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EXHIBIT 10.6
 
 
 
 
 
 
 
 
 
 
 
FEDERAL HOME LOAN BANK OF CINCINNATI                                                        
 
 
Executive Long-Term Incentive Plan
Plan Document
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of January 1, 2011
Revised February, 2011
 

 

FEDERAL HOME LOAN BANK OF CINCINNATI                                    
Executive Long-Term Incentive Plan
TABLE OF CONTENTS
    
			
	 
	 
	Page

	1.0
	Plan Objectives
	1

	2.0
	Definitions
	1

	3.0
	Eligibility
	2

	4.0
	Target Award Opportunity
	3

	5.0
	Performance Measures
	3

	6.0
	Final Award Determination
	4

	7.0
	Administrative Control
	5

	8.0
	Miscellaneous Conditions
	5

	 
	 
	 

	Appendix - 2011 - 2013 Performance Period
	9

	 
	Performance Period
	10

	 
	Target Award Opportunity
	10

	 
	Initial Value of Performance Unit
	10

	 
	Participants
	11

	 
	Performance Measures & Final Value of Performance Unit
	12

	 
	Detailed Goals & Performance Measures
	13

                                            
 
 

 

 
FEDERAL HOME LOAN BANK OF CINCINNATI                                    
Executive Long-Term Incentive Plan
PLAN DOCUMENT
1.0    Plan Objectives
1.1    The purpose of the Federal Home Loan Bank of Cincinnati Executive Long-Term Incentive Plan (the “Plan”) is to achieve five objectives:
1.1.1    Promote the achievement of the Bank's long-term profitability and business goals;
1.1.2    Link executive compensation to specific long-term performance measures;
1.1.3    Provide a competitive reward structure for senior officers and other key employees; 
1.1.4    Provide a vehicle for closer Board involvement and communication with management regarding the Bank's long-term strategic plans; and 
1.1.5    Promote loyalty and dedication to the Bank and its objectives. 
1.2    The Plan is a cash-based, long-term incentive plan which establishes individual Target Award Opportunities related to achievement of Bank performance over certain three-year Performance Periods.  
1.3    The Participants, the Target Award Opportunity, Performance Measures, value of a Performance Unit at the beginning and end of a Performance Period, and other relevant information are set forth in the attached Appendices.
2.0    Definitions
2.1    When used in this Plan, the words and phrases below shall have the following meanings:
2.1.1    Bank means the Federal Home Loan Bank of Cincinnati;
2.1.2    Target Award Opportunity means the award that may be earned during a Performance Period for achieving target performance levels under each Performance Measure;
2.1.3    Board means the Bank's Board of Directors;
2.1.4    Disabled means a Participant who (i) 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

1

 

months, or (ii) is, 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, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank.  
2.1.5    Extraordinary Occurrences means those events that, in the opinion and discretion of the Board, are outside the significant influence of the Participants or the Bank and are likely to have a significant unanticipated effect, whether positive or negative, on the Bank's operating and/or financial results, including, without limit, movement in interest rates, changes in financial strategies, or policies or significant change in Bank membership.
2.1.6    Final Award means the amount ultimately paid to a Participant under the Plan for a Performance Period.
2.1.7    Performance Measure means each performance factor that is taken into consideration under the Plan in determining the value of the Final Award.
2.1.8    Participant means an employee who participates in the Plan pursuant to Section 3.1.
2.1.9    Performance Period means a certain three-year period over which Bank performance is measured.
2.1.10    Performance Unit means a unit, the value of which shall be determined in accordance with the applicable Appendix.
2.1.11    Personnel Committee or Committee means the Personnel Committee of the Board.
2.1.12    Plan means this Executive Long-Term Incentive Plan.
2.1.13    Plan Award means an amount that is provisionally determined at the end of the Performance Period subject to adjustment as provided in Section 6.
2.1.14    President means the President of the Bank.
3.0    Eligibility
3.1    A Bank employee who is nominated by the President and approved by the Board may participate in the Plan.
3.2    Eligibility shall generally be limited to officers (i) whose functional responsibilities encompass the establishment of strategic direction and tactical action plans for the Bank, and (ii) who have received at least satisfactory rankings on annual performance reviews over a Performance Period.  Other

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employees may also be eligible to participate as defined by competitive compensation practices within the Bank's labor market.
3.3    Due to its unique role for the Bank and reporting relationship to the Board, the Director of Internal Audit will not be included as an eligible position under the Plan, but will be eligible for a similar plan administered by the Audit Committee of the Board.
4.0    Target Award Opportunity
4.1    At the beginning of each Performance Period, the Bank will provide a Target Award Opportunity to Participants.  The Target Award Opportunity is equal to a percentage of each Participant's annual base salary at the beginning of the Performance Period as described in the applicable Appendix.  Certain executive positions have a greater and more direct impact than others on the annual success of the Bank; therefore, these differences are recognized by varying award opportunities for each Participant level. 
4.2    Each Participant in a Performance Period shall be granted a number of Performance Units for that Performance Period determined by dividing the Target Award Opportunity by the value of a Performance Unit at the beginning of a Performance Period as described in the applicable Appendix.
4.3    There will be four levels of award opportunities:
		
	Level I
	President

	 
	 

	Level II
	Executive Vice President

	 
	 

	Level III
	Senior Vice Presidents

	 
	 

	Level IV
	Vice Presidents

5.0    Performance Measures
5.1    Three achievement levels will be established for each Performance Measure:
		
	Threshold
	The minimum achievement level accepted for the Performance Measure.

	Target
	The planned achievement level for the Performance Measure.

	Maximum
	The achievement level for the Performance Measure that substantially exceeds the planned level of achievement.

5.2    At the beginning of each Performance Period, Performance Measures for a Performance Period and Performance Units and their initial values will be established by the Personnel Committee with Board approval.

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5.3    When establishing Performance Measures, the Threshold level should reflect a 90 percent success rate; the Target level should reflect a 75 to 80 percent success rate; and the Maximum level should reflect a 10 to 15 percent success rate.
6.0    Final Award Determination
6.1    Plan Awards will be based on the achievement level for each of the three-year Performance Measures.  However, if the Bank fails to achieve the Threshold level for a Performance Measure other than the Mission Goal, no award will be payable for that specific Performance Measure.  If the Bank fails to achieve the Threshold level for the Mission Goal Performance Measure, no award will be payable under the Plan for the Performance Period.
6.2    A Participant's Plan Award for a Performance Period equals the number of his or her Performance Units for that Performance Period multiplied by the value of a Performance Unit at the end of the Performance Period as determined in accordance with the applicable Appendix. 
6.3    In the event that a Federal Housing Finance Agency (FHFA) examination identifies a Composite Four (4) Rating (as defined in the FHLBank Rating System) indicating the Bank has been found to be operating in an unacceptable manner, exhibits serious deficiencies in corporate governance, risk management or financial condition and performance, or in substantial noncompliance with laws, FHFA regulation or supervisory guidance in a Participant's area of responsibility, the Participant will not be eligible for an award under the Plan for the Performance Period in which the Composite Four Rating existed.
6.4    Promptly after a Performance Period, Plan Awards for the Performance Period shall be determined by the Board in its sole discretion based upon the Plan Award determined pursuant to Section 6.2.  
6.5    President's Award.  In addition to the Plan Award, in determining a Participant's Final Award, the Executive Vice President, Senior Vice Presidents, Vice Presidents and other employees (e.g., new hires and highly valued existing employees) may be nominated by the President for a discretionary allocation of Performance Units, to be approved by the Board, to recognize extraordinary performance and/or to address competitive compensation practices within the Bank's labor market (the “President's Award”).
6.6     The value of a Performance Unit under the President's Award will be equal to the value of a Performance Unit under the Target Award Opportunity.
6.7    For a Performance Period, the total value of Performance Units granted under the President's Award shall not exceed ten (10) percent of the total Performance Units granted under the Target Award Opportunity.
6.8    The Board may also authorize the President to receive a discretionary allocation of Performance Units to recognize extraordinary performance and/or to address 

