EX-10.2






Exhibit 10.2




THE FEDERAL HOME LOAN BANK OF CINCINNATI

NONQUALIFIED DEFERRED COMPENSATION PLAN FOR DIRECTORS

(2008 RESTATEMENT)




     Effective January 1, 2005, the Federal Home Loan Bank of Cincinnati (the “FHLBank”) hereby
amends and restates its Nonqualified Deferred Compensation Plan for Directors (the “Plan”) to
provide the benefits set forth in this instrument. The principal reason for the adoption of this
amended and restated instrument is to conform the provisions of the Plan with the requirements of
Internal Revenue Code Section 409A (“Section 409A”). Accordingly, the payment of benefits
attributable to Non-Grandfathered Accounts under this Plan are intended to comply with the
requirements of Section 409A and the payment of benefits attributable to Grandfathered Accounts are
intended to be exempt from the requirements of Section 409A.



     Section 1. Definitions.



          (a) “Account” shall mean, with respect to a Director, the memorandum account
established on the FHLBank’s books and records for each Director who has elected to defer
Director’s Fees under this Plan. Each Account shall consist of a credit on the records of the
FHLBank equal to the sum of (i) the Non-Grandfathered Account balance, and (ii) the Grandfathered
Account balance. The Account balance, and each other specified account balance, shall be a
bookkeeping entry only and shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to a Director or the Director’s designated Beneficiary,
pursuant to this Plan.




          (b) “Annual Deferral Amount” shall mean that portion of a Director’s Director’s Fees
and any other remuneration from the FHLBank that a Director defers in accordance with this Plan for
any one calendar year.




          (c) “Beneficiary” shall mean one or more persons, trusts, estates, or other entities,
designated by the Director in accordance with this Plan, that are entitled to receive benefits
under this Plan upon the death of a Director.




          (d) “Beneficiary Designation Form” shall mean the form established from time to time
by the Committee that a Director completes, signs, and returns to the Committee to designate one or
more Beneficiaries.




          (e) “Board” shall mean the Board of Directors of the FHLBank.




          (f) “Code” shall mean the Internal Revenue Code of 1986, as it may be amended from
time to time.




          (g) “Committee” shall mean the Personnel Committee of the FHLBank, or its designee.




          (h) “Director” shall mean a member of the Board.




 









 








          (i) “Director’s Fees” shall mean the fees of a Director which result from or are
attributable to the performance of services by such Director as a member (or committee member) of
the Board.




          (j) “Election Form” shall mean the forms established from time to time by the
Committee that a Director completes, signs, and returns to the Committee to make an election under
the Plan.




          (k) “Grandfathered Account” shall mean, with respect to a Director, a credit on the
records of the FHLBank equal to the sum of such Director’s deferrals both vested and deferred on or
prior to midnight December 31, 2004, plus any earnings, gains, or losses thereon credited in
accordance with the terms of this Plan, and minus all distributions made to the Director or his or
her Beneficiary pursuant to this Plan that relate to the Director’s Grandfathered Account. The
Grandfathered Account may be further subdivided into additional Grandfathered sub-accounts (for
example one for each of the Directors’ deferral elections for each calendar year ending prior to
January 1, 2005). All deferrals under this Plan are always 100% vested.




          (l) “Grandfathered Benefit Distribution Date” shall mean the date selected, in advance
and in accordance with this Plan, by a Director, on which commences the distribution of the
applicable portion of such Director’s Grandfathered Account(s). A Director may elect, in the
manner and at the time set forth in this Plan to have his or her Grandfathered Benefit Distribution
Date commence at any time or times.




          (m) “Non-Grandfathered Account” shall mean, with respect to a Director, a credit on
the records of the FHLBank equal to the sum of such Director’s deferrals that were deferred or
vested after midnight December 31, 2004, plus any earnings, gains, or losses thereon credited in
accordance with the terms of this Plan, and minus all distributions made to the Director or his or
her Beneficiary pursuant to this Plan that relate to the Director’s Non-Grandfathered Account. The
Non-Grandfathered Account may be further subdivided into additional Non-Grandfathered sub-accounts
(for example one for each of the Directors’ deferral elections for each calendar year after
December 31, 2004). All deferrals under this Plan are always 100% vested.




