FIRST FINANCIAL CORPORATION 2005 EXECUTIVES? DEFERRED COMPENSATION PLAN

Exhibit 10.5

FIRST FINANCIAL CORPORATION 2005

EXECUTIVES’ DEFERRED COMPENSATION PLAN

Effective Date: January 1, 2005

Krieg DeVault LLP
One Indiana Square, Suite 2800
Indianapolis, IN 46204-2079
www.kriegdevault.com

FIRST FINANCIAL CORPORATION 2005
EXECUTIVES’ DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS

ARTICLE		PAGE
INTRODUCTION			1
ARTICLE I DEFINITIONS			1
1.1 “Acceleration Event”			1
1.2 “Account”			1
1.3 “Adjustment”			1
1.4 “Board”			1
1.5 “Bonus Compensation”			1
1.6 “Code”			1
1.7 “Committee”			1
1.8 “Company”			1
1.9 “Compensation”			1
1.10 “Deferral Account”			2
1.11 “Effective Date”			2
1.12 “Employee”			2
1.13 “Employer”			2
1.14 “ESOP”			2
1.15 “ESOP Account”			2
1.16 “Key Employee”			2
1.17 “Participant”			2
1.18 “Participant Deferral Contributions”			2
1.19 “Plan”			3
1.20 “Plan Year”			3
1.21 “Separation from Service			3
1.22 “Unforeseeable Emergency”			3
ARTICLE II ELIGIBILITY AND PARTICIPATION			3
ARTICLE III CONTRIBUTIONS AND ALLOCATIONS			4
3.1 Participant Deferral Contributions			4
3.2 Deferral Elections			4
3.3 Supplemental Benefit			5
3.4 Allocation of Contributions and Adjustments			6
ARTICLE IV INVESTMENT OF CONTRIBUTIONS			6
4.1 Investments			6
4.2 Unsecured Contractual Rights			7

ARTICLE		PAGE
ARTICLE V DISTRIBUTIONS			7
5.1 Time of Payment of Benefits			7
5.2 Method of Payment of Benefits			7
5.3 Benefit Payment Elections			8
5.4 Death of the Participant and Beneficiary Designation			8
5.5 Unforeseeable Emergency			9
5.6 Acceleration of Time of Payment			10
ARTICLE VI PLAN ADMINISTRATION			12
6.1 Administration by the Committee			12
6.2 Powers and Responsibilities of the Committee			13
6.3 Liabilities			13
6.4 Income and Employment Tax Withholding			13
ARTICLE VII AMENDMENT AND TERMINATION OF THE PLAN			14
7.1 Amendment of the Plan			14
7.2 Termination of the Plan			14
ARTICLE VIII CLAIMS PROCEDURES			14
8.1 Procedures Governing Benefit Claims			14
8.2 Notification of Benefit Determinations			14
8.3 Manner and Content of Notification of Benefit Determinations			14
8.4 Appeal of Adverse Benefit Determinations			15
8.5 Benefit Determination on Review			15
8.6 Notification of Benefit Determination on Review			15
8.7 Manner and Content of Notification of Benefit Determination on Review			16
8.8 Court Action			16
ARTICLE IX MISCELLANEOUS			16
9.1 Governing Law			16
9.2 Headings and Gender			16
9.3 Participant’s Rights; Acquittance			16
9.4 Spendthrift Clause			16
9.5 Counterparts			17
9.6 No Enlargement of Employment Rights			17
9.7 Limitations on Liability			17
9.8 Incapacity of Participant or Beneficiary			17
9.9 Corporate Successors			17
9.10 Evidence			17
9.11 Action by Employer			17
9.12 Severability			17

INTRODUCTION

     The purpose of this Plan is to permit a select group of management or highly compensated Employees to elect to defer compensation from the Employer without regard to the limitations imposed by the Code on the benefits which may accrue to those Employees under the Employer’s tax-qualified retirement plans and to provide supplemental retirement benefits to help recompense the Employees for benefits lost due to the imposition of Code limitations on tax-qualified retirement benefits. It is the intention of the Employer that the Plan will constitute a deferred compensation arrangement that complies with Code Section 409A and an unfunded arrangement maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for federal income tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended.

