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Third Amended and Restated
Salary Continuation Agreement

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HOME FEDERAL BANK
THIRD AMENDED AND RESTATED
SALARY CONTINUATION AGREEMENT

THIS THIRD AMENDED AND RESTATED SALARY CONTINUATION AGREEMENT (the “Agreement”)
is adopted this 21st day of April, 2009, by and between HOME FEDERAL BANK, a
federally-chartered savings and loan association located in Nampa, Idaho (the
“Bank”), and STEVEN D. EMERSON (the “Executive”).

This Agreement amends and restates the prior HOME FEDERAL SAVINGS & LOAN
ASSOCIATION SALARY CONTINUATION AGREEMENT between the Bank and the Executive,
originally effective as of December 1, 2006 (the “Prior Agreement”) and all
subsequent amendments.

This Agreement is amended and restated to reflect a change in the Change in
Control Benefit, herein defined, and to include certain definitional terms.  

The purpose of this Agreement is to provide specified benefits to the Executive,
a member of a select group of management or highly compensated employees who
contribute materially to the continued growth, development and future business
success of the Bank.  This Agreement shall be unfunded for tax purposes and for
purposes of Title I of the Employee Retirement Income Security Act of 1974
(“ERISA”), as amended from time to time.

Article 1
Definitions

Whenever used in this Agreement, the following words and phrases shall have the
meanings specified:

1.1  
“Accrual Balance” means the liability that should be accrued by the Bank, under
Generally Accepted Accounting Principles (“GAAP”), for the Bank’s obligation to
the Executive under this Agreement, by applying Accounting Principles Board
Opinion Number 12 (“APB 12”) as amended by Statement of Financial Accounting
Standards Number 106 (“FAS 106”) and the Discount Rate.  Any one of a variety of
amortization methods may be used to determine the Accrual Balance.  However,
once chosen, the method must be consistently applied.

1.2  
“Beneficiary” means each designated person or entity, or the estate of the
deceased Executive, entitled to any benefits upon the death of the Executive
pursuant to Article 4.

1.3  
“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.

 

 
 

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1.4  
“Board” means the Board of Directors of the Company as from time to time
constituted.

1.5  
“Change in Control” means

(i)  
Any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company or
any person (as hereinafter defined) acting on behalf of the Company as
underwrite pursuant to an offering who is temporarily holding securities in
connection with such offering, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company), is or becomes the
“beneficiary owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company’s then outstanding securities;

(ii)  
Individuals who were members of the Board on the Commencement Date (the
“Incumbent Board”) cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the
Commencement Date whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board or whose
nomination for election by the Company’s stockholders was approved by the
nominating committee serving under an Incumbent Board or who as appointed as a
result of a change at the direction of the OTS or the FDIC, shall be considered
a member of the Incumbent Board;

(iii)  
The stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than (1) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (2) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no person (as hereinabove defined) acquires
more than 25% of the combined voting power of the Company’s then outstanding
securities; or

(iv)  
The stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets (or any transaction having a similar
effect); provided that the term “Change in Control” shall not include an
acquisition of securities by an employee benefit plan of the Bank or the
Company 

 
 

 
 

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Salary Continuation Agreement
 
  
or a change in the composition of the Board at the direction of the OTS or the
FDIC.

 
Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred in the event of a conversion of the Company’s mutual holding company to
stock form or in connection with any reorganization or action used to effect
such conversion (the “Conversion”).  Furthermore, neither the Conversion nor any
transaction related to or occurring in connection therewith shall constitute a
Change in Control event.

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

1.7  
“Commencement Date” means the date the conversion of the Bank from the mutual to
stock form of organization is completed.

1.8  
“Company” means Home Federal Bancorp, Inc., a Federal corporation.  Upon the
effective time of the Conversion (as previously defined), the Company shall mean
Home Federal Bancorp, Inc, a Maryland corporation.

1.9  
“Deferral Account” means the Bank’s accounting of the Deferrals, plus accrued
interest.

1.10  
“Deferrals” means the amount treated as Deferrals under the Prior Agreement.

