Document:

hom_8k0122ex102.htm

    Exhibit
      10.2

     

    

     

    Change
      in Control
      Agreement

     

    This
      Change In Control Agreement (“Agreement”) is made and
      entered into and effective as of this 22nd day of January, 2008, by and between
      HomeFederal Bank, an Indiana commercial bank whose address is 501 Washington
      Street, Columbus, Indiana 47201 (which, together with any successor thereto
      which executes and delivers the assumption agreement provided for in Section
      11(a) hereof or which otherwise becomes bound by the terms and provisions of
      this Agreement by operation of law, is hereinafter referred to as the “Bank”), and Charles R.
      Farber,
      whose residence address is 650 Shoreline Drive, Columbus, Indiana 47201 (the “Employee”).

     

    Whereas,
      the Employee is currently serving as Executive Vice President of the Bank;
      and

     

    Whereas,
      the Bank is a wholly-owned subsidiary of Home Federal Bancorp, a publicly traded
      corporation organized under Indiana law (the “Holding Company”);
      and

     

    Whereas,
      the Board of Directors of the Bank recognizes that, as is the case with publicly
      held corporations generally, the possibility of a change in control of the
      Holding Company may exist and that such possibility, and the uncertainty and
      questions which it may raise among management, may result in the departure
      or
      distraction of key management personnel to the detriment of the Bank, the
      Holding Company and its shareholders; and

     

    Whereas,
      the Board of Directors of the Bank believes it is in the best interests of
      the
      Bank to enter into this Agreement with the Employee in order to assure
      continuity of management of the Bank and to reinforce and encourage the
      continued attention and dedication of the Employee to his or her assigned duties
      without distraction in the face of potentially disruptive circumstances arising
      from the possibility of a change in control of the Holding Company, although
      no
      such change is now contemplated; and

     

    Whereas,
      the parties intend for this Change in Control Agreement to supersede and replace
      the Amended and Restated Employment Agreement (“Employment Agreement”) between
      the Employee and the Bank dated July 25, 2007, which currently has a fixed
      term
      that ends on March 18, 2009; and

     

    Whereas,
      this Change in Control Agreement, unlike the Employment Agreement, contemplates
      the possibility of annual extensions and therefore the protections provided
      herein could extend beyond March 18, 2009, and for that reason Employee has
      agreed to a termination of his Employment Agreement in exchange for that
      possible benefit; and

     

    Whereas,
      the Board of Directors of the Bank has approved and authorized the execution
      of
      this Agreement with the Employee to take effect as stated in Section 1
      hereof;

     

    Now,
      Therefore, in consideration of the foregoing and of the respective covenants
      and
      agreements of the parties herein contained, it is agreed as
      follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.           
      Term of
      Agreement.   The
      term of this Agreement shall be deemed to have commenced as of January 22,
      2008
      (the “Effective Date”)
      and shall continue until January 1, 2009.  Prior to January 1, 2009,
      and at each anniversary date thereafter, the Board of Directors may review
      this
      Agreement and, in its discretion, authorize extension thereof for an additional
      one-year period.  Notwithstanding the foregoing, this Agreement shall
      expire upon the Employee’s termination of employment for any
      reason.

    

    2.           
      Payments to the Employee
      Upon
      Change in Control.

    

    (a)           
      Upon the occurrence of a change in control of the Bank or the Holding Company
      (as herein defined), at any time during the term of this Agreement followed
      within 12 months by the involuntary or voluntary termination of the Employee’s
      employment with the Bank, whether or not such termination occurs during the
      term
      of this Agreement, the provisions of Section 3 shall apply.

     

    (b)           
      A “change in control”
shall mean any of
      the following:

     

    (i)           
      a change in the ownership of the Bank 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 Bank 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
      Bank 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 Bank 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 Bank or
      the
      Holding Company (or to cause a change in the effective control of the Bank
      or
      the Holding Company (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 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 Bank or the Holding Company (or issuance of stock
      of
      the Bank or the Holding Company) and stock in the Bank or the Holding Company
      remains outstanding after the transaction.

     

    (ii)           
      a change in the effective control of the Bank or the Holding Company, which
      shall occur only on either of the following dates:

     

    1)           
      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
      Holding Company possessing thirty percent (30%) or more of the total voting
      power of the stock of the Bank or the Holding Company.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    2)           
      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.

