Document:

Exhibit

Exhibit 10.2
Board Approved 10-16-15

Federal Home Loan Bank of Indianapolis
Directors’ Compensation and Expense Reimbursement Policy
Effective January 1, 2016

Annual Director Fees

The annual director fees are generally split in half, with one half to be paid in the form of a retainer fee. The other half will be paid based on preparation for and attendance at pre-scheduled daily in-person Board or Committee meetings and conference calls, subject to the annual fee cap, as outlined below.   

	
							
	 
	Estimated Annual Fee Cap1
	Quarterly Retainer
	Per-Day Attendance Fee2
	Per-Call Attendance Fee
	Audit Committee Chair Fee
	Other Committee Chair Fees

	Chair
	$125,0003
	$15,625
	$4,693
	$250
	 
	 

	Vice Chair
	$105,000
	$13,125
	$3,923
	$250
	 
	 

	Director
	$95,000
	$11,875
	$3,539
	$250
	$10,000
	$10,000

The annual director fees are established based on an evaluation of McLagan market research data and a fee comparison among the FHLBanks. The fee structure assists the Bank in recruiting and retaining highly qualified directors willing to meet their fiduciary duties while aggressively advocating for the Bank. The fees are also structured to retain qualified directors during times of economic stress for the Bank or the industry.
    
Per-Day/Per-Call Fees Defined

Regular preparation and attendance at Board and Committee meetings (upon which the director serves), as well as related conference calls are all expected elements of the directors’ fiduciary duties to the Bank.

Per-day attendance fees will be paid on a per-day basis for each day that a director attends an in-person meeting of the Board or a Board Committee.  

______________________________________________ 
1 The cap is determined based on director status and committee chair assignments throughout the year. See also "Timing of Director and Committee Chair Fee Payments" section.
2 The per-day attendance fee is calculated based on 15 mandatory in-person events per year (calculated based on the number of meetings a director would be required to attend during the course of a year), minus two excused absences, totaling 13 mandatory in-person meetings. This assumes a director will be paid $1,500 in attendance fees for conference calls (based on eight mandatory Board conference calls, minus two excused, totaling six mandatory Board conference calls to be paid at $250/conference call), so that amount ($1,500) is deducted before calculating the final per-day fee. To have consistency among directors for attendance fees, this baseline calculation may not be reflective of a director's actual attendance requirements, which is ultimately based on a director's actual committee assignments and when meetings are pre-scheduled.
3 Includes $10,000 annual fee for serving as Executive/Governance Committee Chair.

1

Per-call attendance fees will be paid in the amount of $2504 for each pre-scheduled5 Board or Committee-assigned conference call6. In cases where the Board is scheduled to meet in person, directors will not be compensated for attending via conference call.

In the event a director must be recused from a meeting (in-person or conference call) because the director is not disinterested in the meeting topic, the director should appear for the meeting and then be excused. This will count as attendance and will not count against a director’s excused absences.

Subject to the annual cap, per-day fee payments will also include new director orientation (for directors new to the Board only) and the System’s directors’ conference.  

Excused Absences, Forfeitures and Conference Call Penalty

Each director will be excused for ---two pre-scheduled in-person meetings (including training sessions identified as mandatory) and two pre-scheduled Committee-assigned conference call meetings for any reason. Upon the third absence and any absences thereafter for a pre-scheduled in-person meeting, the per-day attendance fee will be forfeited. Upon the third absence and any absences thereafter for a pre-scheduled conference call of the Board or a Board Committee on which the director serves, in addition to forfeiture of the per-call fee, a per-call attendance penalty of $500 will be assessed out of a director’s unpaid fees.

Cancellations by the Bank due to inclement weather or other circumstances beyond a director’s control (such as flight delays, excluding illness and other business or personal scheduling conflicts) will be reimbursed as a regular per-day fee.  

Timing of Director and Committee Chair Fee Payments

Fees shall be paid in arrears on a quarterly basis during the last week of each March, June, September, and December. Upon calculation of the third quarter payment, if such payment will cause a director to reach the annual cap, the third quarter payment will be reduced such that one quarter’s retainer fee will be held until the fourth quarter payment to avoid any director being fully paid before the end of the year and prior to completion of the director’s annual obligations. The payments shall be paid to the Director, or to the Director’s employer pursuant to the terms of the employer’s authorized charitable contribution plan, if timely established.  

_____________________________

4 Based on eight required Board conference calls per year, minus two excused absences, totaling $1,500 total for participation on six Board  conference calls. To have consistency among directors for attendance fees, this baseline calculation may not be reflective of a director's actual attendance requirements, which is ultimately based on a director's actual committee assignments and when meetings are pre-scheduled.
5 For purposes of this Policy, pre-scheduled means anything scheduled as of December 31 of the prior year.
6 A conference call with consecutive meetings of the Board and another Committee is considered one conference call event.

2

Annual Committee Chair fees shall be paid pro-rata on a quarterly basis as part of the annual retainer fee. To be eligible for a Committee Chair fee the Director must be designated by the Board as Chair as of the last day of the quarter, except for the fourth quarter; the Chair designation must be as of December 15 of that quarter. Directors retiring or resigning from the Board shall be entitled to a pro-rata payment (measured monthly) of their quarterly retainer, in addition to any unpaid, but earned, attendance fees. 

Reduction in Compensation for Inadequate Director Performance or Attendance as Required by §1261.22(b) and (c)

A director’s quarterly retainer, payable in the future, will be reduced if a majority of the disinterested directors determines such director’s Board performance, ethical conduct, or Board meeting attendance is significantly deficient. The facts supporting the determination and the amount of the reduction will be documented in the Bank’s Board minutes.

