Document:

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:

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    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.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    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

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    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.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    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”

            

    

    
 

     

     

    12hfb_8k0724ex108.htm

    

      Exhibit
        10.8

      

      HOMEFEDERAL
        BANK

      AMENDED
        AND RESTATED

      SUPPLEMENTAL
        EXECUTIVE RETIREMENT INCOME AGREEMENT

      FOR

      CHARLES
        R. FARBER

      

      THIS
        AMENDED & RESTATED
        SUPPLEMENTAL EXECUTIVE RETIREMENT INCOME AGREEMENT (the “Agreement”) is adopted
        this 25th day of July, 2007, by and between HOMEFEDERAL BANK f/k/a HOME FEDERAL
        SAVINGS BANK, a state-chartered bank located in Columbus, Indiana (the “Bank”)
        and Charles R. Farber (the “Executive”).

      

      This
        agreement amends and restates the prior SUPPLEMENTAL EXECUTIVE RETIREMENT
        INCOME
        AGREEMENT between the Bank and the Executive dated November 1, 2002 and
        subsequently amended (the “Prior Agreement”).

      

      The
        Bank
        intends this Amended and Restated Agreement to be a material modification
        of the
        Prior Agreement such that all amounts earned and vested prior to December
        31,
        2004 shall be subject to the provisions of Section 409A of the Code and the
        regulations promulgated thereunder.

      

      The
        purpose of this Agreement is to provide specified benefits to the Executive,
        a
        member of a select group of management or highly compensated employees who
        contribute materially to the continued growth, development, and future business
        success of the Bank.  This Agreement shall be unfunded for tax
        purposes and for purposes of Title I of the Employee Retirement Income Security
        Act of 1974 (“ERISA”), as amended from time to time.

      

      Article
        1

      Definitions

      

      Whenever
        used in this Agreement, the
        following words and phrases shall have the meanings specified:

      

      
        	
                1.1

              	
                “Accrued
                  Benefit” means the portion of the Supplemental Executive Retirement
                  Income Benefit which is required to be expensed and accrued generally
                  accepted accounting principles by any appropriate
                  methodology.  Such Accrued Benefit  shall be paid to
                  the Executive in one hundred and eighty (180) equal monthly
                  installments.  The interest factor used to annuities the Accrued
                  Benefit shall equal to the average Cost of Funds of the Bank for
                  the prior
                  twelve (12) month period.

              

      

      

      
        	
                1.2

              	
                “Act”
                  means the Employee Retirement Income Security Act of 1974, as amended
                  from
                  time and time.

              

      

      

      
        	
                1.3

              	
                “Bank”
                  means HOMEFEDERAL BANK f/k/a HOME FEDERAL SAVINGS BANK, and any
                  successor
                  thereto.

              

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      
        	
                1.4

              	
                “Beneficiary”
                  means each designated person, or the estate of the deceased Executive,
                  entitled to benefits, if any, upon the death of the Executive determined
                  pursuant to Article 4.

              

      

      

      
        	
                1.5

              	
                “Beneficiary
                  Designation Form” means the form established from time to time by the
                  Plan Administrator that the Executive completes, signs, and returns
                  to the
                  Plan Administrator to designate one or more
                  Beneficiaries.

              

      

      

      
        	
                1.6

              	
                “Board”
                  means the Board of Directors of the Bank as from time to time
                  constituted.

              

      

      

      
        	
                1.7

              	
                “Change
                  of Control” shall mean any of the
                  following:

              

      

      

      
        	
                 

              	
                (i)

              	
                a
                  change in the ownership of the Bank or the Corporation, 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 Bank or the Corporation
                  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 Bank or the Corporation.  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 Bank or the Corporation, the acquisition
                  of additional stock by the same person or persons is not considered
                  to
                  cause a change in the ownership of the Bank or the Corporation
                  (or to
                  cause a change in the effective control of the Bank or the Corporation
                  (within the meaning of subsection (ii)).  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 Bank or the Corporation
                  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 Bank or the Corporation
                  (or
                  issuance of stock of the Bank or the Corporation) and stock in
                  the Bank or
                  the Corporation remains outstanding after the
                  transaction.

              

      

       

      
        	
                 

              	
                (ii)

              	
                a
                  change in the effective control of the Bank or the Corporation,
                  which
                  shall occur only on either of the following
                  dates:

              

      

       

      
        	
                 

              	
                (a)

              	
                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
                  Bank or the Corporation possessing thirty percent (30%) or more
                  of the
                  total voting power of the stock of the Bank or the
                  Corporation.

              

      

       

      
        	
                 

              	
                (b)

              	
                the
                  date a majority of members of the Corporation’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 Corporation’s
                  board of directors before the date of the appointment or election;
                  provided,

              

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      however,
        that this provision shall not apply if another corporation is a majority
        shareholder of the Corporation

       

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

       

      
        	
                 

              	
                (iii)

              	
                a
                  change in the ownership of a substantial portion of the Bank’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 Bank 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 Bank immediately before such
                  acquisition
                  or acquisitions.  For this purpose, gross fair market value
                  means the value of the assets of the Bank, 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 (iii) when there is a transfer to an entity that is
                  controlled
                  by the shareholders of the Bank immediately after the
                  transfer.  A transfer of assets by the Bank is not treated as a
                  change in the ownership of such assets if the assets are transferred
                  to
                  –

              

      

       

      
        	
                 

              	
                (a)

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

              

      

       

      
        	
                 

              	
                (b)

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

              

      

       

      
        	
                 

              	
                (c)

              	
                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 Bank;
                  or

              

      

       

      
        	
                 

              	
                (d)

              	
                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
                  (c)

              

      

       

      for
        purposes of this subsection (iii) and except as otherwise provided in paragraph
        (a) 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
        Bank.  If a person, including an entity, owns stock in both
        corporations that enter into a merger, consolidation, purchase or acquisition
        of

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      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.