ARTICLE I

DEFINITIONS

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

     1.1 “Acceleration Event” means those events described in Section 5.6 which permit acceleration of the time of payment of a Participant’s benefit under the Plan.

     1.2 “Account” means the Participant’s ESOP Account and Deferral Account.

     1.3 “Adjustment” means the net increases and decreases in the market value of the Deferral Account and ESOP Account of each Participant. Such increases and decreases will include such items as realized or unrealized investment gains and losses, if any, and investment income, if any, and may, in the discretion of the Committee, include expenses properly attributable to administering the Plan.

     1.4 “Board” means the Board of Directors of First Financial Corporation.

     1.5 “Bonus Compensation” means amounts received by Participant due to an annual bonus where the amount of, or entitlement to the bonus, is contingent and not part of the Participant’s base salary.

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

     1.7 “Committee” means the Compensation Committee of the Board.

     1.8 “Company” means First Financial Corporation.

     1.9 “Compensation” means the Participant’s total compensation from his Employer for a Plan Year, other than Bonus Compensation or deferred compensation that is currently included in gross income, but including any salary reduction Employer contributions made on behalf of the Participant under this Plan or under a plan which qualifies under Code Section

401(k) and/or Code Section 125. Compensation taken into account under the Plan will not be limited as provided in Code Section 401(a)(17).

     1.10 “Deferral Account” means the individual bookkeeping account maintained for each Participant in accordance with subsection 3.4(a) and which is credited with Participant Deferral Contributions for that Participant.

     1.11 “Effective Date” means January 1, 2005.

     1.12 “Employee” means any individual who is employed by an Employer.

     1.13 “Employer” means the Company, First Financial Bank, NA or any other entity First Financial Corporation allows to adopt and become a co-sponsor of the Plan.

     1.14 “ESOP” means the First Financial Corporation Employee Stock Ownership Plan, as amended from time to time.

     1.15 “ESOP Account” means the individual bookkeeping account maintained for each Participant in accordance with subsection 3.4(b) and which is credited with any Supplemental Benefit contributed for that Participant pursuant to Section 3.3.

     1.16 “Key Employee” means an Employee who is:

	(a)		An officer of an Employer having annual compensation greater than $140,000;
	(b)		A five-percent owner of the Company; or
	(c)		A one-percent owner of the Company having annual compensation greater than $150,000.

The $140,000 amount in subsection 1.16 (a) will be adjusted at the same time and in the same manner as under Code Section 415(d), except that the base period will be the calendar quarter beginning July 1, 2001, and any increase under this sentence which is not a multiple of $5,000 will be rounded to the next lower multiple of $5,000.

     1.17 “Participant” means a salaried executive Employee of an Employer who becomes a Participant pursuant to the provisions of Article II of the Plan.

     1.18 “Participant Deferral Contributions” means contributions made to the Plan pursuant to Section 3.1 by an Employer, at the election of the Participant, in lieu of Compensation or Bonus Compensation, under a deferral election filed by the Participant. Although the term “contribution” is used for ease of reference, credits to Participants’ individual accounts under the Plan are merely credits to a bookkeeping account.

     1.19 “Plan” means the deferred compensation plan embodied herein, as amended from time to time, known as the First Financial Corporation 2005 Executives’ Deferred Compensation Plan.

     1.20 “Plan Year” means the 12-month period beginning each January 1 and ending on the following December 31.

     1.21 “Separation from Service” means the date on which the Participant dies, retires or otherwise experiences a Termination of Employment with the Employer. Provided, however, a Separation from Service does not occur if the Participant is on military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Participant retains a right to reemployment with the Employer under an applicable statute or by contract. For purposes of this Section 1.21, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer. If the period of leave exceeds six months and the Participant does not retain the right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of his position of employment or any substantially similar position of employment, a 29-month period of absence may be substituted for such six-month period. The Participant shall incur a “Termination of Employment” for purposes of this Section 1.21 when a termination of employment has occurred under Treasury Regulation 1.409A-1(h)(ii).

