Document:

exv10w7

 

Exhibit 10.7

Gladstone Commercial Corporation

Second Amendment to 2003 Equity Incentive Plan

RECITALS

     A. On June 10, 2003, the Board of Directors and stockholders of Gladstone Commercial
Corporation, a Maryland corporation (the
“Company”), adopted the 2003 Equity Incentive Plan
(the “Plan”).

     B. On July 17, 2003, the Board of Directors and stockholders of the Company approved the
Amendment No. 1 to the Plan.

     C. On March 9, 2004, the Board of Directors of the Company approved the following Second
Amendment to the Plan, which was ratified by the stockholders of the Company on May 26, 2004.

AMENDMENT

	1.  	Section 4(a) of the Plan shall be amended and restated in its entirety to read as follows:
	 
	   	“(a) Share Reserve. Subject to the provisions of Section 11(a) relating to
Capitalization Adjustments, the capital stock that may be issued pursuant to Stock
Awards shall not exceed nine hundred sixty thousand (960,000).”
	 
	2.  	Except as set forth in this Second Amendment, the Plan shall be unaffected hereby and shall
remain in full force and effect.exv10w8

 

Exhibit 10.8

FIRST AMENDMENT

OF

AGREEMENT OF LIMITED PARTNERSHIP

OF GLADSTONE COMMERCIAL LIMITED PARTNERSHIP

     This First Amendment of Agreement of Limited Partnership (the “Agreement”), is
entered into as of September 1, 2004, by and between Gladstone Commercial Corporation, Inc.,
a Maryland corporation (the “Corporation”), and Gladstone Commercial Partners, LLC, a
Delaware limited liability company (“GCP”).

     WHEREAS, the Corporation and GCP are parties to the Agreement of Limited Partnership
of Gladstone Commercial Limited Partnership (the “Partnership”) dated July 17, 2003 (the
“Partnership Agreement”); and

     WHEREAS, at the time of execution of the Partnership Agreement, the Corporation owned
a one percent (1%) Percentage Interest as a General Partner in the Partnership (the “General
Partnership Interest”) and GCP owned a ninety-nine percent (99%) Percentage Interest as a Limited
Partner in the partnership (the “Limited Partnership Interest”); and

     WHEREAS, the Corporation and GCP (the “Partners”) have entered into a Partnership
Interest Exchange Agreement (the “Exchange Agreement”) dated of even date herewith, pursuant to
which the Partners have exchanged the General Partnership Interest for the Limited Partnership
Interest; and

     WHEREAS, the parties desire to amend the Partnership Agreement to reflect the terms
of the Exchange Agreement;

     NOW THEREFORE, in consideration of the covenants and obligations contained herein,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

     1. Amendment of Partnership Agreement. From and after the date hereof, the Corporation shall
be deemed the Original Limited Partner, and GCP shall be deemed the General Partner, for all
purposes under the Partnership Agreement. Exhibit A of the Partnership Agreement shall be deleted
in its entirety, and Exhibit A hereto shall be inserted in lieu thereof.

     2. Miscellaneous Provisions.

          2.1 This Agreement shall be construed and performed in accordance with the laws of the State
of Delaware, without regard to the conflicts of law therein. The rights and liabilities of the
present parties shall bind and inure to their respective heirs, devisees, personal representatives,
successors and assigns.

 

 

          2.2 This Agreement and the exhibits hereto constitute the entire agreement among the parties
relating to their subject matter and supersede all prior and contemporaneous agreements and
understandings of the parties in connection with such subject matter.

          2.3 From and after the date of this Agreement, upon the request of the Corporation or GCP, the
other party shall execute and deliver such instruments, documents or other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.

     In Witness Whereof, the parties hereto have executed this First Amendment of
Agreement of Limited Partnership as of the day and year first written above.

	 	 	 	 	 	 
	 	 	Gladstone Commercial Corporation	 
	 	 	a Maryland corporation	 
	 
	 	 	 	 	 
	

	 	By:	 	 	 
	

	 	 	 	 	 
	

	 	Name:	 	 	 
	

	 	 	 	 	 
	

	 	Title:	 	 	 
	

	 	 	 	 	 
	 
	 	 	 	 	 
	 	 	Gladstone Commercial Partners, LLC	 
	 	 	a Delaware limited liability company	 
	 
	 	 	 	 	 
	

	 	By:	 	 	 
	

	 	 	 	 	 
	

	 	Name:	 	 	 
	

	 	 	 	 	 
	