       

      
        	
                1.8

              	
                “Children”
                  means the Executive’s children, both natural and
                  adopted.

              

      

      

      
        	
                1.9

              	
                “Code”
                  means the Internal Revenue Code of 1986, as
                  amended.

              

      

      

      
        	
                1.10

              	
                “Corporation”
                  means Home Federal Bancorp, an Indiana corporation, and the sole
                  shareholder of the Bank.

              

      

      

      
        	
                1.11

              	
                “Cost
                  of Funds” shall be equal to total interest expense, divided by the
                  monthly weighted average of total interest-bearing
                  liabilities.  The time frame for measuring Cost of Funds shall
                  be the last twelve (12) complete months immediately prior to the
                  event
                  which triggered the need for
                  measurement.

              

      

      

      
        	
                1.12

              	
                “Disability”
                  means Executive: (i) is unable to engage in any substantial gainful
                  activity by reason of any medically determinable physical or mental
                  impairment which can be expected to result in death or can be expected
                  to
                  last for a continuous period of not less than twelve (12) months;
                  or (ii)
                  is, by reason of any medically determinable physical or mental
                  impairment
                  which can be expected to result in death or can be expected to
                  last for a
                  continuous period of not less than twelve (12) months, receiving
                  income
                  replacement benefits for a period of not less than three (3) months
                  under
                  an accident and health plan covering employees of the
                  Bank.  Medical determination of Disability may be made by either
                  the Social Security Administration or by the provider of an accident
                  or
                  health plan covering employees of the Bank.  Upon the request of
                  the Plan Administrator, the Executive must submit proof to the
                  Plan
                  Administrator of the Social Security Administration’s or the provider’s
                  determination.

              

      

      

      
        	
                1.13

              	
                “Early
                  Retirement” means Termination of Employment before Normal Retirement
                  Age except when such
                  Termination of Employment occurs:
                  (i) within twelve
                  (12)
                  months following a Change in
                  Control; or (ii) due to death, Disability, or Termination for
                  Cause.

              

      

      

      
        	
                1.14

              	
                “Early
                  Retirement Age” means the Executive attaining age sixty (60) and
                  completing five (5) Years of
                  Service.

              

      

      

      
        	
                1.15

              	
                “Early
                  Termination for Good Cause” means a Termination of Employment, for
                  reasons other than death, Disability or Termination for Cause,
                  at any time
                  during the twelve (12) month period following a Change of Control,
                  but
                  prior to Early Retirement Age, if the Executive is (i) involuntarily
                  terminated by the Bank or (ii) if at any time during such period,
                  the
                  Executive is demoted, undergoes a material change in title, position,
                  duties or responsibilities, or has a material reduction in compensation,
                  including fringe benefits, and the Executive voluntarily terminates
                  employment with the Bank.

              

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      
        	
                1.16

              	
                “Effective
                  Date” means January 1, 2005.

              

      

       

      
        	
                1.17

              	
                “Estate”
                  means the Estate of the Executive.

              

      

       

      
        	
                1.18

              	
                “Normal
                  Retirement Age” means the Executive attaining age sixty five
                  (65).

              

      

       

      
        	
                1.19

              	
                “Normal
                  Retirement Date” means the later of Normal Retirement Age or
                  Termination of Employment.

              

      

       

      
        	
                1.20

              	
                “Plan
                  Administrator” means the plan administrator described in Article
                  6.

              

      

       

      
        	
                1.21

              	
                “Plan
                  Year” means each twelve-month period commencing on July 1 and ending
                  on June 30 of each year.  The initial Plan Year shall commence
                  on the Effective Date of this Agreement and end on the following
                  June 30,
                  2006.

              

      

       

      
        	
                1.22

              	
                “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 Section 414(c) of the Code is publicly traded
                  on an
                  established securities market or
                  otherwise.

              

      

       

      
        	
                1.23

              	
                “Spouse”
                  means the individual to whom the Executive is legally married at
                  the time
                  of the Executive’s death.

              

      

       

      
        	
                1.24

              	
                “Suicide”
                  means the act of intentionally killing
                  oneself.

              

      

       

      
        	
                1.25

              	
                “Supplemental
                  Retirement Income Benefit” means an annual amount equal to an
                  annualized benefit of Fifty Thousand Dollars
                  ($50,000).  Payments shall be made in equal monthly installments
                  for one hundred eighty months
                  (180).

              

      

       

      
        	
                1.26

              	
                “Survivor’s
                  Benefit” means monthly level payments totaling Fifty Thousand Dollars
                  ($50,000) annually for fifteen (15)
                  years.

              

      

       

      
        	
                1.27

              	
                “Termination
                  for Cause” means Termination of Employment
                  for:

              

      

       

      
        	
                 

              	
                (a)

              	
                Personal
                  dishonesty; or

              

      

      
        	
                 

              	
                (b)

              	
                Incompetence;
                  or

              

      

      
        	
                 

              	
                (c)

              	
                Willful
                  misconduct; or

              

      

      
        	
                 

              	
                (d)

              	
                Breach
                  of fiduciary duty involving personal profit;
                  or

              

      

      
        	
                 

              	
                (e)

              	
                Intentional
                  failure to perform stated duties;
                  or

              

      

      
        	
                 

              	
                (f)

              	
                Willful
                  violation of any law, rule or regulation (other than traffic violations
                  or
                  similar offenses) or final cease-and-desist
                  order.

              

      

      

      
        	
                1.28

              	
                “Termination
                  of Employment” means the termination of the Executive’s employment
                  with the Bank for reasons other than death or
                  Disability.  Whether a Termination of Employment takes place is
                  determined based on the facts and circumstances
                  surrounding

              

      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                the
                  termination of the Executive’s employment.  A Termination of
                  Employment will be considered to have occurred if it is reasonably
                  anticipated that:

              

      

       

      
        	
                 

              	
                (a)

              	
                the
                  Executive will not perform any services for the Bank after Termination
                  of
                  Employment, or

              

      

       

      
        	
                 

              	
                (b)

              	
                the
                  Executive will continue to provide services to the Bank at an annual
                  rate
                  that is less than fifty percent (50%) of the bona fide services
                  rendered
                  during the immediately preceding twelve (12) months of
                  employment.

