hfb_8k0724ex107.htm


    Exhibit
      10.7

     

    


     

    AMENDED
      AND RESTATED EMPLOYMENT AGREEMENT

     

    This
      Amended and Restated Employment Agreement, is made and dated as of July 24,
      2007, by and among HomeFederal Bank, a state chartered commercial bank
      (“Employer”), Home Federal Bancorp, an Indiana corporation, which owns all of
      the capital stock of the Employer (the “Holding Company”), and Mark T. Gorski, a
      resident of Hamilton County, Indiana (“Employee”), but effective as of July 8,
      2005.

     

    This
      Agreement amends and restates the prior Employment Agreement among the Employer,
      the Holding Company and the Employee dated July 8, 2005 (the “Prior
      Agreement”).  It has been amended and restated for compliance with the
      final regulations under Section 409A of the Internal Revenue Code of 1986,
      as
      amended.

     

    WITNESSETH

    


    WHEREAS,
      Employee is employed by Employer as an Executive Vice President and Chief
      Financial Officer and has made valuable contributions to the profitability
      and
      financial strength of Employer;

     

    WHEREAS,
      Employer desires to encourage Employee to continue to make valuable
      contributions to Employer’s business operations and not to seek or accept
      employment elsewhere;

     

    WHEREAS,
      Employee desires to be assured of a secure minimum compensation from Employer
      for his services over a defined term;

     

    WHEREAS,
      Employer desires to assure the continued services of Employee on behalf of
      Employer on an objective and impartial basis and without distraction or conflict
      of interest in the event of an attempt by any person to obtain control of
      Employer or of the Holding Company.

     

    WHEREAS,
      Employer recognizes that when faced with a proposal for a change of control
      of
      Employer, Employee will have a significant role in helping the Board of
      Directors assess the options and advising the Board of Directors on what is
      in
      the best interests of Employer and its shareholders, and it is necessary for
      Employee to be able to provide this advice and counsel without being influenced
      by the uncertainties of his own situation;

     

    WHEREAS,
      Employer desires to provide fair and reasonable benefits to Employee on the
      terms and subject to the conditions set forth in this Agreement;

     

    WHEREAS,
      Employer desires reasonable protection of its confidential business and customer
      information which it has developed over the years at substantial expense and
      assurance that Employee will not compete with Employer for a reasonable period
      of time after termination of his employment with Employer, except as otherwise
      provided herein.

     

    NOW,
      THEREFORE, in consideration of these premises, the mutual covenants and
      undertakings herein contained and the continued employment of Employee by
      Employer as its Executive Vice President and Chief Financial Officer, Employer
      and Employee, each intending to be legally bound, covenant and agree as
      follows:

     


    
      
        
        

      

      
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    1.           Upon
      the terms and subject to the conditions set forth in this Agreement, Employer
      employs Employee as Executive Vice President and Chief Financial Officer of
      Employer, and Employee accepts such employment.

     

    2.           Employee
      agrees to serve as Executive Vice President and Chief Financial Officer of
      Employer and to perform such duties in that office as may reasonably be assigned
      to him by Employer’s Board of Directors; provided, however that such duties
      shall be performed in or from the offices of Employer currently located at
      Columbus, Indiana and Indianapolis, Indiana.  Employee shall not be
      required to be absent from the location of the offices of Employer at which
      he
      works on travel status or otherwise more than 45 days in any calendar
      year.  Although while employed by Employer, Employee shall devote
      substantially all his business time and efforts to Employer’s business and shall
      not engage in any other related business, Employee may use his discretion in
      fixing his hours and schedule of work consistent with the proper discharge
      of
      his duties.

     

    3.           The
      term of this Agreement shall begin on July 8, 2005 (the “Effective Date”) and
      shall end on the date which is three years following such date; provided,
      however, that such term shall be extended for an additional year on each
      anniversary of the Effective Date if Employer’s Board of Directors determines by
      resolution with respect to each such annual extension  that the
      performance of the Employer has met the Board’s requirements and standards and
      that this Agreement should be extended for another
      year.  Notwithstanding the foregoing, if either party hereto gives
      written notice to the other party not to so extend prior to such anniversary,
      or
      if the Employer’s Board  of Directors does not adopt the resolution
      authorizing annual extension of the contract with respect to any annual period
      during the term of this Agreement, no further automatic extension shall occur
      and the term of this Agreement shall end two years subsequent to the anniversary
      as of which the notice not to or failure to extend for an additional year occurs
      (such term including any extension thereof shall herein be referred to as the
      “Term”).  Notwithstanding the foregoing, this Agreement shall
      automatically terminate (and the Term of this Agreement shall thereupon end)
      without notice when Employee attains 65 years of age.

