LAFAYETTE BANCORPORATION
                       1998 NONQUALIFIED STOCK OPTION PLAN


                                    ARTICLE I
                                   Definitions


Section 1.1  Definitions:  As used herein,  the  following  terms shall have the
meaning set forth below, unless the context clearly requires otherwise:

(a)  "Applicable  Event"  shall  mean (i) the  expiration  of a tender  offer or
     exchange offer (other than an offer by the Company)  pursuant to which more
     than 50% of the Company's issued and outstanding  stock has been purchased,
     or (ii) the approval by the  shareholders of the Company of an agreement to
     merge or  consolidate  the Company  with or into  another  entity where the
     Company is not the surviving  entity,  or an agreement to sell or otherwise
     dispose of all or substantially  all of the Company's  assets  (including a
     plan of liquidation), or the approval by the shareholders of the Company of
     an  agreement  to merge or  consolidate  the Company  with or into  another
     entity where the Company is the  surviving  entity,  pursuant to which more
     than  50%  of  the  Company's   issued  and  outstanding   Stock  has  been
     transferred.

(b)  "Bank" shall mean any Subsidiary of Lafayette  Bancorporation as defined in
     Section 1.1(n).

(c)     "Committee"  shall mean a  Committee  consisting  of the  members of the
        Board of Directors of the Company,  who are not employees of the Bank or
        the Company.

(d)     "Company" shall mean Lafayette Bancorporation

(e)  "Director"  shall mean a member of the Board of  Directors  of the  Company
     and/or the Bank.

(f)       "Effective  Date"  with  respect  to the  Plan  shall  mean  the  date
          specified in Section 2.3 as the Effective Date.

(g)     "Fair Market Value" with respect to a share of Stock shall mean the Fair
        Market  Value  of the  Stock,  as  determined  by  application  of  such
        reasonable  valuation methods as the Committee shall adopt or apply. The
        Committee's  determination  of Fair Market Value shall be conclusive and
        binding on the  Company and the  Optionee.  In no event may an Option be
        granted  under the Plan if the  Option  Price per Share is less than the
        par value of a Share.

(h)     "Option" shall mean an option to purchase Stock granted  pursuant to the
        provisions  of the  Plan.  Options  granted  under  the  Plan  shall  be
        Nonqualified Stock Options.

(i)     "Optionee" shall mean a Director,  executive or key management  employee
        of the Bank or the Company to whom an Option has been granted.


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(j)     "Plan" shall mean the Lafayette  Bancorporation  1998 Nonqualified Stock
        Option Plan, the terms of which are set forth herein.

(k)     "Plan  Year"  shall  mean  the  twelve-month  period  beginning  on  the
        Effective Date, and each twelve-month period thereafter beginning on the
        anniversary date of the Effective Date.

(l)     "Stock" shall mean the Common Stock of the Company or, in the event that
        the outstanding shares of Stock are changed into or exchanged for shares
        of a different  stock or securities of the Company or some other entity,
        such other stock or securities.

(m)     "Stock Option  Agreement"  shall mean the agreement  between the Company
        and the Optionee under which the Optionee may purchase Stock pursuant to
        the terms of the Plan.

(n)     "Subsidiary"  shall mean "subsidiary  corporation" as defined in Section
        424 (f) of the Internal Revenue Code of 1986, as amended.

                                   ARTICLE II
                                    The Plan

Section 2.1 Name. This plan shall be known as the "Lafayette Bancorporation 1998
Nonqualified Stock Option Plan." 

Section 2.2 Purpose.  The purpose of the Plan is to advance the interests of the
Company and its  stockholders  by affording to key  management  employees of the
Company and the Bank an  opportunity  to acquire or increase  their  proprietary
interest in the Company by the grant to such persons of Options  under the terms
set forth herein.  By encouraging  such persons to become owners of the Company,
the Company seeks to attract, motivate, reward and retain those highly competent
individuals upon whose judgment, initiative,  leadership and efforts the success
of the Company depends.