	 	Title:	 	 	 
	

	 	 	 	 	 

 

 

EXHIBIT A

PARTNERS, CAPITAL CONTRIBUTIONS AND PARTNERSHIP UNITS

As of September 1, 2004

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Agreed	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Value of	 	 	 	 	 	 	 
	 	 	 	 	Cash	 	 	Property	 	 	Partnership	 	 	Percentage	 
	 	Partners	 	 	Contribution	 	 	Contribution	 	 	Units	 	 	Interest	 
	 	GENERAL PARTNER:

Gladstone Commercial Partners, LLC

1750 Tysons Blvd.

Fourth Floor

McLean, Virginia 22102
	 	 	$1.00	 	 	N/A	 	 	1 Unit	 	 	1.0%	 
	 	ORIGINAL
LIMITED PARTNER:

Gladstone Commercial Corporation 

1750 Tysons Blvd.

Fourth Floor

McLean, Virginia 22102
	 	 	$99.00	 	 	N/A	 	 	99 Units	 	 	99.0%	 
	 	ADDITIONAL LIMITED

PARTNERS: [none]exv10w1

 

Exhibit 10.1

CHANGE-IN-CONTROL AGREEMENT

          AGREEMENT entered into as of March 1, 2004 by and between Home Federal Savings Bank, a
federally chartered savings bank (the “Bank”) and a wholly owned subsidiary of HMN Financial, Inc.,
a Delaware corporation (the “Company”), and Michael McNeil (the “Executive”).

WITNESSETH:

          WHEREAS, the Executive is a key member of the management of the Company and the Bank and has
heretofore devoted substantial skill and effort to the affairs of the Company and the Bank; and

          WHEREAS, it is desirable and in the best interests of the Bank and the Company and its
shareholders to continue to obtain the benefits of the Executive’s services and attention to the
affairs of the Company and the Bank; and

          WHEREAS, it is desirable and in the best interests of the Bank and the Company and its
shareholders to provide inducement for the Executive (A) to remain in the service of the Company
and the Bank in the event of any proposed or anticipated change in control of the Company and (B)
to remain in the service of the Company and the Bank in order to facilitate an orderly transition
in the event of a change in control of the Company; and

          WHEREAS, it is desirable and in the best interests of the Bank and the Company and its
shareholders that the Executive be in a position to make judgments and advise the Company with
respect to proposed changes in control of the Company or the Bank; and

          WHEREAS, the Executive desires to be protected in the event of certain changes in control of
the Company or the Bank; and

          WHEREAS, Executive and the Bank are currently party to a Change-in-Control Agreement dated
November 1, 2000 (the “Prior Agreement”); and

          WHEREAS, Executive and the Bank desire to terminate the Prior Agreement and to enter into this
Agreement to conform the renewal period of this Agreement with that of the Executive’s Employment
Agreement with the Company; and

          WHEREAS, for the reasons set forth above, the Bank and the Executive desire to enter into this
Agreement.

          NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
contained herein, the Bank and the Executive agree as follows:

 

 

     1. Employment. The Executive has previously executed an Employment Agreement (the
“Employment Agreement”) which governs the terms of the Executive’s employment, unless an Event
shall be deemed to have occurred as contemplated by Section 2.

     2. Events. No amounts or benefits shall be payable or provided for pursuant to this
Agreement unless an Event shall occur during the Term of this Agreement.

     (a) For purposes of this Agreement, an “Event” shall be deemed to have occurred if any
of the following occur:

     (i) Any “person” (as defined in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, or any successor statute thereto (the “Exchange
Act”)) acquires or becomes a “beneficial owner” (as defined in Rule 13d-3 or any
successor rule under the Exchange Act), directly or indirectly, of securities of the
Company or the Bank representing 35% or more of the combined voting power of the
then outstanding securities entitled to vote generally in the election of directors
(“Voting Securities”), provided, however, that the following shall not constitute an
Event pursuant to this Section 2(a)(i):

     (A) any acquisition of beneficial ownership by the Company, the Bank or
a subsidiary of the Company or the Bank;

     (B) any acquisition or beneficial ownership by any employee benefit
plan (or related trust) sponsored or maintained by the Company, the Bank or
one or more of their subsidiaries;