     

    4.           Employee
      shall receive an annual salary of $193,000 effective April 1, 2007 (“Base
      Compensation”), payable at regular intervals in accordance with Employer’s
      normal payroll practices now or hereafter in effect.  Employer may
      consider and declare from time to time increases in the salary it pays Employee
      and thereby increases in his Base Compensation.  Prior to a Change of
      Control, Employer may also declare decreases in the salary it pays Employee
      if
      the operating results of Employer are significantly less favorable than those
      for the fiscal year ending December 31, 2004, and Employer makes similar
      decreases in the salary it pays to other executive officers of Employer. After
      a
      Change in Control, Employer shall consider and declare salary increases based
      upon the following standards:

     

    Inflation;

     

    Adjustments
      to the salaries of other senior management personnel; and

     

    Past
      performance of Employee and the contribution which Employee makes to the
      business and profits of Employer during the Term.

     


    
      
        
        

      

      
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    Any
      and
      all increases or decreases in Employee’s salary pursuant to this section shall
      cause the level of Base Compensation to be increased or decreased by the amount
      of each such increase or decrease for purposes of this Agreement.  The
      increased or decreased level of Base Compensation as provided in this section
      shall become the level of Base Compensation for the remainder of the Term of
      this Agreement until there is a further increase or decrease in Base
      Compensation as provided herein.

     

    5.           So
      long as Employee is employed by Employer pursuant to this Agreement, he shall
      be
      included as a participant in all present and future employee benefit,
      retirement, and compensation plans generally available to employees of Employer,
      consistent with his Base Compensation and his position as an Executive Vice
      President of Employer, including, without limitation, Employer’s Pension Plan,
      401(k) Plan, Stock Option Plan, Long Term Incentive Plan, and hospitalization,
      major medical, disability and group life insurance plans, each of which Employer
      agrees to continue in effect on terms no less favorable than those currently
      in
      effect as of the date hereof (as permitted by law) during the Term of this
      Agreement unless prior to a Change of Control the operating results of Employer
      are significantly less favorable than those for the fiscal year ended December
      31, 2004, and unless (either before or after a Change of Control) changes in
      the
      accounting or tax treatment of such plans would adversely affect Employer’s
      operating results or financial condition in a material way, and the Board of
      Directors of Employer concludes that modifications to such plans need to be
      made
      to avoid such adverse effects.

     

    6.           So
      long as Employee is employed by Employer pursuant to this Agreement, Employee
      shall receive reimbursement from Employer for all reasonable business expenses
      incurred in the course of his employment by Employer, upon submission to
      Employer of written vouchers and statements for reimbursement. So long as
      Employee is employed by Employer pursuant to the terms of this Agreement,
      Employer shall continue in effect reasonable vacation policies applicable to
      Employee.

     

    7.           Subject
      to the respective continuing obligations of the parties, including but not
      limited to those set forth in subsections 9(A) and 9(B) hereof, Employee’s
      employment by Employer may be terminated prior to the expiration of the Term
      of
      this Agreement as follows:

     

    
      	
               

            	
              (A)

            	
              Employer,
                by action of its Board of Directors and upon written notice to Employee,
                may terminate Employee’s employment with Employer immediately for
                cause.  For purposes of this subsection 7(A), “cause” shall be
                defined as (i) personal dishonesty, (ii) incompetence, (iii) willful
                misconduct, (iv) breach of fiduciary duty involving personal profit,
                (v)
                intentional failure to perform stated duties, (vi) willful violation
                of
                any law, rule, or regulation (other than traffic violations or similar
                offenses) or final cease-and-desist order, or (vii) any material
                breach of
                any term, condition or covenant of this
                Agreement.

            


    

     

    
      	
               

            	
              (B)

            	
              Employer,
                by action of its Board of Directors, may terminate Employee’s employment
                with Employer without cause at any
                time.