              

      

       

      
        	
                1.29

              	
                “Vested”
                  means the non-forfeitable portion of the benefit to which the Executive
                  is
                  entitled.

              

      

      

      
        	
                1.30

              	
                “Vested
                  Accrued Benefit” means the portion of the Executive’s Accrued Benefit
                  in which he is vested.  It is computed by multiplying the
                  Accrued Benefit by the vesting percentage specified in Section
                  3.6.

              

      

      

      
        	
                1.31

              	
                “Years
                  of Service” means the total number of complete calendar years of
                  continuous employment (including authorized leaves of absence),
                  beginning
                  from the date of execution of this
                  Agreement.

              

      

      

      Article
        2

      Distribution
        at Death

      

      
        	
                2.1

              	
                Death
                  During Active Service.  In the event of the Executive’s
                  death prior to Termination of Employment with the Bank, while covered
                  by
                  the provisions of this Agreement, the Executive’s Beneficiary shall be
                  paid the Survivor’s Benefit.  Payments shall commence within
                  thirty (30) days after the date of the Executive’s
                  death.

              

      

      

      
        	
                2.2

              	
                Death
                  During Distribution of a Benefit.  Except as provided in
                  Section 2.3 below, if the Executive dies after any benefit distributions
                  have commenced under this Agreement but before receiving all such
                  distributions, the Bank shall distribute to the Beneficiary the
                  remaining
                  benefits at the same time and in the same amounts that would have
                  been
                  distributed to the Executive had the Executive
                  survived.

              

      

       

      
        	
                2.3

              	
                Death
                  After Termination of Employment But Before Benefit Distributions
                  Commence. If the Executive is entitled
                  to benefit distributions under this Agreement, but dies prior to
                  the
                  commencement of said benefit distributions, the Bank shall distribute
                  to
                  the Beneficiary the same benefits that the Executive was entitled
                  to prior
                  to death except that the benefit distributions shall commence within
                  sixty
                  (60) days following receipt by the Bank of the Executive’s death
                  certificate.

              

      

      

      
        	
                2.4

              	
                Burial
                  Benefit.  In addition to the above-described death benefits,
                  the Executive’s Beneficiary shall be entitled to a one-time lump sum death
                  benefit in the amount of Fifteen Thousand Dollars
                  ($15,000).  The payment shall be made within thirty (30) days
                  following receipt by the Bank of the Executive’s death
                  certificate.

              

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                Article
                  3

              

      

      Distributions
        During Lifetime

      

      
        	
                3.1

              	
                Normal
                  Retirement Benefit.  Upon the Normal Retirement Date, the
                  Bank shall distribute to the Executive the benefit described in
                  this
                  Section 3.1 in lieu of any other benefit under this
                  Article.

              

      

       

      
        	
                 

              	
                3.1.1

              	
                Amount
                  of Benefit.  The annual benefit under this Section 3.1 is
                  Fifty Thousand Dollars ($50,000).

              

      

       

      
        	
                 

              	
                3.1.2

              	
                Distribution
                  of Benefit.  The Bank shall distribute the annual benefit to
                  the Executive in twelve (12) equal monthly installments commencing
                  on the
                  first day of the month following Termination of Employment.  The
                  annual benefit shall be distributed to the Executive for one hundred
                  eighty (180) months.

              

      

       

      
        	
                3.2

              	
                Early
                  Retirement Benefit.  Upon Early Retirement on or after Early
                  Retirement Age, the Bank shall distribute to the Executive the
                  benefit
                  described in this Section 3.2 in lieu of any other benefit under
                  this
                  Article.

              

      

       

      
        	
                 

              	
                3.2.1

              	
                Amount
                  of Benefit.  The annual benefit under this Section 3.2 is
                  the benefit specified in Section 3.1, reduced by 4.5% per year
                  for each
                  year that Early Retirement precedes Normal Retirement Date and
                  discounted
                  to present value by an interest factor equal to the Bank’s average Cost of
                  Funds for the twelve (12) month period prior to Early Retirement
                  Date.

              

      

       

      
        	
                 

              	
                3.2.2

              	
                Distribution
                  of Benefit.  The Bank shall distribute the annual benefit to
                  the Executive in twelve (12) equal monthly installments commencing
                  on the
                  first day of the month following Early Retirement.  The annual
                  benefit shall be distributed to the Executive for one hundred eighty
                  (180)
                  months.

              

      

       

      
        	
                3.3

              	
                Disability
                  Benefit.  If the Executive experiences a Disability
                  prior to Normal Retirement Age, the Bank shall distribute to the
                  Executive
                  the benefit described in this Section 3.3 in lieu of any other
                  benefit
                  under this Article.

              

      

       

      
        	
                 

              	
                3.3.1

              	
                Amount
                  of Benefit.  The benefit under this Section 3.3 is
                  the Accrued Benefit at the time of such
                  Disability.

              

      

       

      
        	
                 

              	
                3.3.2

              	
                Distribution
                  of Benefit.  The Bank shall distribute the benefit to the
                  Executive in twelve (12) equal monthly installments commencing
                  on the
                  first day of the month following such Disability.  The annual
                  benefit shall be distributed to the Executive for one hundred eighty
                  (180)
                  months.

              

      

       

      
        	
                3.4

              	
                Change
                  in Control Benefit.  Upon a Change in Control followed
                  within twelve (12) months by an Early Termination for Good Cause,
                  the Bank
                  shall distribute to the

              

      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      Executive
        the benefit described in this Section 3.4 in lieu of any other benefit under
        this Article.