     (C) any acquisition or beneficial ownership by any corporation
(including without limitation an acquisition in a transaction of the nature
described in Section 2(a)(iii)) with respect to which, immediately following
such acquisition, more than 65%, respectively, of (x) the combined voting
power of the Company’s or the Bank’s then outstanding Voting Securities and
(y) the Company’s or the Bank’s then outstanding common stock (the “Common
Stock”) is then beneficially owned, directly or indirectly, by all or
substantially all of the persons who beneficially owned Voting Securities
and Common Stock, respectively, of the Company or the Bank immediately prior
to such acquisition in substantially the same proportions as their ownership
of such Voting Securities and Common Stock, as the case may be, immediately
prior to such acquisition;

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     (D) any acquisition of Voting Securities or Common Stock directly from
the Company or the Bank;

     (ii) Continuing Directors shall not constitute a majority of the members of the
Board of Directors of the Company. For purposes of this Section 2(a)(ii),
“Continuing Directors” shall mean: (A) individuals who, on the date hereof, are
directors of the Company, (B) individuals elected as directors of the Company
subsequent to the date hereof for whose election proxies shall have been solicited
by the Board of Directors of the Company or (C) any individual elected or appointed
by the Board of Directors of the Company to fill vacancies on the Board of Directors
of the Company caused by death or resignation (but not by removal) or to fill
newly-created directorships, provided that a “Continuing Director” shall not include
an individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the threatened election or removal of
directors (or other actual or threatened solicitation of proxies or consents) by or
on behalf of any person other than the Board of Directors of the Company;

     (iii) Consummation of a reorganization, merger or consolidation of the Company
or the Bank or a statutory exchange of outstanding Voting Securities of the Company
or the Bank, unless immediately following such reorganization, merger, consolidation
or exchange, all or substantially all of the persons who were the beneficial owners,
respectively, of Voting Securities and Common Stock immediately prior to such
reorganization, merger, consolidation or exchange beneficially own, directly or
indirectly, more than 65% of, respectively, (x) the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors and (y) the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger, consolidation or exchange in
substantially the same proportions as their ownership, immediately prior to such
reorganization, merger, consolidation or exchange, of the Voting Securities and
Common Stock, as the case may be;

     (iv) (x) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company or the Bank or (y) approval by the shareholders of
the Company of the sale or other disposition of all or substantially all of the
assets of the Company or the Bank (in one or a series of transactions), other than
to a corporation with respect to which, immediately following such sale or other
disposition, more than 65% of, respectively, (1) the combined voting power of the
then outstanding voting securities of such

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corporation entitled to vote generally in the election of directors and (2) the then
outstanding shares of common stock of such corporation is then beneficially owned,
directly or indirectly, by all or substantially all of the persons who were the
beneficial owners, respectively, of the Voting Securities and Common Stock
immediately prior to such sale or other disposition in substantially the same
proportions as their ownership, immediately prior to such sale or other disposition,
of the Voting Securities and Common Stock, as the case may be;

     (v) The Company or the Bank enters into a letter of intent, an agreement in
principle or a definitive agreement relating to an Event described in Section
2(a)(i), 2(a)(ii), 2(a)(iii) or 2(a)(iv) hereof that ultimately results in such an
Event, or a tender or exchange offer or proxy contest is commenced which ultimately
results in an Event described in Section 2(a)(i) or 2(a)(ii) hereof; or

     (vi) There shall be an involuntary termination or Constructive Involuntary
Termination of employment of the Executive, and the Executive reasonably
demonstrates that such event (x) was requested by a party other than the Board of
Directors of the Company or the Bank that had previously taken other steps
reasonably calculated to result in an Event described in Section 2(a)(i), 2(a)(ii),
2(a)(iii) or 2(a)(iv) hereof and which ultimately results in an Event described in
Section 2(a)(i), 2(a)(ii), 2(a)(iii) or 2(a)(iv) hereof, or (y) otherwise arose in
connection with or in anticipation of an Event described in Section 2(a)(i),
2(a)(ii), 2(a)(iii) or 2(a)(iv) hereof that ultimately occurs.

Notwithstanding anything stated in this Section 2(a), an Event shall not be deemed to occur
with respect to the Executive if (x) the acquisition or beneficial ownership of the 35% or
greater interest referred to in Section 2(a)(i) is by the Executive or by a group, acting in
concert, that includes the Executive or (y) a majority of the then combined voting power of
the then outstanding voting securities (or voting equity interests) of the surviving
corporation or of any corporation (or other entity) acquiring all or substantially all of
the assets of the Company or the Bank shall, immediately after a reorganization, merger,
consolidation, exchange or disposition of assets referred to in Section 2(a)(iii) or
2(a)(iv), be beneficially owned, directly or indirectly, by the Executive or by a group,
acting in concert, that includes the Executive.