1.11  
“Disability” means the Executive’s suffering a sickness, accident or injury
which has been determined by the insurance carrier of any individual or group
disability insurance policy covering the Executive, or by the Social Security
Administration, to be a disability rendering the Executive totally and
permanently disabled.  The Executive must submit proof to the Plan Administrator
of the insurance carrier’s or Social Security Administration’s determination
upon the request of the Plan Administrator.

1.12  
“Discount Rate” means the rate used by the Plan Administrator for determining
the Accrual Balance.  The Discount Rate is seven and one-half percent (7.5%).

1.13  
“Early Retirement” means the Termination of Employment before Normal Retirement
Age for reasons other than death, Disability, Termination for Cause, or
Involuntary Termination.

1.14  
“Early Retirement Date” means the month, day and year in which Early Retirement
occurs.

1.15  
“Effective Date” means December 1, 2006.

1.16  
“Final Salary” means the average of the Executive’s final thirty-six (36) months
of base salary.

 

 
 

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1.17  
“Involuntary Termination” means the Executive has been notified in writing by
the Bank of a Termination of Employment before Normal Retirement Age for reasons
other than due to death, Disability, Early Retirement or Termination for Cause.

1.18  
“Normal Retirement Age” means the Executive’s sixty-fifth (65th) birthday.

1.19  
“Normal Retirement Date” means the later of Normal Retirement Age or Termination
of Employment.

1.20  
“Plan Administrator” means the Board or such committee or person as the Board
shall appoint.

1.21  
“Plan Year” means each twelve (12) month period commencing on October 1st and
ending on September 30th of each year.

1.22  
“Projected Benefit” means the annual Normal Retirement Benefit the Executive
would have received under Section 2.1.1 if the Executive survived until Normal
Retirement Age, assuming the Executive’s base salary increased at an annual rate
of four percent (4%) from the date of death until Normal Retirement Age.

1.23  
“Specified Employee” means a key employee (as defined in Code Section 416(i)
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, as determined
by the Plan Administrator based on the twelve (12) month period ending each
December 31 (the “identification period”).  If the Executive is determined to be
a Specified Employee for an identification period, the Executive shall be
treated as a Specified Employee for purposes of this Agreement during the twelve
(12) month period that begins on the first day of the fourth month following the
close of the identification period.

1.24  
“Termination for Cause “means termination of the employment of the Employee
because of the Employee's personal dishonesty, incompetence, willful misconduct,
breach of a fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule, or regulation (other
than traffic violations or similar offenses) or final cease-and-desist order, or
material breach of any provision of this Agreement. No act or failure to act by
the Employee shall be considered willful unless the Employee acted or failed to
act with an absence of good faith and without a reasonable belief that his
action or failure to act was in the best interest of the Company or the Bank.
The Employee shall not be deemed to have been Terminated for Cause unless and
until there shall have been delivered to the Employee a copy of a resolution,
duly adopted by the Board of Directors at a meeting of the Board duly called and
held for such purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's counsel, to be heard
before the Board), stating that in the good faith opinion of the Board of
Directors the Employee has engaged in conduct described in the preceding
sentence and specifying the particulars thereof in detail.

 

 
 

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1.25  
“Termination of Employment” means the termination of the Executive’s employment
with the Bank (and any entity required to be affiliated with the Bank under
Section 409A) for reasons other than death.  Whether a Termination of Employment
takes place is determined in accordance with the requirements of Section 409A
(taking into account all special rules and presumptions provided for in the
regulations under Section 409A) based on the facts and circumstances surrounding
the termination of the Executive’s employment, and whether the Executive and the
Bank reasonably anticipate that no further services will be performed by the
Executive after a certain date, or that the level of bona fide services the
Executive would provide to the Bank or an affiliate after such date (whether as
an employee or independent contractor) would permanently decrease to no more
than 20 percent of the average level of bona fide services performed (whether as
an employee or an independent contractor) over the immediately preceding
36-month period (or the full period of services to the bank if the Executive has
been providing services to the Bank less than 36 months).

1.26  
“Vested Accrual Balance” means the following vesting schedule applied to the
Accrual Balance:

End of Plan Year
Vesting Percentage
1
10%
2
20%
3
30%
4
40%
5
50%
6
60%
7
70%
8
80%
9
90%
10+
100%

Article 2
Distributions During Lifetime

2.1
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.