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competitive compensation practices within the Bank's labor market.  Any discretionary allocation of Performance Units granted to the President under this section will not exceed ten (10) percent of the total Performance Units granted to the President under the Target Award Opportunity.
6.9    A Participant's Final Award will consist of his or her Plan Award plus any additional discretionary award granted under Section 6.5 or 6.8.
7.0    Administrative Control
7.1    The Bank's Director of Human Resources will assist, as requested, the President and the Committee in the administration of the Plan, however, the Board will have the ultimate authority over the Plan.
7.2    In addition to the authority expressly provided in the Plan, the Board shall have such authority in its sole discretion to control and manage the operation and administration of the Plan and shall have all authority necessary to accomplish these purposes, including, but not limited to, the authority to interpret the terms of the Plan, and to decide questions regarding the Plan and the eligibility of any person to participate in the Plan and to receive benefits under the Plan.  The Board's determinations and interpretations regarding the Plan shall be final, binding, and conclusive.
8.0    Miscellaneous Conditions
8.1    Except as provided in Section 8.4, Participants must be employed by the Bank on the last day of the Performance Period in order to become eligible to receive a Final Award.  A Participant will not become vested in an award under this Plan until the date the Board authorizes the payment of the Participant's Final Award.
8.2    In the event a Participant voluntarily or involuntarily terminates employment during the Performance Period, no award will be made to the Participant, except as provided in Section 8.4 below.
8.3    Employees of the Bank who are hired, transferred, or promoted into an eligible position during a Performance Period may be nominated for participation in the Plan in accordance with Section 3.1, and receive a prorated Target Award Opportunity.  
8.4    A Participant who retires, dies or becomes disabled during the Performance Period may receive a prorated Plan Award, but only if the President nominates and the Board approves such action.  For purposes of this Section, the term “retires” means the Participant has (i) been employed with the Bank for at least five (5) years and (ii) reached at least age 62 when he or she retires from the Bank.  If a Participant becomes vested to receive a prorated award under this Section, the prorated Final Award will be paid to the Participant no later than 21⁄2 months following the calendar year in which such vesting occurred.  If a Participant terminates service with the Bank for any reason other than 

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retirement, death, or disability during the Performance Period, the Participant will not be eligible to receive an award under the Plan.
8.5    The amount of any prorated award will be determined by dividing the number of months the Participant was employed by the Bank during the Performance Period by 36 and multiplying such quotient by the Plan Award.
8.6    If a Participant ceases employment after the Performance Period but before the Board approves the Final Award for that Performance Period, the President may nominate and the Board may approve the Participant to receive an award.  However, if the President fails to make such a recommendation or the Board fails to approve such action, the Participant will not be entitled to an award.
8.7    Notwithstanding any Plan provision to the contrary, mere participation in the Plan will not entitle a Participant to an award.
8.8     The designation of an employee as a Participant in the Plan does not guarantee employment.  Nothing in this Plan shall be deemed (i) to give any employee or Participant any legal or equitable rights against the Bank, except as expressly provided herein or provided by law; or (ii) to create a contract of employment with any employee or Participant, to obligate the Bank to continue the service of any employee or Participant, or to affect or modify any employee's or Participant's term of employment in any way.
8.9    The right of the Bank to discipline or discharge a Participant shall not be affected by reason of any provision of this Plan.
8.10    All Final Awards will be paid out in cash and will be subject to applicable payroll tax withholdings.
8.11    No Final Award received by a Participant shall be considered as compensation under any employee benefit plan of the Bank, except as otherwise determined by the Bank.
8.12    Final awards will be made no later than 2 1⁄2 months following the calendar year which the Participant became vested in the Final Award. 
8.13    The Board has the right to revise, modify, or terminate the Plan in whole or in part at any time or for any reason, and the right to modify any recommended award amount (including the determination of a greater or lesser award, or no award), for any reason, without the consent of any Participant.  Any payments under the Plan may be impacted by extraordinary events, a failure to meet certain minimum financial performance or control requirements and may be subject to a claw back provision.
 
Extraordinary events may include changes in business strategy, impact of severe economic fluctuations, significant growth or consolidation of the membership base or other factors that impact the Bank or Bank System. Any undue incentives paid to an officer of the Bank based on achievement of financial or operational goals within this Plan that subsequently are deemed to 

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be inaccurate, misstated or misleading shall be recoverable from the officer by the Bank.  Inaccurate, misstated and/or misleading achievement of financial or operational goals includes, but is not limited to, overstated revenue, income, capital, return measures and/or understated credit risk, market risk, operational risk or expenses.  The value of any benefits delivered or accrued related to the undue incentive (the amount of the incentive over and above what should have been paid barring inaccurate, misstated and/or misleading achievement of financial or operational goals) shall be reduced and/or recovered by the Bank to the fullest extent possible.
 
8.14    Since no employee has a guaranteed right to any award under this Plan, any attempt by an employee to sell, transfer, assign, pledge, or otherwise encumber any anticipated award shall be void, and the Bank shall not be liable in any manner for or subject to the debts, contracts, liabilities, engagements or torts of any person who might anticipate an award under this program.
8.15    This Plan shall at all times be entirely unfunded and no provision shall at any time be made with respect to segregating assets of the Bank for payment of any award under this program.
8.16    The Plan shall be construed, regulated and administered in accordance with the laws of the state of Ohio, unless otherwise preempted by the laws of the United States.
8.17    If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability shall not affect any other provision of the Plan, and the Plan shall be construed and enforced as if such provision had not been included herein.
8.18     If a Participant dies before receiving his or her award, any amounts determined to be paid under this Plan shall be paid to the Participant's surviving spouse, if any, or if none, to the Participant's estate.  The Bank's determination as to the identity of the proper payee of any amount under this Plan shall be binding and conclusive and payment in accordance with such determination shall constitute a complete discharge of all obligations on account of such amount.  
8.19    Claims and Appeals Procedures.  A Participant (such Participant being referred to below as a “Claimant”) may deliver to the Personnel Committee a written claim for a determination with respect to any claim as to which the Personnel Committee has jurisdiction under this Plan.  If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after such notice was received by the Claimant.  The claim must state with particularity the determination desired by the Claimant.
The Personnel Committee shall consider a Claimant's claim within a reasonable time, but no later than ninety (90) days after receiving the claim.  If the Personnel Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial ninety (90) day 

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period.  Upon reaching its decision, the Personnel Committee shall notify the Claimant in writing.
On or before sixty (60) days after receiving a notice from the Personnel Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimant's duly authorized representative) may file with the Committee a written request for a review of the denial of the claim.  The Committee shall render its decision on review promptly, in writing, and deliver it to the Claimant no later than sixty (60) days after it receives the Claimant's written request for a review of the denial of the claim.
8.20    Any agreements or representations, oral or otherwise, express or implied, with respect to the subject matter of this Plan which are not contained herein will have no effect or enforceability.
 
 
 
 
 
 
 
 
 
 

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APPENDICES                                                                        
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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FEDERAL HOME LOAN BANK OF CINCINNATI                                    
Executive Long-Term Incentive Plan
APPENDIX
2011 - 2013 Performance Period
Performance Period
The Performance Period described in this Appendix shall be January 1, 2011 through December 31, 2013.
Target Award Opportunity
The Target Award Opportunity (as a percentage of January 1, 2011 base salary) for Levels I, II, III, and IV are:
		
	Level
	 

	I
	30%

	II
	25%

	III
	20%

	IV
	15%

 
Initial Value of Performance Unit
The value of a Performance Unit at the beginning of this Performance Period equals $100.
 

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Plan Participants:
 
The Level I, II, III and IV Participants for the 2011 - 2013 Performance Period are:
			
	Level
	Name
	Title

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

 
 
 

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Performance Measures
		
	1.    
	After the Performance Period ends, evaluate actual Bank performance against the Performance Measures stated below. 

 
		
	2.    
	Determine the value of the Performance Unit based on the minimum, target, and maximum awards for the Operating Efficiency, Risk Adjusted Profitability, Market Capitalization Ratio and Market Penetration achievements according to the following table:

 
				
	 
	Threshold
	Target
	Maximum

	Operating Efficiency
	3rd Quartile
	2nd Quartile
	1st Quartile

	Dollar Value at Hurdles
	 
	 
	 

	Weight
	0.25
	0.25
	0.25

	Operating Efficiency Value
	 
	 
	 

	 
	 
	 
	 

	Risk Adjusted Profitability
	3rd Quartile
	2nd Quartile
	1st Quartile

	Dollar Value at Hurdles
	 
	 
	 

	Weight
	0.25
	0.25
	0.25

	Risk Adjusted Profitability Value
	 
	 
	 

	 
	 
	 
	 

	Market Capitalization Ratio
	 
	 
	 

	Dollar Value at Hurdles
	 
	 
	 

	Weight
	0.25
	0.25
	0.25

	Market Capitalization Value
	 
	 
	 

	 
	 
	 
	 

	Market Penetration
	 
	 
	 

	Dollar Value at Hurdles
	 
	 
	 

	Weight
	0.25
	0.25
	0.25

	Market Penetration Value
	 
	 
	 

	 
	 
	 
	 

	Total Value
	 
	 
	 

 
		
	3.    
	The value of the Performance Unit at the end of the Performance Period equals (a) the dollar value determined by achievement of the goals (as illustrated above) multiplied by (b) a “Mission” goal multiplier (i.e., Percent of Participating Members using one or more HCI Programs):

			
	Percent of Participating Members Using One or More HCI Programs
	Multiplier

	Maximum
	 
	1.1

	Target
	 
	1.0

	Threshold
	 
	0.9

	Minimum
	 
	0.0

 
 
Detailed descriptions of the performance measures on the next page.