          (n) “Non-Grandfathered Benefit Distribution Date” shall mean the date or dates
selected, in advance and in accordance with this Plan, by a Director, which commences the
distribution of the applicable portion of such Director’s Non-Grandfathered Account Balance. A
Director may elect, in the manner and at the time set forth in this Plan, to have his or her
Non-Grandfathered Benefit Distribution Date(s) commence upon the occurrence of any of the
following:





     (i) As soon as administratively practicable following the Director’s Separation
From Service with the FHLBank for any reason;




     (ii) January 1 of the year next following the year the Director Separates From
Service with the FHLBank for any reason;




     (iii) The Director’s death; or



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     (iv) A fixed date (anticipated, at the time of the election, to occur after the
Director’s Separation From Service; and occurring no sooner than the third year
following the Service Year to which it pertains).


If a Director fails to elect a Non-Grandfathered Benefit Distribution Date, the applicable portion
of such Director’s Non-Grandfathered Account Balance will be distributed in lump sum form as soon
as administratively practicable following the Director’s Separation From Service with the FHLBank
for any reason.




          (o) “Restated Effective Date” shall mean January 1, 2005.




          (p) “Separation From Service” or “Separates From Service” means, with respect
to a Director, his or her resignation, removal, or the expiration of his or her term as a member of
the Board (or in the case of a Director serving on more than one board or governing body, all
boards and governing bodies) if the resignation, removal, or expiration constitutes a good-faith
and complete termination of the relationship. A resignation, removal, or expiration does not
constitute a good faith and complete termination of the relationship if the FHLBank anticipates the
Director again becoming a Director. In all cases, such term shall be interpreted in a manner
consistent with the meaning of “separation from service” as defined in Section 409A and the final
regulations promulgated thereunder.




          (q) “Service Year” means the calendar year.




          (r) “Unforeseeable Emergency” means a severe financial hardship to a Director
resulting from an illness or accident of a Director, a Director’s spouse, a Director’s beneficiary,
or a Director’s dependent (as defined in section 152 of the Code, without regard to section
152(b)(1), (b)(2), and (d)(1)(B)); loss of a Director’s property due to casualty; or other similar
extraordinary and unforeseeable circumstances arising as a result of events beyond the control of a
Director. Whether a Director is faced with an unforeseeable emergency permitting a distribution
under this definition is to be determined based on the relevant facts and circumstances of each
case, but, in any case, a distribution on account of unforeseeable emergency may not be made to the
extent such emergency is or may be relieved through reimbursement or compensation from insurance or
otherwise, by liquidation of a Director’s assets, to the extent the liquidation of such assets
would not cause severe financial hardship, or by cessation of deferrals under this Plan. In all
cases, such term shall be interpreted in a manner consistent with the meaning of “unforeseeable
emergency” as defined in Section 409A and the final regulations promulgated thereunder.




     Section 2. Participation.



          (a) Participation in the Plan is limited to Directors. Each Director who was a participant in
the Plan on the day before the Restated Effective Date shall continue to be a participant in this
Plan on the Restated Effective Date and until such individual’s Account is fully distributed.
Each newly elected Director shall become a participant when he or she timely completes the
enrollment requirements established under this Plan.




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          (b) As a condition of participation, each Director shall execute and return all of the
applicable Election Forms and a Beneficiary Designation Form, all within thirty (30) days after he
or she first becomes eligible to participate in the Plan. Distribution and beneficiary designation
forms filed in connection with the Plan prior to this restatement shall remain in effect until a
Director files an Election Form or a Beneficiary Designation Form which supersedes the pertinent
predecessor form. In addition, the Committee shall establish other enrollment requirements as are
necessary.