On a quarterly basis, prior to payment of the quarterly retainer fee, the Board Chair shall review director attendance records, as prepared by the Corporate Secretary. The results of that review will be reported to the Board, as necessary, based on the record of unexcused absences. The attendance records shall be used, in addition to considering director performance, when assisting the Board in determining whether a director’s quarterly retainer should be reduced.

Any reports of significantly deficient Board performance or unethical conduct must be made to the Board Chair, who will then discuss the issue with the disinterested directors of the full Board in making the final determination of whether a director’s quarterly retainer should be reduced.

If the Board Chair is the subject of the report, the report should be made to the Board Vice-Chair. If the Board Vice-Chair is also the subject of the report, then the report should be made to the most tenured disinterested director of the Board, who will then discuss the issue with the remaining disinterested directors of the full Board.
  

Expense Reimbursement

Travel expense reimbursement will be provided for Board meetings, committee meetings, meetings with regulators, new director orientations, mandatory and optional training sessions of the Board, educational seminars (pre-approved by the Bank), member events, FHLBank System meetings, Council of FHLBanks’ meetings (for Council members), Community Investment conference meetings, or Bank marketing meetings. Travel expenses include reasonable and necessary transportation, meals, lodging, entertainment, and incremental charges for long-distance telephone, internet, and cellular phone.

No gift or entertainment expenses initiated by a director shall be reimbursed without being prearranged by the Bank. Each director should review the Bank’s Code of Conduct regarding gift and entertainment restrictions.

To qualify for reimbursement, all eligible expenses incurred must be sufficiently documented according to IRS guidelines and submitted to the Bank within 60 days of the date of the corresponding meeting’s conclusion. The timing requirement may be waived, at the discretion of the Chief Accounting Officer, in the event of an error or omission or other reasonable circumstances.

3

Reimbursement for Spouses/Guests Travel

While spouses/guests are welcome to attend Board events, the Bank will not reimburse the directors for travel expenses incurred by spouses/guests for such attendance, unless pre-approved by the Chief Accounting Officer as having a bona fide business purpose. However, spouses/guests may participate, at no charge, in group meals or entertainment activities as part of a Board meeting or event. Incidental expenses including, but not limited to, individual meals, personal hotel or spa services, personal entertainment expenses and similar items, will not be reimbursed. All IRS requirements shall be met by the Bank regarding reporting of spouse/guest expenses and reimbursements. 

Air Travel and First Class

		
	1.
	The Bank will reimburse the regular coach class airfare expense for a roundtrip flight between the director’s home airport and the site of a Bank function. The expense will also include any reasonable fees associated with air travel, including check in, seat, and baggage fees. Travel scheduling affecting the air travel expense shall be reasonable, given the timing of the meetings. The actual cost of private air travel will not be reimbursed, but the regular coach class airfare expense may be substituted. 

		
	2.
	First-class air travel will be reimbursed at the regular coach rate, unless the upgrade to first-class was necessary due to scheduling or flight availability.

		
	3.
	If a director’s non-Bank activity requires a route to attend a Bank function that originates or terminates in a location other than the director’s home airport, the Bank will reimburse the director for the incremental cost not to exceed the coach class round trip airfare that would have otherwise been incurred by the director to attend the Bank event. 

Mileage reimbursement

The Bank will reimburse a director for use of a personal automobile on Bank business based on
the number of business miles driven. The mileage reimbursement rate will adhere to IRS
guidelines. Reimbursable mileage will be based on the most direct route to and from the
destination.

Issues of Interpretation

Unless expressly provided herein or in 12 CFR Part 1261.20-24 (as amended), the Chief Accounting Officer is authorized to interpret the provisions of the policy and to address situations not anticipated by the Policy, consistent with the requirements set forth in the statute or the regulations promulgated by the Federal Housing Finance Agency or other relevant IRS guidelines, along with the Bank’s Business Travel & Eligible/Ineligible Expenses Policy.

 

4

Human Resources Committee Annual Review and Reporting

The Human Resources Committee shall annually review this policy and shall submit its recommendation to the Board for approval no later than the last regularly scheduled meeting of the Board for the year. Per 1261.22, the Board shall also submit the annually adopted Directors’ Compensation and Expense Reimbursement Policy and supporting decisional documentation to the Federal Housing Finance Agency Director within ten days of Board approval, no later than December 31 of each calendar year, and at least 30 days prior to disbursing the first payment to any directors. 

In addition, per 1261.21, no later than the tenth business day of each calendar year, the Bank shall report to the Finance Agency the amount of compensation and expenses paid to each director, along with the total number of meetings held by the Board and its designated committees, and the number of Board and designated committee meetings each director attended in-person or through electronic means for the immediately preceding calendar year.  

5Exhibit

        

Exhibit 10.8
EXECUTION COPY

FEDERAL HOME LOAN BANK OF INDIANAPOLIS
2016 DIRECTORS’ DEFERRED COMPENSATION PLAN
(Effective as of January 1, 2016)

Krieg DeVault LLP
One Indiana Square, Suite 2800
Indianapolis, IN 46204-2079
www.kriegdevault.com

ADOPTION OF
FEDERAL HOME LOAN BANK OF INDIANAPOLIS
2016 DIRECTORS’ DEFERRED COMPENSATION PLAN

Pursuant to resolutions adopted by the Board of Directors of the Federal Home Loan Bank of Indianapolis, the undersigned officers of the Company hereby adopt the Federal Home Loan Bank of Indianapolis 2016 Directors’ Deferred Compensation Plan, amended and restated effective as of January 1, 2016, on behalf of the Company, in the form attached hereto.
Dated this 20th day of November, 2015.