     (b) For purposes of this Agreement, a “subsidiary” of the Company or the Bank shall
mean any entity of which securities or other ownership interests having general voting power
to elect a majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Company or the Bank.

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     3. Payments and Benefits. If any Event shall occur during the Term of this Agreement,
then the Executive shall be entitled to receive from the Company, the Bank or either of their
successors (which term as used herein shall include any person acquiring all or substantially all
of the assets of the Company or the Bank) a cash payment and other benefits on the following basis
(unless the Executive’s employment by the Company is terminated voluntarily or involuntarily prior
to the occurrence of the earliest Event to occur (the “First Event”), in which case the Executive
shall be entitled to no payment or benefits under this Section 3):

     (a) If at the time of, or at any time after, the occurrence of the First Event and
prior to the end of the Transition Period (as defined in Section 4(d)), the employment of
the Executive with the Company or the Bank is voluntarily or involuntarily terminated for
any reason (unless such termination is a voluntary termination by the Executive other than a
Constructive Involuntary Termination or is on account of the death or Disability of the
Executive or is a termination by the Company or the Bank for Cause), the Executive (or the
Executive’s legal representative, as the case may be),

     (i) shall be entitled to receive from the Company, the Bank or either of their
successors, upon such termination of employment with the Company, the Bank or either
of their successors, a cash payment in an amount equal to 2.99 times the average
annual base salary payable by the Bank and included in the gross income for Federal
Income Tax purposes of the Executive during the shorter of the period consisting of
the five most recently completed taxable years of the Executive ending before the
First Event (other than an Event described in Section 2(a)(v) or 2(a)(vi) unless the
Executive is terminated prior to the occurrence of an Event described in Section
2(a)(i), 2(a)(ii), 2(a)(iii) or 2(a)(iv)) or that portion of such period during
which the Executive was employed by the Company or the Bank (for which purpose
compensation for a partial year shall be annualized, in accordance with temporary or
final regulations promulgated under Section 280G(d) of the Internal Revenue Code of
1986, as amended (the “Code”), or any successor provision thereto, before
determining average annual compensation for the period, such average annual
compensation to be determined in accordance with temporary or final regulations
promulgated under Section 280G(d) of the Code or any successor provision thereto and
such payment to be made to the Executive by the Company, the Bank or either of their
successors in a lump sum at the time of such termination of employment; and

     (ii) shall be entitled for two years after the termination of the Executive’s
employment with the Company or the Bank to participate in any health, disability and
life insurance plan or program in which the Executive was entitled to participate
immediately prior to the First Event as if he were an

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employee of the Company or the Bank during such two-year period (except, with
respect to health insurance coverage, for those portions remaining during such
two-year period that duplicate health insurance coverage that is in place for the
Executive under any other policy provided at the expense of another employer);
provided however, that in the event that the Executive’s participation in any such
health, disability or life insurance plan or program of the Company or the Bank is
barred, the Company or the Bank, at its sole cost and expense, shall arrange to
provide the Executive with benefits substantially similar to those which the
Executive would be entitled to receive under such plan or program if he were not
barred from participation.

     (b) The payments provided for in this Section 3 shall be in addition to any salary or
other remuneration otherwise payable to the Executive on account of employment by the
Company, the Bank or one or more of either of their subsidiaries or successors (including
any amounts received prior to such termination of employment for personal services rendered
after the occurrence of the First Event) but shall be reduced by any severance pay which the
Executive receives from the Bank, its subsidiaries or its successor under any other policy
or agreement of the Bank or its subsidiaries in the event of involuntary termination of
Executive’s employment.

     (c) In the event that at any time from the date of the First Event until the end of the
Transition Period,

     (i) the Executive shall not be given substantially equivalent or greater title,
duties, responsibilities and authority, in each case as compared with the
Executive’s status immediately prior to the First Event, other than for Cause or on
account of Disability;

     (ii) the Executive’s annual base salary shall be reduced from the Executive’s
annual base salary in effect immediately prior to the First Event;

     (iii) the Company or the Bank shall fail to provide the Executive with benefits
under either of their pension, profit sharing, retirement, life insurance, medical,
health and accident, disability, bonus and incentive plans and other employee
benefit plans and arrangements that in the aggregate for all such plans and
arrangements are at least as favorable to the Executive as those benefits covering
the Executive immediately prior to the First Event or shall fail to provide the
Executive with at least the number of paid vacation days to which the Executive was
entitled immediately prior to the First Event;