2.1.1  
Amount of Benefit.  The annual benefit under this Section 2.1 is fifty percent
(50%) of Final Salary.

2.1.2  
Distribution of Benefit.  The Bank shall pay the annual Normal Retirement
Benefit to the Executive in twelve (12) equal monthly installments commencing
with the first of the month following Termination of Employment.  The annual

 
 

 
 

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Normal Retirement Benefit shall be paid to the Executive for a period of fifteen
(15) years.

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

2.2.1  
Amount of Benefit.  The Early Retirement Benefit under this Section 2.2 is the
Vested Accrual Balance as of the end of the month prior to the Early Retirement
Date.

2.2.2  
Distribution of Benefit.  The Bank shall pay the Early Retirement Benefit to the
Executive in one hundred eighty (180) equal monthly installments, crediting
interest equal to the Discount Rate compounded monthly on the unpaid Vested
Accrual Balance, commencing with the first of the month following Normal
Retirement Age.

2.3
Disability Benefit.  If the Executive experiences a Disability prior to Early
Retirement Age, the Bank shall distribute to the Executive the benefit described
in this Section 2.3 in lieu of any other benefit under this Article.

2.3.1  
Amount of Benefit.  The Disability Benefit under this Section 2.3 is one hundred
percent (100%) of the Accrual Balance as of the end of the month prior to
Disability.

2.3.2  
Distribution of Benefit.  The Bank shall pay the Disability Benefit to the
Executive in one hundred eighty (180) equal monthly installments, crediting
interest equal to the Discount Rate compounded monthly on the unpaid Accrual
Balance, commencing with the first of the month following Termination of
Employment.

2.4
Change in Control Benefit.  Upon Involuntary Termination within twenty-four (24)
months following a Change in Control while the Executive is in the active
service of the Bank, the Bank shall distribute to the Executive the benefit
described in this Section 2.4 (subject to Section 2.4.3) in lieu of any other
benefit under this Article.

2.4.1  
Amount of Benefit.  The Change in Control Benefit under this Section 2.4 is one
hundred percent (100%) of the Accrual Balance as of the end of the month prior
to Involuntary Termination.

2.4.2  
Distribution of Benefit.  The Bank shall pay the Change in Control Benefit to
the Executive in one hundred eighty (180) equal monthly installments, crediting
interest equal to the Discount Rate compounded monthly on the unpaid Accrual
Balance, commencing with the first of the month following Normal Retirement Age.

 

 
 

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2.4.3  
Excess Parachute Payment.  Notwithstanding any other provision of this
Agreement, if payments and the value of benefits received or to be received
under this Agreement, together with any other amounts and the value of benefits
received or to be received by the Executive, would cause any amount to be
nondeductible by the Company or any of the Consolidated Subsidiaries for federal
income tax purposes pursuant to or by reason of Section 280G of the Code, then
payments and benefits under this Agreement shall be reduced (not less than zero)
to the extent necessary to as to maximize amounts and the value of benefits to
be received by the Executive without causing any amount to become nondeductible
pursuant to or by reason of Section 280G of the Code.  For this purpose, the
term “Consolidated Subsidiaries” means any subsidiary or subsidiaries of the
Company (or its successors) that are part of the affiliated group (as defined in
Section 1054 of the Code, without regard to subsection (b) thereof) that
includes the Bank, including but not limited to the Company.

2.5
Restriction on Commencement of Distributions.  Notwithstanding any provision of
this Agreement to the contrary, if the Executive is considered a Specified
Employee at Termination of Employment, the provisions of this Section 2.5 shall
govern all distributions hereunder.  Benefit distributions that are made due to
a Termination of Employment occurring while the Executive is a Specified
Employee shall not be made during the first six (6) months following Termination
of Employment.  Rather, any distribution which would otherwise be paid to the
Executive during such period shall be accumulated and paid to the Executive in a
lump sum on the first day of the seventh month following the Termination of
Employment.  All subsequent distributions shall be paid in the manner specified
or provided for in the Plan.