FEDERAL HOME LOAN BANK OF INDIANAPOLIS

By:/s/ JAMES D. MACPHEE
      James D. MacPhee, Chairman

By: /s/ MICHAEL J. HANNIGAN
      Michael J. Hannigan, Vice Chairman
ATTEST:

By:/s/ KANIA D. WARBINGTON
      Kania D. Warbington, Corporate Secretary

FEDERAL HOME LOAN BANK OF INDIANAPOLIS 
2016 DIRECTORS’ DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS

	
								
	Article I INTRODUCTION.................................................................................................
	1
	

	 
	 
	 
	 
	 
	 
	 

	Section 1.1
	 
	Purpose.................................................................................................
	1
	

	Section 1.2
	 
	Effective Date; Plan Year.....................................................................
	1
	

	Section 1.3
	 
	Administration.......................................................................................
	1
	

	Section 1.4
	 
	Supplements.........................................................................................
	1
	

	Section 1.5
	 
	Definitions............................................................................................
	2
	

	 
	 
	 
	 
	 
	 
	 

	Article II ELIGIBILITY AND PARTICIPATION.............................................................
	2
	

	 
	 
	 
	 
	 
	 
	 

	Section 2.1
	 
	Eligibility..............................................................................................
	2
	

	Section 2.2
	 
	Participation.........................................................................................
	2
	

	 
	 
	 
	 
	 
	 
	 

	Article III CONTRIBUTIONS AND ALLOCATIONS.....................................................
	3
	

	 
	 
	 
	 
	 
	 
	 

	Section 3.1
	 
	Participant Deferral Contributions.......................................................
	3
	

	Section 3.2
	 
	Deferral Elections.................................................................................
	3
	

	Section 3.3
	 
	Plan Account........................................................................................
	4
	

	Section 3.4
	 
	Investment Credits................................................................................
	4
	

	Section 3.5
	 
	Account Allocations.............................................................................
	4
	

	 
	 
	 
	 
	 
	 
	 

	Article IV BENEFIT PAYMENTS......................................................................................
	5
	

	 
	 
	 
	 
	 
	 
	 

	Section 4.1
	 
	Time of Payment of Benefits................................................................
	5
	

	Section 4.2
	 
	Method of Payment..............................................................................
	6
	

	Section 4.3
	 
	Method of Payment Elections..............................................................
	6
	

	Section 4.4
	 
	Vesting..................................................................................................
	7
	

	Section 4.5
	 
	Death or Disability of the Participant...................................................
	7
	

	Section 4.6
	 
	Unforeseeable Emergency....................................................................
	8
	

	Section 4.7
	 
	Acceleration of Time of Payment.........................................................
	9
	

	 
	 
	 
	 
	 
	 
	 

	Article V PLAN ADMINISTRATION.................................................................................
	12
	

	 
	 
	 
	 
	 
	 
	 

	Section 5.1
	 
	Appointment of the Committee............................................................
	12
	

	Section 5.2
	 
	Powers and Responsibilities of the Committee....................................
	12
	

	Section 5.3
	 
	Liabilities..............................................................................................
	12
	

	Section 5.4
	 
	Disclosure to Participant Upon Separation from Service.....................
	13
	

	Section 5.5
	 
	Plan Expenses.......................................................................................
	13
	

	 
	 
	 
	 
	 
	 
	 

	Article VI BENEFIT CLAIMS.............................................................................................
	13
	

	 
	 
	 
	 
	 
	 
	 

	Article VII FUNDING AND TRANSFERS.........................................................................
	13
	

	 
	 
	 
	 
	 
	 
	 

	Section 7.1
	 
	Unfunded Status....................................................................................
	13
	

i

	
								
	Section 7.2
	 
	Investments...........................................................................................
	13
	

	 
	 
	 
	 
	 
	 
	 

	Article VIII AMENDMENT AND TERMINATION OF THE PLAN..............................
	14
	

	 
	 
	 
	 
	 
	 
	 

	Section 8.1
	 
	Amendment of the Plan........................................................................
	14
	

	Section 8.2
	 
	Termination of the Plan.........................................................................
	14
	

	 
	 
	 
	 
	 
	 
	 

	Article IX MISCELLANEOUS............................................................................................
	14
	

	 
	 
	 
	 
	 
	 
	 

	Section 9.1
	 
	Governing Law......................................................................................
	14
	

	Section 9.2
	 
	Headings and Gender............................................................................
	14
	

	Section 9.3
	 
	Spendthrift Clause.................................................................................
	14
	

	Section 9.4
	 
	Counterparts..........................................................................................
	14
	

	Section 9.5
	 
	No Enlargement of Employment Rights...............................................
	14
	

	Section 9.6
	 
	Limitations on Liability.........................................................................
	15
	

	Section 9.7
	 
	Incapacity of Participant or Beneficiary...............................................
	15
	

	Section 9.8
	 
	Evidence................................................................................................
	15
	

	Section 9.9
	 
	Action by Bank.....................................................................................
	15
	

	Section 9.10
	 
	Severability...........................................................................................
	15
	

	Section 9.11
	 
	Information to be Furnished by a Participant.......................................
	15
	

	Section 9.12
	 
	Attorneys' Fees......................................................................................
	15
	

