Document:

hfb_8k0724ex105.htm

     

    Exhibit
      10.5

     

    

      FIRST
        AMENDMENT

      TO
        THE

      HOMEFEDERAL
        BANK

      SUPPLEMENTAL
        EXECUTIVE RETIREMENT PLAN AGREEMENT

      FOR

      JOHN
        K. KEACH, JR.

      

      

      THIS
        FIRST AMENDMENT is adopted this 24
        day of July, 2007, effective as of January 1, 2005, by and between HOMEFEDERAL
        BANK f/k/a HOME FEDERAL SAVINGS BANK, a state-chartered bank located in
        Columbus, Indiana (the “Bank”), and John K. Keach, Jr. (the
“Executive”).

      

      The
        Bank and the Executive executed the
        SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT on May 22, 1991, and amended
        it
        several times (the “First Agreement”).  The parties amended and
        restated the First Agreement on April 1, 2001 (the “Second
        Agreement”).  The First and Second Agreements are referred to
        collectively herein as the “Prior Agreement”.

      

      The
        undersigned hereby amend the Prior
        Agreements for the purpose of bringing the Prior Agreements into compliance
        with
        Section 409A of the Internal Revenue Code.  Therefore, the following
        changes shall be made:

      

      The
        following Section 1.2a shall be
        added to the Agreement immediately following Section 1.2:

      

      
        	
                1.2a

              	
                “Specified
                  Employee” means a key employee (as defined in Section 416(i) of the
                  Code without regard to paragraph 5 thereof) of the Bank if any
                  stock of
                  the Bank or any entity required to be aggregated with the Bank
                  under
                  Section 414(b) or 414(c) of the Code is publicly traded on an established
                  securities market or otherwise.

              

      

      

      Section
        1.4 of the Agreement shall be
        deleted in its entirety and replaced by the following:

      

      
        	
                1.4

              	
                “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 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

          
            

          

        

        
          
          

        

      

       

      Section
        2.1.1 of the Agreement shall be deleted in its entirety and replaced by the
        following:

      

      
        	
                2.1.1

              	
                Amount
                  of Benefit.  The annual retirement benefit under this
                  Section 2.1 is eighty-two thousand six hundred sixty-four dollars
                  ($82,664).

              

      

      
 

      The
        following Sections 2.2, 2.3 and 2.4
        shall be added to the Agreement immediately following Section
        2.1.2:

      

      
        	
                2.2

              	
                Restriction
                  on Timing of Distributions.  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 2.2 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.
                  § 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 2.2 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.

              

      

      

      
        	
                2.3

              	
                Distributions
                  Upon Income Inclusion Under Section 409A of the Code.  Upon
                  the inclusion of any amount 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 amount the Bank has accrued with
                  respect
                  to the Bank’s obligations hereunder, a distribution shall be made as soon
                  as is administratively practicable following the discovery of the
                  plan
                  failure.

              

      

      

      
        	
                2.4

              	
                Change
                  in Form or Timing of Distributions.  All changes in the
                  form or timing of distributions hereunder must comply with the
                  following
                  requirements.  The
                  changes:

              

      

      

      
        	
                (a)  

              	
                may
                  not accelerate the time or schedule of any distribution, except
                  as
                  provided in Section 409A of the Code and the regulations
                  thereunder;

              

      

      

      
        	
                (b)  

              	
                must,
                  for benefits distributable under Section 2.1, 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

              

      

      
      

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
 

      
        	
                (c)  

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

              

      

      

      Article
        6 of the Agreement shall be deleted in its entirety and replaced by the
        following:

      

      

      

      Article
        6

      Claims
        And Review Procedures

      

      
        	
                6.1

              	
                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:

              

      

       

      
        	
                6.1.1 
                  

              	
                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.

              

      

       

      

      
        	
                6.1.2 
                  

              	
                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.

              

      

      

      
        	
                6.1.3 
                  

              	
                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;

              

      

      
        	
                 

              	
                (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.

              

      

       

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      
 

      
        	
                6.2

              	
                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:

              

      

      

      
        	
                6.2.1 
                   

              	
                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.

              

      

      

      
        	
                6.2.2  
                  

              	
                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.

              

      

      

      
        	
                6.2.3  
                  

              	
                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.

              

      

      

      
        	
                6.2.4 
                   

              	
                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.

              

      

      

      
        	
                6.2.5  
                  

              	
                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;

              

      

      
        	
                 

              	
                (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
        7 of the Agreement shall be
        deleted in its entirety and replaced by the following:

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

      Article
        7

      Amendments
        and Termination

      

      
        	
                7.1

              	
                Amendments.  This
                  Agreement may be amended only by a written agreement signed by
                  the Bank
                  and the Executive.  However, the Bank may unilaterally amend
                  this Agreement to conform with written directives to the Bank from
                  its
                  auditors or banking regulators or to comply with legislative changes
                  or
                  tax law, including without limitation Section 409A of the Code
                  and any and
                  all Treasury regulations and guidance promulgated
                  thereunder.