          (c) Provided a Director has met all enrollment requirements set forth in this Plan and
required by the Committee, including returning all required documents to the Committee within the
specified time period, the Director shall commence participation in the Plan on the first day of
the month immediately following the month in which such Director satisfies all enrollment
requirements. If a Director fails to satisfy all such requirements within the period required, the
Director shall not be eligible to participate in the Plan until the first day of the calendar year
immediately following the delivery to and acceptance by the Committee of the required documents.




          (d) If the Committee determines in good faith that a Director should no longer be eligible to
actively participate in the Plan, the Committee shall have the right, in the Committee’s sole
discretion, to prevent the Director from making future deferral elections; provided, however, the
Committee shall have no right to terminate any deferral election the Director has made for that
calendar year (or the remainder thereof) in which the Director’s status changes unless otherwise
permitted under another provision of the Plan. Nevertheless, the Account of such Director shall
continue to be credited or debited in the manner provided in this Plan until fully distributed in
accordance with the provisions of this Plan.




     Section 3. Elections.



          (a) In connection with a Director’s commencement of participation in the Plan, the Director
shall make an irrevocable deferral election for the year in which the Director commences
participation in the Plan, along with such other elections as the Committee deems necessary or
desirable under the Plan. For these elections to be valid, the Election Form must be completed and
signed by the Director, timely delivered to the Committee (in accordance with the above) and
accepted by the Committee. Such forms may be changed at any time prior to the last permissible
date for making the deferral election, but as of that date the election shall become irrevocable,
except as otherwise provided herein.




          (b) For each succeeding year, an irrevocable deferral election and such other elections as the
Committee deems necessary or desirable under the Plan shall be made by timely delivering a new
Election Form to the Committee, in accordance with the Committee’s rules and procedures. Except as
otherwise provided Section 2(b), for an election to defer compensation for services performed
during a Service Year to be effective, the election to defer such compensation must be made not
later than the close of the calendar year immediately preceding the Service Year. If no such
Election Form is timely delivered for a year, the Annual Deferral Amount shall be zero for that
year. A Director’s election may be changed at any time prior to the last permissible date for
making the



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election as permitted in this Section 3, “Elections”, and shall thereafter be irrevocable.
The Committee may from time to time establish policies and rules consistent with the requirements
of Section 409A of the Code to govern the manner in which deferral elections may be made. In
accordance with the Committee’s policies and rules, the Committee has determined the Directors may
generally elect to defer Director’s Fees for the following Service Year during December.




          (c) Except as provided above, a deferral election under this Plan shall be irrevocable, and
the Director’s Fees deferred thereunder will not be paid to the Director or the Director’s
Beneficiary until the time or times prescribed in the Director’s election or as otherwise provided
in this Plan.




     Section 4. Accounts and Interest.



          (a) The FHLBank shall establish an Account on its books and records for each Director who has
elected to defer Director’s Fees under this Plan. The Account shall be credited with the amount of
any fee deferred as of the time such fee is earned, and separate sub-accounts shall be maintained
to the extent necessary to distinguish amounts deferred under each respective deferral election
(for example, one sub-account for each calendar year’s deferrals), and may include both
Grandfathered and Non-Grandfathered components. The Account shall be reduced by all payments to
the Director or his or her Beneficiary under this Plan.




          (b) Each Director’s Account shall be credited quarterly with a return on investment (positive
or negative) that is substantially equivalent to the net return on investment that would have been
earned on such Director’s elected investments under this Plan. A Director may elect from the
investment options approved by the Committee, and such Director may change his or her investment
elections once each calendar month, including after his or her Separation From Service.




          (c) Notwithstanding any provision to the contrary, if the FHLBank modifies the return on
investment to be credited to the Accounts, such modification shall only have prospective effect.




     Section 5. Payment of Grandfathered Account.



          (a) Except as provided below, a Director’s Grandfathered Account shall be paid to the Director
at the end of the deferral period and in the form designated by the Director in the respective
deferral election from among the available options.