	Section 9.13
	 
	Binding on Successors..........................................................................
	16
	

ii

Article I 
 
INTRODUCTION
Section 1.1    Purpose. The purpose of the Federal Home Loan Bank of Indianapolis 2016 Directors’ Deferred Compensation Plan (the "Plan”) is to permit members of the Board of Directors (the “Board”) of the Federal Home Loan Bank of Indianapolis (the “Bank”) to elect to defer all or a portion of the fees payable to them for their services as Board members.  It is the intention of the Bank that the Plan constitute a deferred compensation arrangement that complies with §409A of the Internal Revenue Code of 1986, as amended (the “Code”).  Consequently, the Plan will be administered and its provisions interpreted consistently with that intention.
Section 1.2    Effective Date;  Plan Year.  The “Effective Date” of the Plan is January 1, 2016.  The “Plan Year” is the 12-month period beginning on each January 1 and ending on the next following December 31.
Section 1.3    Administration.  The Plan will be administered by an administrative committee (the “Committee”) appointed by the Board, which will initially be the Human Resources Committee of the Board.  The Committee, from time to time, may adopt any rules and procedures it deems necessary or desirable for the proper and efficient administration of the Plan that are consistent with the terms of the Plan.  Any notice or document required to be given or filed with the Committee will be properly given or filed if delivered to or mailed, by registered mail, postage paid, to the Corporate Secretary of the Board of Directors, Federal Home Loan Bank of Indianapolis, 8250 Woodfield Crossing Boulevard, Suite 400, Indianapolis, Indiana 46240.
Section 1.4    Supplements.  The provisions of the Plan may be modified by supplements to the Plan.  The terms and provisions of each supplement are a part of the Plan and supersede any other provisions of the Plan to the extent necessary to eliminate any inconsistencies between the supplement and any other Plan provisions.

1

Section 1.5    Definitions.  The following terms are defined in the Plan in the following Sections:
	
		
	Term
	Plan Section

	Acceleration Event................................................................................
	4.7

	Account........................................................................................................................
	3.3

	Bank.............................................................................................................................
	1.1

	Board.....................................................................................................
	1.1

	Code.............................................................................................................................
	1.1

	Director..................................................................................................
	2.1

	Disabled.......................................................................................................................
	4.5(b)

	Effective Date........................................................................................
	1.2

	Fees........................................................................................................
	3.1

	Investment Account...............................................................................
	7.2

	Participant..............................................................................................
	2.2

	Participant Deferral Contribution..........................................................
	3.1

	Plan........................................................................................................
	1.1

	Plan Year................................................................................................
	1.2

	Separation from Service........................................................................
	4.1(c)

	Trust.......................................................................................................
	7.1

	Unforeseeable Emergency.....................................................................
	3.2(e)

ARTICLE II     
 
ELIGIBILITY AND PARTICIPATION
Section 2.1    Eligibility.  Any duly elected and serving member of the Board (“Director”) may become a “Participant” in the Plan as of the later of the Effective Date or the date the individual becomes a Director.  
Section 2.2    Participation.  A Director will become a Participant by making a deferral election pursuant to Article III.  A Participant will cease to be an active Participant effective as of the date the Plan is terminated or the date the Director is no longer serving as a Director, so that he will not be entitled to make deferrals under Article III on or after that date.  A Participant will continue as an inactive Participant until the entire benefit is distributed.

2

ARTICLE III     
 
CONTRIBUTIONS AND ALLOCATIONS
Section 3.1    Participant Deferral Contributions.  Subject to the terms and limitations of this Article III, a Participant may elect, pursuant to Section 3.2, to have all or a portion of his Fees payable in any Plan Year withheld by the Company and credited as a “Participant Deferral Contribution” under this Plan.  The term “contribution” is used for ease of reference; however, credits are merely credits to each Participant’s Account, which is a bookkeeping account.  The term “Fees” for purposes of this Plan means all fees payable to the Participant for a Plan Year for the Participant’s services as a Director.
Section 3.2    Deferral Elections.  Participant Deferral Contributions will be withheld from a Participant’s Fees in accordance with the following terms and conditions.
		
	(a)
	Requirement for Deferral Elections.  As a condition to the Bank’s obligation to withhold and the Committee’s obligation to credit Participant Deferral Contributions for the benefit of a Participant pursuant to Section 3.1, the Participant must complete and file a deferral election form with the Committee (in a format prescribed by the Committee).  

		
	(b)
	Timing of Execution and Delivery of Elections.  To be effective to defer any portion of a Participant’s Fees, a deferral election form must be filed with the Committee on or prior to the last day of the calendar year preceding the Plan Year in which the services giving rise to the Fees are performed.  For example, to defer Fees payable with respect to services performed during the 2018 Plan Year, an election must be filed on or before December 31, 2017.  

		
	(c)
	Initial Eligibility.  In the case of the first Plan Year in which an individual becomes a Director, the deferral election form may be filed at any time within 30 days of the date the individual becomes a Director (rather than the date specified under subsection (b)).  This initial election will only apply to Fees paid for services performed after the filing of the deferral election form.  This special initial eligibility election rule will not apply if the Participant is or has been a participant in a deferred compensation arrangement required to be aggregated with this Plan under the rules of Code §409A.