2.6
Distributions Upon Income Inclusion Under Section 409A; Other Circumstances. If
any amount is required to be included in income by the Executive prior to
receipt due to a failure of this Agreement to meet the requirements of Section
409A, the Executive may petition the Plan Administrator for a distribution of
that portion of the amount the Bank has accrued with respect to the Bank’s
obligations hereunder that is required to be included in the Executive’s
income.  Upon the grant of such a petition, which grant shall not be
unreasonably withheld, the Bank shall distribute to the Executive immediately
available funds in an amount equal to the portion of the amount the Bank has
accrued with respect to the Bank’s obligations hereunder required to be included
in income as a result of the failure of this Agreement to meet the requirements
of Section 409A, within ninety (90) days.  Such a distribution shall affect and
reduce the Executive’s benefits to be paid under this Agreement.  At the
discretion of the Plan Administrator, distribution also may be made from the
Plan prior to the Executive’s Termination of Employment for any other reason
permitted under Treasury Regulation Section 1.409A-3(j)(4) or subsequent Section
409A guidance (including but not limited to the following: pursuant to a
domestic relations order, to comply with an ethics order, to effect a limited
cashout,

 

 
 

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to pay employment taxes, to pay state, local or foreign taxes, to offset certain
debt obligations and to resolve a bona fide dispute regarding the Executive’s
benefits under the Plan).

 
 2.7
Change in Form or Timing of Distributions.  All changes in the form or timing of
distributions hereunder must comply with the following requirements.  The
changes:

 
 

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

(b)  
must, for benefits distributable under Section 2.2 and 2.4, be made at least
twelve (12) months prior to the first scheduled distribution;

(c)  
must, for benefits distributable under Sections 2.1, 2.2, and 2.4, delay the
commencement of the distributions for a minimum of five (5) years from the date
the first distribution was originally scheduled to be made; and

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

Article 3
Distribution at Death

3.1
Death During Active Service.  If the Executive dies prior to Termination of
Employment, the Bank shall distribute to the Beneficiary the benefit described
in this Section 3.1.  This benefit shall be distributed in lieu of any benefit
under Article 2.

3.1.1  
Amount of Benefit.  The benefit under this Section 3.1 is Projected Benefit.

3.1.2  
Distribution of Benefit.  The Bank shall pay the annual benefit to the
Beneficiary in twelve (12) equal monthly installments commending with the first
of the month following the Executive’s death.  The annual benefit shall be paid
to the Beneficiary for a period of fifteen (15) years.

 
3.2
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 they would have been
distributed to the Executive had the Executive survived.

 
3.3
Death After Termination of Employment 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 to which the
Executive was entitled prior to death, except that the

 

 
 

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benefit distributions shall commence within thirty (30) days following receipt
by the Bank of the Executive’s death certificate.

 
Article 4
Beneficiaries

4.1
In General.  The Executive shall have the right, at any time, to designate a
Beneficiary to receive any benefit distributions under this Agreement upon the
death of the Executive.  The Beneficiary designated under this Agreement may be
the same as or different from the beneficiary designated under any other plan of
the Bank in which the Executive participates.

4.2
Designation.  The Executive shall designate a Beneficiary by completing and
signing the Beneficiary Designation Form and delivering it to the Plan
Administrator or its designated agent.  If the Executive names someone other
than the Executive’s spouse as a Beneficiary, the Plan Administrator may, in its
sole discretion, determine that spousal consent is required to be provided in a
form designated by the Plan Administrator, executed by the Executive’s spouse
and returned to the Plan Administrator.  The Executive's beneficiary designation
shall be deemed automatically revoked if the Beneficiary predeceases the
Executive or if the Executive names a spouse as Beneficiary and the marriage is
subsequently dissolved.  The Executive shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the terms of the
Beneficiary Designation Form and the Plan Administrator’s rules and
procedures.  Upon the acceptance by the Plan Administrator of a new Beneficiary
Designation Form, all Beneficiary designations previously filed shall be
cancelled.  The Plan Administrator shall be entitled to rely on the last
Beneficiary Designation Form filed by the Executive and accepted by the Plan
Administrator prior to the Executive’s death.

4.3
Acknowledgment.  No designation or change in designation of a Beneficiary shall
be effective until received, accepted and acknowledged in writing by the Plan
Administrator or its designated agent.

4.4
No Beneficiary Designation.  If the Executive dies without a valid beneficiary
designation, or if all designated Beneficiaries predecease the Executive, then
the Executive’s spouse shall be the designated Beneficiary.  If the Executive
has no surviving spouse, any benefit shall be paid to the personal
representative of the Executive's estate.