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Detailed Goals & Performance Measures
				
	Performance Measures
	Threshold
	Target
	Maximum

	OPERATING EFFICIENCY - Incentive Weight: 25%
Ranking of Operating Efficiency Ratio in comparison to other FHLBanks 1
	 
	 
	 

	 
	 
	 
	 

	RISK ADJUSTED PROFITABILITY - Incentive Weight: 25%
Ranking of Risk Adjusted Profitability in comparison to other FHLBanks 2
	 
	 
	 

	 
	 
	 
	 

	MARKET CAPITALIZATION RATIO - Incentive Weight: 25%
Ratio of Market Value of Equity (MVE) to Par Value of Regulatory Capital Stock 3
	 
	 
	 

	 
	 
	 
	 

	MARKET PENETRATION - Incentive Weight: 25%
Ratio of Member Advances to Member Assets in comparison to other FHLBanks 4
	 
	 
	 

	 
	 
	 
	 

	AFFORDABLE HOUSING/COMMUNITY INVESTMENT - Incentive Multiplier: +/- 10%
Percent of Participating Members using one or more HCI Programs 5
	 
	 
	 

 
1 The Operating Efficiency goal is defined as a ratio of the FHLBank's total operating expenses divided by the sum of net interest income after loan loss provision and other income reported on the Statement of Income to the Finance Agency.  The Operating Efficiency Ratio for calendar year 2011, 2012 and 2013 will be calculated at each year-end and each year's results summed and divided by three to determine the average Ratio during the three year performance period.  The FHLBank's three-year average Ratio will be compared to an identical calculation for each of the other FHLBanks to determine the final ranking in ascending order.
 
2 The Risk Adjusted Profitability (RAP) goal is defined in terms of the FHLBank's Return on Equity which will be risk-adjusted for earnings volatility as measured by the Sharpe ratio.  The Sharpe ratio is defined as average return on equity minus three-month LIBOR divided by the standard deviation (which measures the volatility).  It indicates how well the FHLBank's return on capital compensates for the risk assumed and indicates the quality or stability of profitability relative to the level of risk.  This FHLBank's RAP will be calculated using the monthly average result (36 data points).  The FHLBank's three-year average RAP will then be compared with an identical calculation for each of the other FHLBanks to determine final ranking in descending order.
 
3 The Market Capitalization Ratio (MCR) is defined as the ratio of Market Value of Equity (MVE) to Par Value of Regulatory Capital Stock.  This goal provides in certain circumstances a theoretical measure of stock impairment (it shows the ability of the market value of equity to hypothetically protect the par value of stock) and long-term earnings levels. It will use the lower MCR for an up 200 basis points interest rate shock and a down 100 basis points shock measured at each month-end during 2011-2013 with the resulting monthly ratios averaged for each year.
 
4 The Market Penetration goal is designed to enhance the franchise value of FHLBank membership by demonstrating the extent to which Advances serve as a valuable, competitive source of funding for all Members.  This goal will be calculated by dividing each Member's month-end Advances during 2011, 2012 and 2013 by the Member's total assets.  The total assets used will lag the Advance balances used by one quarter, e.g., Advances for January through March of 2011 would be divided by Members assets as of December, 2010.  A monthly average Advances to Assets ratio will be produced for each Member and the monthly ratios will be summed and divided by the total number of Members to determine the average Advances to Assets ratio.  Monthly averages will be summed and divided by the 36 months in the performance period to determine the final results.  This calculation provides equal weighting for each Member's monthly Advances to Asset ratio with no weighting applied for a Member's asset size. 
 
5 The Affordable Housing/Community Investment goal is intended to increase participation in the FHLBank's Housing and Community Investment (HCI) programs.  For this goal, a Participating Member is defined as a Member who submits an application to participate in any HCI program (AHP, Welcome Home, CIP, EDA, ZIF or a new HCI program) and will be counted only once per calendar year.  The percent of participation will be calculated by dividing the actual number of Participating Members in 2010, 2011 and 2012 by the total number of Members from the previous year-end (2009, 2010 and 2011 respectively).  The average for each calendar year will then be summed and divided by three years to determine the final average.
 

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FEDERAL HOME LOAN BANK OF INDIANAPOLIS
LONG TERM INCENTIVE PLAN
(Effective as of January 1, 2011)

 

 

 
ADOPTION OF
FEDERAL HOME LOAN BANK OF INDIANAPOLIS 
LONG TERM INCENTIVE PLAN
Pursuant to resolutions adopted by the Board of Directors of the Federal Home Loan Bank of Indianapolis (the “Bank”), the undersigned officers of the Bank hereby adopt the Federal Home Loan Bank of Indianapolis Long Term Incentive Plan, effective as of January 1, 2011, on behalf of the Bank, in the form attached hereto.
Dated this 20th day of January, 2011.
FEDERAL HOME LOAN BANK OF INDIANAPOLIS
By:/s/PAUL CLABUESCH
Paul Clabuesch, Chairman
By:/s/JEFFREY A. POXON
Jeffrey A. Poxon, Vice Chairman
ATTEST:
By:/s/KANIA D. WARBINGTON
      Kania D. Warbington, Corporate Secretary
 
 

 

 

FEDERAL HOME LOAN BANK OF INDIANAPOLIS
LONG TERM INCENTIVE PLAN
TABLE OF CONTENTS
    
				
	 
	 
	PAGE
	 

	Article I INTRODUCTION
	1
	 

	Section 1.1
	Purpose
	1
	 

	Section 1.2
	Effective Date
	1
	 

	Section 1.3
	Administration
	1
	 

	Section 1.4
	Supplements
	1
	 

	Section 1.5
	Definitions
	1
	 

	Article II ELIGIBILITY AND PARTICIPATION
	2
	 

	Section 2.1
	Eligibility
	2
	 

	Section 2.2
	Participation
	 

	Article III AWARDS
	2
	 

	Section 3.1
	Awards
	2
	 

	Section 3.2
	Performance Goals
	3
	 

	Section 3.3
	Earning and Vesting of Awards
	4
	 

	Section 3.4
	Effect of Termination of Service
	4
	 

	Section 3.5
	Effect of Reorganization
	6
	 

	Section 3.6
	Payment of Awards
	6
	 

	Section 3.7
	Forfeiture or Reduction of Awards
	7
	 

	Article IV ADMINISTRATION
	7
	 

	Section 4.1
	Appointment of the Committee
	7
	 

	Section 4.2
	Powers and Responsibilities of the Committee
	7
	 

	Section 4.3
	Income and Employment Tax Withholding
	8
	 

	Section 4.4
	Plan Expenses
	8
	 

	Article V BENEFIT CLAIMS
	8
	 

	Article VI AMENDMENT AND TERMINATION OF THE PLAN
	8
	 

	Section 6.1
	Amendment of the Plan
	8
	 

	Section 6.2
	Termination of the Plan
	9
	 

	Article VII MISCELLANEOUS
	9
	 

	Section 7.1
	Governing Law
	9
	 

	Section 7.2
	Headings and Gender
	9
	 

	Section 7.3
	Spendthrift Clause
	9
	 

	Section 7.4
	Counterparts
	9
	 

	Section 7.5
	No Enlargement of Employment Rights
	9
	 

	Section 7.6
	Limitations on Liability
	9
	 

	Section 7.7
	Incapacity of Participant
	10
	 

	Section 7.8
	Evidence
	10
	 

	Section 7.9
	Action by Bank
	10
	 

	Section 7.10
	Severability
	10
	 

 

 

				
	Section 7.11
	Information to be Furnished by a Participant
	10
	 

	Section 7.12
	Attorneys' Fees
	10
	 

	Section 7.13
	Binding on Successors
	10
	 

	Section 7.14
	Awards Not Compensation for Other Plans
	11
	 

	APPENDIX A FORM OF AWARD AGREEMENT
	A-1
	 

	APPENDIX B FORM OF NON-SOLICITATION AND NON-DISCLOSURE AGREEMENT
	B-1
	 

	APPENDIX C PERFORMANCE PERIOD
	C-1
	 

 

 

 

