Document:

Form of Key Employee Severance Agreement for Executive Officers

 EXHIBIT 10.7 
  
 FORM OF KEY EMPLOYEE SEVERANCE 
 AGREEMENT FOR EXECUTIVE OFFICERS 
  
 The attached form is identical for the following 
 Executive Officers: 
  
 Milton J. Miller, II 
 Jonathan R. West 
 Vincent A. Cera 
 Brian K. Fike 
 Douglas J. Iverson 

 KEY EMPLOYEE 
 SEVERANCE AGREEMENT 
  
 This Agreement is entered into as of the 1st day of January, 2001, 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 Executive has been effective in his service to the Bank, and the Bank recognizes the valuable services that the Executive has rendered and desires to be assured that the Executive will continue his active
participation in the business of the Bank; and 
  
 WHEREAS, the
Executive is willing to continue to serve the Bank but desires assurance that, in the event of any consolidation, change in control or reorganization of the Bank, he will continue to have the responsibility and status he has earned, either with the
Bank or with a successor to the Bank; 
  
 NOW, THEREFORE, in
consideration of the promises and the mutual agreements herein contained, the Bank and the Executive hereby agree as follows: 
  
 1. Definitions. 
  
 “Bank” shall mean the Federal Home Loan Bank of Indianapolis and any other entity within the definition of “Bank” in Section 6(a)
hereof. 
  
 “Cause” shall mean (i) the continued failure
of the Executive to perform his duties with the Bank (other than any such failure resulting from Disability), after a demand for performance, pursuant to a resolution of the Bank’s Board of Directors, is delivered to the Executive by the Chair
of the Board of Directors of the Bank, which specifically identifies the manner in which the Executive has not performed his duties, (ii) the 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 (iii) the removal of the Executive 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 pursuant to a similar statute. 
  
 “Compensated Termination” shall have the meaning set forth in Section 2(a). 
  
 “Disability” shall mean, as a result of the Executive’s incapacity due to physical or mental illness, the
Executive shall have been absent from his duties with the Bank for an aggregate of twelve (12) out of fifteen (15) consecutive months and, within thirty (30) days after a Notice of Termination is thereafter given by the Bank to the Executive, the
Executive shall not have returned to the full-time performance of the Executive’s duties. 

 “Good Reason” shall mean any of the following: 
  
 (i) during the period (1) beginning with the earliest to
occur of the following three dates, as applicable: (A) twelve (12) months prior to the execution of a definitive agreement regarding a Reorganization of the Bank or (B) if a Reorganization has been mandated by federal statute, rule, regulation or
directive, twelve (12) months prior to the effective date of such Reorganization or (C) twelve (12) months prior to the adoption of a plan or proposal for the liquidation or dissolution of the Bank, and (2) ending twenty-four (24) months after the
effective date of such Reorganization, 
  

	 	(a)	a change in the Executive’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
Executive’s status and position as in effect as of the date hereof (“Position”), or 

  

	 	(b)	the assignment to the Executive of any duties or responsibilities (or removal of any duties or responsibilities), which assignment or removal is inconsistent with such Position, or

  

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

  
 (ii) within twenty-four (24) months after the effective date of a Reorganization of the Bank, (a) a reduction by the Bank in the
Executive’s base salary as in effect immediately prior to such Reorganization, or (b) the Bank’s (or its successor’s) failure to increase (within 12 months of the Executive’s last increase in base salary) the Executive’s
base salary after a Reorganization of the Bank in an amount which is not less than 50% of the average percentage increase in base salary for all officers of the Bank effected in the preceding twelve (12) months; 
  
 (iii) within twenty-four (24) months after the effective
date of a Reorganization of the Bank, (a) any failure by the Bank to continue in effect any plan or arrangement, including, without limitation, benefit and incentive plans, in which the Executive is participating immediately prior to such
Reorganization (hereinafter referred to as “Plans”), unless such Plans have been replaced with similar benefits that are not materially less than the Executive’s benefits under such Plans, or (b) the taking of any action by the Bank
which would adversely 

  

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 affect the Executive’s participation in or materially reduce the Executive’s benefits under any
such Plan or in or under fringe benefits enjoyed by the Executive immediately prior to the time of such Reorganization of the Bank; 
  
 (iv) any material breach by the Bank of any provisions of this Agreement or any other agreement with the Executive; or 
  
 (v) any failure by the Bank or its successors and assigns to
obtain the assumption of this Agreement by any successor or assign of the Bank. 
  
 “Notice of Termination” shall mean a written notice which shall indicate those specific termination provisions in this Agreement upon which the Bank or the Executive, as the case may be, has relied for such
termination and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. 
  
 “Payment Determination Date” shall have the meaning set forth in
Section 2(b). 
  