4.5
Facility of Distribution.  If the Plan Administrator determines in its
discretion that a benefit is to be distributed to a minor, to a person declared
incompetent or to a person incapable of handling the disposition of that
person’s property, the Plan Administrator may direct distribution of such
benefit to the guardian, legal representative or person having the care or
custody of such minor, incompetent person or incapable person.  The Plan
Administrator may require proof of incompetence, minority or guardianship as it
may deem appropriate prior to distribution of the benefit.  Any distribution of
a benefit shall be a distribution for the account of the Executive and the
Beneficiary, as the case may be, and shall completely discharge any liability
under this Agreement for such distribution amount.

 
 

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Article 5
General Limitations

5.1
Termination for Cause.  Notwithstanding any provision of this Agreement to the
contrary, the Bank shall not distribute any benefit in excess of Deferrals under
this Agreement if the Executive’s employment with the Bank is terminated due to
a Termination for Cause.

5.2
Suicide or Misstatement.  No benefit shall be distributed if the Executive
commits suicide within two (2) years after the Effective Date of this Agreement,
or if an insurance company which issued a life insurance policy covering the
Executive and owned by the Bank denies coverage (i) for material misstatements
of fact made by the Executive on an application for such life insurance, or (ii)
for any other reason.

5.3
Removal. Notwithstanding any provision of this Agreement to the contrary, the
Bank shall not distribute any benefit in excess of Deferrals under this
Agreement if the Executive is subject to a final removal or prohibition order
issued by an appropriate federal banking agency pursuant to Section 8(e) of the
Federal Deposit Insurance Act.  Notwithstanding anything herein to the contrary,
any payments made to the Executive pursuant to this Agreement, or otherwise,
shall be subject to and conditioned upon compliance with 12 U.S.C. 1828 and FDIC
Regulation 12 CFR Part 359, Golden Parachute Indemnification Payments and any
other regulations or guidance promulgated thereunder.

Article 6
Administration of Agreement

6.1
Plan Administrator Duties.  The Plan Administrator shall administer this
Agreement according to its express terms and shall also have the discretion and
authority to (i) make, amend, interpret and enforce all appropriate rules and
regulations for the administra­tion of this Agreement and (ii) decide or resolve
any and all ques­tions, including interpretations of this Agreement, as may
arise in connection with this Agreement to the extent the exercise of such
discretion and authority does not conflict with Section 409A.

6.2
Agents.  In the administration of this Agreement, the Plan Administrator may
employ agents and delegate to them such administrative duties as the Plan
Administrator sees fit, including acting through a duly appointed
representative, and may from time to time consult with counsel who may be
counsel to the Bank.

6.3
Binding Effect of Decisions.  Any decision or action of the Plan Administrator
with respect to any question arising out of or in connection with the
administration, interpretation or application of this Agreement and the rules
and regulations promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest

 

 
 

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in this Agreement.

 
6.4
Indemnity of Plan Administrator.  The Bank shall indemnify and hold harmless the
Plan Administrator against any and all claims, losses, damages, expenses or
liabilities arising from any action or failure to act with respect to this
Agreement, except in the case of willful misconduct by the Plan Administrator.

6.5
Bank Information.  To enable the Plan Administrator to perform its functions,
the Bank shall supply full and timely information to the Plan Administrator on
all matters relating to the date and circum­stances of the death, Disability or
Termination of Employment of the Executive, and such other pertinent information
as the Plan Administrator may reasonably require.

6.6
Annual Statement. The Plan Administrator shall provide to the Executive, within
one hundred twenty (120) days after the end of each Plan Year, a statement
setting forth the benefits to be distributed under this Agreement.

Article 7
Claims And Review Procedures

7.1
Claims Procedure.  An Executive or Beneficiary (“claimant”) who has not received
benefits under this Agreement that he or she believes should be distributed
shall make a claim for such benefits as follows:

7.1.1  
Initiation – Written Claim.  The claimant initiates a claim by submitting to the
Plan Administrator a written claim for the benefits.  If such a claim relates to
the contents of a notice received by the claimant, the claim must be made within
sixty (60) days after such notice was received by the claimant.  All other
claims must be made within one hundred eighty (180) days of the date on which
the event that caused the claim to arise occurred.  The claim must state with
particularity the determination desired by the claimant.