 
ARTICLE I
INTRODUCTION
Section 1.1 Purpose. The purpose of the Federal Home Loan Bank of Indianapolis Long Term Incentive Plan (the “Plan”) is to attract, retain and motivate certain key employees of the Federal Home Loan Bank of Indianapolis (the “Bank”) and to focus their efforts on continued improvement in the profitability of the Bank. The Plan is a cash-based long-term incentive plan that provides award opportunities based on achievement of performance goals over a three-year period.
Section 1.2 Effective Date. The “Effective Date” of the Plan is January 1, 2011.
Section 1.3 Administration. The Plan will be administered by an administrative committee (the “Committee”) appointed by the Bank’s Board of Directors (the “Board”), which initially will 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 Blvd., 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.
Section 1.5 Definitions. The following terms are defined in the Plan in the following Sections:
 
				
	 
	 
	 

	Term
	  
	Plan Section
	 

	Award
	  
	3.1(b)
	 

	Award Agreement
	  
	3.1(b)
	 

	Bank
	  
	1.1
	 

	Board
	  
	1.3
	 

	Cause
	  
	3.4(b)(iv)
	 

	Committee
	  
	1.3
	 

	Disability
	  
	3.4(b)(i)
	 

	Discretionary Award
	  
	3.1(d)
	 

	Effective Date
	  
	1.2
	 

	Extraordinary Occurrences
	  
	3.1(e)
	 

	Final Award
	  
	3.1(e)
	 

	Good Reason
	  
	3.4(b)(iii)
	 

	Level I Participant
	  
	3.1(c)
	 

	Level II Participant
	  
	3.1(c)
	 

	Level III Participant
	  
	3.1(c)
	 

	Maximum
	  
	3.2(b)(iii)
	 

	Non-Solicitation Agreement
	  
	2.1
	 

	Participant
	  
	2.1
	 

	Performance Goals
	  
	3.2
	 

	Performance Period
	  
	3.1(a)
	 

	Plan
	  
	1.1
	 

	Position
	  
	3.4(b)(iii)(1)(A)
	 

	Reorganization
	  
	3.5
	 

	Retirement
	  
	3.4(b)(ii)
	 

	Termination of Service
	  
	3.4(a)
	 

	Target
	  
	3.2(b)(ii)
	 

	Threshold
	  
	3.2(b)(i)
	 

 

 

 
ARTICLE II
ELIGIBILITY AND PARTICIPATION
Section 2.1 Eligibility. Any employee of the Bank is eligible to become a “Participant” in the Plan, provided the employee is designated as a Participant by the Board in writing and he or she executes an agreement containing non-solicitation and non-disclosure provisions in the form provided as Appendix B to the Plan (“Non-Solicitation Agreement”). Any employee of the Bank who is an officer with a title of Senior Vice President or a higher officer level is automatically eligible to become a Participant without the need for designation by the Board, provided that he or she executes a Non-Solicitation Agreement.
Section 2.2 Participation.  A designated employee or otherwise eligible employee will become a Participant as of the later of the Effective Date, the date specified by the Board, or the date, on or after the Effective Date, that the employee satisfies the automatic eligibility provisions described in Section 2.1. Any Participant may be removed as an active Participant by the Board effective as of any date.
ARTICLE III
AWARDS
Section 3.1 Awards. At the beginning of each Performance Period, the Board will make an Award to eligible Participants. Each Award will be equal to a percentage of the Participant’s annual base salary at the beginning of the Performance Period as described in the applicable Plan Appendix.
 
		
	(a)    
	Performance Period. A “Performance Period” is a rolling three-calendar year period over which an Award can be earned.

 
		
	(b)    
	Award Agreement. An “Award” to a Participant will be evidenced by a written “Award Agreement” issued by the Bank to a Participant that specifies the Performance Goals, the Performance Period and other necessary terms and conditions applicable to the Award.

 
		
	(c)    
	Award Levels. Participants will receive varying Awards based on their position with the Bank, as specified for each Performance Period in an Appendix to the Plan. A “Level I Participant” is the Bank’s President and Chief Executive Officer. A “Level II Participant” is an Executive Vice President or a Senior Vice President of the Bank. A “Level III Participant” is an individual who is not a Level I or II Participant.

 
		
	(d)    
	Discretionary Award. The President may recommend to the Board that an additional discretionary Award (the “Discretionary Award”) be made to a Level II or Level III Participant to address external market considerations, including for recruiting purposes. The aggregate pool of funds available for Discretionary Awards to Level II and Level III Participants will not exceed twenty percent of the aggregate Awards for Level I and Level II Participants.

 
		
	(e)    
	Final Award. The “Final Award” is the amount of an Award as adjusted based upon the level at which the Performance Goals have been achieved, including any Discretionary Award, that is ultimately paid to a Participant under the Plan for a Performance Period. Final Awards may be modified up or down at the Board’s discretion to account for performance that is not captured in the Performance Goals. The Board in its discretion may also consider Extraordinary Occurrences when assessing performance results and determining Final Awards. “Extraordinary Occurrences” mean those events that, in the opinion and discretion of the Board, are outside the significant influence of the Participant or the Bank and are likely to have a significant unanticipated effect, whether positive or negative, on the Bank’s operating and/or financial results.

Section 3.2 Performance Goals. “Performance Goals” are the performance factors established by the Board and set forth in an Appendix to the Plan and that are taken into consideration under the Plan in determining the value of an Award. The Board may adjust the Performance Goals for a Performance Period to ensure that the purpose of the Plan is served.
 
		
	(a)    
	Establishment of Performance Goals. Performance Goals for Performance Periods commencing on and after January 1, 2011, will be communicated to Participants in writing after they have been established by the Board.

 
		
	(b)    
	Achievement Level. Three achievement levels will be defined for each Performance Goal.

 

 

		
	i.    
	Threshold. The “Threshold” achievement level is the minimum achievement level accepted for a Performance Goal.

		
	ii.    
	Target. The “Target” achievement level is the planned achievement level for a Performance Goal.

		
	iii.    
	Maximum. The “Maximum” achievement level is achievement that substantially exceeds the Target achievement level.

 
		
	(c)    
	Interpolation. Achievement levels between Threshold - Target and Target – Maximum will be interpolated in a consistent manner as determined by the Committee.

Section 3.3 Earning and Vesting of Awards. Generally, an Award will become earned, and therefore vested, if:
 
		
	(a)    
	the applicable Performance Goals for the Performance Period are satisfied; and

 
		
	(b)    
	the Participant is actively employed on the last day of the Performance Period.

The value of Awards will be calculated in accordance with the applicable Appendix to the Plan and the applicable Award Agreement.
Section 3.4 Effect of Termination of Service.
 
		
	(a)    
	In General. If a Participant incurs a Termination of Service for any reason other than a reason set forth in subsection 3.4(b), then any portion of an Award which has not otherwise become vested as of the date of Termination of Service will be forfeited, effective as of the date of such termination. For purposes of the Plan, “Termination of Service” means the occurrence of any act or event or any failure to act, that actually or effectively causes or results in a Participant ceasing, for whatever reason, to be an employee of the Bank, including, but not limited to, death, Disability, Retirement, termination by the Bank of the Participant’s employment (whether for Cause or otherwise), termination by the Participant of his or her employment with the Bank for Good Reason and voluntary resignation or termination by the Participant of his or her employment.

 
		
	(b)    
	Termination Due to Death, Disability, Retirement or Other Events. Notwithstanding the provisions of Section 3.3 and subsection 3.4(a), if a Participant incurs a Termination of Service (i) due to death, (ii) due to Disability, (iii) due to Retirement, (iv) by the Participant for Good Reason or (v) by the Bank without Cause during the period beginning with the earliest to occur of the following three dates, as applicable, and ending on the effective date of such Reorganization: (1) 12 months prior to the execution of a definitive agreement regarding a Reorganization of the Bank, (2) if a Reorganization has been mandated by federal statute, rule, regulation or directive, 12 months prior to the effective date of such Reorganization, or (3) 12 months prior to the adoption of a plan or proposal for the liquidation or dissolution of the Bank, any portion of his or her Award eligible to become earned and vested in the Performance Periods in which the termination occurs will, to the extent the Performance Goals for such Performance Periods are satisfied, be treated as earned and vested in a pro rata manner equivalent to the period of time during the Performance Periods the Participant participated in the Plan. The Award will become vested effective as of the last day of such Performance Periods in which the Termination of Service occurs.

 
(i)For purposes of the Plan, “Disability” means, as a result of the Participant’s incapacity due to physical or mental illness, the Participant has been absent from his or her duties with the Bank for an aggregate of 12 out of 15 consecutive months and, within 30 days after a written notice of termination is thereafter given by the Bank to the Participant, the Participant does not return to the full-time performance of the Participant’s duties.
 
(ii)    For purposes of the Plan, “Retirement” means the planned and voluntary termination of the Participant’s employment on or after the Participant has attained age 60 with five “Years of Service.” To be credited with a Year of Service, a Participant must complete 1,000 “hours of service” for the Bank during such year. An “hour of service” will be calculated in the same manner as under the Financial Institutions Thrift Plan.
 
