hfb_8k0724ex102.htm


     

    Exhibit
      10.2


    FIRST
      AMENDMENT

    TO
      THE

    HOMEFEDERAL
      BANK

    DIRECTOR
      DEFERRED FEE AGREEMENT

    DATED
      NOVEMBER 22, 2005

    FOR

    HAROLD
      FORCE

    


    


    THIS
      FIRST AMENDMENT is adopted this 24
      day of July, 2007, effective as of January 1, 2006, by and between HOMEFEDERAL
      BANK, a state-chartered bank located in Columbus, Indiana (the “Bank”), and
      Harold Force (the “Director”).

    


    The
      Bank and Director executed the
      DIRECTOR DEFERRED FEE AGREEMENT on November 22, 2005 effective as of January
      1,
      2006 (the “Agreement”).

    


    The
      undersigned hereby amend the
      Agreement for the purpose of bringing the Agreement into compliance with Section
      409A of the Internal Revenue Code.  Therefore, the following changes
      shall be made:

    


    Section
      1.18 of the Agreement shall be
      deleted in its entirety and replaced by the following:

    


    
      	
              1.18

            	
              “Separation
                from
                Service”
means
                the termination of the Director’s service 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 Director’s service.  A Separation from
                Service will be considered to have occurred if the Bank and the Director
                reasonably anticipate that (1)
                the Director will not perform
                any services for the Bank after the Director’s termination; or
                (2)
                the Director will continue to
                provide services for the Bank following such termination at an annual
                rate
                that is less than fifty percent (50%) of the bona fide services that
                were
                provided during the twelve (12) months immediately preceding the
                termination.

            


    

    


    The
      following Section 1.18a shall be
      added to the Agreement immediately following Section 1.18:

    


    
      	
              1.18a

            	
              “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 or any entity required to be aggregated with the Bank under
                Section 414(b) and 414(c) of the Code is publicly traded on an established
                securities market or otherwise.

            


    

    


    The
      following Sections 4.4 and 4.5
      shall be added to the Agreement immediately following Section
      4.3:

    


    
      	
              4.4

            	
              Distributions
                Upon Income Inclusion Under Section 409A of the Code.  Upon
                the inclusion of any amount into the Director’s income as a result of the
                failure of this non-

            


    

     

     

     

    
      
        
        

      

      
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                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
                  Deferral Account balance, a distribution shall be made as soon
                  as is
                  administratively practicable following the discovery of the plan
                  failure.

              


      

       

    

    
      	
              4.5

            	
              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)  

            	
              may
                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 4.1, be made at least twelve
                (12)
                months prior to the first scheduled
                distribution;

            


    

    
      	
              (c)  

            	
              must,
                for benefits distributable under Section 4.1 and 4.2, 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

            


    

    
      	
              (d)  

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

            


    

    


    Article
      10 of the Agreement shall be deleted in its entirety and replaced by the
      following:

    


    Article
      10

    Amendments
      and Termination

    


    
      	
              10.1

            	
              Amendments.  This
                Agreement may be amended only by a written agreement signed by the
                Bank
                and the Director.  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.

            


    

    


    
      	
              10.2

            	
              Plan
                Termination Generally.  The Bank and
                Director may terminate this Agreement at any
                time.  Except as provided in Section 10.3, the termination of
                this Agreement shall not cause a distribution of benefits under this
                Agreement.  Rather, after such termination benefit distributions
                will be made at the earliest distribution event permitted under Article
                4
                or Article 5.

            


    

    


    
      	
              10.3

            	
              Plan
                Terminations Under Section 409A.  Notwithstanding anything
                to the contrary in Section 10.2, if this Agreement is terminated
                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 of the Corporation,
                or in
                the ownership of a substantial portion of the assets of the Bank
                or the
                Corporation as described in Section 409A(2)(A)(v) of the
                Code, provided that the termination of this
                Agreement was affected through an irrevocable action taken by the
                Bank and
                provided further that all distributions are made no later than twelve
                (12)
                months following such termination of the Agreement and that all the
                Bank's arrangements which are substantially similar to the Agreement
                are
                terminated so the Director

            


    

     

     

    
      
        
        

      

      
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                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 the termination of the
                  arrangements;

              


      

      
        	
                 

              	
                (b)

              	
                Upon
                  the Bank’s dissolution or with the approval of a bankruptcy court provided
                  that the amounts deferred under the Agreement are included in the
                  Director's gross income in the latest of (i) the calendar year
                  in which
                  the 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 account balance plans (as
                  referenced in Section 409A of the Code or the regulations thereunder),
                  provided that all distributions are made no earlier than twelve
                  (12)
                  months and no later than twenty-four (24) months following such
                  termination, provided further that the termination of this Agreement
                  does
                  not occur proximate to a downturn in the financial health of the
                  Bank and
                  provided further that the Bank does not adopt any new account balance
                  plans for a minimum of three (3) years following the date of such
                  termination;

              


      

       

    

    then
      the
      Bank may distribute the Deferral Account balance, determined as of the date
      of
      the termination of the Agreement, to the Director in a lump sum subject to
      the
      above terms. 

    


    Section
      11.10 of the Agreement shall be deleted in its entirety and replaced by the
      following:

    


    
      	
              11.10

            	
              Alternative
                Action.  In the event it shall become impossible for the
                Bank or the Plan Administrator to perform any act required by the
                Agreement, the Bank or Plan Administrator may in its discretion 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.  Any
                alternative acts shall be restricted to actions which do not violate
                Section 409A of the Code.

            


    

    


    The
      following Sections 11.14 shall be
      added to the Agreement immediately following Section 11.13: 

    


    
      	
              11.14

            	
              Compliance
                with Section 409A.  This Agreement shall at all times be
                administered and the provisions of this Agreement shall be interpreted
                consistent with the requirements of Section 409A of the Code and
                any and
                all regulations thereunder, including such regulations as may be
                promulgated after the Effective Date of this
                Agreement.

            


    

    



    
      
        
        

      

      
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    IN
      WITNESS OF THE
      ABOVE, the Bank and the Director hereby consent to this First
      Amendment.

    


    


    
      	
              Director:

            	 	
              HOMEFEDERAL
                BANK

            
	 	 	 	 
	 	 	 	 
	/s/
              Harold Force	 	
              By

            	/s/
              John K. Keach, Jr.
	
              Harold
                Force

            	 	
              Title

            	Chairman/CEO


    

    
 

     

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