            


    

     

    
      	
               

            	
              (C)

            	
              Employee,
                by written notice to Employer, may terminate his employment with
                Employer
                immediately for cause. For purposes of this subsection 7(C),
                “cause”

            


    

     


    
      
        
        

      

      
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    shall
      be
      defined as (i) any action by Employer’s Board of Directors to remove the
      Employee as an Executive Vice President of Employer, except where the Employer’s
      Board of Directors properly acts to remove Employee from such office for “cause”
as defined in subsection 7(A) hereof, (ii) any action by Employer’s Board of
      Directors to materially limit, increase, or modify Employee’s duties and/or
      authority as an Executive Vice President of Employer (including his authority,
      subject to corporate controls no more restrictive than those in effect on the
      date hereof, to hire and discharge employees who are not bona fide officers
      of
      Employer), (iii) any failure of Employer to obtain the assumption of the
      obligation to perform this Agreement by any successor or the reaffirmation
      of
      such obligation by Employer, as contemplated in section 19 hereof; or (iv)
      any
      intentional breach by Employer of a term, condition or covenant of this
      Agreement.

     

    
      	
               

            	
              (D)

            	
              Employee,
                upon thirty (30) days written notice to Employer, may terminate his
                employment with Employer without
                cause.

            


    

     

    
      	
               

            	
              (E)

            	
              Employee’s
                employment with Employer shall terminate in the event of Employee’s death
                or disability.  For purposes hereof, “disability” shall be
                defined as Employee’s inability by reason of illness or other physical or
                mental incapacity to perform the duties required by his employment
                for any
                consecutive One Hundred Eighty (180) day period, provided that notice
                of
                any termination by Employer because of Employee’s “disability” shall have
                been given to Employee prior to the full resumption by him of the
                performance of such duties.

            


    

     

    8.           In
      the event of termination of Employee’s employment with Employer pursuant to
      section 7 hereof other than simultaneously with or following a Change of Control
      (as hereinafter defined), compensation shall continue to be paid by Employer
      to
      Employee as follows:

     

    
      	
               

            	
              (A)

            	
              In
                the event of termination pursuant to subsection 7(A) or 7(D), compensation
                provided for herein (including Base Compensation) shall continue
                to be
                paid, and Employee shall continue to participate in the employee
                benefit,
                retirement, and compensation plans and other perquisites as provided
                in
                sections 5 and 6 hereof, through the date of termination specified
                in the
                notice of termination.  Any benefits payable under insurance,
                health, retirement and bonus plans as a result of Employee’s participation
                in such plans through such date shall be paid when due under those
                plans.  The date of termination specified in any notice of
                termination pursuant to Subsection 7(A) shall be no later than the
                last
                business day of the month in which such notice is provided to
                Employee.

            


    

     

    
      	
               

            	
              (B)

            	
              In
                the event of termination pursuant to subsection 7(B) or 7(C), compensation
                provided for herein (including Base Compensation) shall continue
                to be
                paid, and Employee shall continue to participate in the employee
                benefit,
                retirement, and compensation plans and other perquisites as provided
                in
                Sections 5 and 6 hereof, through the date of termination specified
                in the
                notice of termination.  Any benefits payable under insurance,
                health, retirement and bonus plans as a result of Employee’s participation
                in such plans through such date shall be paid when
                due

            


    

     


    
      
        
        

      

      
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    under
      those plans.  In addition, Employee shall be entitled to continue to
      receive from Employer his Base Compensation at the rates in effect at the time
      of termination for the remaining Term of the Agreement.  In addition,
      during such periods, Employer will maintain in full force and effect for the
      continued benefit of Employee each employee welfare benefit plan and each
      employee pension benefit plan (as such terms are defined in the Employee
      Retirement Income Security Act of 1974, as  amended) in which Employee
      was entitled to participate immediately prior to the date of his termination,
      unless an essentially equivalent and no less favorable benefit is provided
      by a
      subsequent employer of Employee.  If the terms of any employee welfare
      benefit plan or employee pension benefit plan of Employer do not permit
      continued participation by Employee, Employer will arrange to provide to
      Employee a benefit substantially similar to, and no less favorable than, the
      benefit he was entitled to receive under such plan at the end of the period
      of
      coverage.