     1.22 “Unforeseeable Emergency” means a severe financial hardship of the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary, or the Participant’s dependent (as defined in Code Section 152(a), without regard to Code Sections 152(b)(1), (b)(2) and (d)(1)(B)); loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); imminent foreclosure of or eviction from the Participant’s primary residence; the need to pay for medical expenses, including non-refundable deductibles, as well as for the costs of prescription drug medication; the need to pay for the funeral expenses of a spouse or a dependent (as defined in Code Section 152(a)) or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

ARTICLE II

     A member of a select group of management or highly compensated Employees is eligible to become a Participant in the Plan provided the Employee is designated as a Participant by the Committee in writing. A designated Employee will become a Participant as of the later of the Effective Date or the date specified by the Committee. A Participant may be removed as an active Participant by the Committee effective as of any date, so that the Participant will not be

entitled to make deferrals or receive benefit accruals under Article III on or after that date, except that no removal shall retroactively impair or otherwise adversely affect (without written consent) the rights of a Participant or beneficiary which have accrued prior to the date of such action.

ARTICLE III

     3.1 Participant Deferral Contributions .

	(a)		Compensation Deferral Elections . Subject to the terms and limitations of this Article, a Participant may elect to have a portion of the Participant’s Compensation withheld by the Company and credited as a Participant Deferral Contribution under this Plan.
	(b)		Bonus Deferral Elections . Subject to the terms and limitations of this Article, a Participant may elect to have all or a portion of the Participant’s Bonus Compensation withheld by the Company and credited as a Participant Deferral Contribution under this Plan.
	(c)		Limit on Contributions . The maximum amount of a Participant’s Compensation or Bonus Compensation that may be subject to Participant Deferral Contributions for a Plan Year will be (i) 50 percent of the Participant’s Compensation, and (ii) 100 percent of any Bonus Compensation.

     3.2 Deferral Elections . Participant Deferral Contributions will be withheld from a Participant’s Compensation or Bonus Compensation in accordance with the following terms and conditions.

	(a)		Requirement for Deferral Elections . As a condition to Bank’s obligation to withhold and the Committee’s obligation to credit Participant Deferral Contributions for the benefit of a Participant pursuant to Section 3.1, the Participant must complete and file a deferral election form with the Committee (in a format prescribed by the Committee).
	(b)		Timing of Execution and Delivery of Elections . To be effective to defer any portion of a Participant’s Compensation or Bonus Compensation, a deferral election form must be filed with the Committee with respect to that Compensation or Bonus Compensation on or prior to the last day of the calendar year preceding the Plan Year in which the services giving rise to the Compensation or Bonus Compensation are performed. For example, to defer Compensation or Bonus Compensation payable with respect to services performed during the 2007 Plan Year, an election must be filed on or before December 31, 2006.

	(c)		Initial Eligibility . In the case of the first Plan Year in which an individual becomes a Participant, the deferral election form may be filed with the Committee at any time within 30 days of the date the individual becomes a Participant (rather than the date specified under subsection (b)). This initial election will only apply to Compensation or Bonus Compensation paid for services performed after the filing of the deferral election form. This special initial eligibility election rule will not apply if the Participant is or has been a participant in a deferred compensation arrangement required to be aggregated with this Plan under the rules of Section 409A.
	(d)		Modification of Deferral Elections . Subject to the provisions of subsection 3.2(e), once made, a deferral election will remain in effect for a Plan Year, unless the election is revoked or a new election filed prior to the beginning of the Plan Year. The revocation or new election must be filed in accordance with the requirements of subsection (b) above. No election may be changed for Compensation or Bonus Compensation payable for a Plan Year after the last day of the election period described in subsection (b). For example, any election in place for 2007 Compensation may not be changed after December 31, 2006, except as provided in subsection 3.2(e).
	(e)		Unforeseeable Emergency . The Committee, in its sole discretion, may cancel a Participant’s election to defer Compensation or Bonus Compensation if the Committee determines the Participant has suffered an “Unforeseeable Emergency,” as defined in Section 1.22. The cancellation will apply to the period after the Committee’s determination. The Participant must submit a signed statement of the facts causing the severe financial hardship and any other information required by the Committee, in its sole discretion. An “Unforeseeable Emergency” will be deemed to occur for purposes of this Section if a Participant receives a hardship withdrawal from the First Financial Corporation 401(k) Plan pursuant to Code Section 401(k) and Treasury Regulation 1.401(k)-1(d)(3).