       

      
        	
                 

              	
                3.4.1

              	
                Amount
                  of Benefit.  The benefit under this Section 3.4 is
                  the present value determined as of the Change in Control of fifteen
                  years
                  of annual installments of the Normal Retirement Benefit as set
                  forth in
                  Section 3.1.1. For purposes of calculating the present value, the
                  discount
                  rate shall be determined by multiplying the Bank’s Cost of Funds by a
                  factor equal to one (1) minus the Bank’s tax
                  rate.

              

      

       

      
        	
                 

              	
                3.4.2

              	
                Distribution
                  of Benefit.  The Bank shall distribute the
                  benefit to the Executive in lump sum within thirty (30) days following
                  Early Termination for Good Cause.

              

      

       

      
        	
                3.5

              	
                Termination
                  of Employment Prior to Early Retirement Age.  Upon
                  Termination of Employment prior to Early Retirement Age for reasons
                  other
                  than (i) Termination of Employment within twelve
                  (12)
                  months following a Change in
                  Control; or (ii) due to death, Disability, or Termination for
                  Cause, the Bank shall distribute to the Executive the benefit described
                  in
                  this Section 3.5 in lieu of any other benefit under this
                  Article.

              

      

       

      
        	
                 

              	
                3.5.1

              	
                Amount
                  of Benefit.  The benefit under this Section 3.5 is the
                  Vested Accrued Benefit at the time of Termination of
                  Employment.

              

      

       

      
        	
                 

              	
                3.5.2

              	
                Distribution
                  of Benefit.  The Bank shall distribute the annual benefit to
                  the Executive in twelve (12) equal monthly installments commencing
                  on the
                  first day of the month following Termination of Employment.  The
                  annual benefit shall be distributed to the Executive for one hundred
                  eighty (180) months.

              

      

       

      
        	
                3.6

              	
                Vesting.  The
                  benefits provided by the Bank to the Executive under this Agreement
                  shall
                  vest in the Executive according to the following
                  schedule:

              

      

       

      
        	 	
                Years
                  of Service

              	 	
                Percentage
                  of Total Benefit Vested

              	 
	 	 	 	 	 
	 	
                1
                  year

              	 	
                20%

              	 
	 	
                2
                  year

              	 	
                40%

              	 
	 	
                3
                  year

              	 	
                60%

              	 
	 	
                4
                  year

              	 	
                80%

              	 
	 	
                5
                  year

              	 	
                100%

              	 

      

      

      
        	
                3.7

              	
                Restriction
                  on Timing of Distribution.  Notwithstanding any provision of this
                  Agreement to the contrary, if the Executive is considered a Specified
                  Employee at Termination of Employment under such procedures as
                  established
                  by the Bank in accordance with Section 409A of the Code, benefit
                  distributions that are made upon Termination of Employment may
                  not
                  commence earlier than six (6) months after the date of
                  such Termination of Employment; provided, however, that the six (6)
                  month delay required under this Section 3.7 shall not apply to
                  the portion
                  of any payment resulting from the Executive’s “involuntary separation from
                  service” (as defined in Treas. Reg. § 1.409A-1(n) and including a
                  “separation from service for good reason,” as defined in Treas. Reg.
                  

              

      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                § 1.409A-1(n)(2))
                  that (a) is payable no later than the last day of the second year
                  following the year in which the separation from service occurs,
                  and (b)
                  does not exceed two times the lesser of (i) the Executive’s annualized
                  compensation for the year prior to the year in which the separation
                  from
                  services occurs, or (ii) the dollar limit described in Section
                  401(a)(17)
                  of the Code.  Therefore, in the event this Section 3.7 is
                  applicable to the Executive, any distribution which would otherwise
                  be
                  paid to the Executive within the first six months following the
                  Termination of Employment shall be accumulated and paid to the
                  Executive
                  in a lump sum on the first day of the seventh month following the
                  Termination of Employment.  All subsequent distributions shall
                  be paid in the manner specified.

              

      

       

      
        	
                3.8

              	
                Distributions
                  Upon Income Inclusion Under Section 409A of the Code.  Upon
                  the inclusion of any portion of the Accrued Benefit into the Executive’s
                  income as a result of the failure of this non-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 Accrued
                  Benefit, a distribution shall be made as soon as is administratively
                  practicable following the discovery of the plan
                  failure.

              

      

       

      
        	
                3.9

              	
                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 Sections 3.1, 3.2, 3.4 and 3.5
                  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

              

      

      
        	
                 

              	
                (c)

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

              

      

      

      Article
        4

      Beneficiaries

      

      
        	
                4.1

              	
                Beneficiary.  The
                  Executive shall have the right, at any time, to designate a Beneficiary
                  to
                  receive any benefit distributions under this Agreement upon the
                  death of
                  the Executive.  The Beneficiary designated under this Agreement
                  may be the same as or different from the beneficiary designation
                  under any
                  other plan of the Bank in which the Executive
                  participates.

              

      

       

      
        	
                4.2

              	
                Beneficiary
                  Designation; Change.  The Executive shall designate a
                  Beneficiary by completing and signing the Beneficiary Designation
                  Form,
                  and delivering it to the Plan Administrator or its designated
                  agent.  The Executive's beneficiary designation shall be deemed
                  automatically revoked if the Beneficiary predeceases the Executive
                  or if
                  the Executive names a spouse as Beneficiary and the marriage is
                  subsequently dissolved.  The Executive shall have the right to
                  change a Beneficiary by completing, signing and

              

      

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                otherwise
                  complying with the terms of the Beneficiary Designation Form and
                  the Plan
                  Administrator’s rules and procedures, as in effect from time to
                  time.  Upon the acceptance by the Plan Administrator of a new
                  Beneficiary Designation Form, all Beneficiary designations previously
                  filed shall be cancelled.  The Plan Administrator shall be
                  entitled to rely on the last Beneficiary Designation Form filed
                  by the
                  Executive and accepted by the Plan Administrator prior to the Executive’s
                  death.