		
	(d)
	Modification of Deferral Elections.  Subject to the provisions of subsection (e), once made for a Plan Year, a deferral election will remain in effect for that Plan Year, unless and until the election is revoked or a new election filed.  The revocation or new election must be filed in accordance with the requirements of subsection (b) above.  No deferral election may be changed for Fees payable for a Plan Year after the last day of the election period described in subsection (b).  For example, except as provided in subsections (e) and (f), any election in place for 2018 Fees may not be changed after December 31, 2017.

3

		
	(e)
	Unforeseeable Emergency.  The Committee, in its sole discretion, may cancel a Participant’s election to defer Fees if the Committee determines the Participant has suffered an Unforeseeable Emergency.  The cancellation will apply to the period after the Committee’s determination.  The Participant must submit a signed statement of the facts causing the severe financial hardship and any other information required by the Committee, in its sole discretion.  “Unforeseeable Emergency” means a severe financial hardship of the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary, or the Participant’s dependent (as defined in Code §152(a), without regard to Code §§152(b)(1), (b)(2) and (d)(1)(B)); loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); imminent foreclosure of or eviction from the Participant’s primary residence; the need to pay for medical expenses, including non-refundable deductibles, as well as for the costs of prescription drug medication; the need to pay for the funeral expenses of a spouse or a dependent (as defined in Code §152(a)) or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  

		
	(f)
	Disability.  The Committee, in its sole discretion, may cancel a Participant’s election to defer Fees if the Committee determines that the Participant has suffered a “disability,” where such cancellation occurs by the later of the end of the taxable year of the Participant, or the 15th day of the third month following the date the Participant incurs a “disability.”  For purposes of this subsection, a “disability” refers to any medically determinable physical or mental impairment resulting in the Participant’s inability to perform the duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months.

Section 3.3    Plan Account.  The Committee will establish and maintain an “Account” on the Bank’s records under the Plan for each Participant and will increase and decrease a Participant’s Account as provided in Section 3.5.
Section 3.4    Investment Credits.  A Participant’s Account will be increased or decreased to reflect the increase or decrease in the value of the Investment Account established for the Participant pursuant to Section 7.2.
Section 3.5    Account Allocations.  As of each accounting date, each Participant’s Account will be:
		
	(i)
	Increased by the amount credited to the Account under Section 3.1 since the last accounting;

		
	(ii)
	Increased or decreased by the amount determined under Section 3.4 since the last accounting; and

		
	(iii)
	Decreased by any payment made under Article IV.

4

The accounting date under this Section will be any date determined by the Committee.  However, the accounting required under this Section must be made, at a minimum, as of the last day of each Plan Year quarter.
ARTICLE IV     
 
BENEFIT PAYMENTS
Section 4.1    Time of Payment of Benefits.  Except as provided in Sections 4.5 through 4.7, a Participant will receive or will begin to receive payment of his Account balance (as determined under Article III) within 90 days following the date specified for payment or the commencement of payment effectively elected by the Participant as provided in this Section.  
		
	(g)
	Timing of Execution and Delivery of Payment Election.  A Participant may elect the date his Account balance will be paid or will begin to be paid by completing and filing with the Committee an election form approved by the Committee.  The specified date must be a date at least two years from the beginning of the Plan Year for which the first deferral under the Plan is made.  To be effective, the election under this Section must be filed with the Committee no later than the time the Participant first makes a deferral election under this Plan (or under any other plan required to be aggregated with this Plan pursuant to the requirements of Code §409A).  In lieu of specifying a date certain, a Participant may elect to have payment made or commenced within a specified period of time following the date the Participant experiences a “Separation from Service.”  If no date is specified, payment will be made or commenced within 90 days following the Participant’s Separation from Service.

		
	(h)
	Change of Time of Payment.  An election as to the date payment will be made or commenced may be changed by a Participant by filing a new payment election form with the Committee; provided, however, that: (i) the new election will not take effect until at least 12 months after the date the new election is filed; (ii) the single lump sum payment or the first payment of installment payments will be delayed for a period of not less than five years from the date the payment or first payment would otherwise have been made; and (iii) the new election is filed with the Committee at least 12 months prior to the date of the first scheduled payment under the Plan.

		
	(i)
	Separation from Service.  “Separation from Service” means the date on which the Participant ceases to be a Director, for any reason.

5

Section 4.2    Method of Payment.  Except as provided in Sections 4.5 through 4.7, the balance of a Participant’s Account will be distributed in cash in one of the following methods effectively elected by the Participant:
		
	(a)
	A single lump sum payment; 

		
	(b)
	Annual installment payments over a period of two to five years; or

		
	(c)
	A combination of the methods specified in subsections (a) and (b).

However, if the Participant Account is less than $10,000, then the entire Account will be paid in a single lump sum payment regardless of any Participant election to the contrary.
Section 4.3    Method of Payment Elections.  
		
	(a)
	Initial Election.  A Participant may elect the method in which his Account balance will be paid to him under Section 4.2 in accordance with the terms and conditions of this Section.  To make an election, a Participant must file an election with the Committee (in the manner prescribed by the Committee).  To be effective, the Participant’s election of a payment method must be filed with the Committee by the time the Participant first makes a deferral election under the Plan.  If no election is made or if the election is not timely or properly made, distribution will be made in the form of a single lump sum payment.  

		
	(b)
	Change of Method of Payment.  An election as to the manner of payment may not be changed after the payment has been made or payments have commenced.  Prior to that time, a Participant may change his election by filing a new election form with the Committee; provided, however, that: (i) the new election will not take effect until at least 12 months after the date the new election is filed; (ii) the single lump sum payment or the commencement of installment payments with respect to which such election is made must be deferred for a period of not less than five years from the date such payment would otherwise have been made; and (iii) the new election is filed at least 12 months prior to the date of the first scheduled payment under the Plan.  