     3.3 Supplemental Benefit . An Employer will make a contribution to each Participant’s ESOP Account for each Plan Year in an amount equal to the amount that would have been contributed to the ESOP, but was not, due to the limitation of Code Section 401(a)(17), for the benefit of the Participant for the ESOP’s plan year that ends with or within that Plan Year.

     3.4 Allocation of Contributions and Adjustments .

	(a)		Deferral Account . The Committee will establish and maintain a Deferral Account in the name of each Participant, to which the Committee will credit all amounts to be allocated to each Participant pursuant to Sections 3.1, 3.2 and 4.1 and from which the Committee will debit all amounts paid to the Participant or his designated beneficiary(ies) pursuant to Article V.
	(b)		ESOP Account . The Committee will also establish and maintain an ESOP account in the name of each Participant, to which the Committee will credit all amounts to be allocated to each Participant pursuant to Sections 3.3 and 4.1 and from which the Committee will debit all amounts paid to the Participant or his designated beneficiary(ies) pursuant to Article V.
	(c)		Determination of Adjustments . Following the allocations made pursuant to the foregoing, the Committee will determine the Adjustments for December 31st of each Plan Year, and on such other dates as the Committee deems necessary or advisable, by adding together all income received, and realized and unrealized gains and losses, and deducting therefrom all taxes, charges or expenses (unless paid separately by the Employers in the Committee’s discretion, outside the confines of this Plan) and any realized and unrealized losses since the most recent allocation of Adjustments to Participants’ Deferral and ESOP Accounts.
	(d)		Allocation of Adjustments . The Adjustments will be allocated as of the allocation date specified in subsection (c) to the Deferral and ESOP Accounts of Participants who maintain a credit balance in their Deferral and ESOP Accounts as of such date as provided in Section 1.3.

ARTICLE IV

     4.1 Investments . All contributions under the Plan will be credited to each Participant’s Deferral Account or ESOP Account as provided in Section 3.4. The Adjustment to each Participant’s Deferral Account will be determined by the earnings on the investments made under the Plan through a so-called irrevocable “rabbi” trust established and maintained by the Company to provide for the benefits created by this Plan. The Participant may direct the trustee of the rabbi trust to invest his Deferral Account in any investment approved by the Committee from time to time, including whole shares of Company common stock. The Committee may establish any rule or procedure it deems necessary or desirable concerning the Participant’s ability to direct or failure to direct the investment of the rabbi trust funds. A Participant’s ESOP Account will be invested in whole shares of Company common stock through the rabbi trust. Fractional shares will be invested in shares of Company common stock or in cash or cash equivalents as determined from time to time by the Committee. No provision of the Plan will impose or be deemed to impose any obligation upon the Employers, other than an unsecured contractual obligation to make a payment to a Participant or his beneficiary(ies) in accordance

with the terms of the Plan. Benefits payable under the Plan will be paid directly by the Employers from their general assets to the extent not paid from the rabbi trust established by the Company.

     4.2 Unsecured Contractual Rights . The Plan at all times will be unfunded and will constitute a mere promise by the Employers to make benefit payments in the future. Notwithstanding any other provision of this Plan, neither a Participant nor his designated beneficiary(ies) will have any preferred claim on, or any beneficial ownership interest in, any assets of the Employers prior to the time benefits are paid as provided in Article