     

    
      	
               

            	
              (C)

            	
              In
                the event of termination pursuant to subsection 7(E) (other than
                simultaneously with or following a Change in Control (as hereinafter
                defined), compensation provided for herein (including Base Compensation)
                shall continue to be paid, and Employee shall continue to participate
                in
                the employee benefit, retirement, and compensation plans and other
                perquisites as provided in sections 5 and 6 hereof, (i) in the event
                of
                Employee’s death, through the date of death, or (ii) in the event of
                Employee’s disability, through the date of proper notice of disability as
                required by subsection 7(E).  Any benefits payable under
                insurance, health, retirement and bonus plans as a result of Employer’s
                participation in such plans through such date shall be paid when
                due under
                those plans.

            


    

     

    
      	
               

            	
              (D)

            	
              In
                the event there is a Change in Control during the Term, Employer
                will
                permit Employee or his personal representative(s) or heirs to require
                Employer, upon written request, as of the effective date of the Change
                in
                Control, to purchase all outstanding stock options previously granted
                to
                Employee under any stock option plan of Employer or any Holding Company
                of
                Employer then in effect whether or not such options are then exercisable
                or have terminated at a cash purchase price equal to the amount by
                which
                the aggregate “fair market value” of the shares subject to such options
                exceeds the aggregate option price for such shares.  For
                purposes of this Agreement, the term “fair market value” shall mean the
                higher of (1) the average of the highest asked prices for Employer
                or
                Holding Company shares in the over-the-counter market as reported
                on the
                NASDAQ system if the shares are traded on such system for the 30
                business
                days preceding such termination, or (2) the average per share price
                actually paid for the most highly priced 1% of the Employer or Holding
                Company shares acquired in connection with the Change of Control
                by any
                person or group acquiring such
                control.

            


    

     

    
      	
               

            	
              (E)

            	
              In
                the event there is a Change of Control during the Term and without
                regard
                to whether the Employee’s employment is terminated in connection with the
                Change of Control, this Agreement shall terminate upon payment to
                the
                Employee of a lump sum payment equal to three (3) times his Base
                Compensation, any amounts owed to Employee under Section 8(D), and
                the
                continued payment to Employee

            


    

     


    
      
        
        

      

      
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    through
      the date of termination of this Agreement of all compensation and benefits
      provided for in Sections 5 and 6 hereof. Employer shall pay to Employee such
      amounts no later than the effective date of the Change in
      Control.  For purposes of this Agreement, a “Change of Control” shall
      mean any of the following:

     

    
      	
               

            	
              (1)

            	
              a
                change in the ownership of the Employer or the Holding Company, which
                shall occur on the date that any one person, or more than one person
                acting as a group, acquires ownership of stock of the Employer or
                the
                Holding Company that, together with stock held by such person or
                group,
                constitutes more than fifty percent (50%) of the total fair market
                value
                or total voting power of the stock of the Employer or the Holding
                Company.  However, if any one person, or more than one person
                acting as a group, is considered to own more than fifty percent (50%)
                of
                the total fair market value or total voting power of the stock of
                the
                Employer or the Holding Company, the acquisition of additional stock
                by
                the same person or persons is not considered to cause a change in
                the
                ownership of the Employer or the Holding Company (or to cause a change
                in
                the effective control of the Employer or the Holding Company (within
                the
                meaning of subsection (2)).  An increase in the percentage of
                stock owned by any one person, or persons acting as a group, as a
                result
                of a transaction in which the Employer or the Holding Company acquires
                its
                stock in exchange for property will be treated as an acquisition
                of stock
                for purposes of this subsection.  This subsection applies only
                when there is a transfer of stock of the Employer or the Holding
                Company
                (or issuance of stock of the Employer or the Holding Company) and
                stock in
                the Employer or the Holding Company remains outstanding after the
                transaction.

            


    

     

    
      	
               

            	
              (2)

            	
              a
                change in the effective control of the Employer or the Holding Company,
                which shall occur only on either of the following
                dates:

            


    

     

    
      	
               

            	
              (i)

            	
              the
                date any one person, or more than one person acting as a group acquires
                (or has acquired during the 12 month period ending on the date of
                the most
                recent acquisition by such person or persons) ownership of stock
                of the
                Employer or the Holding Company possessing thirty percent (30%) or
                more of
                the total voting power of the stock of the Employer or the Holding
                Company.