     (iv) the Bank shall have failed to obtain assumption of this Agreement by any
successor as contemplated by Section 5(b) hereof;

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     (v) the Company or the Bank shall require the Executive to relocate to any
place other than a location within thirty-five miles of the location at which the
Executive performed his primary duties immediately prior to the First Event or, if
the Executive performed such duties at the Company’s principal executive offices,
the Company shall relocate its principal executive offices to any location other
than a location within thirty-five miles of the location of the principal executive
offices immediately prior to the First Event; or

a termination of employment with the Company or the Bank by the Executive thereafter shall
constitute a Constructive Involuntary Termination.

     (d) Notwithstanding any provision to the contrary contained herein except the last
sentence of this Section 3(d), if the lump sum cash payment due and the other benefits to
which the Executive shall become entitled under Section 3(a) hereof, either alone or
together with other payments in the nature of compensation to the Executive which are
contingent on a change in the ownership or effective control of the Company or the Bank or
in the ownership of a substantial portion of the assets of the Company or the Bank or
otherwise, would constitute a “parachute payment” as defined in Section 280G of the Code or
any successor provision thereto, such lump sum payment and/or such other benefits and
payments shall be reduced (but not below zero) to the largest aggregate amount as will
result in no portion thereof being subject to the excise tax imposed under Section 4999 of
the Code (or any successor provision thereto) or being non-deductible to the Company or the
Bank for federal income tax purposes pursuant to Section 280G of the Code (or any successor
provision thereto). The Company or the Bank in good faith shall determine the amount of any
reduction to be made pursuant to this Section 3(d) and shall select from among the foregoing
benefits and payments those which shall be reduced. No modification of, or successor
provision to, Section 280G or Section 4999 subsequent to the date of this Agreement shall,
however, reduce the benefits to which the Executive would be entitled under this Agreement
in the absence of this Section 3(d) to a greater extent than they would have been reduced if
Section 280G and Section 4999 had not been modified or superseded subsequent to the date of
this Agreement, notwithstanding anything to the contrary provided in the first sentence of
this Section 3(d).

     (e) The Executive shall not be required to mitigate the amount of any payment or other
benefit provided for in Section 3 by seeking other employment or otherwise, nor (except as
specifically provided in Section 3(a)(ii) or 3(b)) shall the amount of any payment or other
benefit provided for in Section 3 be reduced by any compensation earned by the Executive as
the result of employment by another employer after termination, or otherwise.

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     (f) The obligations of the Company and the Bank under this Section 3 shall survive the
termination of this Agreement.

     4. Definition of Certain Additional Terms.

     (a) As used herein, other than in Section 2(a) hereof, the term “person” shall mean an
individual, partnership, corporation, estate, trust or other entity.

     (b) As used herein, the term “Cause” shall mean, and be limited to:

	 	(i)  	an act or acts of dishonesty undertaken by
Executive and intended to result in substantial gain or personal
enrichment of Executive at the expense of the Company or the Bank;
	 
	 	(ii)  	unlawful conduct or gross misconduct that is
willful and deliberate on Executive’s part and that, in either event,
is injurious to the Company or the Bank; or
	 
	 	(iii)  	the conviction of Executive of a felony.
	 
	 	(iv)  	failure of Executive to perform his duties and
responsibilities under the Employment Agreement or to satisfy his
obligations as an officer or employee of the Company or the Bank, which
failure has not been cured by Executive within 30 days after written
notice thereof to Executive from the Company or the Bank, as
applicable; or
	 
	 	(v)  	material breach of any terms and conditions of
the Employment Agreement by Executive not caused by the Company or the
Bank, which breach has not been cured by Executive within ten days
after written notice thereof to Executive from the Company or the Bank.

     (c) As used herein, the term “Disability” shall mean the inability of Executive to
perform on a full-time basis the duties and responsibilities of his employment with the
Company or the Bank by reason of his illness or other physical or mental impairment or
condition, if such inability continues for an uninterrupted period of 180 days or more
during any 360-day period. A period of inability shall be “uninterrupted” unless and until
Executive returns to full-time work for a continuous period of at least 30 days.

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     (d) As used herein, the term “Transition Period” shall mean the one year period
commencing on the date of the earliest to occur of an Event described in Section 2(a)(i),
2(a)(ii), 2(a)(iii) or 2(a)(iv) hereof (the “Commencement Date”) and ending one year after
the Commencement Date.