              

      

      

      
        	
                7.2

              	
                Plan
                  Termination Generally.  The Bank and the
                  Executive may terminate this Agreement at any
                  time.  The benefit hereunder shall be the amount the Bank has
                  accrued with respect to the Bank’s obligations
                  hereunder.  Except as provided in Section 7.3, 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.

              

      

      

      
        	
                7.3

              	
                Plan
                  Terminations Under Section 409A.  Notwithstanding anything
                  to the contrary in Section 7.2, 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 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;

              

      

       

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      then
        the
        Bank may distribute the amount the present value of the benefits payable
        to the
        Executive under this Agreement upon his Termination of Employment, using
        the
        actuarial factors that would be used to compute the present value of benefits
        under § 280G of the Code, determined as of the date of the termination of
        the Agreement, to the Executive in a lump sum subject to the above
        terms.

      

       

      
        	
                 

              	
                Section
                  8.7 of the Agreement shall be deleted in its entirety and replaced
                  by the
                  following:

              

      

       

      

      
        	
                8.7

              	
                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.

              

      

      

      

      IN
        WITNESS OF THE
        ABOVE, the Bank and the Executive hereby consent to this First
        Amendment.

       

      

      
        	
                Executive:

              	 	
                HOMEFEDERAL
                  BANK

              
	 	 	 	 
	 	 	 	 
	/s/
                John K. Keach, Jr.	 	
                By

              	/s/
                Mark T. Gorski
	
                John
                  K. Keach, Jr.

              	 	
                Title

              	EVP/CFO

      

       

       

       

       

      6hfb_8k0724ex106.htm

     

    Exhibit
      10.6

     

    

      SECOND
        AMENDMENT

      TO
        THE

      HOMEFEDERAL
        BANK

      SUPPLEMENTAL
        EXECUTIVE RETIREMENT AGREEMENT

      DATED
        NOVEMBER 3, 2005

      FOR

      MARK
        T. GORSKI

      

      THIS
        SECOND AMENDMENT is adopted this
        24 day of July, 2007, effective as of July 1, 2005, by and between HOMEFEDERAL
        BANK, a state-chartered bank located in Columbus, Indiana (the “Bank”), and MARK
        T. GORSKI (the “Executive”).

      

      The
        Bank and the Executive executed the
        SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT on November 3, 2005 effective
        as of
        July 1, 2005 (the “Agreement”), and amended as of February 28,
        2006.

      

      The
        undersigned hereby amend the
        Agreement for the purpose of bringing the Agreement into compliance with
        Section
        409A of the Internal Revenue Code.  Therefore, the following changes
        shall be made:

      

      Section 1.4
        of the Agreement shall be deleted in its entirety and replaced by the
        following:

       

      1.4           “Change
        in 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:

              

      

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

       

      
        	
                 

              	
                (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, 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

         

         

         

         

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

         

         

         

        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 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.

      

       

      Section
        1.13 of the Agreement shall be
        deleted in its entirety and replaced by the following:

      

      
        	
                1.13

              	
                “Separation
                  from Service” means the termination of the Executive’s employment with
                  the Bank for reasons other than death.  Whether a Separation
                  from Service takes place is determined based on the facts and
                  circumstances surrounding the termination of the Executive’s
                  employment.  A change in the Executive’s employment status will
                  be considered a Separation from Service if it is reasonably anticipated
                  that:

              

      

      

      
        	
                (a)  

              	
                the
                  Executive will not perform any services for the Bank after his
                  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.

              

      

      

      The
        following Section 1.13a shall be
        added to the Agreement immediately following Section 1.13:

      

      
        	
                1.13a

              	
                “Specified
                  Employee” means a key employee (as defined in Section 416(i) of the
                  Code without regard to paragraph 5 thereof) of the Bank or any
                  entity
                  required to be aggregated with the Bank under Section 414(b) or
                  414(c) of
                  the Code if any stock of the Bank is publicly traded on
                  an established securities market or
                  otherwise.

              

      

      

      The
        following Section 1.15 shall be
        added to the Agreement immediately following Section 1.14:

      

      
        	
                1.15

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

              

      

      

      Section 2.3
        of the Agreement shall be deleted in its entirety and replaced by the
        following:

       

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

       

      
        	
                2.3

              	
                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 2.3 in lieu of any other benefit
                  under this Article.

              

      

       

      
        	
                2.3.1 
                  

              	
                Amount
                  of Benefit.  The annual benefit under this Section 2.3
                  is the Disability benefit set forth on Schedule A for the Plan Year
                  that ended immediately prior to the date on which Separation from
                  Service
                  due to Disability occurs.

              

      

       

      
        	
                2.3.2 
                  

              	
                Distribution
                  of Benefit.  The Bank shall distribute the annual benefit to
                  the Executive in twelve (12) equal monthly installments commencing
                  within
                  Sixty (60) days following Normal Retirement Age.  The annual
                  benefit shall be distributed to the Executive for fifteen (15)
                  years.