     

    If
      any
      one person, or more than one person acting as a group, is considered to
      effectively control the Bank or the Holding Company, the acquisition of
      additional control of the Bank or the Holding Company by the same person or
      persons is not considered to cause a change in the effective control of the
      Bank
      or the Holding Company (or to cause a change in the ownership of the Bank or
      the
      Holding Company 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 –

     

    1)           
      a shareholder of the Bank (immediately before the asset transfer) in exchange
      for or with respect to its stock;

     

    2)           
      an entity, 50 percent or more of the total value or voting power of which is
      owned, directly or indirectly, by the Bank.

     

    3)           
      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

     

    4)           
      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
      (3).

     

    For
      purposes of this subsection (iii) and except as otherwise provided in paragraph
      1) above, a person’s status is determined immediately after the transfer of the
      assets.

     

    
      
        
        

      

      
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    (iv)           
      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. 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 or the Holding Company; provided,
      however, that they will not be considered to be acting as a group if they are
      owners of a corporation that merges into the Bank or the Holding Company where
      the Bank or the Holding Company is the surviving corporation.

     

    (c)           
      The Employee’s employment under this Agreement may be terminated at any time by
      the Board of Directors of the Bank.

     

    (d)           
      The terms “involuntary
      termination” or “involuntarily terminated” in
      this Agreement shall refer to the termination of the employment of Employee
      without his or her express written consent.  In addition, a material
      diminution of or interference with the Employee’s duties, responsibilities and
      benefits shall be deemed and shall constitute an involuntary termination of
      employment to the same extent as express notice of such involuntary termination;
      provided, however, that the Employee must provide the Bank notice of Employee’s
      intent to terminate employment and at least a 30 day period to remedy the
      condition giving rise to termination.  By way of example and not by
      way of limitation, any of the following actions, if unreasonable and materially
      adverse to the Employee, shall constitute such diminution or interference unless
      consented to in writing by the Employee: (1) any action by the Bank’s Board of
      Directors to remove the Employee as Executive Vice President of the Bank; (2)
      a
      material reduction in the Employee’s salary, perquisites, contingent benefits or
      vacation time as in effect on the date of the change in control as the same
      may
      be changed by mutual agreement from time to time, unless part of an
      institution-wide reduction; (3) the assignment to the Employee of duties and
      responsibilities materially different from those normally associated with his
      or
      her position as referenced in this Agreement; or (4) a material diminution
      or
      reduction in the Employee’s responsibilities or authority (including reporting
      responsibilities) in connection with his or her employment with the
      Bank.

     

    (e)           
      For purposes of determining whether the Employee is entitled to a benefit under
      Section 3 of this Agreement, “termination of employment” means the
      termination of the Employee’s employment with the Bank for reasons other than
      death or total and permanent disability.  Whether a termination of
      employment takes place is determined based on the facts and circumstances
      surrounding the termination of the Employee’s employment.  A
      termination of employment will be considered to have occurred if it is
      reasonably anticipated that:

     

    1)           
      the Employee will not perform any services for the Bank after termination of
      employment, or

     

    2)           
      the Employee 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.

     

    
      
        
        

      

      
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    Any
      reference in this Agreement to a “termination of employment,” severance from
      employment or separation from employment shall be deemed to mean a termination
      of employment.

     

    3.           
      Payments Upon a Change in
      Control.

    

    (a)           
      If during the term of this Agreement there is a change in control of the Bank
      or
      the Holding Company and within 12 months following such change in control there
      is a voluntary or an involuntary termination of the Employee’s employment with
      the Bank, whether or not such termination occurs during the term of this
      Agreement, the Bank shall pay to the Employee in a lump sum in cash within
      31
      business days after the termination of employment an amount equal to 300 percent
      of the Employee’s “base amount” of compensation, as defined in Section
      280G(b)(3) of the Internal Revenue Code of 1986, as amended (“Code”).

     

    (b)           
      If during the term of this Agreement there is a change in control, and within
      12
      months following such change in control there is a voluntary or an involuntary
      termination of the Employee’s employment, whether or not such termination occurs
      during the term of this Agreement, the Bank shall cause to be continued life,
      health and disability coverage substantially identical to the coverage
      maintained by the Bank for the Employee prior to his
      severance.  Subject to applicable federal and state laws, such
      coverage shall cease upon the earlier of the Employee’s obtaining similar
      coverage by another employer or twelve (12) months from the date of the
      Employee’s termination.  In the event the Employee obtains new
      employment and receives less coverage for life, health or disability, the Bank
      shall provide coverage substantially identical to the coverage maintained by
      the
      Bank for the Employee prior to termination for the balance of the twelve (12)
      month period.