            


    

     

    
      	
               

            	
              (ii)

            	
              the
                date a majority of members of the Holding Company’s board of directors is
                replaced during any 12 month period by directors whose appointment
                or
                election is not endorsed by a majority of the members of the Holding
                Company’s board of directors before the date of the appointment or
                election; provided, however, that this provision shall not apply
                if
                another corporation is a majority shareholder of the Holding
                Company.

            


    

     


    
      
        
        

      

      
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                If
                  any one person, or more than one person acting as a group, is considered
                  to effectively control the Employer or the Holding Company, the
                  acquisition of additional control of the Employer or the Holding
                  Company
                  by the same person or persons is not considered to cause a change
                  in the
                  effective control of the Employer or the Holding Company (or to
                  cause a
                  change in the ownership of the Employer or the Holding Company
                  within the
                  meaning of subsection (1) of this
                  section).

              


      

       

    

    
      	
               

            	
              (3)

            	
              a
                change in the ownership of a substantial portion of the Employer’s assets,
                which shall occur on the date that any one person, or more than one
                person
                acting as a group, acquires (or has acquired during the 12 month
                period
                ending on the date of the most recent acquisition by such person
                or
                persons) assets from the Employer that have a total gross fair market
                value equal to or more than forty percent (40%) of the total gross
                fair
                market value of all of the assets of the Employer immediately before
                such
                acquisition or acquisitions.  For this purpose, gross fair
                market value means the value of the assets of the Employer, or the
                value
                of the assets being disposed of, determined without regard to any
                liabilities associated with such assets.  No change in control
                event occurs under this subsection (3) when there is a transfer to
                an
                entity that is controlled by the shareholders of the Employer immediately
                after the transfer.  A transfer of assets by the Employer is not
                treated as a change in the ownership of such assets if the assets
                are
                transferred to –

            


    

     

    
      	
               

            	
              (i)

            	
              a
                shareholder of the Employer (immediately before the asset transfer)
                in
                exchange for or with respect to its
                stock;

            


    

     

    
      	
               

            	
              (ii)

            	
              an
                entity, 50 percent or more of the total value or voting power of
                which is
                owned, directly or indirectly, by the
                Employer.

            


    

     

    
      	
               

            	
              (iii)

            	
              a
                person, or more than one person acting as a group, that owns, directly
                or
                indirectly, 50 percent or more of the total value or voting power
                of all
                the outstanding stock of the Employer;
                or

            


    

     

    
      	
               

            	
              (iv)

            	
              an
                entity, at least 50 percent of the total value or voting power of
                which is
                owned, directly or indirectly, by a person described in paragraph
                (iii).

            


    

     

    For
      purposes of this subsection (3) and except as otherwise provided in paragraph
      (i) above, a person’s status is determined immediately after the transfer of the
      assets.  For purposes of this section, persons will not be considered
      to be acting as a group solely because they purchase or own stock of the same
      corporation at the same time, or as a result of the same public
      offering.  However, persons will be considered to be acting as a group
      if they are owners of a corporation that enters into a merger, consolidation,
      purchase or acquisition of stock, or similar business transaction with the
      Employer.  If a person, including an entity, owns

     


    
      
        
        

      

      
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    stock
      in
      both corporations that enter into a merger, consolidation, purchase or
      acquisition of stock, or similar transaction, such shareholder is considered
      to
      be acting as a group with other shareholders only with respect to the ownership
      in that corporation before the transaction giving rise to the change and not
      with respect to the ownership interest in the other corporation.

     

    
      	
               

            	
              (F)

            	
              To
                the extent the Employee is a “specified employee” (as defined below),
                payments due to the Employee under this Section 8 (other than those
                provided for in Sections 8(D) and 8(E)) shall begin no sooner than
                six
                months after the Employee’s separation from service; provided, however,
                that any payments not made during the six month period described
                in this
                Section 8(F) shall be made in a single lump sum as soon as
                administratively practicable after the expiration of such six month
                period; provided, further, that the six month delay required under
                this
                Section 8(F) shall not apply to the portion of any payment resulting
                from the Employee’s “involuntary separation from service” (as defined in
                Treasury Reg. Section 1.409A-1(n) and including a “separation from
                service for good reason,” as defined in Treasury Reg.
                Section 1.409A-1(n)(2)) that (i) is payable no later than the last
                day of the second year following the year in which the separation
                from
                service occurs, and (ii) does not exceed two times the lesser of
                (1) the
                Employee’s annualized compensation for the year prior to the year in which
                the separation from service occurs, or (2) the dollar limit described
                in
                Section 401(a)(17) of the
                Code.

