FIRST AMENDMENT TO THE HOMEFEDERAL BANK DIRECTOR DEFERRED FEE AGREEMENT DATED NOVEMBER 22, 2005 FOR JOHN T. BEATTY
Exhibit
10.1
FIRST
AMENDMENT
TO
THE
HOMEFEDERAL
BANK
DATED
NOVEMBER 22, 2005
FOR
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THIS
FIRST AMENDMENT is adopted this 24
day of July, 2007, effective as of January 1, 2006, by and between HOMEFEDERAL
BANK, a state-chartered bank located in Columbus, Indiana (the “Bank”), and ▇▇▇▇
▇. ▇▇▇▇▇▇ (the “Director”).
The
Bank and Director executed the
DIRECTOR DEFERRED FEE AGREEMENT on November 22, 2005 effective as of January
1,
2006 (the “Agreement”).
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
1.18 of the Agreement shall be
deleted in its entirety and replaced by the following:
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1.18
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“Separation
from
Service”
means
the termination of the Director’s service 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 Director’s service. A Separation from
Service will be considered to have occurred if the Bank and the
Director
reasonably anticipate that (1) the Director will not perform any
services
for the Bank after the Director’s termination; or (2) the Director will
continue to provide services for the Bank following such termination
at an
annual rate that is less than fifty percent (50%) of the bona fide
services that were provided during the twelve (12) months immediately
preceding the termination.
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The
following Section 1.18a shall be
added to the Agreement immediately following Section 1.18:
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1.18a
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“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.
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The
following Sections 4.4 and 4.5
shall be added to the Agreement immediately following Section
4.3:
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4.4
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Distributions
Upon Income Inclusion Under Section 409A of the Code. Upon
the inclusion of any amount into the Director’s income as a result of the
failure of this non-
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1
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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
Deferral Account balance, a distribution shall be made as soon
as is
administratively practicable following the discovery of the plan
failure.
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4.5
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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:
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(a)
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may
not accelerate the time or schedule of any distribution, except
as
provided in Section 409A of the Code and the regulations
thereunder;
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(b)
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must,
for benefits distributable under Section 4.1, be made at least
twelve (12)
months prior to the first scheduled
distribution;
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(c)
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must,
for benefits distributable under Section 4.1 and 4.2, 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
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(d)
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must
take effect not less than twelve (12) months after the election
is
made.
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Article
10 of the Agreement shall be deleted in its entirety and replaced by the
following:
Article
10
Amendments
and Termination
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10.1
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Amendments. This
Agreement may be amended only by a written agreement signed by
the Bank
and the Director. 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.
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10.2
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Plan
Termination Generally. The Bank and
Director may terminate this Agreement at any
time. Except as provided in Section 10.3, 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 4
or Article 5.
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10.3
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Plan
Terminations Under Section 409A. Notwithstanding anything
to the contrary in Section 10.2, if this Agreement is terminated
in the
following circumstances:
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(a)
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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 the 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 Director
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2
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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;
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(b)
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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
Director'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
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(c)
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Upon
the Bank’s termination of this and all other 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 account
balance
plans for a minimum of three (3) years following the date of
such
termination;
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then
the
Bank may distribute the Deferral Account balance, determined as of the date
of
the termination of the Agreement, to the Director in a lump sum subject to
the
above terms.
Section
11.10 of the Agreement shall be deleted in its entirety and replaced by the
following:
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11.10
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Alternative
Action. In the event it shall become impossible for the
Bank or the Plan Administrator to perform any act required by the
Agreement, the Bank or Plan Administrator may in its discretion
perform
such alternative act as most nearly carries out the intent and
purpose of
this Agreement and is in the best interests of the Bank. Any
alternative acts shall be restricted to actions which do not violate
Section 409A of the Code.
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The
following Sections 11.14 shall be
added to the Agreement immediately following Section 11.13:
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11.14
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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.
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3
IN
WITNESS OF THE
ABOVE, the Bank and the Director hereby consent to this First
Amendment.
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Director:
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HOMEFEDERAL
BANK
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| /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ |
By
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. | |
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▇▇▇▇
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Title
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Chairman/CEO | |
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