Section  2.3  Effective  Date and Term.  The Plan was  approved  by the Board of
Directors of the Company on March 9, 1998 and shall be effective on May 1, 1998,
as approved by a majority of the  shareholders  of the Company present in person
or by proxy at the meeting of the  shareholders of the Company held on April 13,
1998. The Plan shall  terminate upon the fifth  anniversary of the date on which
it is adopted by the Board of Directors.

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                                   ARTICLE III
                                 Administration

Section 3.1 Administration.

(a)     The Plan shall be administered by the Committee.  Subject to the express
        provisions of the Plan,  the Committee  shall have sole  discretion  and
        authority to determine from time to time the individuals to whom Options
        may be  granted,  the  number of shares of Stock to be  subject  to each
        Option,  the period  during which such Option may be  exercised  and the
        price at which such Option may be exercised.

(b)     Meetings  of the  Committee  shall be held at such  times and  places as
        shall be determined  from time to time by the  Committee.  A majority of
        the  members  of  the  Committee  shall  constitute  a  quorum  for  the
        transaction  of  business  and the vote of a majority  of those  members
        present at any meeting  shall  decide any  question  brought  before the
        meeting. In addition, the Committee may take any action otherwise proper
        under the Plan by the affirmative  vote,  taken without a meeting,  of a
        majority of the members.

(c)     No member of the  Committee  shall be liable for any act or  omission of
        any other member of the  Committee or for any act of omission on his own
        part,  including,  but not  limited  to,  the  exercise  of any power or
        discretion given to him under the Plan,  except those resulting from his
        own gross negligence or willful misconduct.

(d)     All questions of  interpretations  and  application  with respect to the
        Plan  or   Options   granted   thereunder   shall  be   subject  to  the
        determination,  which shall be final and  binding,  of a majority of the
        whole Committee.

(e)     The Committee  shall be a minimum of two individuals who (i) are neither
        officers nor employees of the Company,  (ii) do not receive compensation
        from the Company for services in any  capacity  other than as a Director
        in  excess  of  $60,000  per  annum,  and (iii)  have not  engaged  in a
        transaction with the Company nor have a business  relationship  relative
        to the Company which requires disclosure under Item 404(a) or (b) of the
        SEC Regulation S-K.

<PAGE>

Section 3.2 Company  Assistance.  The Company and the Bank shall supply full and
timely  information  to  the  Committee  on all  matters  relating  to  eligible
employees, their employment, death, retirement,  disability or other termination
of employment and such other pertinent  facts as the Committee may require.  The
Company and the Bank shall  furnish the  Committee  with such clerical and other
assistance as is necessary in the performance of its duties.

                                   ARTICLE IV
                                    Optionees

Section 4.1 Eligibility.  Directors and executives and key management  employees
of the Company and the Bank shall be eligible to  participate  in the Plan.  The
Committee may grant Options to any eligible individual subject to the provisions
of Section 5.1

                                    ARTICLE V
                         Shares of Stock Subject to Plan

Section 5.1 Grant of Options and Limitations.

(a)     Initial Plan Year.  For the initial Plan Year,  such  individuals as are
        designated by the Committee shall be eligible to receive Options for the
        number of shares of Stock determined by the Committee.

(b)     Subsequent  Years.  As of the first day of each  subsequent  Plan  Year,
        current  Optionees and such other  individuals  as are designated by the
        Committee  shall be eligible to receive Options for the number of shares
        of Stock determined by the Committee.

(c)     Stock  Available  for  Options.  Subject to  adjustment  pursuant to the
        provisions of Section 9.4 hereof,  the  aggregate  number of shares with
        respect  to which  Options  may be  granted  during the term of the Plan
        shall not exceed:

                      Optionee Group                             Maximum Shares

                      Sum of All Directors                           15,000

                      Sum of All Employees                           42,000

                                                     Total:          57,000

        Shares  with  respect  to which  Options  may be  granted  may be either
        authorized and unissued shares or shares issued and thereafter  acquired
        by the Company.
<PAGE>

Section  5.2  Options  Under the Plan.  Shares of Stock  with  respect  to which
Options granted  hereunder that have been exercised shall not again be available
for grant hereunder. If Options granted hereunder shall expire,  terminate or be
canceled  for any reason  without  being  wholly  exercised,  new Options may be
granted hereunder covering the number of shares to which such Option expiration,
termination or cancellation relates.