            


    

     

    To
      the
      extent any life, health, disability or other welfare benefit coverage provided
      to the Employee under this Section 8 would be taxable to the Employee, the
      taxable amount of such coverage shall not exceed the applicable dollar amount
      under Section 402(g)(1)(B) of the Code determined as of the year in which
      the Employee’s separation from service occurs.  The intent of the
      foregoing sentence is to permit the Holding Company and the Employer to treat
      the provision of such benefits as a limited payment under Treasury Reg.
      Section 1.409A-1(a)(9)(v)(D) so as to avoid application of the six month
      delay rule for specified employees.  For purposes of this
      Section 8, any reference to severance of employment or termination of
      employment shall mean a “separation from service” as defined in Treasury Reg.
      Section 1.409A-1(h).

     

    For
      purposes of this Agreement, the term “specified employee” shall have the meaning
      set forth in Treasury Reg. Section 1.409A-1(i) and shall include, without
      limitation, (1) an officer of the Employer or the Holding Company having annual
      compensation greater than $130,000 (as adjusted for inflation under the Code),
      (2) a five percent owner of the Employer or the Holding Company, or (3) a one
      percent owner of the Employer or the Holding Company having annual compensation
      of more than $150,000.  The determination of whether the Employee is a
“specified employee” shall be made by the Employer in good faith applying the
      applicable Treasury regulations.

     


    
      
        
        

      

      
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    9.           In
      order to induce Employer to enter into this Agreement, Employee hereby agrees
      as
      follows:

     

    
      	
               

            	
              (A)

            	
              While
                Employee is employed by Employer and for a period of three years
                after
                termination of such employment for reasons other than those set forth
                in
                subsections 7(B) or (C) of this Agreement, Employee shall not divulge
                or
                furnish any trade secrets (as defined in IND. CODE § 24-2-3-2) of
                Employer or any confidential information acquired by him while employed
                by
                Employer concerning the policies, plans, procedures or customers
                of
                Employer to any person, firm or corporation, other than Employer
                or upon
                its written request, or use any such trade secret or confidential
                information directly or indirectly for Employee’s own benefit or for the
                benefit of any person, firm or corporation other than Employer, since
                such
                trade secrets and confidential information are confidential and shall
                at
                all times remain the property of
                Employer.

            


    

     

    
      	
               

            	
              (B)

            	
              If
                Employee’s employment by Employer is terminated for reasons other than
                those set forth in subsections 7(B) or (C) of this Agreement, Employee
                will turn over immediately thereafter to Employer all business
                correspondence, letters, papers, reports, customers’ lists, financial
                statements, credit reports or other confidential information or documents
                of Employer or its affiliates in the possession or control of Employee,
                all of which writings are and will continue to be the sole and exclusive
                property of Employer or its
                affiliates.

            


    

     

    If
      Employee’s employment by Employer is terminated during the Term of this
      Agreement for reasons set forth in subsections 7(B) or (C) of this Agreement,
      Employee shall have no obligations to Employer with respect to trade secrets
      or
      confidential information under this section 9.

     

    10.           Any
      termination of Employee’s employment with Employer as contemplated by section 7
      hereof, except in the circumstances of Employee’s death, shall be communicated
      by written “Notice of Termination” by the terminating party to the
      other  party hereto.  Any “Notice of Termination” pursuant
      to subsections 7(A), 7(C) or 7(E) shall indicate the specific provisions of
      this
      Agreement relied upon and shall set forth in reasonable detail the facts and
      circumstances claimed to provide a basis for such termination.