              

      

      

      
        	
                4.3

              	
                Acknowledgment.  No
                  designation or change in designation of a Beneficiary shall be
                  effective
                  until received, accepted and acknowledged in writing by the Plan
                  Administrator or its designated
                  agent.

              

      

       

      
        	
                4.4

              	
                No
                  Beneficiary Designation.  If the Executive dies without a
                  valid beneficiary designation, or if all designated Beneficiaries
                  predecease the Executive, then the Executive’s spouse shall be the
                  designated Beneficiary.  If the Executive has no surviving
                  spouse, the benefits shall be made to the personal representative
                  of the
                  Executive's estate.

              

      

       

      
        	
                4.5

              	
                Facility
                  of Distribution.  If the Plan Administrator determines in
                  its discretion that a benefit is to be distributed to a minor,
                  to a person
                  declared incompetent, or to a person incapable of handling the
                  disposition
                  of that person’s property, the Plan Administrator may direct distribution
                  of such benefit to the guardian, legal representative or person
                  having the
                  care or custody of such minor, incompetent person or incapable
                  person.  The Plan Administrator may require proof of
                  incompetence, minority or guardianship as it may deem appropriate
                  prior to
                  distribution of the benefit.  Any distribution of a benefit
                  shall be a distribution for the account of the Executive and the
                  Executive’s Beneficiary, as the case may be, and shall be a complete
                  discharge of any liability under the Agreement for such distribution
                  amount.

              

      

       

      

      Article
        5

      General
        Limitations

      

      
        	
                5.1

              	
                Termination
                  for Cause.  Notwithstanding any provision of this Agreement
                  to the contrary, the Bank shall not distribute any benefit under
                  this
                  Agreement if the Executive’s employment with the Bank is terminated due to
                  a Termination for Cause.

              

      

      

      
        	
                5.2

              	
                Suicide
                  or Misstatement.  No benefits shall be distributed if the
                  Executive commits suicide within two years after the Effective
                  Date of
                  this Agreement, or if an insurance company which issued a life
                  insurance
                  policy covering the Executive and owned by the Bank denies coverage
                  (i)
                  for material misstatements of fact made by the Executive on an
                  application
                  for such life insurance, or (ii) for any other
                  reason.

              

      

      

      
        	
                5.3

              	
                Removal. Notwithstanding
                  any provision of this Agreement to the contrary, the Bank shall
                  not
                  distribute any benefit under this Agreement if the Executive is
                  subject to
                  a final removal or prohibition order issued by an appropriate federal
                  banking agency pursuant to Section 8(e) of the Federal Deposit
                  Insurance
                  Act.

              

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      
        	
                5.4

              	
                Non-compete.  The
                  Executive expressly agrees that, as consideration for the agreements
                  of
                  the Bank contained herein and as a condition to the performance
                  by the
                  Bank of its obligations hereunder, throughout the entire period
                  beginning
                  with the date of this Agreement and continuing until the final
                  payment is
                  made to the Executive, as provided herein, he will not, without
                  prior
                  written consent of the Bank, engage in, become interested in, directly
                  or
                  indirectly, as a sole proprietor, as a partner in a partnership,
                  or as a
                  substantial shareholder in a corporation, nor become associated
                  with, in
                  the capacity of an employee, director, officer, principal, agent,
                  trustee
                  or in any other capacity whatsoever, any enterprise conducted within
                  a
                  radius of 25 miles of the main office of the Bank which enterprise
                  is, or
                  may deemed to be, competitive with any business carried on by the
                  Bank as
                  of the date of Termination of Employment.  The conditions set
                  forth in this Section 5.4 shall not be applicable if the Executive
                  is
                  discharged without cause or if the Executive is discharged for
                  any reason
                  following a Change in Control.  In the event of any breach by
                  the Executive of the agreements and covenants contained herein,
                  the Board
                  of Directors of the Bank shall direct that any unpaid balance of
                  any
                  payments to the Executive under this Agreement be suspended, and
                  shall
                  thereupon notify the Executive of such suspensions, in
                  writing.  Thereupon, if the Board of Directors of the Bank shall
                  determine that said breach by the Executive has continued for a
                  period of
                  one (1) month following notification of such suspension, all rights
                  of the
                  Executive and any Beneficiary under this Agreement, including rights
                  to
                  further payments hereunder, shall thereupon
                  terminate.

              

      

      

      Article
        6

      Administration
        of Agreement

      

      
        	
                6.1

              	
                Plan
                  Administrator Duties.  This Agreement shall be administered
                  by a Plan Administrator which shall consist of the Board, or such
                  committee or person(s) as the Board shall appoint.  The Plan
                  Administrator shall administer this Agreement according to its
                  express
                  terms and shall also have the discretion and authority to (i) make,
                  amend,
                  interpret and enforce all appropriate rules and regulations for
                  the
                  administra­tion of this Agreement and (ii) decide or resolve any and
                  all ques­tions including interpretations of this Agreement, as may
                  arise in connection with the Agreement to the extent the exercise
                  of such
                  discretion and authority does not conflict with Section 409A of
                  the Code
                  and regulations thereunder.

              

      

      

      
        	
                6.2

              	
                Agents.  In
                  the administration of this Agreement, the Plan Administrator may
                  employ
                  agents and delegate to them such administrative duties as it sees
                  fit,
                  (including acting through a duly appointed representative), and
                  may from
                  time to time consult with counsel who may be counsel to the
                  Bank.

              

      

      

      
        	
                6.3

              	
                Binding
                  Effect of Decisions.  The decision or action of the Plan
                  Administrator with respect to any question arising out of or in
                  connection
                  with the administration, interpretation and application of the Agreement
                  and the rules and regulations promulgated hereunder shall be final
                  and
                  conclusive and binding upon all persons having any interest in
                  the
                  Agreement.

