THIRD AMENDED EMPLOYMENT
AGREEMENT


THIS THIRD AMENDED EMPLOYMENT AGREEMENT
(the “Agreement”) is made and entered into as of this 21st day of April, 2009 by
and includes the amendments made on December 30, 2008, on January 30, 2008 and
on December 21, 2007, between Home Federal Bank (the “Savings Bank”), and Len E.
Williams (the “Employee”).  References to the “Company” mean Home
Federal Bancorp, Inc., a Maryland corporation.
 
 WHEREAS, the Employee has made and will
continue to make a major contribution to the success of the Savings Bank in the
position of President and Chief Executive Officer;
 
 WHEREAS, the Board of Directors of the
Savings Bank (the “Board of Directors”) recognizes that the possibility of a
change in control of the Savings Bank or the Company may occur and that such
possibility, and the uncertainty and questions which may arise among management,
may result in the departure or distraction of key management to the detriment of
the Savings Bank;
 
 WHEREAS, the Board of Directors
believes that it is in the best interests of the Savings Bank to enter into this
Agreement with the Employee in order to assure continuity of management of the
Savings Bank and its subsidiaries; and
 
 WHEREAS, the Board of Directors has
approved and authorized the execution of this Agreement with the Employee;
and
 
 NOW, THEREFORE, in consideration of the
foregoing and of the respective covenants and agreements of the parties herein,
it is AGREED as follows:
 
 1.  Definitions.
 
 (a)   “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, any Consolidated Subsidiaries (as hereinafter defined),
any person (as hereinabove defined) acting on behalf of the Company as
underwriter 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
“beneficial 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 are members of the Board on the Effective 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 Effective 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
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   committee
serving under an Incumbent Board or who was appointed as a result of a change at
the direction of the Office of Thrift Supervision (“OTS”) or the Federal Deposit
Insurance Corporation (“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 Savings Bank or the Company or a change in the
composition of the Board at the direction of the OTS or the FDIC.
 
 (b)         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 1504 of the Internal Revenue Code of 1986, as amended (the “Code”),
without regard to subsection (b) thereof) that includes the Savings Bank,
including but not limited to the Company.
 
 (c)          The
term “Date of Termination” means the date upon which the Employee experiences a
Separation from Service from the Savings Bank, as specified in a notice of
termination pursuant to Section 8 of this Agreement or the date a succession
becomes effective under Section 10.
 
 (d)          The
term “Effective Date” means September 11, 2006, the original effective date of
this Agreement.
 
 (e)          The
term “Involuntary Termination” means the Employee’s Separation from Service (i)
by the Savings Bank without the Employee's express written consent; or (ii) by
the Employee by reason of a material diminution of or interference with his
duties, responsibilities or benefits, including (without limitation), if the
termination of employment occurs within 30 days of  any of the
following actions unless consented to in writing by the Employee:  (1)
a requirement that the Employee be based at any place other than Nampa, Idaho,
or within a radius of 35 miles from the location of the Savings Bank's
administrative offices as of the Effective Date, except for reasonable travel on
Savings Bank business; (2) a material demotion of the Employee; (3) a material
reduction in the number or seniority of personnel reporting to the Employee or a
material reduction in the frequency with which, or in the nature of the matters
with respect to which such personnel are to report to the Employee, other than
as part of a Savings Bank-wide reduction in staff; (4) a reduction in the
Employee's salary or a material adverse change in the Employee's perquisites,
benefits, contingent benefits or vacation, other
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   than as
part of an overall program applied uniformly and with equitable effect to all
members of the senior management of the Savings Bank; (5) a material permanent
increase in the required hours of work or the workload of the Employee; or (6)
the failure of the Board of Directors (or a board of directors of a successor of
the Savings Bank) to elect the Employee as President and Chief Executive Officer
of the Savings Bank (or a successor of the Savings Bank) or any action by the
Board of Directors (or a board of directors of a successor of the Savings Bank)
removing the Employee from such office.  The term “Involuntary
Termination” does not include Termination for Cause, Separation from Service due
to death or permanent disability pursuant to Section 7(f) of this Agreement,
retirement or suspension or temporary or permanent prohibition from
participation in the conduct of the Savings Bank's affairs under Section 8 of
the Federal Deposit Insurance Act (“FDIA”).
 
 (f)           The
term “Section 409A” shall mean Section 409A of the Code and the regulations and
guidance of general applicability issued thereunder.
 
 (g)           The
term “Separation from Service” shall have the same meaning as in Section
409A.
 