     

    4.           
      Certain Reduction of Payments
      by the Bank.

     

    (a)           
      Anything in this Agreement to the contrary notwithstanding, in the event it
      shall be determined that any payment or distribution by the Bank to or for
      the
      benefit of the Employee (whether paid or payable or distributed or distributable
      pursuant to the terms of this Agreement or otherwise) (a “Payment”) would be
      nondeductible (in whole or part) by the Bank for Federal income tax purposes
      because of Section 280G of the Code, then the aggregate present value of amounts
      payable or distributable to or for the benefit of the Employee pursuant to
      this
      Agreement (such amounts payable or distributable pursuant to this Agreement
      are
      hereinafter referred to as “Agreement Payments”) shall be
      reduced to the Reduced Amount.  The “Reduced Amount” shall be an
      amount, not less than zero, expressed in present value which maximizes the
      aggregate present value of Agreement Payments without causing any Payment to
      be
      nondeductible by the Bank because of Section 280G of the Code.  For
      purposes of this Section 4, present value shall be determined in accordance
      with
      Section 280G(d)(4) of the Code.

     

    (b)           
      All determinations required to be made under this Section 4 shall be made by
      the
      Bank’s independent auditors, or at the election of such auditors by such other
      firm or individuals of recognized expertise as such auditors may select (such
      auditors or, if

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    applicable,
      such other firm or individual, are hereinafter referred to as the “Advisory Firm”). The Advisory
      Firm shall within ten business days of termination of the Employee’s employment
      by the Bank or the Holding Company resulting in benefit payments hereunder
      (the
“Date of Termination”),
      or at such earlier time as is requested by the Bank, provide to both the Bank
      and the Employee an opinion (and detailed supporting calculations) that the
      Bank
      has substantial authority to deduct for federal in­come tax purposes the
      full amount of the Agreement Payments and that the Employee has substantial
      authority not to report on his or her federal income tax return any excise
      tax
      imposed by Section 4999 of the Code with respect to the Agreement
      Payments.  Any such determination and opinion by the Advisory Firm
      shall be binding upon the Bank and the Employee.  The Employee shall
      determine which and how much, if any, of the Agreement Payments shall be
      eliminated or reduced consistent with the requirements of this Section 4,
      provided that, if the Employee does not make such determination within ten
      business days of the receipt of the calculations made by the Advisory Firm,
      the
      Bank shall elect which and how much, if any, of the Agreement Payments shall
      be
      eliminated or reduced consistent with the requirements of this Section 4 and
      shall notify the Employee promptly of such election.  Within five
      business days of the earlier of (i) the Bank’s receipt of the Employee’s
      determination pursuant to the immediately preceding sentence of this Agreement
      or (ii) the Bank’s election in lieu of such determination, the Bank shall pay to
      or distribute to or for the benefit of the Employee such amounts as are then
      due
      the Employee under this Agreement.  The Bank and the Employee shall
      cooperate fully with the Advisory Firm, including without limitation providing
      to the Advisory Firm all information and materials reasonably requested by
      it,
      in connection with the making of the determinations required under this Section
      4.

     

    (c)           
      As a result of uncertainty in application of Section 280G of the Code at the
      time of the initial determination by the Advisory Firm hereunder, it is possible
      that Agreement Payments will have been made by the Bank which should not have
      been made (“Overpayment”) or that
      additional Agreement Payments will not have been made by the Bank which should
      have been made (“Underpayment”), in each case,
      consistent with the calculations required to be made hereunder.  In
      the event that the Advisory Firm, based upon the assertion by the Internal
      Revenue Service against the Employee of a deficiency which the Advisory Firm
      believes has a high probability of success, determines that an Overpayment
      has
      been made, any such Overpayment paid or distributed by the Bank to or for the
      benefit of Employee shall be treated for all purposes as a loan abinitio
      which the Employee
      shall repay to the Bank together with interest at the applicable federal rate
      provided for in Section 7872(f)(2) of the Code; provided, however, that no
      such loan shall be deemed to have been made and no amount shall be payable
      by
      the Employee to the Bank if and to the extent such deemed loan and payment
      would
      not either reduce the amount on which the Employee is subject to tax under
      Section 1 and Section 4999 of the Code or generate a refund of such
      taxes.  In the event that the Advisory Firm, based upon controlling
      precedent or other substantial authority, determines that an Underpayment has
      occurred, any such Underpayment shall be promptly paid by the Bank to or for
      the
      benefit of the Employee together with interest at the applicable federal rate
      provided for in Section 7872(f)(2) of the Code.