              

      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      
        	
                6.4

              	
                Indemnity
                  of Plan Administrator.  The Bank shall indemnify and hold
                  harmless the members of the Plan Administrator against any and
                  all claims,
                  losses, damages, expenses or liabilities arising from any action
                  or
                  failure to act with respect to this Agreement, except in the case
                  of
                  willful misconduct by the Plan Administrator or any of its
                  members.

              

      

      

      
        	
                6.5

              	
                Bank
                  Information.  To enable the Plan Administrator to perform
                  its functions, the Bank shall supply full and timely information
                  to the
                  Plan Administrator on all matters relating to the date and
                  circum­stances of the retirement, Disability, death, or Termination of
                  Employment of the Executive, and such other pertinent information
                  as the
                  Plan Administrator may reasonably
                  require.

              

      

       

      

      Article
        7

      Claims
        And Review Procedures

      

      
        	
                7.1

              	
                Claims
                  Procedure.  An Executive or Beneficiary (“claimant”) who has
                  not received benefits under the Agreement that he or she believes
                  should
                  be distributed shall make a claim for such benefits as
                  follows:

              

      

      
      

      

      
        	
                 

              	
                7.1.1

              	
                Initiation
                  – Written Claim.  The claimant initiates a claim by
                  submitting to the Plan Administrator a written claim for the
                  benefits.  If such a claim relates to the contents of a notice
                  received by the claimant, the claim must be made within sixty
                  (60) days after such notice was received by the
                  claimant.  All other claims must be made within one hundred
                  eighty (180) days of the date on which the event that caused the
                  claim to arise occurred.  The claim must state with
                  particularity the determination desired by the
                  claimant.

              

      

       

      
        	
                 

              	
                7.1.2

              	
                Timing
                  of Plan Administrator Response.  The Plan
                  Administrator shall respond to such claimant within 90 days after
                  receiving the claim.  If the Plan Administrator determines that
                  special circumstances require additional time for processing the
                  claim,
                  the Plan Administrator can extend the response period by an additional
                  90
                  days by notifying the claimant in writing, prior to the end of
                  the initial
                  90-day period, that an additional period is required.  The
                  notice of extension must set forth the special circumstances and
                  the date
                  by which the Plan Administrator expects to render its
                  decision.

              

      

       

      
        	
                 

              	
                7.1.3

              	
                Notice
                  of Decision.  If the Plan Administrator denies part or all
                  of the claim, the Plan Administrator shall notify the claimant
                  in writing
                  of such denial.  The Plan Administrator shall write the
                  notification in a manner calculated to be understood by the
                  claimant.  The notification shall set
                  forth:

              

      

       

      
        	
                 

              	
                (a)

              	
                The
                  specific reasons for the denial;

              

      

      
        	
                 

              	
                (b)

              	
                A
                  reference to the specific provisions of the Agreement on which
                  the denial
                  is based;

              

      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (c)

              	
                A
                  description of any additional information or material necessary
                  for the
                  claimant to perfect the claim and an explanation of why it is
                  needed;

              

      

      
        	
                 

              	
                (d)

              	
                An
                  explanation of the Agreement’s review procedures and the time limits
                  applicable to such procedures; and

              

      

      
        	
                 

              	
                (e)

              	
                A
                  statement of the claimant’s right to bring a civil action under ERISA
                  Section 502(a) following an adverse benefit determination on
                  review.

              

      

      

      
        	
                7.2

              	
                Review
                  Procedure.  If the Plan Administrator denies part or all of
                  the claim, the claimant shall have the opportunity for a full and
                  fair
                  review by the Plan Administrator of the denial, as
                  follows:

              

      

       

      
        	
                 

              	
                7.2.1

              	
                Initiation
                  – Written Request.  To initiate the review, the claimant,
                  within 60 days after receiving the Plan Administrator’s notice of denial,
                  must file with the Plan Administrator a written request for
                  review.

              

      

       

      
        	
                 

              	
                7.2.2

              	
                Additional
                  Submissions – Information Access.  The claimant shall then
                  have the opportunity to submit written comments, documents, records
                  and
                  other information relating to the claim.  The Plan Administrator
                  shall also provide the claimant, upon request and free of charge,
                  reasonable access to, and copies of, all documents, records and
                  other
                  information relevant (as defined in applicable ERISA regulations)
                  to the
                  claimant’s claim for benefits.

              

      

       

      
        	
                 

              	
                7.2.3

              	
                Considerations
                  on Review.  In considering the review, the Plan
                  Administrator shall take into account all materials and information
                  the
                  claimant submits relating to the claim, without regard to whether
                  such
                  information was submitted or considered in the initial benefit
                  determination.

              

      

       

      
        	
                 

              	
                7.2.4

              	
                Timing
                  of Plan Administrator Response.  The Plan Administrator
                  shall respond in writing to such claimant within 60 days after
                  receiving
                  the request for review.  If the Plan Administrator determines
                  that special circumstances require additional time for processing
                  the
                  claim, the Plan Administrator can extend the response period by
                  an
                  additional 60 days by notifying the claimant in writing, prior
                  to the end
                  of the initial 60-day period, that an additional period is
                  required.  The notice of extension must set forth the special
                  circumstances and the date by which the Plan Administrator expects
                  to
                  render its decision.