     

    11.           If
      Employee is suspended and/or temporarily prohibited from participating in the
      conduct of Employer’s affairs by a notice served under section 8(e)(3) or (g)(1)
      of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e)(3) and (g)(1)),
      Employer’s obligations under this Agreement shall be suspended as of the date of
      service, unless stayed by appropriate proceedings.  If the charges in
      the notice are dismissed, Employer may in its discretion (i) pay Employee all
      or
      part of the compensation withheld while its obligations under this Agreement
      were suspended and (ii) reinstate (in whole or in part) any of its obligations
      which were suspended.

     

    12.           If
      Employee is removed and/or permanently prohibited from participating in the
      conduct of Employer’s affairs by an order issued under section 8(e)(4) or (g)(1)
      of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e)(4) or (g)(1)),
      all obligations of Employer under this

     


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    Agreement
      shall terminate as of the effective date of the order, but vested rights of
      the
      parties to the Agreement shall not be affected.  If Employer is in
      default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act),
      all obligations under this Agreement shall terminate as of the date of default,
      but this provision shall not affect any vested rights of Employer or
      Employee.

     

    13.           All
      obligations under this Agreement may be terminated except to the extent
      determined that the continuation of the Agreement is necessary for the continued
      operation of Employer:  (i) by the Director of the Indiana Department
      of Financial Institutions, or his designee (the “Director”), at the time the
      Federal Deposit Insurance Corporation enters into an agreement to provide
      assistance to or on behalf of Employer under the authority contained in Section
      13(c) of the Federal Deposit Insurance Act; or (ii) by the Director at the
      time
      the Director approves a supervisory merger to resolve problems related to
      operation of Employer or when Employer is determined by the Director to be
      in an
      unsafe and unsound condition.  Any rights of the parties that have
      already vested, however, shall not be affected by such action.

     

    14.           Anything
      in this Agreement to the contrary notwithstanding, in the event that the
      Employer’s independent public accountants determine that any payment by the
      Employer to or for the benefit of the Employee, whether paid or payable pursuant
      to the terms of this Agreement, would be non-deductible by the Employer for
      federal income tax purposes because of Section 280G of the Internal Revenue
      Code
      of 1986, as amended (the “Code”), then the amount payable to or for the benefit
      of the Employee pursuant to this Agreement shall be reduced (but not below
      zero)
      to the Reduced Amount.  For purposes of this section 14, the “Reduced
      Amount” shall be the amount that maximizes the amount payable without causing
      the payment to be non-deductible by the Employer because of Section 280G of
      the
      Code.  In the event the Employee is entitled to receive payments
      following a Change in Control under a Supplemental Retirement Agreement with
      the
      Employer which payments, together with the amounts payable to the Employee
      under
      this Agreement would result in a tax under §4999 of the Code, the amounts
      payable to the Employee pursuant to this Agreement shall be reduced first,
      before any reduction is made in payments under the Supplemental Retirement
      Agreement, to the extent necessary to avoid a tax imposed under §4999 of the
      Code.

     

    15.           If
      a dispute arises regarding the termination of Employee pursuant to section
      7
      hereof or as to the interpretation or enforcement of this Agreement and Employee
      obtains a final judgment in his favor in a court of competent jurisdiction
      or
      his claim is settled by Employer prior to the rendering of a judgment by such
      a
      court, all reasonable legal fees and expenses incurred by Employee in contesting
      or disputing any such termination or seeking to obtain or enforce any right
      or
      benefit provided for in this Agreement or otherwise pursuing his claim shall
      be
      paid by Employer, to the extent permitted by law.

     

    16.           Should
      Employee die after termination of his employment with Employer while any amounts
      are payable to him hereunder, this Agreement shall inure to the benefit of
      and
      be enforceable by Employee’s executors, administrators, heirs, distributees,
      devisees and legatees and all amounts payable hereunder shall be paid in
      accordance with the terms of this Agreement to Employee’s devisee, legatee or
      other designee or, if there is no such designee, to his estate.

     

    17.           For
      purposes of this Agreement, notices and all other communications provided for
      herein shall be in writing and shall be deemed to have been given when delivered
      or mailed

     


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    by
      United
      States registered or certified mail, return receipt requested, postage prepaid,
      addressed as follows:

     

    
      	 	
              If
                to Employee:

            	
              Mark
                T. Gorski

            
	 	 	
              12422
                Anchorage Way

            
	 	 	
              Fishers,
                IN  46037

            
	 	 	 
	 	
              If
                to Employer:

            	
              HomeFederal
                Bank

            
	 	 	
              Attn:
                CEO

            
	 	 	
              501
                Washington Street

            
	 	 	
              Columbus,
                IN  47201

            


    

    


    or
      to
      such address as either party hereto may have furnished to the other party in
      writing in accordance herewith, except that notices of change of address shall
      be effective only upon receipt.