 

7.1.2  
Timing of Plan Administrator Response.  The Plan Administrator shall respond to
such claimant within ninety (90) days after receiving the claim.  If the Plan
Administrator determines that special circumstances require additional time for
processing the claim, the Plan Administrator can extend the response period by
an additional ninety (90) days by notifying the claimant in writing, prior to
the end of the initial ninety (90) day period, that an additional period is
required.  The notice of extension must set forth the special circumstances and
the date by which the Plan Administrator expects to render its decision.

7.1.3  
Notice of Decision.  If the Plan Administrator denies part or all of the claim,
the Plan Administrator shall notify the claimant in writing of such denial.  The
Plan Administrator shall write the notification in a manner calculated to be
understood 

 

 
 

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by the claimant.  The notification shall set forth:

 
 
(a)
The specific reasons for the denial;

 
(b)
A reference to the specific provisions of this Agreement on which the denial is
based;

 
(c)
A description of any additional information or material necessary for the
claimant to perfect the claim and an explanation of why it is needed;

 
(d)
An explanation of this Agreement’s review procedures and the time limits
applicable to such procedures; and

 
(e)
A statement of the claimant’s right to bring a civil action under ERISA Section
502(a) following an adverse benefit determination on review.

7.2
Review Procedure.  If the Plan Administrator denies part or all of the claim,
the claimant shall have the opportunity for a full and fair review by the Plan
Administrator of the denial as follows:

7.2.1  
Initiation – Written Request.  To initiate the review, the claimant, within
sixty (60) days after receiving the Plan Administrator’s notice of denial, must
file with the Plan Administrator a written request for review.

7.2.2  
Additional Submissions – Information Access.  The claimant shall then have the
opportunity to submit written comments, documents, records and other information
relating to the claim.  The Plan Administrator shall also provide the claimant,
upon request and free of charge, reasonable access to, and copies of, all
documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits.

7.2.3  
Considerations on Review.  In considering the review, the Plan Administrator
shall take into account all materials and information the claimant submits
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination.

7.2.4  
Timing of Plan Administrator Response.  The Plan Administrator shall respond in
writing to such claimant within sixty (60) days after receiving the request for
review.  If the Plan Administrator determines that special circumstances require
additional time for processing the claim, the Plan Administrator can extend the
response period by an additional sixty (60) days by notifying the claimant in
writing, prior to the end of the initial sixty (60) day period, that an
additional period is required.  The notice of extension must set forth the
special circumstances and the date by which the Plan Administrator expects to
render its decision.

 

 
 

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7.2.5  
Notice of Decision.  The Plan Administrator shall notify the claimant in writing
of its decision on review.  The Plan Administrator shall write the notification
in a manner calculated to be understood by the claimant.  The notification shall
set forth:

 
(a)
The specific reasons for the denial;

 
(b)
A reference to the specific provisions of this Agreement on which the denial is
based;

 
(c)
A statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits; and

 
(d)
A statement of the claimant’s right to bring a civil action under ERISA Section
502(a).

Article 8
Amendments and Termination

8.1  
Amendments.  This Agreement may be amended only by a written agreement signed by
the Bank and the Executive.  However, the Bank may unilaterally amend this
Agreement to conform with written directives to the Bank from its auditors or
banking regulators or to comply with legislative changes or tax law, including
without limitation Section 409A of the Code and any and all Treasury regulations
and guidance promulgated thereunder.

8.2  
Plan Termination Generally.  This Agreement may be terminated only by a written
agreement signed by the Bank and the Executive.  The benefit shall be the sum
of:  (a) the Accrual Balance as of the date this Agreement is terminated; and
(b) the Deferral Account balance.  Except as provided in Section 8.3, the
termination of this Agreement shall not cause a distribution of benefits under
this Agreement.  Rather, upon such termination benefit distributions will be
made at the earliest distribution event permitted under Article 2 or Article 3.