 (h)           The
terms “Termination for Cause” and “Terminated for Cause” mean the Employee’s
Separation from Service with  the Savings Bank 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.   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.
 
 2.  Term.  The
initial term of this Agreement shall be a period of one year, commencing on the
Effective Date, subject to earlier termination as provided herein (the “Initial
Term”). Beginning on the first anniversary of the Effective Date, the term of
this Agreement shall be extended for a period of two years, provided that (i)
neither the Employee nor the Company has given notice to the other in writing at
least 90 days prior to the end of such two-year term that this Agreement shall
not be extended further; and (ii) prior to the end of such two-year term, the
Board of Directors, or a committee of the Board of Directors which has been
delegated authority to act on such matters by the Board of Directors
(“Committee”), explicitly reviews and approves the extension (the “Second
Term”).  Assuming the Employee’s employment has not been previously
terminated pursuant to the preceding sentence, or otherwise under this
Agreement, on the third anniversary of the Effective Date, and on each
anniversary thereafter, the term of this Agreement shall be extended for a
period of one year, provided that (i)
neither the Employee nor the Company has given notice to the other in writing at
least 90 days prior to such anniversary
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   that the
term of this Agreement shall not be extended further; and (ii) prior to such
anniversary, the Board of Directors, or the Committee, explicitly reviews and
approves the extension (an “Extended Term”).  Reference herein to the
term of this Agreement shall refer to both such initial term and such extended
terms.
 
 3.  Employment.  The
Employee shall be employed as the President and Chief Executive Officer of the
Savings Bank.  As such, the Employee shall render all services and
possess the powers as are customarily performed by persons situated in similar
executive capacities, and shall have such other powers and duties as the Board
of Directors may prescribe from time to time.  The Employee shall also
render services to the Company or any subsidiary or subsidiaries of the Company
or Savings Bank as requested by the Savings Bank from time to time consistent
with his executive position.  The Employee shall devote his best
efforts and reasonable time and attention to the business and affairs of the
Savings Bank to the extent necessary to discharge his responsibilities
hereunder.  The Employee may (i) serve on charitable or civic boards
or committees and, in addition, on such corporate boards as are approved in a
resolution adopted by a majority of the Board of Directors or the Committee,
which approval shall not be withheld unreasonably and (ii) manage personal
investments, so long as such activities do not interfere materially with
performance of his responsibilities hereunder.
 
 4.  Cash
Compensation.
 
 (a)           Salary.  The
Savings Bank agrees to pay the Employee during the term of this Agreement a base
salary (the “Salary”) in the annualized amount of
$200,000.    The Salary shall be paid no less frequently
than monthly and shall be subject to customary tax withholding.  The
amount of the Employee's Salary shall be increased (but shall not be decreased)
from time to time in accordance with the amounts of salary approved by the Board
of Directors or the Committee or the board of directors or the appropriate
committee of the Savings Bank after the Effective Date.  The amount of
the Salary shall be reviewed by the Board of Directors or the Committee at least
annually during the term of this Agreement.
 
 (b)           Bonuses.   The
Employee shall be entitled to participate in an equitable manner with all other
executive officers of the Savings Bank in such performance-based and
discretionary bonuses, if any, as are authorized and declared by the Board of
Directors or the Committee for executive officers.  Bonuses provided
for under this Agreement shall be paid no later than 21⁄2 months after the end of
the year in which the Employee obtains a legally binding right to such
payments.
 
 (c)           Expenses.  The
Employee shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Employee in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive officers
of the Savings Bank, provided that the
Employee accounts for such expenses as required under such policies and
procedures.
 
 
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  5.  Benefits.
 
 (a)           Participation in Benefit
Plans.  The Employee shall be entitled to participate, to the
same extent as executive officers of the Savings Bank generally, in all plans of
the Savings Bank relating to pension, retirement, thrift, profit-sharing,
savings, group or other life insurance, hospitalization, medical and dental
coverage, travel and accident insurance, education, cash bonuses, and other
retirement or employee benefits or combinations thereof.  In addition,
the Employee shall be entitled to be considered for benefits under all of the
stock and stock option related plans in which the Savings Bank's executive
officers are eligible or become eligible to participate.  It is
specifically intended that the Employee will be eligible to participate in Tier
One of the Savings Bank’s executive year-end cash incentive plan, commencing
October 1, 2006.
 
 (b)           Fringe
Benefits.  The Employee shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Savings Bank's executive officers,
including but not limited to supplemental retirement, deferred compensation
program, supplemental medical or life insurance plans, company cars, club dues,
physical examinations, financial planning and tax preparation
services.
 