          (b) In the event the Director incurs a hardship prior to the receipt of the Director’s entire
Grandfathered Account, then, to the extent necessary to satisfy that part of the hardship which the
Director reasonably represents cannot be satisfied through other resources (such as insurance or
other compensation, reasonable liquidation of assets, cessation of elective deferrals, or available
credit on reasonable terms) of the Director or the Director’s immediate family, the Committee may,
in its sole discretion, accelerate the time for payment of such amounts notwithstanding the
deferral period and/or payment method designated by the Director in the Director’s deferral
election. For this purpose, a hardship shall be defined as an immediate and heavy financial need on
account of medical



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expenses, the purchase of a principal residence, the payment of tuition, or the need to
prevent eviction from or foreclosure on a principal residence.




          (c) In the event the Director wishes to change a distribution election with respect to all or
any portion of the Director’s Grandfathered Account, the Director may file the Election Form
developed by the Committee from time to time, provided however, (i) the form is filed no later than
the calendar year prior to the calendar year during which the Director separates from service, and
(ii) the form is filed at least six (6) months prior to the date of the Director’s separation from
service.




          (d) In the event the Director dies prior to the receipt of the Director’s entire Account, then
the unpaid balance shall be paid in accordance with the rules of Section 6(e).




     Section 6. Payment of Non-Grandfathered Account.



          (a) Except as provided below, a Director’s Non-Grandfathered Account shall be paid to the
Director at the time and in the form designated by the Director on the respective Election Form.
The available payment options shall be specified on the Election Form. The Election Forms shall
provide for distribution only upon the occurrence of an event defined herein as a
“Non-Grandfathered Benefit Distribution Date.” An Election Form completed by a Director shall not
be valid unless, the Director, in addition to complying with the other requirements applicable to
such form, has timely elected the form and timing of distribution from among the available options,
and has designated a Beneficiary.




          (b) In the event the Director suffers an Unforeseeable Emergency prior to the receipt of the
entire balance of the Director’s Non-Grandfathered Account, then, to the extent necessary to
satisfy the Unforeseeable Emergency, the Committee may, and only if such distribution is in
compliance with the requirements of Section 409A of the Code, accelerate the time for payment of
such amounts necessary to satisfy the Unforeseeable Emergency notwithstanding the deferral period
and/or payment method designated by the Director in the Director’s deferral election.




          (c) After the end of the period for a timely annual deferral election has passed, a Director
may not change any distribution election applicable to all or a portion of the Director’s
Non-Grandfathered Account.




          (d) Notwithstanding anything in this Plan to the contrary, a Director may change his or her
distribution election applicable to the portions of the Director’s Non-Grandfathered Account
deferred prior to December 31, 2008 to allowable alternative Non-Grandfathered Benefit Distribution
Date(s) and/or allowable alternative forms of payment by submitting the appropriate Election Form
supplied by the Committee to the Committee prior to December 31, 2008. Such election(s) shall only
be effective if it applies only to amounts not otherwise be payable in 2008 and does not cause an
amount to be paid in 2008 not otherwise be payable in such year. If a Director submits several
transitional Election Forms during this election period, the last properly completed transitional
Election Form timely submitted to the Committee shall govern the payout of the applicable portion
of the Non-Grandfathered Account deferred prior to December 31, 2008 and such election shall



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become effective on December 31, 2008. This election is intended to comply with the
transition rule permitted under the Treasury guidance issued under Section 409A.




          (e) In the event the Director dies prior to the receipt of the entire balance of the
Director’s Account under this Plan, then the unpaid balance shall be paid to the Beneficiary
designated by the Director in the respective deferral election or in any subsequent Designation of
Beneficiary Election delivered by the Director to the Committee, subject to the requirement that
such Beneficiary survives the Director by 30 days. Payments to a Beneficiary shall be made as soon
as administratively practical in the form elected by the Director from among the available options;
provided, however, if installment payments to the Director with respect to a particular deferral
have already begun, then any installment payments elected by the Director to be made to the
Beneficiary shall be limited to the lesser of (i) the number of years elected by the Director for
payments to the Beneficiary, or (ii) the number of remaining years over which payments would have
continued to the Director had the Director lived; and provided further if a Beneficiary entitled to
payment hereunder dies prior to the receipt of the full amount, then the unpaid balance shall be
paid in lump sum to such Beneficiary’s estate. If no designation of a Beneficiary is made by the
Director or if the designated Beneficiary does not survive the Director by 30 days, then the
Account shall be paid in a lump sum to the Director’s estate.