8.3  
Plan Terminations Under Section 409A.  Notwithstanding anything to the contrary
in Section 8.2, if the Bank terminates this Agreement in the following
circumstances:

 
(a)
Within thirty (30) days before or twelve (12) months after 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 described in Code Section 409A(2)(A)(v),
provided that all distributions are made no later than twelve (12) months

 

 
 

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HOME FEDERAL BANK
Third Amended and Restated
Salary Continuation Agreement
 

 
 
following such termination of this Agreement and further provided that all the
Bank's arrangements which are substantially similar to this Agreement are
terminated so the Executive and all participants in the similar arrangements are
required to receive all amounts of compensation deferred under the terminated
arrangements within twelve (12) months of such termination;

 
 
(b)
Upon the Bank’s dissolution or with the approval of a bankruptcy court provided
that the amounts deferred under this Agreement are included in the Executive's
gross income in the latest of (i) the calendar year in which this Agreement
terminates; (ii) the calendar year in which the amount is no longer subject to a
substantial risk of forfeiture; or (iii) the first calendar year in which the
distribution is administratively practical; or

 
(c)
Upon the Bank’s termination of this and all other plans required by Section 409A
to be aggregated with this Plan, provided that (i) the Plan’s termination and
liquidation does not occur proximate to a downturn in the financial health of
the Bank; (2) all distributions in connection with the termination of the Plan
are made no earlier than twelve (12) months and no later than twenty-four (24)
months following the date the Bank takes all actions necessary to irrevocably
terminate and liquidate the Plan (the “Termination Date”); and (3) the Bank does
not adopt any new plan that would be required by Section 409A to be aggregated
with this Plan at any time within three years following the Termination Date;

the Bank may distribute the sum of the Accrual Balance and the Deferral Account
balance, determined as of the date of the termination of this Agreement, to the
Executive in a lump sum subject to the above terms.  This Section 8.3 shall be
administered and interpreted in a manner consistent with Section 409A.

Article 9
Miscellaneous

9.1
Binding Effect.  This Agreement shall bind the Executive and the Bank and their
beneficiaries, survivors, executors, administrators and transferees.

9.2
No Guarantee of Employment.  This Agreement is not a contract for
employment.  It does not give the Executive the right to remain as an employee
of the Bank nor interfere with the Bank's right to discharge the Executive.  It
does not require the Executive to remain an employee nor interfere with the
Executive's right to terminate employment at any time.

9.3
Non-Transferability.  Benefits under this Agreement cannot be sold, transferred,
assigned, pledged, attached or encumbered in any manner.

9.4
Tax Withholding and Reporting.  The Bank shall withhold any taxes that are
required to be withheld, including but not limited to taxes owed under Section
409A from the

 

 
 

--------------------------------------------------------------------------------

 
HOME FEDERAL BANK
Third Amended and Restated
Salary Continuation Agreement
 

 
benefits provided under this Agreement.  The Executive acknowledges that the
Bank’s sole liability regarding taxes is to forward any amounts withheld to the
appropriate taxing authorities.  The Bank shall satisfy all applicable reporting
requirements, including those under Section 409A.

 
9.5
Applicable Law.  This Agreement and all rights hereunder shall be governed by
the laws of the State of Idaho, except to the extent preempted by the laws of
the United States of America.

9.6
Unfunded Arrangement.  The Executive and the Beneficiary are general unsecured
creditors of the Bank for the distribution of benefits under this
Agreement.  The benefits represent the mere promise by the Bank to distribute
such benefits.  The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment by creditors.  Any insurance on the Executive's life
or other informal funding asset is a general asset of the Bank to which the
Executive and Beneficiary have no preferred or secured claim.  The Plan shall
not be funded in a manner inconsistent with the requirements of Section 409A.

9.7
Reorganization. The Bank shall not merge or consolidate into or with another
bank, or reorganize, or sell substantially all of its assets to another bank,
firm or person unless such succeeding or continuing bank, firm or person agrees
to assume and discharge the obligations of the Bank under this Agreement.  Upon
the occurrence of such an event, the term “Bank” as used in this Agreement shall
be deemed to refer to the successor or survivor entity.

9.8
Entire Agreement. This Agreement constitutes the entire agreement between the
Bank and the Executive as to the subject matter hereof.  No rights are granted
to the Executive by virtue of this Agreement other than those specifically set
forth herein.

9.9
Interpretation.  Wherever the fulfillment of the intent and purpose of this
Agreement requires and the context will permit, the use of the masculine gender
includes the feminine and use of the singular includes the plural.