(iii)    For purposes of the Plan, “Good Reason” will mean a Termination of Service by the Participant under any of the following circumstances:
 
		
	(1)    
	during the period: (A) beginning with the earliest to occur of the following three dates, as applicable: (I) 12 months prior to the execution of a definitive agreement regarding a Reorganization of the Bank or (II) if a Reorganization has been mandated by federal statute, rule, regulation or directive, 12 months prior to the 

 

 

effective date of such Reorganization or (III) 12 months prior to the adoption of a plan or proposal for the liquidation or dissolution of the Bank, and (B) ending on the effective date of such Reorganization.
		
	(A.)    
	a material change in the Participant’s status, position, job title or principal duties and responsibilities as a key employee of the Bank which does not represent a promotion from the Participant’s status and position as in effect as of the date hereof (“Position”), or

 
		
	(B.)    
	the assignment to the Participant of any duties or responsibilities (or removal of any duties or responsibilities), which assignment or removal is materially inconsistent with such Position, or

 
		
	(C.)    
	any removal of the Participant from such Position (including, without limitation, all demotions and harassing assignments), except in connection with the termination of the Participant’s employment for Cause or Disability, or as a result of the Participant’s death;

 
		
	(D.)    
	any material breach by the Bank of any provisions of this Plan or any other agreement with the Participant; or

 
(2)    any failure by the Bank or its successors and assigns to obtain the assumption of this Plan by any successor or assign of the Bank.
 
		
	(3)    
	For purposes of the Plan, “Cause” means (1) continued failure of the Participant to perform his or her duties with the Bank (other than any such failure resulting from Disability), after a demand for performance, pursuant to a resolution of the Board, is delivered to the Participant by the Chair of the Board, which specifically identifies the manner in which the Participant has not performed his or her duties, (2) personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, or willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses); or (3) removal of the Participant for cause by the Federal Housing Finance Board pursuant to 12 U.S.C. 1422b(a)(2), or by any successor agency to the Federal Housing Finance Board (“FHFB”) pursuant to a similar statute.

Section 3.5 Effect of Reorganization. Notwithstanding the provisions of Section 3.3 and subsection 3.4(b), if a Reorganization of the Bank occurs, then any portion of an Award which has not otherwise become vested as of the date of the Reorganization will be treated as earned and vested, effective as of the date of the Reorganization, in a pro rata manner equivalent to the period of time during the Performance Periods the Participant participated in the Plan prior to the Reorganization. “Reorganization” of the Bank will mean the occurrence at any time of any of the following events:
 
		
	(a)    
	The Bank is merged or consolidated with or reorganized into or with another bank or other entity, or another bank or other entity is merged or consolidated into the Bank;

 
		
	(b)    
	The Bank sells or transfers all, or substantially all of its business and/or assets to another bank or other entity; or

 
		
	(c)    
	The liquidation or dissolution of the Bank.

Section 3.6 Payment of Awards. Unless payment of a Final Award has been properly deferred by a Participant under the terms of a deferred compensation plan, a Final Award will be paid in a single sum cash payment by March 15th of the year following the year in which the Award becomes vested. Compensation will be paid upon approval by the Bank’s Board of Directors and after review of the calculations by the external auditor. However, in the event of a Reorganization, unless payment has been properly deferred under a Bank deferred compensation plan, payment of a Final Award will be made in a single sum on the date on which the Reorganization occurs.
Section 3.7 Forfeiture of Awards.
 
		
	(a)    
	Notwithstanding any other provision of the Plan, if a Participant violates a Non-Solicitation Agreement, all of his unpaid vested and unvested Awards will be forfeited effective as of the date the Board determines such violation has occurred and notifies the Participant of such determination. Any future payments for a vested Award will cease and the Bank will have no further obligation to make such payments.

 
		
	(b)    
	Notwithstanding any other provision of the Plan, if during the most recent examination of the Bank by the FHFA, the FHFA identified an unsafe or unsound practice or condition that is material to the financial operation of the Bank 

 

 

within the Participant’s area(s) of responsibility and such unsafe or unsound practice or condition is not subsequently resolved in favor of the Bank, then all of a Participant’s vested and unvested Awards will be forfeited. Any future payments for a vested Award will cease and the Bank will have no further obligation to make such payments.
 
		
	(c)    
	By resolution, the Board may reduce or eliminate an Award that is otherwise earned under this Plan but not yet paid, if the Board finds that a serious, material safety-soundness problem, a serious, material risk management deficiency exists at the Bank, or if: (i) operational errors or omissions result in material revisions to the financial results, information submitted to the FHFA, or data used to determine incentive payouts; (ii) submission of material information to the SEC, Office of Finance, and/or FHFA is significantly past due, or (iii) the Bank fails to make sufficient progress, as determined by the Board, in the timely remediation of significant examination, monitoring, and other supervisory findings.

 
ARTICLE IV
ADMINISTRATION
Section 4.1 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 sub-section 4.2(d), 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; provided that the power to determine eligibility pursuant to Article II is reserved to the Board.
Section 4.2 Powers and Responsibilities of the Committee. The Committee will have all powers necessary to administer the Plan, including the power to construe and interpret the Plan document; 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 under the Plan; to resolve any claim for benefits in accordance with Article V, 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.
 
		
	(a)    
	Records and Reports. The Committee will be responsible for maintaining sufficient records to determine each Participant’s eligibility to participate in the Plan.

 
		
	(b)    
	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, the Bank or the legal counsel of the Bank.

 
		
	(c)    
	Application for Benefits. The Committee may require a Participant 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 current mailing address.

 
		
	(d)    
	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 4.3 Income and Employment Tax Withholding. The Bank will withhold from payments to Participants of their Awards, to the extent required by law, all applicable federal, state, city and local taxes.
Section 4.4 Plan Expenses. The expenses incurred for the administration and maintenance of the Plan will be paid by the Bank.
ARTICLE V
BENEFIT CLAIMS
While a Participant need not file a claim to receive his or her benefit under the Plan, if he or she 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 full and fair review of the denial of a claim for benefits by filing a written request with the Committee.

 

 

ARTICLE VI
AMENDMENT AND TERMINATION OF THE PLAN
Section 6.1 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 Award 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.
Section 6.2 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 and vested 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 VII
MISCELLANEOUS
Section 7.1 Governing Law. Except to the extent superseded by laws of the United States, the laws of Indiana will be controlling in all matters relating to the Plan without regard to the choice of law principles therein. The Plan and all Award Agreements are intended to comply, and will be construed by the Bank in a manner which they are exempt from or comply with the applicable provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent there is any conflict between a provision of the Plan or an Award Agreement and a provision of Code Section 409A, the applicable provision of Code Section 409A will control.
 
Section 7.2 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 7.3 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, either voluntarily or involuntarily.
Section 7.4 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 7.5 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 in the employ of the Bank or limit the right of the Bank to employ or discharge any person with or without cause.
Section 7.6 Limitations on Liability. The individual members of the Board 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. In addition, notwithstanding any other provision of the Plan, neither the Bank nor any individual acting as an employee or agent of the Bank will be liable to a Participant 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 7.7 Incapacity of Participant. 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 and the Plan.
Section 7.8 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 7.9 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 7.10 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 7.11 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 7.12 Attorneys’ Fees. If any action is commenced to enforce the provisions of the Plan, payment of attorneys’ fees will be governed by the terms set forth in the mandatory “Agreement to Arbitrate” entered into between the Bank and the Participant.
Section 7.13 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.
Section 7.14 Awards Not Compensation for Other Plans.  No Final Award received by a Participant shall be considered as compensation for purposes of determining benefits under any employee benefit plan of the Bank, except as otherwise determined by the Bank.