 6.  Vacations;
Leave.  The Employee shall be entitled to (i) annual paid
vacation in accordance with the policies established by the Board of Directors
or the Committee for executive officers (but not less than four weeks), with
such vacation accruing annually and available beginning after the end of a
90-day orientation period; (ii) voluntary leaves of absence, with or without
pay, from time to time at such times and upon such conditions as the Board of
Directors or the Committee may determine in its discretion; and (iii) six days
of sick leave annually, without carryover, accruing annually beginning with the
Effective Date.
  7.   Termination of
Employment.
 
 (a)           Involuntary
Termination.  The Board of Directors may terminate the
Employee's employment at any time, but, except in the case of Termination for
Cause, termination of employment shall not prejudice the Employee's right to
compensation or other benefits under this Agreement.  In the event of
Involuntary Termination other than after a Change in Control which occurs during
the First Term, the Savings Bank shall (i) if the Involuntary Termination occurs
prior to the first anniversary of the Effective Date, pay to the Employee within
25 business days after the Date of Termination a lump-sum severance amount equal
to one year’s Salary as in effect immediately prior to the Date of Termination,
or (ii) if the Involuntary Termination occurs during the Second Term, pay to the
Employee within 25 business days after the Date of Termination a lump-sum
severance amount equal to two times the Employee’s Salary as in effect
immediately prior to the Date of Termination, or (iii) if the Involuntary
Termination occurs during an Extended Term, pay to the Employee within 25
business days after the Date of Termination a lump-sum severance amount equal to
2.99 times the Employee’s Salary as in effect immediately prior to the Date of
Termination,  and (iv)
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   provide
to the Employee substantially the same group life insurance, hospitalization,
medical, dental, prescription drug and other health benefits, and long-term
disability insurance (if any) for the benefit of the Employee and his dependents
and beneficiaries who would have been eligible for such benefits if the Employee
had not suffered Involuntary Termination, on terms substantially as favorable to
the Employee, including amounts of coverage and deductibles and other costs to
him, as if he had not suffered Involuntary Termination for (a) one year, if the
Involuntary Termination occurred during the Initial Term, or (b) for two years,
if the Involuntary Termination occurred during the Second Term, or (c) for three
years if the Involuntary Termination occurred during an Extended
Term.  Notwithstanding the foregoing, if the taxable payments under
this Section 7(a) would extend over a period of time sufficient for such
payments not to be considered severance payments under Section 409A, or are of a
large enough amount (and as such considered deferred compensation under Section
409A), then the final payment that could be made without causing the payments to
be considered deferred compensation under Section 409A shall include the present
value of the remaining payments, with such present value determined using the
applicable discount rate used for purposes of determining present value under
Section 280G of the Code.
 
 (b)           Termination for
Cause.    In the event of Termination for Cause, the
Savings Bank shall pay to the Employee the Salary and provide benefits under
this Agreement only through the Date of Termination, and shall have no further
obligation to the Employee under this Agreement.
 
 (c)           Voluntary
Termination.  The Employee's employment may be voluntarily
terminated by the Employee at any time upon at least 90 days' written notice to
the Savings Bank or such shorter period as may be agreed upon between the
Employee and the Board of Directors.  In the event of such voluntary
termination, the Savings Bank shall be obligated to continue to pay to the
Employee the Salary and provide benefits under this Agreement only through the
Date of Termination, at the time such payments are due, and shall have no
further obligation to the Employee under this Agreement.
 
 (d)           Change in
Control.  In the event of the Employee’s Involuntary
Termination within 12 months after a Change in Control, and which occurs at any
time following the first anniversary of the Effective Date while the Employee is
employed under this Agreement, the Savings Bank shall (i) pay to the Employee in
a lump sum in cash within 25 business days after the Date of Termination an
amount equal to 299% of the Employee's “base amount” as defined in Section 280G
of the Code; and (ii) provide to the Employee during the remaining term of this
Agreement substantially the same group life insurance, hospitalization, medical,
dental, prescription drug and other health benefits, and long-term disability
insurance (if any) for the benefit of the Employee and his dependents and
beneficiaries who would have been eligible for such benefits if the Employee had
not suffered Involuntary Termination, on terms substantially as favorable to the
Employee, including amounts of coverage and deductibles and other costs to him,
as if he had not suffered Involuntary Termination; provided, however, that no
payment shall be made under this Section 7(d) that would cause the Savings Bank
to be “undercapitalized” for purposes of 12 C.F.R. 565.4 or any successor
provision.  Notwithstanding
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   the
foregoing, if the Employee is a “specified employee” (as defined in Section
409A), then the payment under subparagraph (i) above shall be paid on the sixth
month anniversary of the date of the Employee’s Separation from Service or on
the first day of the month following his death, if earlier.
 