     Section 7. Miscellaneous.



          (a) The FHLBank shall withhold from any payments made under this Plan the amount of any taxes
required to be withheld under federal, state, and local law. The FHLBank shall make all required
information reports concerning payments made and compensation deferred under this Plan.




          (b) The obligation of the FHLBank to provide payments under this Plan is a general contractual
obligation of the FHLBank and imposes no obligation on the FHLBank to provide for payment through
any specific source or fund. An individual Director and any person claiming under or through a
Director shall have no greater legal or equitable rights, interests or claims in any property or
assets of the FHLBank than an unsecured general creditor of the FHLBank. For purposes of the
payment of benefits under this Plan, any and all of the FHLBank’s assets shall be, and remain, the
general, unpledged, unrestricted assets of the FHLBank. The FHLBank’s obligation under the Plan
shall be merely an unfunded and unsecured promise to pay money in the future.




          (c) The FHLBank, through the Board, may amend or terminate this Plan at any time and for any
reason. Except as provided below, no such amendment or termination shall affect the amount or
timing of payments to a Director of amounts deferred prior to the date of adoption of such
amendment or termination, nor reduce the interest to be credited with respect to such prior
deferrals, unless the Director gives his or her express written consent to such change. In the
event the FHLBank is restructured or dissolved, the obligation to make payments under this Plan may
be transferred to any institution which succeeds to all or any part of the business of the FHLBank,
as determined in sole discretion of the FHLBank.




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          (d) For purposes of federal income taxation, the Plan is intended to be a plan not qualified
within the meaning of Code Section 401(a) and the benefits attributable to Non-Grandfathered
Accounts are intended to be subject to and to comply with the requirements of Code Section 409A and
the benefits attributable to the Grandfathered Accounts are intended to be outside the scope of and
exempt from the requirement of Code Section 409A. The Plan shall be interpreted, operated and
administered in a manner consistent with that intent.




          (e) The FHLBank’s liability for the payment of benefits under this Plan is exclusively
contained in this Plan instrument and the Election Forms. The FHLBank shall not have an obligation
to a Director under the Plan except as expressly provided in the Plan and the Director’s Election
Form(s).




          (f) Except as provided in Section 7(p), neither a Director nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which are expressly declared
to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Director or any other person, be
transferable by operation of law in the event of a Director’s or any other person’s bankruptcy or
insolvency or be transferable to a spouse as a result of a property settlement or otherwise, except
as provided in Section 7(p).




          (g) Nothing in this Plan shall be deemed to give a Director the right to continue to serve as
a member of the Board or other governing body, nor shall it interfere with any right to discipline
or remove a Director from the Board or other governing body of the FHLBank at any time.




          (h) A Director or a Director’s Beneficiary will cooperate with the Committee by furnishing any
and all information requested by the Committee and take such other actions as may be requested in
order to facilitate the administration of the Plan and the payments of benefits hereunder,
including but not limited to taking such physical examinations as the Committee may deem necessary.




          (i) The captions of the articles, sections, and paragraphs of this Plan are for convenience
only and shall not control or affect the meaning or construction of any of its provisions.




          (j) Any legal actions, suits or proceedings pertaining to this Plan shall be brought in the
courts of Ohio (whether federal or state) and by execution of the Election Form, the Director on
his or her behalf and on behalf of his or her Beneficiaries, persons claiming to be a Beneficiary
or any other persons who claim to derive a benefit under this Plan by reference to the Director
hereby irrevocably submits to the exclusive jurisdiction of said courts. The Director on his or
her behalf and on behalf of his or her Beneficiaries, persons claiming to be a Beneficiary or any
other persons who claim to derive a benefit under this Plan by reference to the Director hereby
waives, to the fullest extent permitted by



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law, any objections he or she, his or her Beneficiaries or any such persons may now or
hereafter have to the laying of venue in any suit, action or proceeding hereunder in any court, as
well as any right he or she, his or her Beneficiaries or any such persons may now or hereafter have
to remove any such suit, action or proceeding once commenced to another court in any jurisdiction
on the grounds of forum non conveniens or otherwise.