 

 

APPENDIX A
FORM OF AWARD AGREEMENT
THIS AWARD AGREEMENT (the “Award Agreement”) is made and entered into this      day of January, 2011, but effective as of January 1, 20   , between Federal Home Loan Bank of Indianapolis (the “Bank”), and                       (the “Participant”).
WITNESSETH:
WHEREAS, the Bank has adopted the Federal Home Loan Bank of Indianapolis Long Term Incentive Plan (the “Plan”) to attract, retain and motivate designated key employees of the Bank and to focus their efforts on continued improvement in the profitability of the Bank; and
WHEREAS, the Participant is eligible to receive an Award;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Bank and the Participant agree as follows:
1. Awards. The Bank hereby awards to the Participant the Award specified in Schedule A to this Agreement which is incorporated herein as if fully set forth, subject to the terms of this Award Agreement and the provisions of the Plan (the “Award”). All provisions of the Plan, including defined terms, are incorporated herein and are expressly made a part of this Award Agreement by reference. If any provision of this Award Agreement conflicts with a provision of the Plan, the provision of the Plan will control.
2. Deferral of Awards. If the Participant participates in the Federal Home Loan Bank of Indianapolis deferred compensation plan, he or she has the right to make a deferral election under that plan to defer any Final Award earned under the Plan.
3. Non-Solicitation and Non-Disclosure Provisions. The Participant will execute a Non-Solicitation Agreement in the form attached to the Plan as Appendix B.
4. Income and Employment Tax Withholding. The Participant will be responsible for (and, where required by applicable law, the Bank will withhold from any amounts payable under the Plan) all required federal, state, city and local taxes.
5. Nontransferability. During the Participant’s lifetime, Awards will be payable only to him or her, except as provided in Section 7.7 of the Plan. Neither an Award nor any rights and privileges pertaining thereto, may be transferred, assigned, pledged or hypothecated by the Participant in any way, whether by operation of law or otherwise, and are not subject to execution, attachment or similar process.
6. Condition Precedent. In no event will the Bank be obligated to make payment for a vested Award until it is satisfied that all conditions precedent to the payment of the Award, as provided in the Plan and this Award Agreement, have been performed and completed.
7. Acknowledgments. The Participant acknowledges receiving, reading and fully understanding all of the provisions of the Plan and this Award Agreement and that the execution and delivery of this Award Agreement constitutes his or her unequivocal acceptance of all of the terms and conditions thereof.
IN WITNESS WHEREOF, the Bank, by its officer thereunder duly authorized, and the Participant, have executed this Award Agreement on the day and year first above written, but effective as of January 1, 20   .
 
							
	 
	 
	 
	 
	 
	 
	 

	FEDERAL HOME LOAN BANK OF INDIANAPOLIS
	 
	 
	 
	PARTICIPANT

	 
	 
	 
	 

	By:
	 
	 
	 
	 
	 
	 

	Its:
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 

	By:
	 
	 
	 
	 
	 
	 

	Its:
	 
	 
	 
	 
	 
	 

 

 

 
SCHEDULE A
TO AWARD AGREEMENT UNDER
FEDERAL HOME LOAN BANK OF INDIANAPOLIS
LONG TERM INCENTIVE PLAN
Name of Participant:     
[Award:     ]
[Discretionary Award:     ]
Performance Period Beginning January 1, 20___ and Ended December 31, 20___
Performance Goals for Performance Period:
[To Be Finalized Using the Applicable Year's LTI Performance Goals]
					
	MISSION GOALS
	WEIGHTED VALUE 
Bank     CRM
	MINIMUM THRESHOLD
	20__ TARGET
	MAXIMUM

 
 
 
 
 

 

 

 
 
APPENDIX B
 
FORM OF NON-SOLICITATION AND NON-DISCLOSURE AGREEMENT
 
This Agreement is entered into as of the ____ day of _____________, 20___, by and between the FEDERAL HOME LOAN BANK OF INDIANAPOLIS, a corporation organized under the laws of the United States (the “Bank”) and ____________________ (the “Executive”).
WHEREAS, the Bank sponsors the Federal Home Loan Bank of Indianapolis Long Term Incentive Plan (the “Plan”); and
WHEREAS, as a condition of participation in the Plan, the Bank requires that the Executive agree to the terms and conditions found within this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual promises and agreements contained herein and other good and valuable consideration, the receipt, legal adequacy and sufficiency of which are hereby acknowledged, the parties agree as follows:
		
	1.    
	Non-Disclosure; Return  of Confidential Information and Other Property.

 
		
	(a)    
	Access to Confidential Information.  The Executive understands, acknowledges and agrees that during the course of his or her employment with the Bank he or she has gained or will gain information regarding, knowledge of, and familiarity with, the Confidential Information of the Bank (as defined in subsection (c)) that would cause irreparable damage and harm to the Bank if it was disclosed.  The Executive understands, acknowledges and agrees that the Confidential Information has substantial economic value because it is not known or readily ascertainable by proper means by others who could obtain economic value from it.  The Executive also acknowledges and agrees that the Bank uses reasonable means to maintain the secrecy and confidentiality of the Confidential Information.

 
		
	(b)    
	Non-Disclosure.  At all times while the Executive is employed by the Bank, and at all times thereafter, the Executive will not (i) directly or indirectly disclose, provide or discuss any Confidential Information with or to any Person (as defined in subsection (d)) other than those directors, officers, employees, representatives and agents of the Bank who need to know such Confidential Information for a proper corporate purpose, and (ii) directly or indirectly use any Confidential Information (A) to compete against the Bank, or (B) for the Executive's own benefit, or for the benefit of any Person other than the Bank.

 
		
	(c)    
	Confidential Information Defined.  For purposes of this Agreement, the term “Confidential Information” means any and all:

 
		
	(i)    
	materials, records, data, documents, lists, writings and information (whether in writing, printed, verbal, electronic, computerized or otherwise) (A) relating or referring in any manner to the business, operations, affairs, financial condition, results of operation, cash flow, assets, liabilities, sales, revenues, income, estimates, projections, policies, strategies, techniques, methods, products, developments, suppliers, relationships and/or customers of the Bank that are confidential, proprietary or not otherwise publicly available, in any event not without a breach of this Agreement, or (B) that the Bank has deemed confidential, proprietary, nonpublic or not otherwise publicly available without breaching this Agreement;

 
		
	(ii)    
	trade secrets of the Bank, as defined in Indiana Code Section 24-2-3-2, as amended, or any successor statute; and

 
		
	(iii)    
	any and all copies, summaries, analyses and extracts which relate or refer to or reflect any of the items set forth in (i) or (ii) above.  The Executive agrees that all Confidential Information is confidential and is and at all times will remain the property of the Bank.

 

 

 

		
	(d)    
	Person Defined.  For purposes of this Agreement, the term “Person” will mean any natural person, proprietorship, partnership, corporation, limited liability corporation, bank, organization, firm, business, joint venture, association, trust or other entity and any government agency, body or authority.

 
		
	(e)    
	Return of Confidential Information and Other Property.  The Executive covenants and agrees:

		
	(iv)    
	to keep all Confidential Information subject to the Bank's custody and control and to promptly return to the Bank all Confidential Information that is still in the Executive's possession or control at the termination of the Executive's employment with the Bank; and

		
	(v)    
	promptly upon termination of the Executive's employment with the Bank, to return to the Bank, at the Bank's principal office, all vehicles, equipment, computers, credit cards and other property of the Bank and to cease using any of the foregoing.

 
		
	2.    
	Non-Solicitation and No-Hire.  The Executive hereby understands, acknowledges and agrees that, by virtue of his or her position with the Bank, the Executive has and will have advantageous familiarity and personal contacts with the employees of the Bank and has and will have advantageous familiarity with the business, operations and affairs of the Bank.  In addition, the Executive understands, acknowledges and agrees that the business of the Bank is highly competitive.  Accordingly, at all times while the Executive is employed by the Bank and for a twelve-month period following Termination of Service, the Executive will not, directly or indirectly, or individually or together with any other Person, as owner, shareholder, investor, member, partner, proprietor, principal, director, officer, Executive, manager, agent, representative, independent contractor, consultant or otherwise induce, request or attempt to influence any Bank employee who was employed by the Bank during the twelve-month period prior to Termination of Service, to terminate his or her employment with the Bank.  In addition, the Executive agrees that for a period of twelve months following the Executive's Termination of Service, Executive will not hire any Bank employee who was employed by the Bank during the twelve-month period prior to the Executive's Termination of Service.

 
		
	3.    
	Periods of Noncompliance and Reasonableness of Periods.  The restrictions and covenants contained in Section 2 will not run during all periods of noncompliance and will apply during the Term of this Agreement and for the full periods specified in Section 2.  The Bank and the Executive understand, acknowledge and agree that the restrictions and covenants contained in Section 2 are reasonable in view of the nature of the business in which the Bank is engaged, the Executive's position with the Bank and the Executive's advantageous knowledge and familiarity with, the Bank's employees, business, operations, affairs and customers.

 
The Bank's obligation to pay an award to the Executive pursuant to the Federal Home Loan Bank of Indianapolis Long Term Incentive Plan will immediately terminate in the event the Executive breaches any of the provisions of Section 1 or 2 and all outstanding awards will be forfeited.  Notwithstanding the foregoing:
		
	(a)    
	the Executive's covenants set forth in Sections 1 or 2 will continue in full force and effect and be binding upon the Executive;

 
		
	(b)    
	the Bank will be entitled to the remedies specified in Section 5; and

 
		
	(c)    
	the Bank will be entitled to its damages, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) resulting from or relating to the Executive's breach of any of the provisions of Section 1 or  2.