                                   ARTICLE VI
                                     Options

Section 6.1 Option Grant and Agreement.  Each Option granted  hereunder shall be
evidenced by minutes of a meeting or the written  consent of at least a majority
of the members of the Committee and by a written Stock Option Agreement dated as
of the date of grant and  executed by the Company  and the  Optionee.  The Stock
Option  Agreement shall set forth such terms and conditions as may be determined
by the Committee consistent with the Plan.

Section 6.2 Option Price. The exercise price of the Stock subject to each Option
shall not be less than the Fair Market Value of the Stock on the date the Option
is granted.

Section 6.3 Option Grant and Exercise  Periods.  No Option may be granted  after
the fifth  anniversary  of the Effective  Date.  The period for exercise of each
Option  shall be  determined  by the  Committee,  but in no instance  shall such
period extend beyond the tenth anniversary of the date of grant of the Option.

Section 6.4 Option Exercise.

(a)  The Company  shall not be required to sell or issue shares under any Option
     if the issuance of such shares shall constitute or result in a violation of
     the  Optionee  or the  Company  of any  provisions  of any law,  statute or
     regulation of any governmental authority.  Specifically, in connection with
     the  Securities Act of 1933 (the "Act"),  upon exercise of any Option,  the
     Company shall not be required to issue such shares unless the Committee has
     received evidence  satisfactory to it to the effect that registration under
     the Act and applicable  state  securities laws is not required,  unless the
     offer and sale of  securities  under the Plan is  registered  or  qualified
     under  the  Act  and  applicable  state  laws.  Any  determination  in this
     connection  by the Committee  shall be final,  binding and  conclusive.  If
     shares are issued under any Option without  registrations  under the Act or
     applicable  state  securities  laws, the Optionee may be required to accept
     the shares subject to such  restrictions on  transferability  as may in the
     reasonable  judgment of the Committee be required to comply with exemptions
     from registrations  under such laws. The Company may, but shall in no event
     be obligated to, register any securities covered hereby pursuant to the Act
     or applicable  state securities laws. The Company shall not be obligated to
     take any other  affirmative  action in order to cause  the  exercise  of an
     Option or the issuance of shares pursuant thereto to comply with any law or
     regulation of any governmental authority.


<PAGE>

(b)     Subject  to  Section  6.4(c)  and such  terms and  conditions  as may be
        determined by the Committee in its sole  discretion upon the grant of an
        Option, an Option may be exercised in whole or in part (but with respect
        to whole shares only) and from time to time by delivering to the Company
        at its principal  office written notice of intent to exercise the Option
        with respect to a specified number of shares.

(c) Options shall be exercisable according to the following vesting schedules:

                  Employees:

                      0% on and  before  one year from  grant 20% after one year
                      from grant 40% after two years from grant 60% after  three
                      years  from  grant 80% after  four  years  from grant 100%
                      after five years from grant

                 Directors:

                      0% on and before two years from grant 100% after two years
                      from grant

        Provided,  however, that upon the earlier of (i) the Optionee-Employee's
        65th birth date or the  Optionee-Director's  70th birth  date,  (ii) the
        occurrence of an Applicable Event,  (iii) the death of the Optionee (iv)
        or total disability,  all Options granted to the Optionee shall be fully
        exercisable  in accordance  with terms of the Plan. For purposes of this
        paragraph, an Optionee is totally disabled if he is receiving disability
        benefits  under the  Social  Security  Act as the  result of a total and
        permanent disability,  or is determined to be totally disabled under any
        long-term disability plan sponsored by the Bank or Company.

        At  the  discretion  of  the  Committee,  all or a  portion  of  Options
        previously  granted to an Optionee  can be amended to reduce the vesting
        schedule or immediately 100% vest such Options.