 “Reorganization” of the Bank shall
mean the occurrence at any time of any of the following events: 
  
 (i) 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; 
  
 (ii) The Bank sells or transfers all, or substantially all
of its business and/or assets to another bank or other entity; or 
  
 (iii) The liquidation or dissolution of the Bank. 
  
 “Retirement” shall mean the planned and voluntary termination by the Executive of his employment on or after reaching the earliest retirement age permitted by the Bank’s qualified retirement plans.

  
 2. Compensated Termination. 
  
 (a) Compensated Termination. If the Executive incurs
a Compensated Termination while the Executive is employed by the Bank or within twenty-four (24) months after the effective date of a Reorganization of the Bank (whether the Executive is then employed by the Bank or a successor to the Bank as a
result of such Reorganization), the Executive shall be entitled to the benefits provided in Section 4(a). For purposes of this Agreement, a “Compensated Termination” means termination of the 

  

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 Executive’s employment under either of the following circumstances: 
  

	 	(i)	By the Executive for Good Reason; or 

  

	 	(ii)	By the Bank, or by its successor in a Reorganization, without Cause at any time during the period (1) beginning with the earliest to occur of the following three dates, as
applicable (A) twelve (12) months prior to the execution of a definitive agreement regarding a Reorganization, or (B) if a Reorganization has been mandated by federal statute, rule, regulation or directive, twelve (12) months prior to the effective
date of such Reorganization, or (C) twelve (12) months prior to the adoption of a plan or proposal for the liquidation or dissolution of the Bank, and (2) ending twenty-four (24) months after the effective date of such Reorganization.

  
 (b) Payment Determination
Date. “Payment Determination Date,” for purposes of determining when a payment resulting from a Compensated Termination must be made pursuant to Section 4(a), shall mean the effective date of the termination of the Executive’s
employment with the Bank if such termination is a “Compensated Termination.” 
  
 (c) Non-Compensated Termination. For the avoidance of doubt, none of the following events shall result in any payment to the
Executive for a Compensated Termination under Section 4(a): 
  
 (i) The termination of employment by the Executive without Good Reason; 
  
 (ii) The termination of the Executive’s employment for Cause by the Bank or its successor in a Reorganization; 
  
 (iii) The termination of the Executive’s employment
Without Cause by the Bank or its successor in a Reorganization, (1) prior to the date which is the earliest to occur of the following three dates, as applicable: (A) twelve (12) months prior to the execution of a definitive agreement regarding a
Reorganization of the Bank or (B) if a Reorganization has been mandated by federal statute, rule, regulation or directive, twelve (12) months prior to the effective date of such Reorganization or (C) twelve (12) months prior to the adoption of a
plan or proposal for the liquidation or dissolution of the Bank, or (2) more than twenty-four (24) months after the effective date of a Reorganization; 
  
 (iv) The termination of the Executive’s employment by the Bank or its successor in a Reorganization for Disability; 
  

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 (v) The death of the Executive; or 
  
 (vi) The Retirement of the Executive. 
  
 3. Termination of Employment. 
  
 (a) Termination by the Bank. The Bank may terminate
the employment of the Executive as follows: 
  
 (i) For Cause upon the adoption of a resolution by the affirmative vote of not less than a majority of the entire membership of the Bank’s Board of Directors at a meeting of the Board (after reasonable notice to the Executive and an
opportunity for the Executive, together with counsel, to be heard by the Board), finding that in the good faith opinion of the Board the Executive was guilty of conduct set forth in the definition of “Cause” in Section 1 hereof and
specifying the particulars thereof in detail. A vote of the Board is not required if the Executive is removed for cause by the Federal Housing Finance Board pursuant to 12 U.S.C. 1422b(a)(2); 
  
 (ii) Without Cause; 
  
 (iii) Upon the Disability of the Executive; and 

 
 (iv) Upon the death of the Executive. 
  
 (b) Termination by Executive. The Executive may
terminate his employment with the Bank as follows: 
  
 (i) For Good Reason; 
  
 (ii) Without
Good Reason; or 
  
 (iii) Upon the
Executive’s Retirement, in which case the Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which the Executive is a party. 
  
 (c) Preservation of Compensated Termination. The provisions of Sections 3(a) and 3(b) are included in
this Agreement for clarification of the rights of termination of the employment relationship between the Bank and the Executive, but such provisions 

  

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 shall not prejudice the Executive’s right to receive payments or benefits required to be provided to
the Executive if any such termination is a “Compensated Termination.” 
  
 (d) Notice of Termination. 
  
 (i) Any termination by the Bank for Disability or Cause shall be communicated by a Notice of Termination; provided, however, that the
failure by the Bank to give notice in such circumstances shall not constitute a Compensated Termination. 
  