 
		
	4.    
	Survival of Certain Provisions.  Upon any termination of the Executive's employment with the Bank, the Executive and the Bank hereby expressly agree that the provisions of Sections 1, 2, 3 and 5 will continue to be in full force and effect and binding upon the Executive and the Bank in accordance with the applicable respective provisions of such Sections.

 
		
	5.    
	Remedies.  The Executive agrees that the Bank will suffer irreparable damage and injury and will not have an adequate remedy at law in the event of any actual, threatened or attempted breach by the Executive of any provision of Section 1 or 2.  Accordingly, in the event of a threatened, attempted or actual breach by the Executive of any provision of Section 1 or 2, in addition to all other remedies to which the Bank is entitled at law, in equity or otherwise, the Bank may be entitled to a temporary restraining order and a permanent injunction or a decree of specific performance of any provision of Section 1 or 2.  The foregoing remedies will not be deemed to be the exclusive rights or remedies of the Bank for any breach of or noncompliance with this Agreement by the Executive but will be in addition to all other rights and remedies available to the Bank at law, in equity or otherwise.

 

 

 
		
	6.    
	Severability.  In case any one or more of the provisions (or any portion thereof) contained herein will, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provision of this Agreement, but this Agreement will be construed as if such invalid, illegal or unenforceable provision or provisions (or portion thereof) had never been contained herein.  If any provision of this Agreement will be determined by a court of competent jurisdiction to be unenforceable because of the provision's scope, duration or other factor, then such provision will be considered divisible and the court making such determination will have the power to reduce or limit (but not increase or make greater) such scope, duration or other factor or to reform (but not increase or make greater) such provision to make it enforceable to the maximum extent permitted by law, and such provision will then be enforceable against the appropriate party hereto in its reformed, reduced or limited form; provided, however, that a provision will be enforceable in its reformed, reduced or limited form only in the particular jurisdiction in which a court of competent jurisdiction makes such determination.

 
		
	7.    
	Entire Agreement.  This Agreement sets forth the entire understanding of the parties hereto with respect to its subject matter, merges and supersedes all prior and contemporaneous understandings with respect to its subject matter, and may not be waived or modified, in whole or in part, except in a writing signed by each of the parties hereto.  No waiver of any provision of this Agreement in any instance will be deemed to be a waiver of the same or any other provision in any other instance.

 
		
	8.    
	Effect and Modification.  No statement or promise, except as set forth herein, has been made with respect to the subject matter of this Agreement.  No modification or amendment will be effective unless in writing and signed by the Executive and an officer of the Bank (other than the Executive).

 
		
	9.    
	Non-Waiver.  The Bank's or the Executive's failure or refusal to enforce all or any part of, or the Bank's or the Executive's waiver of any breach of this Agreement, will not be a waiver of the Bank's or the Executive's continuing or subsequent rights under this Agreement, nor will such failure or refusal or waiver have any effect on the subsequent enforceability of this Agreement.

 
		
	10.    
	Non-Assignability.  This Agreement contemplates that the Executive will personally provide the services described herein, and accordingly, the Executive may not assign the Executive's rights or obligations hereunder, whether by operation of law or otherwise, in whole or in part, without the prior written consent of the Bank.

 
		
	11.    
	Notice.  Any notice, request, instruction or other document to be given hereunder to any party will be in writing and delivered by hand, telegram, registered or certified United States mail return receipt requested, or other form of receipted delivery, with all expenses of delivery prepaid, as follows:

 
If to the Executive:        _________________________
_________________________
_________________________
_________________________
If to the Bank:     Federal Home Loan Bank of Indianapolis
c/o Daniel A. Lane 
First Vice President-General Counsel
8250 Woodfield Crossing Blvd.
Suite 400
Indianapolis, IN 46240
 
		
	12.    
	Governing Law.  This Agreement is being delivered in and will be governed by the laws of the State of Indiana without regard to the choice of law principles thereof.  Any dispute regarding this Agreement will be brought in Indiana state or federal court, as appropriate, and the Executive expressly consents to the jurisdiction of such courts.

 
		
	13.    
	Prior Agreements.  The Executive represents and warrants to the Bank that the Executive is not a party to or otherwise bound by any agreement that would restrict in any way the performance by the Executive of the Executive's duties, services and obligations under this Agreement, that the Executive has disclosed to the Bank all employment type agreements to which the Executive has been bound, including without limitation employment agreements, consulting agreements, non-compete agreements or covenants, confidentiality or non-disclosure agreements or covenants, and intellectual property assignment agreements, and that the Bank will not have any liability to any third party arising out of the Executive entering into this Agreement or performing hereunder.

 

 

		
	14.    
	Effect of Headings.  The descriptive headings of the Sections and, where applicable, subsections, of this Agreement are inserted for convenience and identification only and do not constitute a part of this Agreement for purposes of interpretation.

 
		
	15.    
	Counterparts.  This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which collectively will constitute one and the same instrument.

 
IN WITNESS WHEREOF, the Bank, by its officer thereunder duly authorized, and the Executive, have caused this Non-Competition, Non-Solicitation and Non-Disclosure Agreement to be executed as of the day and year first above written.
FEDERAL HOME LOAN BANK
OF INDIANAPOLIS                EXECUTIVE
By:             
Its:     
 
 
By:     
Its:     
 
 
 

 

 

APPENDIX C
 
2011 PERFORMANCE PERIOD
 
(Effective January 1, 2011)
This Appendix C will be updated each year to reflect the applicable Performance Period and the Performance Goals for that Performance Period.
Performance Period
The Performance Period described in this Appendix will begin on January 1, 2011 and end on December 31, 2013 with payments to be awarded by March 15, 2014.
Performance Goals
Performance Goals for the 2011 Performance Period are as follows:										
	MISSION GOALS
	WEIGHTED VALUE 
Bank     CRM
	MINIMUM THRESHOLD
	2011 TARGET
	MAXIMUM

	PROFITABILITY
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	      Potential Dividend
      over our Cost of
      Funds(1)
	35
	%
	15
	%
	50 B.P.
	100 B.P.
	 
	250 B.P.
	 

	 
	 
	 
	 
	 
	 

	ADVANCES
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	      Member Advance 
      Growth(2)
	10
	%
	5
	%
	0%
	2.8
	%
	4
	%

	 
	 
	 
	 
	 
	 

	      New Member
      Recruitment(3)
	5
	%
	5
	%
	 
6 members
	 
8 members
	 
	16 members
	 

	 
	 
	 
	 
	 
	 

	      Public Unit Deposit
      Letters of Credit - 
      Members Using(4)
	5
	%
	5
	%
	$100 M
	$250 M
	 
	$950 M
	 

	 
	 
	 
	 
	 
	 

	MORTGAGE PURCHASE PROGRAM
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	      MPP Production(5)
	5
	%
	2.5
	%
	$238 M
	$325 M
	 
	$750 M
	 

	 
	 
	 
	 
	 
	 

	      MPP Balance(6)
	5
	%
	2.5
	%
	$6.7 B
	$7.0 B
	 
	$7.4 B
	 

	 
	 
	 
	 
	 
	 

	      New or Reactivated
      Traders(7)
	5
	%
	5
	%
	 
5 members
	 
7 members
	 
	10 members
	 

 

 

 
								
	MISSION GOALS
	WEIGHTED VALUE 
Bank     CRM
	MINIMUM THRESHOLD
	2011 TARGET
	MAXIMUM

	 
	 
	 
	 
	 
	 

	COMMUNITY INVESTMENT
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	      CIP Advances and
      Letters of Credit 
      Originated(8)
	10
	%
	5
	%
	$25 M
	$50 M
	$75 M

 
											
	 INFORMATION TECHNOLOGY(9)
	5
	%
	5
	%
	2 goals
	 
	3 goals
	 
	4 goals
	 

	 
	 
	 
	 
	 
	 

	 CORPORATE RISK MANAGEMENT
	 
	 
	 
	 
	 

	       
 Economic Value “Added Percentage” for Bank Stock(10)
	5
	%
	5
	%
	0
	 
	Average greater than 0 and not all quarters positive
	 
	Average greater than 0 and all quarters positive
	 

	 CRM Memo and Annual Risk Assessment(11) 
	1
	%
	10
	%
	2 memos + 1RA
	 
	4 memos + 1RA
	 
	5 memos 
+ 1RA
	 

	CRM Reports, ORM Reports and IS Reports(11)
	1
	%
	10
	%
	8 CRM reports, 2 ORM reports, and 1 IS report
	 
	10 CRM reports, 3 ORM reports, and 2 IS reports
	 
	12 CRM reports, 4 ORM reports, and 3 IS reports
	 

	 
Special Risk Assessments, Risk Analysis or Risk
Process Improvements(12)
	3
	%
	15
	%
	2
	 
	3
	 
	4
	 

	CRM Proficiency and Efficiency in Reporting (13)
	5
	%
	10
	%
	Met Expectations for CRM Reporting/
Monitoring
	 
	Fully Proficient
	 
	Fully Proficient and Efficient
	 

 
 
Definitions:
 
		
	(1)    
	Potential Dividend is defined as adjusted net income as a percentage of average total capital stock.  Adjusted net income is adjusted (i) for the effects of current and prior period prepayments and debt extinguishments, (ii) to exclude mark-to-market adjustments and other effects from SFAS 133, and (iii) to exclude the effects from SFAS 150.  Assumes no material change in investment authority under FHFA's FMP, regulation, policy, or law.  