     

    5.           
      Required Regulatory
      Provisions.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    (a)           
      The Bank may terminate the Employee’s employment at any time, but any
      termination by the Bank on or after a change in control shall not prejudice
      the
      Employee’s right to compensation or other benefits under this
      Agreement.

     

    (b)           
      If the Employee is suspended and/or temporarily prohibited from participating
      in
      the conduct of the Bank’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),
      the Bank’s obligations under this Agreement shall be suspended as of the date of
      service, unless stayed by appropriate proceedings.  If the charges in
      the notice are dismissed, the Bank may in its discretion (i) pay the Employee
      all or part of the compensation withheld while its obligations under this
      Agreement were suspended, and (ii) reinstate (in whole or in part) any of the
      obligations which were suspended.

     

    (c)           
      If the Employee is removed from office and/or permanently prohibited from
      participating in the conduct of the Bank’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 the Bank under this Agreement shall
      terminate, as of the effective date of the order, but vested rights of the
      parties shall not be affected.

     

    (d)           
      If the Bank 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 (d) shall not affect any vested rights
      of
      the parties.

     

    (e)           
      All obligations under this Agreement may be terminated, except to the extent
      determined that continuation of this Agreement is necessary for the continued
      operation of the Bank: (i) by the Director of the Indiana Department of
      Financial Institutions (the “Director”), or his or her
      designee, at the time the Federal Deposit Insurance Corporation enters into
      an
      agreement to provide assistance to or on behalf of the Bank under the authority
      contained in Section 13(c) of the Federal Deposit Insurance Act, 12 U.S.C.
      §1823(c), or (ii) by the Director, or his or her designee, at the time the
      Director or his or her designee approves a supervisory merger to resolve
      problems related to operation of the Bank or when the Bank is determined by
      the
      Director to be in an unsafe or unsound condition.  Any rights of the
      parties that have already vested, however, shall not be affected by any such
      action.

     

    6.           
      Reinstatement of Benefits
      Under
      Section 3.   In
      the event the Employee is suspended and/or temporarily prohibited from
      participating in the conduct of the Bank’s affairs by a notice described in
      Section 5(b) hereof (the “Notice”) during the term
      of
      this Agreement and a change in control occurs, the Bank will assume its
      obligation to pay and the Employee will be entitled to receive all of the
      termination benefits provided for under Section 3 of this Agreement, as
      applicable, upon the Bank’s receipt of a dismissal of charges in the
      Notice.

     

    7.           
      Effect on Prior
      Agreements.   This
      Agreement contains the entire understanding between the parties hereto and
      supersedes any prior agreement between the Bank and the Employee relating to
      matters covered by this Agreement.

     

    
      
        
        

      

      
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            8.           
      No
      Attachment.

    

    (a)           
      Except as required by law, no right to receive payments under this Agreement
      shall be subject to anticipation, commutation, alienation, sale, assignment,
      encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
      levy, or similar process or assignment by operation of law, and any attempt,
      voluntary or involuntary, to affect any such action shall be null, void, and
      of
      no effect.

     

    (b)           
      This Agreement shall be binding upon, and inure to the benefit of, the Employee,
      the Bank and their respective successors and assigns.

     

    9.           
      Modification and
      Waiver.

    

    (a)           
      This Agreement may not be modified or amended except by an instrument in writing
      signed by the parties hereto.

     

    (b)           
      No term or condition of this Agreement shall be deemed to have been waived,
      nor
      shall there be any estoppel against the enforcement of any provision of this
      Agreement, except by written instrument of the party charged with such waiver
      or
      estoppel. No such written waiver shall be deemed a continuing waiver unless
      specifically stated therein, and each such waiver shall operate only as to
      the
      specific term or condition waived and shall not constitute a waiver of such
      term
      or condition for the future or as to any act other than that specifically
      waived.

     

    10.           
      No
      Mitigation.   Except
      as expressly provided herein, the amount of any payment or benefit provided
      for
      in this Agreement shall not be reduced by any compensation earned by the
      Employee as the result of employment by another employer, by retirement benefits
      after the date of termination or otherwise.