<PAGE>

(d)     Subject  to  such  terms  and  conditions  as may be  determined  by the
        Committee in its sole discretion  upon grant of any Option,  payment for
        the shares to be acquired  pursuant  to exercise of the Option  shall be
        made as follows:

        (1)    by delivering to the Company at its principal  office a cashier's
               or certified check,  payable to the order of the Company,  in the
               amount of the Option Price for the number of shares of Stock with
               respect to which the Option is then being exercised; or

        (2)    by delivering to the Company at its principal office certificates
               representing  Stock,  duly  endorsed for transfer to the Company,
               having an aggregate  Fair Market Value as of the date of exercise
               equal to the amount of the Option Price, for the number of shares
               of  Stock  with  respect  to  which  the  Option  is  then  being
               exercised; or

        (3) by any  combination  of payments  delivered  pursuant to  paragraphs
(d)(1) and (d)(2) above.

Section  6.5  Rights  as  Shareholder.  An  Optionee  shall  have no rights as a
shareholder  with  respect  to any share  subject  to such  Option  prior to the
exercise of the Option and the purchase of such shares.

Section 6.6 Limited  Rights.  Upon the  occurrence  of an Applicable  Event,  an
Optionee shall have the right (without  regard to the limitation on the exercise
of Options set forth in Section  6.4(c) of the Plan and similar  limitations  in
the Stock  Option  Agreement)  to exercise  Options  then held,  or to surrender
unexercised  Options in exchange  for a cash  amount.  Such cash amount shall be
equal to the product of (1) the number of shares of Stock subject to the Option,
or portion thereof which is  surrendered,  multiplied by (2) the amount by which
the highest price paid or to be paid per share  pursuant to an Applicable  Event
exceeds the exercise price.

                                   ARTICLE VII
                 Termination, Amendment and Modification of Plan

Section 7.1  Termination.  The Board of Directors of the Company may at any time
and from time to time and in any respect  amend,  modify or terminate  the Plan;
provided,  however,  that absent the approval of holders representing a majority
of the voting shares of stock of the Company, no such action may:

(a)       increase  the total  number of  shares of Stock  subject  to the Plan,
          except as contemplated in Section 9.4 hereof; or

(b)     withdraw the administration of the Plan from the Committee; or

(c)       change the terms by which an Option may be  exercised,  in whole or in
          part, as described in Section 6.4 of this Plan; or

<PAGE>

(d)       change the  limitation  on the price at which  Options  may be granted
          hereunder as provided by Section 6.2; or

(e)     affect any Stock Option Agreement  previously  executed  pursuant to the
        Plan without the consent of the Optionee.

                                  ARTICLE VIII
                                   Withholding

Section 8.1 Tax  Withholding.  The Company shall have the power and the right to
deduct or  withhold an amount  sufficient  to satisfy  Federal,  state and local
taxes  required by law to be withheld  with respect to any grant,  exercise,  or
payment  made  under  or as a  result  of the  Plan.  At the  discretion  of the
Committee,  an Optionee may be  permitted to pay to the Company the  withholding
amount  in the  form of cash or  previously  owned  shares.  If  payment  of the
withholding  amount is made by  delivery  of  shares,  the  value of the  shares
delivered  shall equal the Fair Market Value of the shares on the day  preceding
the date of exercise of the Option.

Section 8.2 Share  Withholding.  With respect to tax  withholding  required upon
exercise  of  Options,  an Optionee  may elect,  subject to the  approval of the
Committee,  to satisfy  the  withholding  requirement,  in whole or in part,  by
having the Company  withhold  shares  having a Fair Market Value on the date the
tax is to be determined equal to an amount sufficient to satisfy Federal,  state
and local taxes. If the Optionee is a "reporting  person" under Section 16(a) of
the  Exchange  Act,  then  any  withholding  shall  comply  with  Rule  16b-3(e)
thereunder.

