Benefit . Upon Early Termination, the Bank shall distribute to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Article.

Amount of Benefit . The annual benefit under this Section 2.2 is the Early Termination Benefit set forth on Schedule A.

Distribution of Benefit . The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Normal Retirement Age. The annual benefit shall be distributed to the Executive for fifteen (15) years..

Change in Control Benefit . If the Agreement has not been sooner terminated pursuant to Section 8.3, upon a Change in Control followed by the Executive’s Separation from Service, the Bank shall distribute to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Article.

Amount of Benefit . The annual benefit under this Section 2.3 is Fifty-Four Thousand Six Hundred Sixty-Three Dollars ($54,663).

Distribution of Benefit . The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Normal Retirement Age. The annual benefit shall be distributed to the Executive for fifteen (15) years.

Excess Parachute Payment Gross-up . If any benefit payable under this Agreement, the Pendleton Community Bank, Inc. Executive Performance Driven Plan, the Bank’s Change in Control Plan, or any arrangement similar to the foregoing would create an excise tax under the excess parachute rules of Section 280G of the Code, the Bank shall pay to the Executive an additional amount (the “Gross-up”) equal to:

Restriction on Timing of Distribution .  Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee at Separation from Service under such procedures as established by the Bank in accordance with Section 409A of the Code, benefit distributions that are made upon Separation from Service may not commence earlier than six (6) months after the date of such Separation from Service. Therefore, in the event this Section 2.4 is applicable to the Executive, any distribution or series of distributions to be made due to a Separation from Service shall commence no earlier that the first day of the seventh month following the Separation from Service.

Distributions Upon Income Inclusion Under Section 409A of the Code . Upon the inclusion of any portion of the Account Value into the Executive’s income as a result of the failure of this non-qualified deferred compensation plan to comply with the requirements of Section 409A of the Code, to the extent such tax liability can be covered by the Executive’s vested Account Value, a distribution shall be made as soon as is administratively practicable following the discovery of the plan failure.

Change in Form or Timing of Distributions .  For distribution of benefits under this Article 2, the Executive and the Bank may, subject to the terms of Section 8.1, amend the Agreement to delay the timing or change the form of distributions.  Any such amendment:

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

must, for benefits distributable under Sections 2.1, 2.2, and 2.3 delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

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

Death During Active Service . If the Executive dies while in the active service of the Bank, the Bank shall distribute to the Beneficiary the benefit described in this Section 3.1. This benefit shall be distributed in lieu of the benefits under Article 2.

Amount of Benefit . The annual benefit under this Section 3.1 is Fifty-Four Thousand Six Hundred Sixty-Three Dollars ($54,663).

Distribution of Benefit . The Bank shall distribute the benefit to the Beneficiary in twelve (12) equal monthly installments for fifteen (15) years commencing within thirty (30) days following receipt by the Bank of the Executive’s death certificate.

Death During Distribution of a Benefit . If the Executive dies after any benefit distributions have commenced under this Agreement but before receiving all such distributions, the Bank shall distribute to the Beneficiary the remaining benefits at the same time and in the same amounts that would have been distributed to the Executive had the Executive survived; provided, however, for benefits payable under Sections 2.1, 2.2 or 2.3, if the Executive has received less than fifteen (15) equal consecutive monthly installments, the Beneficiary shall continue to receive the same amounts and at the same time until the sum of the installments to the Beneficiary and Executive equal
fifteen (15).

Death After Separation from Service But Before Benefit Distributions Commence . If the Executive is entitled to benefit distributions under this Agreement, but dies prior to the commencement of said benefit distributions, the Bank shall distribute to the Beneficiary the same benefits that the Executive was entitled to prior to death except that the benefit distributions shall commence within thirty (30) days following receipt by the Bank of the Executive’s death certificate for a total of fifteen (15) equal consecutive monthly installments.

Beneficiary . The Executives shall have the right, at any time, to designate a Beneficiary(ies) to receive any benefit distributions under this Agreement upon the de