		
	(c)
	Installments.  If installment distributions are elected, the initial annual installment amount will be the Account balance otherwise payable in a single sum multiplied by a fraction, the numerator of which is one and the denominator of which is the total number of installment distributions.  Subsequent annual installments will also be a fraction of the unpaid Account balance, the numerator of which is always one but the denominator of which is the denominator used in calculating the previous installment minus one.  For example, if five annual installment payments are elected, the initial installment will be one-fifth of the vested single sum Account balance, the second installment will be one-fourth of the remaining Account balance and the third installment will be one-third of the remaining Account balance, and so on.  

6

Section 4.4    Vesting.  A Participant will be fully “vested” in his Account balance at all times.
Section 4.5    Death or Disability of the Participant.  In the event a Participant Separates from Service due to the Participant’s Disability or if the Participant dies or becomes Disabled before he has received his entire Account balance, the unpaid balance will be paid to the Participant, or in the event of his death to his designated beneficiary or beneficiaries, in a single sum, within 90 days of the date of a determination by the Committee that the Participant is Disabled or within 90 days of the date of the Participant’s death.
		
	(a)
	Beneficiary Designations.  A Participant may designate a beneficiary or beneficiaries to receive any amount payable under this Section as a result of his death.  A Participant may change his designation of beneficiaries at any time by filing with the Committee a written notice of the change in a manner approved by the Committee.  Each beneficiary designation filed with the Committee will cancel all previously filed beneficiary designations.  If no designation is in effect on the Participant’s death, or if the designated beneficiary does not survive the Participant, his beneficiary will be his surviving spouse, if any, and then his estate.

		
	(b)
	Disability.  A Participant is “Disabled” for purposes of the Plan if the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.  The Committee will be the sole and final judge of whether a Participant is Disabled for purposes of this Plan, after consideration of any evidence it may require, including the reports of any physician or physicians it may designate.  

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Section 4.6    Unforeseeable Emergency.  In the event the Committee determines in its sole discretion that a Participant has experienced an Unforeseeable Emergency, as defined in subsection 3.2(e), all or a portion of a Participant’s Account may be distributed in a single lump sum payment no later than 90 days after the Committee’s determination.  The Participant must submit a signed statement of the facts causing the severe financial hardship and any other information required by the Committee, in its sole discretion.  Payment under this Section is subject to the following conditions:
		
	(a)
	The emergency must not be able to be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under this Plan.

		
	(b)
	The amount of the distribution must be limited to the amount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution) and must take into account any additional compensation available due to cancellation of a deferral election under subsection 3.2(e).  However, the determination of amounts reasonably necessary to satisfy the emergency need is not required to take into account any additional compensation that due to the unforeseeable emergency is available under another nonqualified deferred compensation plan but has not actually been paid, or that is available due to the unforeseeable emergency under another plan that would provide for deferred compensation except due to the application of the effective date provisions of Treasury Regulation §1.409A-6.  The payment may be made from any plan in which the Participant participates that provides for payment upon an Unforeseeable Emergency, provided that the plan under which the payment was made must be designated at the time of payment. 

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Section 4.7    Acceleration of Time of Payment.  Except as provided in Section 4.6 or this Section, the time or schedule of payment of a Participant’s Account provided in Sections 4.1 through 4.5 may not be accelerated.  The time or schedule of payment of a Participant’s Account may be accelerated in the following circumstances, each of which is an “Acceleration Event,” to a time that is no later than 90 days following the Committee’s determination that one of the Acceleration Events has occurred, and payment will be made in the form of a single lump sum:
		
	(a)
	Domestic Relations Order.  The time or schedule of a payment from a Participant’s Account may be accelerated to make a payment to an individual other than the Participant as may be necessary to fulfill a domestic relations order (as defined in Code §414(p)(1)(B)).

		
	(b)
	Conflicts of Interest.  The time or schedule of a payment from a Participant’s Account may be accelerated to the extent reasonably necessary to avoid the violation of an applicable Federal, state, local or foreign ethics law or conflicts of interest law (including where such payment is reasonably necessary to permit the service provider to participate in activities in the normal course of his or her position in which the service provider would otherwise not be able to participate under an applicable rule).  A payment is reasonably necessary to avoid the violation of Federal, state, local or foreign ethics laws or conflicts of interest law if the payment is a necessary part of a course of action that results in compliance with a Federal, state, local or foreign ethics law or conflicts of interest law that would be violated absent such course of action, regardless of whether other actions would also result in compliance with the Federal, state, local or foreign ethics law or conflicts of interest law.

		
	(c)
	Income Inclusion Under Code §409A.  The time or schedule of a payment from a Participant’s Account may be accelerated to pay the income tax, interest and penalties imposed if the Plan fails to meet the requirements of Code §409A and related regulations; provided, however, such payment will not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Code §409A and related regulations.

9

		
	(d)
	Plan Termination.  The time or schedule of payment or commencement of payments from a Participant’s Account may be accelerated when the Plan is terminated in accordance with one of the following:

		
	(i)
	The Company terminates the Plan within 12 months of a corporate dissolution taxed under Code §331, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred under the Plan are included in the Participants’ gross incomes in the latest of the following years (or, if earlier, the taxable year in which the amount is constructively received).

		
	(A)
	The calendar year in which the Plan termination and liquidation occurs;

		
	(B)
	The first calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or

		
	(C)
	The first calendar year in which the payment is administratively practicable.