     

    11.           
      No
      Assignments.

    

    (a)           
      This Agreement is personal to each of the parties hereto, and neither party
      may
      assign or delegate any of its rights or obligations hereunder without first
      obtaining the written consent of the other party; provided, however, that the
      Bank will require any successor or assign (whether direct or indirect, by
      purchase, merger, consolidation or otherwise) to all or substantially all of
      the
      business and/or assets of the Bank, by an assumption agreement in form and
      substance satisfactory to the Employee, to expressly assume and agree to perform
      this Agreement in the same manner and to the same extent that the Bank would
      be
      required to perform it if no such succession or assignment had taken
      place.  Failure of the Bank to obtain such an assumption agreement
      prior to the effectiveness of any such succession or assignment shall be a
      breach of this Agreement and shall entitle the Employee to compensation from
      the
      Bank in the same amount and on the same terms as the compensation pursuant
      to
      Section 3 hereof.  For purposes of implementing the provisions of this
      Section 11(a), the date on which any such succession becomes effective shall
      be
      deemed the Date of Termination.

     

    
      
        
        

      

      
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    (b)           
      This Agreement and all rights of the Employee hereunder shall inure to the
      benefit of and be enforceable by the Employee’s personal and legal
      representatives, executors, administrators, successors, heirs, distributees,
      devisees and legatees.  If the Employee should die while any amounts
      would still be payable to the Employee hereunder if the Employee had continued
      to live, all such amounts, unless otherwise provided herein, shall be paid
      in
      accordance with the terms of this Agreement to the Employee’s devisee, legatee
      or other designee or if there is no such designee, to the Employee’s
      estate.

     

    12.           
      Notice.   For
      the purposes of this Agreement, notices and all other communications provided
      for in the Agreement shall be in writing and shall be deemed to have been duly
      given when personally delivered or sent by certified mail, return receipt
      requested, postage prepaid, addressed to the respective addresses set forth
      on
      the first page of this Agreement (provided that all notices to the Bank shall
      be
      directed to the attention of the Board of Directors of the Bank with a copy
      to
      the Secretary of the Bank), or to such other address as either party may have
      furnished to the other in writing in accordance herewith.

     

    13.           
      Amendments.   No
      amendments or additions to this Agreement shall be binding unless in writing
      and
      signed by both parties, except as herein otherwise provided.

     

    14.           
      Paragraph
      Headings.   The
      paragraph headings used in this Agreement are included solely for convenience
      and shall not affect, or be used in connection with, the interpretation of
      this
      Agreement.

     

    15.           
      Severability.   The
      provisions of this Agreement shall be deemed severable and the invalidity or
      unenforceability of any provision shall not affect the validity or
      enforceability of the other provisions hereof.

     

    16.           
      Governing
      Law.   This
      Agreement shall be governed by the laws of the United States to the extent
      applicable and otherwise by the laws of the State of Indiana.

     

    17.           
      Arbitration.   Any
      dispute or controversy arising under or in connection with this Agreement shall
      be settled exclusively by arbitration in accordance with the rules of the
      American Arbitration Association then in effect.  Judgment may be
      entered an the arbitrator’s award in any court having jurisdiction.

     

    18.           
      Reimbursement.   If
      in any event it is determined by a court of competent jurisdiction or by an
      arbitrator pursuant to Section 17 that the Bank has failed to make timely
      payment of any amounts owed to the Employee under this Agreement, the Employee
      shall be entitled to reimbursement for all reasonable costs, including
      attorneys’ fees, incurred in challenging such termination or collecting such
      amounts.  Such reimbursement shall be in addition to all rights to
      which the Employee is otherwise entitled under this Agreement.

     

    19.           
      Specified Employee
      Limits.

    

    (a)           
      It is intended that payments under Section 3 of this Agreement will be made
      no
      later than March 15 of the year immediately following the year in which the
      Employee’s benefit under this Agreement is no longer subject to a substantial
      risk of

     

    
      
        
        

      

      
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    forfeiture
      (the “Short-Term Deferral Payment Deadline”), so as to comply with the
      short-term deferral rule of Treas. Reg.
§1.409A-1(b)(4).  Alternatively, it is expected that the exception for
      participation in a voluntary window program under Treas. Reg.
§1.409A-1(b)(9)(vi) would apply.  In either event, Section 409A
      of the Code would not apply to this Agreement and the provisions of Sections
      19(b), (c) and (d) shall not apply.  If the voluntary window program
      exception does not apply and if, due to the timing of a change in control and
      the Employee’s termination of employment, it is not possible to pay a benefit to
      an Employee on or before the Short-Term Deferral Payment Deadline, it is
      expected that Section 409A would apply to this Agreement and the provisions
      of Section 19(b), (c) and (d) shall apply.