<PAGE>

                                   ARTICLE IX
                                  Miscellaneous

Section 9.1  Nontransferability of Option.  During the Optionee's lifetime,  any
Option  may  be  exercised  only  by  the  Optionee  or any  guardian  or  legal
representative of the Optionee,  and the Option shall not be transferable except
in the case of the death of the  Optionee,  by will or the laws of  descent  and
distribution,  and (i) as  specifically  permitted  by and  solely to the extent
permitted in the Stock Option Agreement,  or (ii) to an immediate family member,
a partnership  consisting solely of immediate family members,  or trusts for the
benefit of immediate family members.

Section  9.2  Designation  of  Beneficiary.  An  Optionee  may  file  a  written
designation  of a  beneficiary  who is to receive  any Stock  and/or  cash.  The
Optionee  may change  such  designation  of  beneficiary  at any time by written
notice to the  Company.  Upon the death of an Optionee  and upon  receipt by the
Company of proof of identity and the existence of a  beneficiary  at the time of
the  Optionee's  death validly  designated by the Optionee  under the Plan,  the
Company shall deliver such Stock and/or cash to such  beneficiary.  In the event
of the death of an Optionee in the absence of a beneficiary  validly  designated
under the Plan who is living at the time of such Optionee's  death,  the Company
shall deliver such Stock and/or cash to the executor or the administrator of the
estate  of the  Optionee,  or if no such  executor  or  administrator  has  been
appointed (to the knowledge of the Company), the Company, in its discretion, may
deliver such Stock and/or cash to the spouse or to any one or more dependents of
the Optionee as the Company may designate.  No beneficiary  shall,  prior to the
death of the  Optionee by whom he has been  designated,  acquire any interest in
the Stock and/or cash credited to the Optionee under the Plan.

Section 9.3 Effect of  Termination  of  Employment,  Retirement,  Disability  or
Death.

 (a)      If an Optionee's  status as a Director  and/or employee of the Company
          and all Subsidiaries  terminates for any reason other than retirement,
          disability or death of the Optionee,  before the date of expiration of
          Options held by the Optionee, the right to exercise such Options shall
          become null and void on the day three (3) months following the date of
          such termination. In the case of an Optionee who terminates employment
          with the  Company  and all  Subsidiaries,  but retains his status as a
          Director of the Company or Bank,  the Optionee shall not be considered
          terminated  for  purposes  of  this  Section  9.3.  The  date  of such
          termination  shall  be the  date  the  Optionee  ceases  to be  both a
          Director and an employee of the Company and all Subsidiaries.

<PAGE>

(b)     If an Optionee's status as a Director and/or employee of the Company and
        all  Subsidiaries  terminates due to retirement,  the three month period
        specified in Section  9.3(a)  shall  become one year.  In the case of an
        Optionee who retires from the Company and all Subsidiaries,  but retains
        his status as a Director of the Company or Bank,  the Optionee shall not
        be considered  terminated  for purposes of this Section 9.3. The date of
        such  termination by retirement shall be the date the Optionee ceases to
        be both a Director and an employee of the Company and all Subsidiaries.

(c)     For an Optionee who terminates  employment and/or board service with the
        Company and all Subsidiaries  due to disability,  as defined in Internal
        Code  Section 22 (e) (3),  the three month  period  specified in Section
        9.3(a) shall become one year.

(d)     In the  event of the death of an  Optionee  while in the  employ  and/or
        board  service  of the  Company  or Bank or within  three  months  after
        termination  of such  employment  and/or board  service,  the executors,
        administrators,  legatees or  distributes  of the estate of the Optionee
        shall have the right to exercise any Options  which  became  exercisable
        prior to or on account of the Optionees's death but only within a period
        of one year from the date of the  Optionee's  death  (even if the Option
        period as defined in Section  6.3 would  have  expired  earlier  had the
        Optionee  lived)  after  which  time  any  unexercised  portion  of  all
        outstanding Options shall expire.