		
	(ii)
	The Company’s irrevocable action to terminate and liquidate the Plan within the 30 days preceding or the 12 months following a change in control as defined in Treasury Regulation §1.409A-3(i)(5).  For purposes of this subsection (d), the Plan may be terminated only if all agreements, methods, programs, and other arrangements sponsored by the Employer immediately after the time of the change in control with respect to which deferrals of compensation are treated as having been deferred under a single plan under Treasury Regulation §1.409A-1(c)(2) are terminated and liquidated with respect to each Participant that experienced the change in control, so that under the terms of the termination and liquidation all such Participants are required to receive all amounts of compensation deferred under the Plan and other arrangements within 12 months of the date the Company irrevocably takes all necessary action to terminate and liquidate the Plan and other arrangements.

10

		
	(iii)
	The Company’s termination and liquidation of the Plan, provided that: 

		
	(A)
	The termination and liquidation does not occur proximate to a downturn in the financial health of the Company;

		
	(B)
	The Company terminates and liquidates all agreements, programs, and other arrangements that would be aggregated under Treasury Regulation §1.409A-1(c) if the Participant had deferrals of compensation under all of the agreements, methods, programs, and other arrangements that are terminated and liquidated; 

		
	(C)
	No payments in liquidation of the Plan are made within 12 months of the date the Company takes all necessary action to irrevocably terminate and liquidate the plan other than payments that would be payable under the terms of the Plan if the action to terminate and liquidate the Plan had not occurred;

		
	(D)
	All payments are made within 24 months of the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan; and

		
	(E)
	The Company does not adopt a new plan or arrangement that would be aggregated with any terminated and liquidated plan or arrangement under Treasury Regulation §1.409A-1(c) if the same Participant participated in both plans or arrangements, at any time within three years following the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan.

		
	(iv)
	Limited Cashouts.  The Plan may terminate and liquidate a Participant’s interest under the Plan up to the Code §402(g)(1)(B) limit prior to the times provided in Sections 4.1 and 4.2, provided that the Company comply with the requirements of Treasury Regulation §1.409A-3(j)(4)(v).

		
	(v)
	Such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin. 

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ARTICLE V     
 
PLAN ADMINISTRATION
Section 5.1    Appointment of the Committee.  The Committee, or a duly authorized officer or officers of the Bank empowered by the Committee to act on its behalf under subsection 5.2(e), will be responsible for administering the Plan, and the Committee will be charged with the full power and the responsibility for administering the Plan in all its details.  
Section 5.2    Powers and Responsibilities of the Committee.
		
	(d)
	Committee Powers.  The Committee will have all powers necessary to administer the Plan, including the power to construe and interpret the Plan documents; to decide all questions relating to an individual’s eligibility to participate in the Plan; to determine the amount, manner and timing of any distribution of benefits or withdrawal under the Plan; to resolve any claim for benefits in accordance with Article VI, and to appoint or employ advisors, including legal counsel, to render advice with respect to any of the Committee’s responsibilities under the Plan.  Any construction, interpretation, or application of the Plan by the Committee will be final, conclusive and binding.  

		
	(e)
	Records and Reports.  The Committee will be responsible for maintaining sufficient records to determine each Participant’s eligibility to participate in the Plan, and for purposes of determining the amount of contributions that may be made on behalf of the Participant under the Plan.

		
	(f)
	Rules and Decisions.  The Committee may adopt such rules as it deems necessary, desirable, or appropriate in the administration of the Plan.  All rules and decisions of the Committee will be applied uniformly and consistently to all Participants in similar circumstances.  When making a determination or calculation, the Committee will be entitled to rely upon information furnished by a Participant or beneficiary, the Bank or the legal counsel of the Bank.

		
	(g)
	Application for Benefits.  The Committee may require a Participant or beneficiary to complete and file with it an application for a benefit, and to furnish all pertinent information requested by it.  The Committee may rely upon all such information so furnished to it, including the Participant’s or beneficiary’s current mailing address.

		
	(h)
	Delegation.  The Committee may authorize one or more officers of the Bank to perform administrative responsibilities on its behalf under the Plan.  Any such duly authorized officer will have all powers necessary to carry out the administrative duties delegated to such officer by the Committee.

Section 5.3    Liabilities.  The individual members of the Committee will, in accordance with the Bank’s by-laws, be indemnified and held harmless by the Bank with respect to any alleged breach of responsibilities performed or to be performed hereunder.

12

Section 5.4    Disclosure to Participant Upon Separation from Service.  Within 90 days of a Participant’s Separation from Service or a termination of the Plan, the Bank will provide the Participant a comprehensive statement setting forth the value of the Participant’s benefit and the date and manner in which such benefit, plus earnings or minus losses, will be paid out to the Participant.
Section 5.5    Plan Expenses.  The expenses incurred for the administration and maintenance of the Plan will be paid by the Bank.
ARTICLE VI     
 
BENEFIT CLAIMS
While a Participant or beneficiary need not file a claim to receive his benefit under the Plan, if he wishes to do so, a claim must be made in writing and filed with the Committee.  If a claim is denied, the Committee will furnish the claimant with written notice of its decision.  A claimant may request a review of the denial of a claim for benefits by filing a written request with the Committee.  The Committee will afford the claimant a full and fair review of such request.  
ARTICLE VII     
 
FUNDING AND TRANSFERS
Section 7.1    Unfunded Status.  All contributions credited to a Participant’s Account will be invested in an irrevocable “rabbi trust” (the “Trust”) to provide for the benefits created by the Plan.  The Trust will be maintained in such a fashion that the Plan at all times for purposes of ERISA and the Code will be unfunded and will constitute a mere promise by the Bank to make Plan benefit payments in the future.  Any and all rights created under this Plan will be unsecured contractual rights against the Bank.
Section 7.2    Investments.  Subject to the provisions of Section 7.1, the Bank will establish an investment account for each Participant under the Trust (the “Investment Account”).  The Investment Account will, consequently, at all times remain an asset of the Bank and will be subject to the claims of the Banks’ general creditors.  A Participant may request that the Investment Account be allocated among available investment options established by the Committee or the Board from time to time under the Investment Account.  The initial allocation request may be made at the time of enrollment.  Investment allocation requests will remain effective until changed in accordance with procedures established by the Committee.

