EX-10.2






EXHIBIT 10.2




HMN FINANCIAL, INC.

AGREEMENT WITH SENIOR EXECUTIVE OFFICER

TO AMEND CERTAIN BENEFIT PLANS OF THE COMPANY




     THIS AGREEMENT is entered into as of the 23rd day of December, 2008 (the “Effective
Date”), by and between HMN Financial, a Minnesota corporation (the “Company”), and the senior
executive officer of the Company named below (the “SEO”).



     WHEREAS, the Company has entered or will enter into a Securities Purchase Agreement with the
United States Department of Treasury (the “Securities Purchase Agreement”) as part of the Capital
Purchase Program under the Emergency Economic Stabilization Act of 2008 (“EESA”);



     WHEREAS, pursuant to Section 1.2(d)(iv) of the Securities Purchase Agreement, the Company is
required to amend its “Benefit Plans” with respect to its “Senior Executive Officers” (as such
terms are defined in the Securities Purchase Agreement) to the extent necessary to comply with
Section 111 of EESA; and



     WHEREAS, the applicable “Benefit Plans” are the plans in which any Senior Executive Officer
participates, or is eligible to participate, and the agreements to which any Senior Executive
Officer is a party, that either: (i) provide for incentive or bonus compensation based on the
achievement of performance goals tied to or affected by the Company’s financial results (“Financial
Performance Plans”) or (ii) provide for payments or benefits upon an “applicable severance from
employment” within the meaning of EESA (“Involuntary Separation Pay Arrangements”).



     WHEREAS, pursuant to action of the Board of Directors, each Financial Performance Plan and
Involuntary Separation Pay Arrangement is amended effective as of the date of entry into the
Securities Purchase Agreement to the extent necessary to comply with Section 111 of EESA; and



     WHEREAS, in consideration of the benefits which the SEO will receive as a result of the
Company’s entering into the Securities Purchase Agreement, the SEO desires to consent to such
amendment of the Financial Performance Plans and Involuntary Separation Pay Arrangements in which
the SEO participates by entering into this Agreement.



     NOW, THEREFORE, the Company and the SEO hereby agree as follows:



     1. Compliance With Section 111 of EESA. Each Financial Performance Plan
and Involuntary Separation Pay Arrangement is hereby amended by adding the following provision as a
final section to such arrangement:




“Compliance With Section 111 of EESA. Solely to the extent, and for the period,
required by the provisions of Section 111 of the Emergency Economic Stabilization Act of
2008 (“EESA”) applicable to participants in the Capital Purchase Program under EESA and the
regulation issued by the Department of the Treasury as published in the Federal Register on
October 20, 2008: (a) each “Senior Executive Officer” within the meaning of Section 111 of
EESA and the regulation issued by the Department of the Treasury as published in the Federal
Register on October 20, 2008 who participates in this plan or is a party to this agreement
shall be ineligible to receive compensation hereunder to the extent that the Compensation
Committee of the Board of Directors of the Company determines this plan or agreement
includes incentives for the Senior Executive Officer to take unnecessary and excessive risks
that threaten the value of the financial institution; (b) each Senior Executive Officer who
participates in this plan or is a party to this



 









 







agreement
shall be required to forfeit any bonus or incentive compensation paid to the Senior
Executive Officer hereunder during the period that the Department of the Treasury holds a
debt or equity position in the Company based on statements of earnings, gains, or other
criteria that are later proven to be materially inaccurate; and (c) the Company shall be
prohibited from making to each Senior Executive Officer who participates in this plan or is
a party to this agreement, and each such Senior Executive Officer shall be ineligible to
receive hereunder, any “golden parachute payment” in connection with the Senior Executive
Officer’s “applicable severance from employment,” in each case, within the meaning of
Section 111 of EESA and the regulations and guidance issued by the Department of the
Treasury. If the making of any payment or provision of any benefit under this plan or
agreement would be in violation of Section 111 EESA or any such regulation or guidance, or
if the making of such payment or provision of such benefit may in the judgment of the
Company limit or adversely impact the ability of the Company to participate in, or the terms
of the Company’s participation in, any program offered under EESA by the Treasury or to
qualify for any other relief under EESA, each affected Senior Executive Officer shall be
deemed to have waived his or her right to such payment or such benefit under this plan or
agreement. Notwithstanding any other provision in this plan or agreement, the Company shall
have the right to amend this plan or agreement, at any time and from time to time, as the
Company, in its sole judgment, shall deem necessary in order to comply with Section 111 of
EESA and the regulations and guidance issued by the Department of the Treasury.”



     2. Continuation of Affected Plans. Except as expressly or by necessary
implication amended hereby, each Financial Performance Plan and Involuntary Separation Pay
Arrangement shall continue in full force and effect.



     IN WITNESS WHEREOF, the Company and the SEO have executed this Agreement as of the Effective
Date.



	 	 	 	 	 
	 	HMN FINANCIAL, INC.

 	 
	 	By:  	
 	 
	 	 	Title:  	 	 
	 
	 	SEO

 	 
	 	
 	 
	 	Name:  	 	 
	 	Title:  	 	 



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