Section 9.4  Antidilution.  The provisions of subsections (a), (b) and (c) shall
apply in the event  that the  outstanding  shares of Stock are  changed  into or
exchanged  for a different  number or kind of shares or other  securities of the
Company   or   another   entity  by  reason   of  any   merger,   consolidation,
reorganization, recapitalization,  reclassification, combination, stock split or
stock dividend.

(a)     The aggregate number and kind of shares subject to Options, which may be
        granted hereunder, shall be adjusted appropriately;

(b)     Rights  under  outstanding  Options  granted  hereunder,  both as to the
        number  of  subject  shares  and the  Option  Price,  shall be  adjusted
        appropriately; and

<PAGE>

(c)     Where  dissolution  or  liquidation  of the  Company  or any  merger  or
        combination in which the Company is not a surviving company is involved,
        each outstanding Option granted hereunder shall, subject to Section 6.6,
        terminate.

The  foregoing  adjustments  and the  manner  of  application  of the  foregoing
provisions  shall be determined  solely by the Committee and any such adjustment
may provide for the elimination of fractional share interests.

Section 9.5 Application of Funds. The proceeds  received by the Company from the
sale of Stock pursuant to Options shall be used for general corporate purposes.

Section 9.6 No Right to Continued Employment or Service.  Nothing in the Plan or
in any Option  granted  hereunder  or in any Stock  Option  Agreement,  relating
thereto  shall confer upon any  employee or  Director,  the right to continue in
such position with the Company or the Bank.

Section 9.7 Other Compensation  Plans. The adoption of the Plan shall not affect
any other stock option or incentive  or other  compensation  plans in effect for
the  Company or the Bank,  nor shall the Plan  preclude  the Company or the Bank
from  establishing  any  other  forms of  incentive  or other  compensation  for
employees or Directors of the Company or the Bank.

Section 9.8 No Obligation to Exercise  Options.  The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option.

Section  9.9 Plan  Binding on  Successors.  The Plan  shall be binding  upon the
successors and assigns of the Company.

Section  9.10  Compliance  with Section 16. If the Company has a class of equity
securities  registered  under  Section  12 of the  Exchange  Act and the Plan is
qualified   under  Rule  16b-3  or  its  successors   under  the  Exchange  Act,
transactions  under  the  Plan  are  intended  to  comply  with  all  applicable
conditions  of such Rule or its  successors.  To the extent any provision of the
Plan or action by the Committee fails to so comply,  the Committee may amend the
Plan and the terms of any  outstanding  Option,  and any action of the Committee
which fails to comply  shall be deemed void to the extent  permitted  by law and
deemed advisable by the Committee.

Section 9.11 Investment Representation and Restrictions. The Company may require
Optionee's  receiving  shares pursuant to any Option under the Plan to represent
to and agree with the  Company in writing  that the  Optionee is  acquiring  the
shares for investment without a view to distribution thereof. No shares shall be
issued or  transferred  pursuant to an Option  unless such  issuance or transfer
complies with all relevant  provisions of law, including but not limited to, the
(i)  limitations,  if any,  imposed in the state of issuance or  transfer,  (ii)
restrictions,  if any,  imposed by the Securities  Act of 1933, as amended,  the
Exchange Act, and the rules and regulations  promulgated  thereunder,  and (iii)
requirements  of any stock exchange upon which the Company's  shares may then be
listed.  The  certificates  for such  shares may  include  any legend  which the
Committee deems appropriate to reflect any restrictions on transfer.


<PAGE>

Section 9.12  Singular,  Plural,  Gender.  Whenever  used  herein,  nouns in the
singular  shall  include the plural,  and the  masculine  pronoun  shall include
feminine.

Section 9.13 Headings,  Etc., No Part of Plan. Headings of Articles and Sections
hereof are inserted for convenience of reference; they constitute no part of the
Plan.

Section 9.14 Governing Law.  Except as otherwise  required by law, the validity,
construction and  administration of this Plan shall be determined under the Laws
of the State of Indiana.

Signed this _________ day of _____________________, 199__.


                                 LAFAYETTE BANCORPORATION

                                 By: __________________________________
                                       Chairman of the Board of Directors