9.10
Alternative Action.  In the event it shall become impossible for the Bank or the
Plan Administrator to perform any act required by this Agreement due to
regulatory or other constraints, the Bank or Plan Administrator may perform such
alternative act as most nearly carries out the intent and purpose of this
Agreement and is in the best interests of the Bank, provided that such
alternative act does not violate Section 409A (without the consent of the
Executive).

9.11
Headings.  Article and section headings are for convenient reference only and
shall not control or affect the meaning or construction of any provision herein.

9.12
Validity.  If any provision of this Agreement shall be illegal or invalid for
any reason, said

 

 
 

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HOME FEDERAL BANK
Third Amended and Restated
Salary Continuation Agreement
 

 
illegality or invalidity shall not affect the remaining parts hereof, but this
Agreement shall be construed and enforced as if such illegal or invalid
provision had never been included herein.

 
9.13
Notice.  Any notice or filing required or permitted to be given to the Bank or
Plan Administrator under this Agreement shall be sufficient if in writing and
hand-delivered or sent by registered or certified mail to the address below:

 
Home Federal Bank
P.O. Box 190
Nampa, ID  83653

 
Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.

Any notice or filing required or permitted to be given to the Executive under
this Agreement shall be sufficient if in writing and hand-delivered or sent by
mail to the last known address of the Executive.

9.14
Deduction Limitation on Benefit Payments.  If the Bank reasonably anticipates
that the Bank’s deduction with respect to any distribution under this Agreement
would be limited or eliminated by application of Code Section 162(m), then to
the extent deemed necessary by the Bank to ensure that the entire amount of any
distribution from this Agreement is deductible, the Bank may delay payment of
any amount that would otherwise be distributed under this Agreement.  The
delayed amounts shall be distributed to the Executive (or the Beneficiary in the
event of the Executive's death) at the earliest date the Bank reasonably
anticipates, should reasonably anticipate, that the deduction of the payment of
the amount will not be limited or eliminated by application of Code Section
162(m).

9.15
Compliance with Section 409A.  This Agreement shall be interpreted and
administered consistent with Section 409A.

IN WITNESS WHEREOF, the Executive and a duly authorized representative of the
Bank have signed this Agreement.
 

 

 EXECUTIVE:    BANK:      HOME FEDERAL BANK              ____________________  
 By: ___________________________________  STEVEN D. EMERSON    Title: President
and CEO      

 

 
 

--------------------------------------------------------------------------------

 
HOME FEDERAL BANK
Second Amended and Restated
Salary Continuation Agreement
Beneficiary Designation Form

{  }           New Designation
{  }           Change in Designation

I, STEVEN D. EMERSON, designate the following as Beneficiary under this
Agreement:

Primary:
___________________________________________________________
 
___________________________________________________________
 
 
_____%
 
_____%
 
Contingent:
___________________________________________________________
 
___________________________________________________________
 
 
_____%
 
_____%
 

 
Notes:

·  
Please PRINT CLEARLY or TYPE the names of the beneficiaries.

·  
To name a trust as Beneficiary, please provide the name of the trustee(s) and
the exact name and date of the trust agreement.

·  
To name your estate as Beneficiary, please write “Estate of [your name]”.

·  
Be aware that none of the contingent beneficiaries will receive anything unless
ALL of the primary beneficiaries predecease you.

I understand that I may change these beneficiary designations by delivering a
new written designation to the Plan Administrator, which shall be effective only
upon receipt and acknowledgment by the Plan Administrator prior to my death.  I
further understand that the designations will be automatically revoked if the
Beneficiary predeceases me, or, if I have named my spouse as Beneficiary and our
marriage is subsequently dissolved.

Name:                                        _______________________________

Signature:                                _______________________________                                                                                     Date:                      _______

SPOUSAL CONSENT (Required if spouse is not named Beneficiary and Plan
Administrator requests):

I consent to the beneficiary designation above, and acknowledge that if I am
named Beneficiary and our marriage is subsequently dissolved, the designation
will be automatically revoked.

Spouse Name:                         _______________________________

Signature:                                _______________________________                                                                                     Date:                      _________________

Received by the Plan Administrator this ________ day of ___________________,
200__

By:                          _________________________________

Title:                       _________________________________