13

ARTICLE VIII     
 
AMENDMENT AND TERMINATION OF THE PLAN
Section 8.1    Amendment of the Plan.  The Bank may amend the Plan at any time in its sole discretion.  Notwithstanding the foregoing, the Bank may not amend the Plan to reduce a Participant’s Account balance as determined on the day preceding the effective date of the amendment or to otherwise retroactively impair or adversely affect the rights of a Participant or beneficiary.
Section 8.2    Termination of the Plan.  The Bank may terminate the Plan at any time in its sole discretion.  Absent an amendment to the contrary, Plan benefits that had accrued prior to the termination will be paid at the times and in the manner provided for by the Plan at the time of the termination.
ARTICLE IX     
 
MISCELLANEOUS
Section 9.1    Governing Law.  The Plan shall be construed, regulated and administered according to the laws of the State of Indiana, without reference to that state’s choice of law principles, except in those areas preempted by the laws of the United States of America in which case the federal laws will control.
Section 9.2    Headings and Gender.  The headings and subheadings in the Plan have been inserted for convenience of reference only and will not affect the construction of the Plan provisions.  In any necessary construction, the masculine will include the feminine and the singular the plural, and vice versa.
Section 9.3    Spendthrift Clause.  No benefit or interest available under the Plan will be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of a Participant or a Participant’s beneficiary, either voluntarily or involuntarily.  
Section 9.4    Counterparts.  This Plan may be executed in any number of counterparts, each one constituting but one and the same instrument, and may be sufficiently evidenced by any one counterpart.
Section 9.5    No Enlargement of Employment Rights.  Nothing contained in the Plan may be construed as a contract of employment between the Bank and any person, nor may the Plan be deemed to give any person the right to be retained as a director or limit the right of the Bank to dismiss a director.

14

Section 9.6    Limitations on Liability.  Notwithstanding any other provision of the Plan, neither the Company nor any individual acting as an employee or agent of the Company will be liable to a Participant or any beneficiary for any claim, loss, liability or expense incurred in connection with the Plan, except when the same has been affirmatively determined by a court order or by the affirmative and binding determination of an arbitrator, to be due to the gross negligence or willful misconduct of that person.
Section 9.7    Incapacity of Participant or Beneficiary.  If any person entitled to receive a distribution under the Plan is physically or mentally incapable of personally receiving and giving a valid receipt for any payment due (unless a prior claim for the distribution has been made by a duly qualified guardian or other legal representative), then, unless and until a claim for the distribution has been made by a duly appointed guardian or other legal representative of the person, the Committee may provide for the distribution to be made to any other individual or institution then contributing toward or providing for the care and maintenance of the person.  Any payment made for the benefit of the person under this Section will be a payment for the account of such person and a complete discharge of any liability of the Bank under and the Plan.
Section 9.8    Evidence.  Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person relying on the evidence considers pertinent and reliable, and signed, made or presented by the proper party or parties.
Section 9.9    Action by Bank.  Any action required of or permitted by the Bank under the Plan will be by resolution of the Board, or by a person or persons authorized by resolution of the Board.
Section 9.10    Severability.  In the event any provisions of the Plan are held to be illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and endorsed as if the illegal or invalid provisions had never been contained in the Plan.
Section 9.11    Information to be Furnished by a Participant.  A Participant, or any other person entitled to benefits under the Plan, must furnish the Committee with any and all documents, evidence, data or other information the Committee considers necessary or desirable for the purpose of administering the Plan.  Benefit payments under the Plan are conditioned on a Participant (or other person who is entitled to benefits) furnishing full, true and complete data, evidence or other information to the Committee, and on the prompt execution of any document reasonably related to the administration of the Plan requested by the Committee.
Section 9.12    Attorneys’ Fees.  If any action is commenced to enforce the provisions of the Plan, attorneys’ fees will be paid by the Bank.

15

Section 9.13    Binding on Successors.  The Plan will be binding upon and inure to the benefit of the Bank and its successors and assigns, and the successors, assigns, designees and estates of a Participant.  The Plan will also be binding upon and inure to the benefit of any successor organization succeeding to substantially all of the assets and business of the Bank, but nothing in the Plan will preclude the Bank from merging or consolidating into or with, or transferring all or substantially all of its assets to, another organization which assumes the Plan and all obligations of the Bank hereunder.  The Bank agrees that it will make appropriate provision for the preservation of a Participant’s rights under the Plan in any agreement or plan which it may enter into to effect any merger, consolidation, reorganization or transfer of assets.  Upon such a merger, consolidation, reorganization, or transfer of assets and assumption of Plan obligations of the Bank, the term “Bank” will refer to such other organization and the Plan will continue in full force and effect.

16

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