              

      

       

      
        	
                 

              	
                7.2.5

              	
                Notice
                  of Decision.  The Plan Administrator shall notify the
                  claimant in writing of its decision on review.  The Plan
                  Administrator shall write the notification in a manner calculated
                  to be
                  understood by the claimant.  The notification shall set
                  forth:

              

      

       

      

      
        	
                 

              	
                (a)

              	
                The
                  specific reasons for the denial;

              

      

      
        	
                 

              	
                (b)

              	
                A
                  reference to the specific provisions of the Agreement on which
                  the denial
                  is based;

              

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (c)

              	
                A
                  statement that the claimant is entitled to receive, upon request
                  and free
                  of charge, reasonable access to, and copies of, all documents,
                  records and
                  other information relevant (as defined in applicable ERISA regulations)
                  to
                  the claimant’s claim for benefits;
                  and

              

      

      
        	
                 

              	
                (d)

              	
                A
                  statement of the claimant’s right to bring a civil action under ERISA
                  Section 502(a).

              

      

      

      Article
        8

      Amendments
        and Termination

      

      
        	
                8.1

              	
                Amendments.  The
                  Bank may amend this Agreement unilaterally by written
                  action.  No amendment shall directly or indirectly deprive the
                  Executive of all or any portion of any benefit payment which has
                  commenced
                  prior to the effective date of the resolution amending the
                  Agreement.

              

      

      

      
        	
                8.2

              	
                Plan
                  Termination Generally.  The Bank and Executive may terminate
                  this Agreement at any time.  Except as provided in Section 8.3,
                  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 2 or Article
                  3.

              

      

      

      
        	
                8.3

              	
                Plan
                  Terminations Under Section 409A.  Notwithstanding anything
                  to the contrary in Section 8.2, if this Agreement terminates 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 of the
                  Corporation as described in Section 409A(2)(A)(v) of the Code,
                  provided
                  that 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 Executive
                  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
                  Executive'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 non-account balance plans (as
                  referenced in Section 409A of the Code or the regulations thereunder),
                  provided

              

      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      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 the downturn in
        the
        financial health of the Bank and provided further that the Bank does not
        adopt
        any new non-account balance plans for a minimum of three (3) years following
        the
        date of such termination;

      

      then
        the
        Bank may distribute the present value of the Executive’s accrued benefit
        determined as of the date of the termination of the Agreement, to the Executive
        in a lump sum subject to the above terms.

      

      Article
        9

      Miscellaneous

      

      
        	
                9.1

              	
                Binding
                  Effect.  This Agreement shall bind the Executive and the
                  Bank, and their beneficiaries, survivors, executors, administrators
                  and
                  transferees.

              

      

      

      
        	
                9.2

              	
                No
                  Guarantee of Employment.  This Agreement is not a contract
                  for employment.  It does not give the Executive the right to
                  remain as an employee of the Bank, nor does it interfere with the
                  Bank's
                  right to discharge the Executive.  It also does not require the
                  Executive to remain an employee nor interfere with the Executive's
                  right
                  to terminate employment at any
                  time.

              

      

      

      
        	
                9.3

              	
                Non-Transferability.  Benefits
                  under this Agreement cannot be sold, transferred, assigned, pledged,
                  attached or encumbered in any
                  manner.

              

      

      

      
        	
                9.4

              	
                Tax
                  Withholding and Reporting.  The Bank shall withhold any
                  taxes that are required to be withheld, including but not limited
                  to taxes
                  owed under Section 409A of the Code and regulations thereunder,
                  from the
                  benefits provided under this Agreement.  The Executive
                  acknowledges that the Bank’s sole liability regarding taxes is to forward
                  any amounts withheld to the appropriate taxing
                  authority(ies).  Further, the Bank shall satisfy all applicable
                  reporting requirements, including those under Section 409A of the
                  Code and
                  regulations thereunder.

              

      

      

      
        	
                9.5

              	
                Applicable
                  Law.  The Agreement and all rights hereunder shall be
                  governed by the laws of the State of Indiana, except to the extent
                  preempted by the laws of the United States of
                  America.

              

      

      

      
        	
                9.6

              	
                Unfunded
                  Arrangement.  The Executive and the Beneficiary are general
                  unsecured creditors of the Bank for the distribution of benefits
                  under
                  this Agreement.  The benefits represent the mere promise by the
                  Bank to distribute such benefits.  The rights to benefits are
                  not subject in any manner to anticipation, alienation, sale, transfer,
                  assignment, pledge, encumbrance, attachment, or garnishment by
                  creditors.  Any insurance on the Executive's life or other
                  informal funding asset is a general asset of the Bank to which
                  the
                  Executive and Beneficiary have no preferred or secured
                  claim.

              

      

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      

      
        	
                9.7

              	
                Reorganization. The
                  Bank shall not merge or consolidate into or with another bank,
                  or
                  reorganize, or sell substantially all of its assets to another
                  bank, firm,
                  or person unless such succeeding or continuing bank, firm, or person
                  agrees to assume and discharge the obligations of the Bank under
                  this
                  Agreement.  Upon the occurrence of such event, the term “Bank”
                  as used in this Agreement shall be deemed to refer to the successor
                  or
                  survivor bank.

              

      

       

      
        	
                9.8

              	
                Entire
                  Agreement. This Agreement constitutes the entire
                  agreement between the Bank and the Executive as to the subject
                  matter
                  hereof.  No rights are granted to the Executive by virtue of
                  this Agreement other than those specifically set forth
                  herein.

              

      

       

      
        	
                9.9

              	
                Interpretation.  Wherever
                  the fulfillment of the intent and purpose of this Agreement requires,
                  and
                  the context will permit, the use of the masculine gender includes
                  the
                  feminine and use of the singular includes the
                  plural.

              

      

      

      
        	
                9.10

              	
                Alternative
                  Action.  In the event it shall become impossible for the
                  Bank or the Plan Administrator to perform any act required by this
                  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, provided
                  that
                  such alternative acts do not violate Section 409A of the
                  Code.

              

      

      

      
        	
                9.11

              	
                Headings.  Article
                  and section headings are for convenient reference only and shall
                  not
                  control or affect the meaning or construction of any of its
                  provisions.