     

    18.           The
      validity, interpretation, and performance of this Agreement shall be governed
      by
      the laws of the State of Indiana.

     

    19.           Employer
      shall require any successor (whether direct or indirect, by purchase, merger,
      consolidation or otherwise) to all or substantially all of the business or
      assets of Employer, by agreement in form and substance satisfactory to Employee
      to expressly assume and agree to perform this Agreement in the same manner
      and
      same extent that Employer would be required to perform it if no such succession
      had taken place.  Failure of Employer to obtain such agreement prior
      to the effectiveness of any such succession shall be a material intentional
      breach of this Agreement and shall entitle Employee to terminate his employment
      with Employer pursuant to subsection 7(C) hereof. As used in this Agreement,
      “Employer” shall mean Employer as hereinbefore defined and any successor to its
      business or assets as aforesaid.

     

    20.           No
      provision of this Agreement may be modified, waived or discharged unless such
      waiver, modification or discharge is agreed to in writing signed by Employee
      and
      Employer.  No waiver by either party hereto at any time of any breach
      by the other party hereto of, or compliance with, any condition or provision
      of
      this Agreement to be performed by such other party shall be deemed a waiver
      of
      dissimilar provisions or conditions at the same or any prior subsequent
      time.  No agreements or representation, oral or otherwise, express or
      implied, with respect to the subject matter hereof have been made by either
      party which are not set forth expressly in this Agreement.

     

    21.           The
      invalidity or unenforceability of any provisions of this Agreement shall not
      affect the validity or enforceability of any other provisions of this Agreement
      which shall remain in full force and effect.

     

    22.           This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original but all of which together shall constitute one and the same
      agreement.

     

    23.           This
      Agreement is personal in nature and neither party hereto shall, without consent
      of the other, assign or transfer this Agreement or any rights or obligations
      hereunder

     


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    except
      as
      provided in section 16 and section 19 above.  Without limiting the
      foregoing, Employee’s right to receive compensation hereunder shall not be
      assignable or transferable, whether by pledge, creation of a security interest
      or otherwise, other than a transfer by his will or by the laws of descent or
      distribution as set forth in section 16 hereof, and in the event of any
      attempted assignment or transfer contrary to this paragraph, Employer shall
      have
      no liability to pay any amounts so attempted to be assigned or
      transferred.

     

    24.           The
      Holding Company agrees that if it shall be determined for any reason that any
      obligation on the part of Employer to continue to make any payments due under
      this Agreement to Employee or to satisfy any other obligation under this
      Agreement for the benefit of Employee is unenforceable for any reason, the
      Holding Company agrees to honor the terms of this Agreement and continue to
      make
      any such payments due hereunder to Employee or to satisfy any such obligation
      pursuant to the terms of this Agreement, as though it were the Employer
      hereunder.

     

    IN
      WITNESS WHEREOF, the parties have caused this Amended and Restated Employment
      Agreement to be executed and delivered as of the day and year first above set
      forth.

     

    


    
      	 	
              HOMEFEDERAL
                BANK

            
	 	 	 
	 	 	 
	 	
              By:

            	/s/
              John K. Keach, Jr.
	 	 	
              John
                K. Keach, Jr., President and Chief Executive Officer

            
	 	 
	 	
              “Employer”

            
	 	 	 
	 	 	 
	 	 	 
	 	/s/
              Mark T. Gorski
	 	
              Mark
                T. Gorski

            
	 	 	 
	 	
              “Employee”

            
	 	 	 
	 	
              HOME
                FEDERAL BANCORP

            
	 	 	 
	 	 	 
	 	
              By:

            	/s/
              John K. Keach, Jr.
	 	 	
              John
                K. Keach, Jr., President and Chief Executive Officer

            
	 	 	 
	 	
              “Holding
                Company”

            


    

    
 

     

     

    12