              

      

       

      Section
        2.5 of the Agreement shall be
        deleted in its entirety and replaced by the following:

      

      
        	
                2.5

              	
                Restriction
                  on Timing of Distributions.  Notwithstanding any provision of
                  this Agreement to the contrary, if the Executive
                  is considered a Specified Employee at Separation from Service under
                  such
                  procedures as established by the Bank in accordance with Section
                  409A of
                  the Code, benefit distributions that are made upon Separation from
                  Service
                  may not commence earlier than six (6) months after the date of
                  such Separation from Service.  Therefore, in the event this
                  Section 2.5 is applicable to the Executive,
                  any distribution which would otherwise be paid to the Executive
                  within the
                  first six months following the Separation from Service shall be
                  accumulated and paid to the Executive
                  in a lump sum on the first day of the seventh month following the
                  Separation from Service.  All subsequent distributions shall be
                  paid in the manner specified.

              

      

      

      

      The
        following Sections 2.6 and 2.7
        shall be added to the Agreement immediately following Section
        2.5:

      

      
        	
                2.6

              	
                Distributions
                  Upon Income Inclusion Under Section 409A of the Code.  Upon
                  the inclusion of any amount 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 amount the Bank has accrued with
                  respect
                  to the Bank’s obligations hereunder, a distribution shall be made as soon
                  as is administratively practicable following the discovery of the
                  plan
                  failure.

              

      

      

      
        	
                2.7

              	
                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 2.1, 2.2, 2.3 and 2.4,
                  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

              

      

       

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

       

      
        	
                 

              	
                (c)

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

              

      

       

      Section
        3.1.2 of the Agreement shall be deleted in its entirety and replaced by the
        following:

      

      
        	
                3.1.2

              	
                Distribution
                  of Benefit.  The Bank shall distribute the benefit to the
                  Beneficiary in a lump sum within sixty (60) days following receipt
                  by the
                  Bank of the Executive’s death
                  certificate.

              

      

      

      Sections
        5.1 and 5.2 of the Agreement
        shall be deleted in their entirety and replaced with the
        following:

      

      
        	
                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 Executive has a Separation from Service for the following
                  reasons:

              

      

       

      
        	 	 (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.

              

      

       

      
        	
                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 misstatement of fact made by the Executive on an application
                  for
                  life insurance, or (ii) for any other
                  reason.

              

      

      

      Section
        6.6 of the Agreement shall be deleted in its entirety.

      

      Article
        8 of the Agreement shall be
        deleted in its entirety and replaced by the following:

      

      Article
        8

      Amendments
        and Termination

      

      
        	
                8.1

              	
                Amendments.  This
                  Agreement may be amended only by a written agreement signed by
                  the Bank
                  and the Executive.  However, the Bank may unilaterally amend
                  this Agreement to conform with written directives to the Bank from
                  its
                  auditors or banking regulators or to comply with legislative changes
                  or
                  tax law, including without limitation Section 409A of the Code
                  and any and
                  all Treasury regulations and guidance promulgated
                  thereunder.

              

      

      

      
        	
                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

              

      

       

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
         

        
 

        
          	
                   

                	
                  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 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 that all distributions are made no earlier than twelve
                  (12)
                  months and no later than twenty-four (24) months following such
                  termination, provided further that the termination of this Agreement
                  does
                  not occur proximate to a downturn in the financial health of the
                  Bank and
                  provided further that the Bank does not adopt any new 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 benefits payable to the Executive
        under this Agreement upon his Separation from Service, using the actuarial
        factors that would be used to compute the present value of benefits under
§ 280G
        of the Code, determined as of the date of the termination of the Agreement,
        to
        the Executive in a lump sum subject to the above terms.

      

      Section
        9.4 of the Agreement shall be deleted in its entirety and replaced by the
        following:

      

      
        	
                9.4

              	
                Tax
                  Withholding and Reporting.  The Bank shall withhold any
                  taxes that are required to be withheld from the benefits provided
                  under
                  this Agreement.  The Executive acknowledges that the Bank’s sole
                  liability regarding taxes is to forward any
                  amounts

              

      

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        

        
          	
                   

                	
                  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.

                

        

         

      

                 The
        following Section 9.10 shall be added to the Agreement immediately following
        Section 9.9:

      

      
        	
                9.10

              	
                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.

              

      

      

      A
        new Section 9.11 shall be added to
        the Agreement immediately following Section 9.10 to read in its entirety
        as
        follows:

      

      
        	
                9.11

              	
                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 9.11, 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.

              

      

      

      The
        Death Benefit Election Form of the Agreement shall be deleted in its
        entirety.

      

      IN
        WITNESS OF THE
        ABOVE, the Bank and the Executive hereby consent to this Second
        Amendment.

      

      

      
        	
                Executive:

              	 	
                HOMEFEDERAL
                  BANK

              
	 	 	 	 
	 	 	 	 
	/s/
                Mark T. Gorski	 	
                By

              	/s/
                John K. Keach, Jr.
	
                MARK
                  T. GORSKI

              	 	
                Title

              	Chairman/CEO

      

      
 

       

       

       

      7

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