hfb_8k0724ex101.htm


    Exhibit
      10.1

     

    

      FIRST
        AMENDMENT

      TO
        THE

      HOMEFEDERAL
        BANK

      DIRECTOR
        DEFERRED FEE AGREEMENT

      DATED
        NOVEMBER 22, 2005

      FOR

      JOHN
        T. BEATTY

      


      


      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 John
        T. Beatty (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) or 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 effected 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/
                John T. Beatty	 	
                By

              	/s/
                John K. Keach, Jr.
	
                John
                  T. Beatty

              	 	
                Title

              	Chairman/CEO


      

      


       

      
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