              

      

      

      
        	
                9.12

              	
                Validity.  In
                  case any provision of this Agreement shall be illegal or invalid
                  for any
                  reason, said illegality or invalidity shall not affect the remaining
                  parts
                  hereof, but this Agreement shall be construed and enforced as if
                  such
                  illegal and invalid provision has never been inserted
                  herein.

              

      

      

      
        	
                9.13

              	
                Notice.  Any
                  notice or filing required or permitted to be given to the Bank
                  or Plan
                  Administrator under this Agreement shall be sufficient if in writing
                  and
                  hand-delivered, or sent by registered or certified mail, to the
                  address
                  below:

              

      

       

      
        	 	
                HomeFederal
                  Bank

              	 
	 	
                Attention:  CEO

              	 
	 	
                501
                  Washington Street

              	 
	 	
                Columbus,
                  IN  47201

              	 

      

       

      Such
        notice shall be deemed given as of the date of delivery or, if delivery is
        made
        by mail, as of the date shown on the postmark on the receipt for registration
        or
        certification.

      

      Any
        notice or filing required or permitted to be given to the Executive under
        this
        Agreement shall be sufficient if in writing and hand-delivered, or sent by
        mail,
        to the last known address of the Executive.

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      
        	
                9.14

              	
                Litigation
                  Expenses.  Any legal Expenses incurred by the Executive or
                  any Beneficiary relating to the enforcement or enforceability of
                  any
                  benefit obligations hereunder shall be paid or reimbursed by the
                  Bank to
                  the extent permitted by law; provided however, that except as
                  provided below, the maximum aggregate payment and reimbursement
                  of legal
                  expenses under this Section 9.14 with respect to the Executive
                  or any
                  Beneficiary shall not exceed Ten Thousand Dollars ($10,000); provided
                  further, that this Ten Thousand Dollar ($10,000) limitation shall
                  be
                  reduced by the amount of any legal expenses incurred by the Executive
                  or
                  any Beneficiary which were paid or reimbursed by the Bank under
                  any other
                  plan or arrangement entered into by the Bank and
                  Executive.  Notwithstanding anything contained in this Section
                  9.14 to the contrary, the Executive or any Beneficiary shall be
                  entitled
                  to payment or reimbursement of legal expenses in excess of Ten
                  Thousand
                  Dollars ($10,000) if the expenses were incurred as a result of
                  bona fide
                  claims under this Agreement in which the Executive or any Beneficiary
                  obtains a final judgment in their favor from a court of competent
                  jurisdiction or their claim is settled by the Bank prior to the
                  rendering
                  of a judgment by such a court.

              

      

       

      
        	
                9.15

              	
                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.

              

      

       

      
        	
                9.16

              	
                280G
                  Limits.  Anything in this Agreement to the contrary
                  notwithstanding, in the event that the Bank’s independent public
                  accountants determine that any payment by the Bank to or for the
                  benefit
                  of the Executive, whether paid or payable pursuant to the terms
                  of this
                  Agreement, would be non-deductible by the Bank for federal income
                  tax
                  purposes because of Section 280G of the Code, then the amount payable
                  to
                  or for the benefit of the Executive pursuant to this Agreement
                  shall be
                  reduced (but not below zero) to the Reduced Amount.  For
                  purposes of this Section 9.16, the “Reduced Amount” shall be the amount
                  which maximizes the amount payable without causing the payment
                  to be
                  non-deductible by the Bank because of Section 280G of the
                  Code.

              

      

       

      

      IN
        WITNESS WHEREOF, the Executive and a duly authorized representative of the
        Bank
        have signed this Agreement.

      

      

      
        	
                EXECUTIVE:

              	 	
                HOMEFEDERAL
                  BANK

              
	 	 	 	 
	 	 	 	 
	/s/
                Charles R. Farber	 	
                By

              	/s/
                John K. Keach, Jr.
	
                Charles
                  R. Farber

              	 	
                Title

              	Chairman/CEO

      

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

                

                    

            HOMEFEDERAL
              BANK                            

            Executive
              Supplemental Retirement Income
              Agreement        

            BENEFICIARY
              DESIGNATION FORM

             

             
              
                

              

            

          

        

      

      {  }           New
        Designation

      {  }           Change
        in Designation

      

      I,
        __________________________, designate the following as Beneficiary under
        the
        Agreement:

      

      
        	
                Primary:

                  
                  ___________________________________________________________

                 

                  
                  ___________________________________________________________

                 

              	
                 

                _____%

                 

                _____%

                 

              
	
                Contingent:

                  
                  ___________________________________________________________

                 

                  
                  ___________________________________________________________

                 

              	
                 

                _____%

                 

                _____%

                 

              

      

      

       

        Notes:

      

      
      

      

      
        	
                 

              	
                ·

              	
                Please
                  PRINT CLEARLY or TYPE the names of the
                  beneficiaries.

              

      

      
        	
                 

              	
                ·

              	
                To
                  name a trust as Beneficiary, please provide the name of the trustee(s)
                  and
                  the exact name and date of the
                  trust agreement.

              

      

      
        	
                 

              	
                ·

              	
                To
                  name your estate as Beneficiary, please write “Estate of
                  [your
                  name]”.

              

      

      
        	
                 

              	
                ·

              	
                Be
                  aware that none of the contingent beneficiaries will receive anything
                  unless ALL of the primary beneficiaries predecease
                  you.

              

      

      

      I
        understand that I may change these beneficiary designations by delivering
        a new
        written designation to the Plan Administrator, which shall be effective only
        upon receipt and acknowledgment by the Plan Administrator prior to my
        death.  I further understand that the designations will be
        automatically revoked if the Beneficiary predeceases me, or, if I have named
        my
        spouse as Beneficiary and our marriage is subsequently dissolved.

      

      Name:                                _______________________________

      

      Signature:                        _______________________________                      Date:    ___________

      

      Received
        by the Plan Administrator this ________ day of ___________________,
        2_____

      

      By:            _________________________________

      

      Title:         _________________________________

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