 (e)           Death.  In
the event of the death of the Employee while employed under this Agreement and
prior to any termination of employment, the Savings Bank shall pay to the
Employee's estate, or such person as the Employee may have previously designated
in writing, the Salary which was not previously paid to the Employee and which
he would have earned if he had continued to be employed under this Agreement
through the last day of the calendar month in which the Employee died, together
with the benefits provided hereunder through such date.
 
 (f)           Disability.  If
the Employee becomes entitled to benefits under the terms of the then-current
disability plan, if any, of the Savings Bank (the “Disability Plan”) or becomes
otherwise unable to fulfill his duties under this Agreement, he shall be
entitled to receive such group and other disability benefits, if any, as are
then provided by the Savings Bank for executive employees.  In the
event of such disability, this Agreement shall not be suspended, except that (i)
the obligation to pay the Salary to the Employee shall be reduced in accordance
with the amount of disability income benefits received by the Employee, if any,
pursuant to this paragraph such that, on an after-tax basis, the Employee shall
realize from the sum of disability income benefits and the Salary the same
amount as he would realize on an after-tax basis from the Salary if the
obligation to pay the Salary were not reduced pursuant to this Section 7(f); and
(ii) upon a resolution adopted by a majority of the disinterested members of the
Board of Directors or the Committee, the Savings Bank may discontinue payment of
the Salary beginning six months following a determination that the Employee has
become entitled to benefits under the Disability Plan or otherwise unable to
fulfill his duties under this Agreement. If the Employee’s disability does not
constitute a disability within the meaning of Section 409A, then payments under
this Section 7(f) shall not commence until the earlier of the Employee’s death
or the sixth month anniversary of the Employee’s Separation from Service, with
any delayed payments being made with the first permissible payment.
 
 (g)           Temporary Suspension or
Prohibition.  If the Employee is suspended and/or temporarily
prohibited from participating in the conduct of the Savings Bank's affairs by a
notice served under Section 8(e)(3) or (g)(1) of the FDIA, 12 U.S.C. Section
1818(e)(3) and (g)(1), the Savings Bank'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, the Savings
Bank may in its discretion (i) pay the 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.
 
 (h)           Permanent Suspension or
Prohibition.  If the Employee is removed and/or permanently
prohibited from participating in the conduct of the Savings Bank's affairs by an
order issued under Section 8(e)(4) or (g)(1) of the FDIA, 12 U.S.C. Section
1818(e)(4) and
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   (g)(1),
all obligations of the Savings Bank under this Agreement shall terminate as of
the effective date of the order, but vested rights of the contracting parties
shall not be affected.
 
 (i)           Default of the Savings
Bank.  If the Savings Bank is in default (as defined in Section
3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of
the date of default, but this provision shall not affect any vested rights of
the contracting parties.
 
 (j)           Termination by
Regulators.  All obligations under this Agreement shall be
terminated, except to the extent determined that continuation of this Agreement
is necessary for the continued operation of the Savings Bank:  (1) by
the Director of the OTS (the “Director”) or his or her designee, at the time the
FDIC enters into an agreement to provide assistance to or on behalf of the
Savings Bank under the authority contained in Section 13(c) of the FDIA; or (2)
by the Director or his or her designee, at the time the Director or his or her
designee approves a supervisory merger to resolve problems related to operation
of the Savings Bank or when the Savings Bank is determined by the Director to be
in an unsafe or unsound condition.  Any rights of the parties that
have already vested, however, shall not be affected by any such
action.
 
 (k)           Reductions of
Benefits. 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 Employee, would cause any amount to be nondeductible by
the Savings Bank 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 so as to maximize the economic present value of benefits to be
received by the Employee, as determined by the Compensation Committee of the
Board of Directors of the Company as of the date of the Change in Control using
the discount rate required by Section 280G(d)(4) of the Code, without causing
any amount to become nondeductible pursuant to or by reason of Section 280G of
the Code.
 
 (l)           Further
Reductions.  Any payments made to the Executive pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. Section 1828(k) and FDIC regulation 12 C.F.R. Part
359, Golden Parachute and Indemnification Payments.
 