 (ii) Any termination of employment by the Executive for Good Reason will be a Compensated Termination only if the Executive gives Notice
of Termination to the Bank therefor within ninety (90) days of the event or occurrence which constitutes “Good Reason”; provided, further, that, if the Executive gives such notice of termination to the Bank in a timely manner, the
Executive shall not be deemed to have waived any of his rights hereunder in the event he remains in the employment of the Bank while he and the Bank engage in good faith discussions to resolve any event or occurrence which constitutes “Good
Reason.” 
  
 (iii) Any termination by the
Bank without Cause or by the Executive without Good Reason shall be communicated to the other party in accordance with the general notice provisions of this Agreement. 
  
 4. Payment for Compensated Termination. 
  
 (a) In the event of a Compensated Termination, the Bank shall pay or provide the Executive the following:

  
 (i) an amount equal to 2.99 times the average
of the three (3) preceding calendar years’ base salary, bonuses, and any other cash compensation (taxable or non-taxable) paid to the Executive during such years; plus 
  
 (ii) an amount equal to 2.99 times the average of the Executive’s salary deferrals and employer
matching contributions under the Bank’s Supplemental Executive Thrift Plan and the Financial Institutions Thrift Plan for the three (3) preceding calendar years; plus 
  
 (iii) an amount equal to 2.99 times the average of the three (3) preceding calendar years’ taxable
portion of the Executive’s automobile allowance provided by the Bank; plus 
  

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 (iv) an additional amount under the Bank’s non-qualified Supplemental Executive
Retirement Plan (“SERP”), equal to the additional annual benefit under Section 3.1 of the SERP with the benefit under Section 3.1 (i) being calculated as if: 
  

	 	(w)	the Executive is three (3) years older than his actual age; 

  

	 	(x)	the Executive had three (3) additional years of service at the same annual rate of compensation (as defined in the Regulations Governing the Comprehensive Retirement Program of the
Financial Institutions Retirement Fund as from time to time amended, and as adopted by the Bank) in effect for the 12 month period ending on the December 31 date which immediately precedes the Compensated Termination (including any compensation
deferred by the Executive); 

  

	 	(y)	the Executive maintained the same deferral election as in effect on the date immediately preceding his Compensated Termination; and 

  

	 	(z)	the SERP continued in effect without change in accordance with its terms as in effect on the date immediately preceding the Compensated Termination. 

  
 The Bank shall distribute such amount (except the amount provided under
Section 4(a)(iv)) in a lump sum in cash within twenty (20) days of the Payment Determination Date. The amount provided under Section 4(a)(iv) above shall be distributed at the same time as the Executive’s benefit under the SERP is distributed.

  
 (b) If the aggregate payments received or to
be received by the Executive pursuant to this Agreement exceed the highest amount permissible without triggering payment of an excise tax under Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended, including without limitation,
any successor excise tax, tax penalties or alternative federal tax which is not ordinary federal income tax (“Code”), the Executive will receive from the Bank an additional gross-up payment sufficient to provide him with the same after-tax
benefits as he would have received had the excise tax under the Code not been imposed. 
  
 (c) Notwithstanding Section 4(a), if the Bank is not in compliance with any 

  

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 applicable regulatory capital or regulatory leverage requirement or if the payment would cause the Bank
to fall below applicable regulatory requirements, such payment shall be deferred until such time as the Bank achieves compliance with its regulatory requirement. 
  
 (d) To the extent the Executive is eligible, he shall continue after a Compensated Termination to be covered
by the Bank’s medical and dental insurance plans in effect immediately prior to the Compensated Termination, for thirty-six (36) months, subject to the Executive’s payment of the Employee’s portion of the cost of such coverage. In the
event the Executive is ineligible under the terms of such plans to continue to be so covered or such plans shall have been modified, the Bank shall provide through other sources coverage which is substantially equivalent to the coverage provided
immediately prior to the Compensated Termination, subject to the Executive’s payment of a comparable portion of the cost of such coverage as under the Bank’s medical and dental insurance plans. If during this time period the Executive
should enter into employment providing for comparable medical and dental insurance coverage, his participation in the medical and dental plans provided by the Bank shall cease. 
  
 (e) The Bank shall reimburse the Executive for all reasonable legal, accounting, financial advisory and
actuarial expenses incurred by the Executive before or at the time of the execution of this Agreement and at the time any payments are made upon the occurrence of a Compensated Termination. 
  
 (f) The Executive shall be responsible for the payment of
all federal, state and local income taxes which may be due with respect to any payments made to the Executive pursuant to this Agreement, except for the ordinary federal and state income tax owed by the Executive due to the gross-up payment made to
the Executive under subsection 4(b) of this Agreement. 
  
 5.
No Obligation to Seek Further Employment; No Effect on Other Contractual Rights. 
  
 (a) The Executive shall not be required to seek other employment, nor shall any payment made under this Agreement be reduced by any
compensation received from other employment, except as set forth in the last sentence of Section 4(d). 
  