		
	(2)    
	Member advances are calculated as the growth in the average daily balance of advances outstanding to members.  Average daily balances are used instead of point-in-time balances to eliminate activity that may occur at the member level and to reward for the benefit of the income earned on advances while outstanding.  In all scenarios, to achieve target under the base strategic plan forecast (Board approved Nov. 2010), the average growth assumes that advances grow in a steady state beginning January 1, 2011.  If a member becomes a non-member due to merger or receivership, the advances outstanding will still count toward the goal. 

		
	(3)    
	New members are institutions that have a minimum of $50 million in assets (as of December 31, 2011), are not a member of the Bank on December 31, 2010, and in 2011 join the Bank and buy its required stock.  

		
	(4)    
	Four quarter average of total outstanding PUDLs issued to the Indiana Board for Depositories to support public unit deposits, assuming the collateral requirement is effective February 15, 2011.  If Indiana changes the law or implementation, this goal will be re-visited with Board mid-year.

		
	(5)    
	Mortgage Purchase Program production will be the amount of all conventional MDCs traded in 2011.  Assumes no capital requirement for MPP.  It also assumes no material change in MPP authority under FHFA's FMP, regulation, policy, or law.  When calculating achievement between the minimum threshold and the performance maximum, no single member can account for more than 25% of conventional production.  FHA production will not be counted in the numerator when doing this calculation.

 

 

		
	(6)    
	Ending principal balance of all outstanding MPP loans as of December 31, 2011.

		
	(7)    
	Members that have never traded or not traded with MPP within the previous 12 months of their 2011 trade would qualify to count toward the goal. 

		
	(8)    
	Newly-originated Community Investment Cash Advances, including CIP, HomeRetain and other qualifying advances and CIP qualified letters of credit (excluding public unit deposit LCs), provided in support of targeted projects as defined in 12 CFR Part 952 and the FHLBank Act.

		
	(9)    
	Information Technology goals:

		
	•    
	Complete Business Process Map work stream to support Core Banking System (“CBS”) Requirements and Design efforts in 2011.

		
	•    
	Complete Down Stream Data requirements work stream to support CBS Requirements and Design efforts in 2011.

		
	•    
	Implement Automated Regression Testing Tools in 2011 to support CBS.

		
	•    
	Complete Requirements and Design documentation for CBS Phase I in 2011.

 
		
	(10)    
	“Value Added %” for Bank stock.  Use Average Value Added % for 2011 (calculated as average of 4 quarters)

Average Value Added %   >  0    (=> Maximum)  EVE/PVCS:  is calculated as a ratio = (Economic Value  of Equity) / (Par Value of Capital Stock)
 
Value Added %  =  (EVE/PVCS)currentQ    minus  (EVE/PVCS)prevQ   plus  Dividends paid in Qtr as a % of PVCSprevQ 
 
		
	(11)    
	As per the Board meeting schedule, provide the Board the Corporate Risk Management (“CRM”) memo and present the Annual Risk Assessment Report.

		
	(12)    
	CRO will propose and CEO will evaluate whether to categorize these as special and whether work product was acceptable to count toward this goal.

		
	(13)    
	CEO evaluated.  This will be based on evaluation of efficiency and responsiveness regarding the level of CRM reporting and assessment services provided to the Bank, taking into account CRM officer's project deliverables, and both risk and return for its activities.  Efficiency is broader than just meeting budget expectations for CRM division and entails exhibiting executive vision and creating/maintaining a high level of cooperation and professionalism with all operating areas of the Bank, while providing beneficial insight into material risks.  The Board will determine the goal achievement for the CEO.

 
2011 Plan Participants
Level I
 
Milton J. Miller II, President-CEO
 
Level II
Cindy L. Konich, Executive Vice President-Chief Operating Officer, Chief Financial Officer
Jonathan R. West, Executive Vice President-Chief Operating Officer, Business Operations
Douglas J. Iverson, Senior Vice President-Marketing Director
Sunil U. Mohandas, Senior Vice President-Chief Risk Officer
K. Lowell Short, Senior Vice President-Chief Accounting Officer
Gregory L. Teare, Senior Vice President-Chief Banking Officer
 
Level III
N/A
 
Awards: Level I and II Participants
Level I and Level II Participants may earn Awards in accordance with the following Table, expressed as a percentage of annual base salary.  Level II and Level III Participants are eligible to receive Discretionary Awards which will not exceed twenty percent of the aggregate Awards earned by Level I and II Participants.

 

 

															
	Level Participant
	Sample
Salary
	Award Expressed As a Percentage of Salary
	Discretionary Award
	Final Award Value

	Threshold
	Target
	Maximum

	I
	$
	475,000
	 
	15
	%
	30
	%
	45
	%
	N/A
	Same As Base Award

	$
	71,250
	 
	$
	142,500
	 
	$
	213,750
	 

	II
	$
	230,000
	 
	10
	%
	20
	%
	30
	%
	Discretionary
	Base Award + Discretionary Award

	$
	23,000
	 
	$
	46,000
	 
	$
	69,000
	 

Award: Level III Participants
Level III Participants, if any, are eligible to receive Discretionary Awards which will not exceed twenty percent of the aggregate Awards earned by Level I and II Participants:
Example Assuming Awards Earned at Target Achievement Level
		
	•    
	Level I: $142,500 x 1 Participant = $142,500 at Target achievement level

		
	•    
	Level II: $46,000 x 6 Participants = $276,000 at Target achievement level

		
	•    
	Level III: ($142,500 + $276,000) x 20% = $83,700/# Level III Participants Receiving an Award = Average award per Tier III Participant at Target achievement level

 
Final Award Value
The value of a Participant's Final Award will be determined as follows:
		
	1.    
	At the end of a Performance Period, determine the extent the Performance Goals were met by averaging the sum of performances for each year of the Performance Period.

		
	2.    
	Determine what Award level is appropriate based on the percentage achievement for the Performance Goal.

		
	3.    
	Multiply the Participant's salary by the Award expressed as a percentage of salary for the applicable Award level and interpolate between Award levels.

		
	4.    
	Add Discretionary Award, if applicable.

		
	5.    
	Revise Award if necessary based on Extraordinary Occurrences.

 
								
	Level Participant
	Percentage Achievement
	Threshold
60%
	Target
80%
	Maximum
100%

	I
	Award Expressed as a Percentage of Salary
	15
	%
	30
	%
	45
	%

	II
	Award Expressed as a Percentage of Salary
	10
	%
	20
	%
	30
	%

Example #1 (Note: Percentage Achievement of 59% or less for one year is still included in determining the final three-year average, even though it does not meet the threshold percentage)
 
		
	•    
	Assume that the Performance Goals for the Performance Period were met as follows:

2011: 58%
2012: 96%
2013: 92%
Three-Year Achievement Average: 82% = percentage of achievement (see chart above) x 2011 base salary
		
	•    
	Level I Participant: Salary of $475,000 x 31.5% (80% target achievement = 30% + interpolation of .75% for each additional 1% achievement) = $149,625

		
	•    
	Level II Participant: Salary of $230,000 x 21% (80% target achievement = 20% + interpolation of .5% for each additional 1% achievement) = $48,300 + Discretionary Award if applicable +/- Extraordinary Occurrences

		
	•    
	Level III Participant: Awards are Discretionary Awards.  If an Award is given, it will be calculated as provided above.

 

 

Example #2 (Note: Final three-year average is below threshold, which results in no payout)
 
		
	•    
	Assume that the Performance Goals for the Performance Period were met as follows:

2011: 55%
2012: 59%
2013: 60%
Three-Year Achievement Average: 58% = percentage of achievement (see chart above) x 2011 base salary
		
	•    
	Level I Participant: No payout because percentage of achievement level is below threshold

		
	•    
	Level II Participant: No payout because percentage of achievement level is below threshold

		
	•    
	Level III Participant: No payout because percentage of achievement level is below threshold

		
	•    
	Payment for the Final Awards above will be made on or before March 15, 2014, unless the Award has been properly deferred under a Bank deferred compensation plan.

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