 8.  Notice of
Termination.  In the event that the Savings Bank desires to
terminate the employment of the Employee during the term of this Agreement, the
Savings Bank shall deliver to the Employee a written notice of termination,
stating whether such termination constitutes Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, except in the case of
Termination for Cause.  In the event that the Employee determines in
good faith that he has experienced an Involuntary Termination of his employment,
he shall send a written notice to the Savings Bank stating the circumstances
that constitute such Involuntary Termination and the date upon which his
employment shall have ceased due to such
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   Involuntary
Termination.  In the event that the Employee desires to effect a
Voluntary Termination, he shall deliver a written notice to the Savings Bank,
stating the date upon which employment shall terminate, which date shall be at
least 90 days after the date upon which the notice is delivered, unless the
parties agree to a date sooner.
 
 9.  Attorneys'
Fees.  The Savings Bank shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Employee as a result of (i) the Employee's contesting or disputing any
termination of employment, or (ii) the Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Savings Bank (or a successor) or the Consolidated
Subsidiaries under which the Employee is or may be entitled to receive benefits;
provided that
the Savings Bank's obligation to pay such fees and expenses is subject to the
Employee's prevailing with respect to the matters in dispute in any action
initiated by the Employee or the Employee's having been determined to have acted
reasonably and in good faith with respect to any action initiated by the Savings
Bank.
 
 10.  No
Assignments.
 
 (a)           This
Agreement is personal to each of the parties hereto, and no party may assign or
delegate any of its rights or obligations hereunder without first obtaining the
written consent of the other party; provided, however,
that the Savings Bank shall require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) by an assumption
agreement in form and substance satisfactory to the Employee, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Savings Bank would be required to perform it, if no such
succession or assignment had taken place.  Failure to obtain such an
assumption agreement prior to the effectiveness of any such succession or
assignment shall be a breach of this Agreement and shall entitle the Employee to
compensation and benefits from the Savings Bank in the same amount and on the
same terms as the compensation pursuant to Section 7(d) of this
Agreement.  For purposes of implementing the provisions of this
Section 10(a), the date on which any such succession becomes effective shall be
deemed the Date of Termination.
 
 (b)             This
Agreement and all rights of the Employee hereunder shall inure to the benefit of
and be enforceable by the Employee's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
 
 11.  Notice.  For
the purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, to the  Savings Bank at its home office,
to the attention of the Board of Directors with a copy to the Secretary of the
Savings Bank, or, if to the Employee, to such home or other address as the
Employee has most recently provided in writing to the Savings Bank.
    9
 
 12.  Amendments.  No
amendments or additions to this Agreement shall be binding unless in writing and
signed by both parties, except as herein otherwise provided.
 
 13.   Headings.  The
headings used in this Agreement are included solely for convenience and shall
not affect, or be used in connection with, the interpretation of this
Agreement.
 
 14.  Severability. The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
 
 15.  Governing Law. This
Agreement shall be governed by the laws of the State of Idaho.
 
 16.  Arbitration.  Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in accordance with the rules of the
American Arbitration Association then in effect.  Judgment may be
entered on the arbitrator's award in any court having
jurisdiction.  The OTS may appear at any arbitration hearing but the
decision is not binding on the OTS.
 
 17.  Deferral of Non-Deductible
Compensation. In the event that the Employee's aggregate compensation
(including compensatory benefits which are deemed remuneration for purposes of
Section 162(m) of the Code) from the Savings Bank and the Consolidated
Subsidiaries for any calendar year exceeds the maximum amount of compensation
deductible by the Savings Bank or any of the Consolidated Subsidiaries in any
calendar year under Section 162(m) of the Code (the “maximum allowable amount”),
then any such amount in excess of the maximum allowable amount shall be
mandatorily deferred with interest thereon at 8% per annum to a calendar year
such that the amount to be paid to the Employee in such calendar year, including
deferred amounts and interest thereon, does not exceed the maximum allowable
amount.  Subject to the foregoing, deferred amounts including interest
thereon shall be payable at the earliest time permissible.
 
 18.  Knowing and Voluntary
Agreement.  Employee represents and agrees that he has read
this Agreement, understands its terms, and that he has the right to consult
counsel of choice and has either done so or knowingly waives the right to do
so.  Employee also represents that he has had ample time to read and
understand the Agreement before executing it and that he enters into this
Agreement without duress or coercion from any source.
  * * * *
*
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    IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first above written.
  THIS
AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES.
 
 
 HOME
      FEDERAL BANKBy: 
      ____________________Eric
      S. NadeauSecretary
              Its: 
      ____________________EMPLOYEE_______________________Len
      E. Williams
 
 
 
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