     

    (b)           
      To the extent the Employee is a “specified employee” (as defined below), any
      payments due to the Employee upon his separation from service with the Bank
      under this Agreement 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 19
      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 19(b) shall not apply to the portion of any payment
      made to the extent such amount is payable solely as a result of 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)) or made
      pursuant to a “window program” (as defined in Treas. Reg. §1,409A-1(b)(9)(vi)
      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.

     

    (c)           
      To the extent any life, health, disability or other welfare benefit coverage
      provided to the Employee under this Agreement 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 Bank 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 Agreement,
      the phrase “separation from service” shall be as defined in Treasury Reg.
      Section 1.409A-1(h).

     

    (d)           
      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 Bank or Holding Company having annual
      compensation greater than $130,000 (as adjusted for inflation under the Code),
      (2) a five percent owner of the Bank or Holding Company, or (3) a one percent
      owner of the Bank or Holding Company having annual compensation of more than
      $150,000.  For purposes of (1), no more than 50 employees of the Bank
      and Holding Company (or the greater of 3 employees or 10% of the total number
      of
      employees of the Bank and Holding Company) shall be treated as officers of
      the
      Bank or Holding Company.  The determination of

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    whether
      the Employee is a “specified employee” shall be made by the Bank in good faith
      applying the applicable Treasury regulations.

     

    20.           
      Survival.  Any
      obligation of the Bank to pay benefits under Section 3 of this Agreement shall
      survive termination or expiration of this Agreement.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    In
      Witness Whereof, the parties have executed this Change in Control Agreement
      as
      of the day and year first above written.

     

    THIS
      AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
      THE
      PARTIES.

     

    
      	 	
              “Bank”

            
	 	 	 
	 	 
	 	 	 
	 	
              By:

            	/s/
              John K. Keach Jr.
	 	 	
              John
                K. Keach, Jr., President

            
	 	 	 
	 	
              “Employee”

            
	 	 
	 	/s/
              Charles R. Farber
	 	
              Charles
                R. Farber

            

    

    

     

    The
      undersigned, Home Federal Bancorp, sole shareholder of Bank, agrees that if
      it
      shall be determined for any reason that any obligation on the part of Bank
      to
      continue to make any payments due under this Agreement to Employee is
      unenforceable for any reason, Home Federal Bancorp 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 Bank hereunder.

     

    
      	 	
              HOME
                FEDERAL BANCORP

            
	 	 	 
	 	 	 
	 	
              By:

            	/s/
              John K. Keach Jr.
	 	 	
              John
                K. Keach, Jr., President

            

    

    

    
 

    12ADDENDUM TO EMPLOYMENT AGREEMENT

This AGREEMENT (the "Agreement"), dated as of January 18, 2008, by and between
Document Capture Technologies, Inc., a Delaware corporation with principal
executive offices at 1772 Technology Drive, San Jose, California 95110
(hereinafter referred to as the "Company"), and Darwin Hu, an individual
residing at 761 Harry Road, San Jose, California 95120 (hereinafter referred to
as "Employee").

                              W I T N E S S E T H:

WHEREAS, the Company and the Employee are parties to an Employment Agreement,
dated April 26, 2005 (the "Original Agreement"); and

WHEREAS, the Company desires to continue to employ the Employee as its President
and Chief Executive Officer, and the Employee desires to serve the Company in
that capacity, upon the terms and subject to the conditions contained in the
Original Agreement, as amended by this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows:

1. Capitalized terms used herein but not otherwise defined herein have the
meanings ascribed to them in the Original Agreement.

2. The Employee agrees to continue to execute his duties and responsibilities in
accordance with the terms and provisions of the Original Agreement, subject to
the following terms and conditions as agreed upon:

      (a)   The first sentence of Section 2.a shall be replaced in its entirety
            by: "Subject to Section 9 and Section 10 below, the term of this
            Agreement shall be for a period of forty-two (42) months commencing
            on April 26th, 2005 (the Term)."

      (b)   Effective January 1, 2008, Employee shall be paid a base pay of
            $225,000 per year during the Term.

All other terms and conditions of the Original Agreement not affected hereby
shall remain in effect as originally drafted.

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

DOCUMENT CAPTURE
TECHNOLOGIES, INC.                        EMPLOYEE

By: /S/ WILLIAM HAWKINS                   /S/ DARWIN HU
    -------------------                   -------------
    William Hawkins                       Darwin Hu
    Chief Operating Officer

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