          (k) Any notice or filing required or permitted to be given to the Committee under this Plan
shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to
the address below:




Personnel Committee

Federal Home Loan Bank of Cincinnati

221 East Fourth Street, Suite 1000

Cincinnati, Ohio 45202



Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of
the date shown on the postmark on the receipt for registration or certification. Any notice or
filing required or permitted to be given to a Director under this Plan shall be sufficient if in
writing and hand-delivered, or sent by mail, to the last known address of the Director.




          (l) The provisions of this Plan shall bind and inure to the benefit of the FHLBank and its
successors and assigns and the Director and the Director’s Beneficiaries.




          (m) The interest in the benefits hereunder of a spouse of a Director who has predeceased the
Director shall automatically pass to the Director and shall not be transferable by such spouse in
any manner, including but not limited to such spouse’s will, nor shall such interest pass under the
laws of intestate succession. The interest and benefits hereunder of a spouse of a Director who
has not predeceased the Director shall not be transferable by such spouse’s disclaimer.




          (n) In the event any provision of this Plan or an Election Form would cause a Director to be
subject to a tax penalty under Section 409A of the Code, such provision shall be deemed reformed in
a manner that renders the Plan exempt from, or compliant with, the requirements of Section 409A and
preserves as nearly as possible the original intention of the provision. In case any provision of
this Plan shall be declared illegal or invalid for any reason, said illegality or invalidity shall
not affect the remaining provisions hereof, but shall be fully severable and this Plan shall be
construed and enforced as if such illegal or invalid provision had never been inserted herein.




          (o) If the Committee determines in its discretion that a benefit under this Plan is to be paid
to a minor, a person declared incompetent or to a person incapable of handling the disposition of
that person’s property, the Committee may direct payment of such benefit to the guardian, legal
representative, or person having the care and custody of such minor, incompetent, or incapable
person. The Committee may require proof of minority, incompetence, incapacity or guardianship, as
it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a
payment for the account of



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the Director and/or the Director’s Beneficiary, as the case may be, and shall be a complete
discharge of any liability under the Plan for such payment amount.




          (p) The Committee is authorized to make any payments directed by court order in any action in
which the Plan or the Committee has been named as a party. In addition, if a court determines that
a spouse or former spouse of a Director has an interest in the Director’s benefits under the Plan
in connection with a property settlement or otherwise, the Committee, in its sole discretion, shall
have the right, notwithstanding any election made by a Director, to immediately distribute the
spouse’s or former spouse’s interest in the Director’s benefits under the Plan to that spouse or
former spouse as may be necessary to fulfill a domestic relations order (as defined in Code Section
414(p)(1)(B)).




          (q) If, for any reason, all or any portion of a Director’s benefits under this Plan becomes
taxable to the Director prior to actual receipt because the Plan fails to meet the requirements of
Code Section 409A, a Director may request that portion of his or her benefit required to be
included in income as a result of such failure be distributed. Following the Committee’s approval
of such request, the FHLBank shall distribute to the Director immediately available funds in an
amount equal to the portion of his or her benefit required to be included in income as a result of
the failure of the Plan to meet the requirements of Section 409A (which amount shall not exceed the
total of a Director’s unpaid vested Accounts under the Plan). If the request is approved, this
distribution upon inclusion under Section 409A shall be made within 90 days of the date when the
Director’s request is approved. Such a distribution shall affect and reduce the benefits to be
paid under this Plan.




     IN WITNESS WHEREOF, THE FEDERAL HOME LOAN BANK OF CINCINNATI has caused this instrument to be
executed this 17th day of July, 2008.




	 	 	 	 	 
	 	 	FEDERAL HOME LOAN BANK OF CINCINNATI
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	/s/ David H. Hehman	 	 
	 

	 	 	 	 
	 

	 	David H. Hehman           President	 	 







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