     5. Successors and Assigns.

     (a) This Agreement shall be binding upon and inure to the benefit of the successors,
legal representatives and assigns of the parties hereto; provided, however, that the
Executive shall not have any right to assign, pledge or otherwise dispose of or transfer any
interest in this Agreement or any payments hereunder, whether directly or indirectly or in
whole or in part, without the written consent of the Company or the Bank or either of their
successors.

     (b) The Company and the Bank will require any successor (whether direct or indirect, by
purchase of a majority of the outstanding voting stock of the Company or the Bank or all or
substantially all of the assets of the Company or the Bank, or by merger, consolidation or
otherwise), by agreement in form and substance satisfactory to the Executive, to assume
expressly and agree to perform this Agreement in the same manner and to the same extent that
the Company and the Bank would be required to perform it if no such succession had taken
place. Failure of the Company or the Bank, as applicable, to obtain such agreement prior to
the effectiveness of any such succession (other than in the case of a merger or
consolidation) shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Bank in the same amount and on the same terms as the Executive would
be entitled hereunder if the Executive terminated his employment on account of a
Constructive Involuntary Termination, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be deemed the date
of termination. As used in this Agreement, “Company” shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which is required to
execute and deliver the agreement provided for in this Section 5(b) or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of law and
“Bank” shall mean the Bank as hereinbefore defined and any successor to its business and/or
assets as aforesaid which is required to execute and deliver the agreement provided for in
this Section 5(b) or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.

     6. Governing Law. This Agreement shall be construed in accordance with the laws of
the State of Minnesota.

     7. Notices. All notices, requests and demands given to or made pursuant hereto shall
be in writing and shall be delivered or mailed to any such party at its address which:

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	 	(a)  	In the case of the Company or the Bank shall be:
	 
	 	   	HMN Financial, Inc.

Attention: Chairman of the Board

1016 Civic Center Drive NW

Rochester, Minnesota 55901
	 
	 	(b)  	In the case of the Executive shall be:
	 
	 	   	Michael McNeil

1951 Waterford Place Southwest

Rochester, MN 55902

Either party may, by notice hereunder, designate a changed address. Any notice, if mailed properly
addressed, postage prepaid, registered or certified mail, shall be deemed to have been given on the
registered date or that date stamped on the certified mail receipt.

     8. Severability; Severance. In the event that any portion of this Agreement is held
to be invalid or unenforceable for any reason, it is hereby agreed that such invalidity or
unenforceability shall not affect the other portions of this Agreement and that the remaining
covenants, terms and conditions or portions hereof shall remain in full force and effect, and any
court of competent jurisdiction may so modify the objectionable provision as to make it valid,
reasonable and enforceable. In the event that any benefits to the Executive provided in this
Agreement are held to be unavailable to the Executive as a matter of law, the Executive shall be
entitled to severance benefits from the Bank, in the event of an involuntary termination or
Constructive Involuntary Termination of employment of the Executive (other than a termination on
account of the death or Disability of the Executive or a termination for Cause) during the term of
this Agreement occurring at the time of or following the occurrence of an Event, at least as
favorable to the Executive (when taken together with the benefits under this Agreement that are
actually received by the Executive) as the most advantageous benefits made available by the
Employer to employees of comparable position and seniority to the Executive during the five-year
period prior to the First Event.

     9. Term. This Agreement shall commence on the date of this Agreement and shall
terminate, and the Term of this Agreement shall end, on the later of (A) March 31, 2005, provided
that such period shall be extended automatically for one year and from year to year thereafter
until notice of termination is given by the Company or the Executive to the other party hereto at
least 30 days prior to March 31, 2005 or the expiration of the one-year extension period then in
effect, as the case may be, or (B) if the Commencement Date occurs on or prior to March 31, 2005
(or prior to the end of the extension year then in effect as provided for in clause (A) hereof),
one year after the Commencement Date.

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     10. Termination of Prior Agreement. This Agreement supercedes the Prior Agreement
which is hereby terminated and neither party shall have any rights or obligations pursuant to the
terms of the Prior Agreement.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 
	

	 	HOME FEDERAL SAVINGS BANK
	 
	 	 
	

	 	By /s/ Timothy R. Geisler
	

	 	          Its Chairman
	 
	 	 
	

	 	Executive
	 
	 	 
	

	 	/s/ Michael McNeil

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