 (b) The provisions of this Agreement, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any
way diminish the Executive’s existing rights, or rights which would accrue solely as a result of the passage of time, under any Plan. 
  

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 6. Successor to the Bank. 
  
 (a) This Agreement is binding upon the successors and assigns of the Bank. The Bank and its successors and
assigns will require any successor or assign (whether direct or indirect, in a Reorganization, by operation of law, or otherwise) to all or substantially all of the business and/or assets of the Bank, to enter into a written agreement in form and
substance satisfactory to the Executive, expressly, absolutely and unconditionally to assume and agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform it if no such succession or
assignment had taken place. In such event, the Bank agrees that it shall pay or shall cause such employer to pay any amounts owed to the Executive pursuant to Section 4 hereof. 
  
 As used in this Agreement, “Bank” shall mean the Bank as hereinbefore defined and any successor or assign to its
business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 6 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. If at any time during the term of
this Agreement the Executive is employed by any corporation a majority of the voting securities of which is then owned by the Bank, the term “Bank” shall include such employer. Whether or not another entity becomes the successor or assign
of the Bank under this Agreement, the maximum amount which the Executive may receive from all sources under this Agreement in a Compensated Termination shall be the amounts set forth in Section 4 hereof. 
  
 (b) This Agreement shall inure to the benefit of and be
enforceable by the Executive’s personal and legal representatives, executors, administrators, successors, heirs, distributees, and legatees. If the Executive should die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the beneficiary designated by notice in writing executed by the Executive and filed with the Bank, or failing such designation, to the Executive’s
estate. 
  
 7. Late Payment of Benefits. Any payment made
later than the time provided for in Section 4(a) of this Agreement for whatever reason, including, without limitation, the reasons set forth in Section 4(c), shall include interest at the Bank’s cost of funds plus five percent (5%), which shall
begin to accrue on the tenth (10th) day following the Executive’s Payment Determination Date. 
  
 8. Employment Rights. This Agreement shall not confer upon the Executive any right to continue in the employ of the Bank and shall not in any way
affect the right of the Bank to dismiss or otherwise terminate the Executive’s employment at any time and for any reason with or without cause. This Agreement is not intended (i) to be an employment agreement or (ii) to define all aspects of
the employment relationship between the Bank and the Executive 

  

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including, but not limited to applicable employment or benefit policies of the Bank. To the extent there is any conflict between the terms hereof and the
terms of any employment or benefit policies of the Bank, the terms of this Agreement shall control. Any payments or benefits to which the Executive may be entitled under Section 4 hereof will not constitute wages for work performed by the Executive.

  
 9. Tax Withholding. The Bank will withhold from any
amounts payable to Executive under this Agreement to satisfy all applicable federal, state, local or other withholding taxes. All amounts payable under Section 4(a) are considered “wages” to be reported on Form W-2. The normal withholding
rules for wages apply. The Bank will also withhold any excise taxes owed under Code Section 4999. 
  
 10. Notice. For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand, delivered by a nationally-recognized overnight courier service, or mailed by United States registered mail, return receipt requested, postage prepaid, as follows: 
  
 If to the Bank: 
  
 Federal Home Loan Bank of Indianapolis 
 8250 Woodfield Crossing Boulevard 
 P.O. Box 60 
 Indianapolis, Indiana 46206 
 Attention: Chair of the Board of Directors 
  
 With a copy to the President 
  
 If to the Executive: 
  
 _________________________________ 
 8250 Woodfield Crossing Boulevard 
 P.O. Box 60 
 Indianapolis, Indiana 46206 
  
 or such other address as either party may have furnished to the other in writing in accordance herewith. Any notice shall be effective upon receipt.

  
 11. Legal Fees and Expenses. The Bank shall pay all
reasonable legal fees and expenses which the Executive may incur as a result of the Bank’s contesting the validity or enforceability of this Agreement or the calculation of amounts payable hereunder so long as the Executive is wholly or
partially successful on the merits or the parties agree to a settlement of the dispute. 
  

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 12. Term. This Agreement shall remain in effect during the employment of the Executive by the
Bank, its successors or assigns, and shall survive termination of such employment until all payments and benefits, if any, under this Agreement have been paid or satisfied. 
  
 13. Arbitration. 
  
 (a) Disputes regarding this Agreement are subject to the Federal Home Loan Bank of Indianapolis Agreement to Arbitrate by and between the
Bank and the Executive dated April 14, 2000 (“Arbitration Agreement”). No cancellation, replacement or modification to the arbitration procedures under the Arbitration Agreement shall be effective unless agreed to in writing by both the
Bank and the Executive. In the event of any conflict between the provisions of this Agreement and the Arbitration Agreement, the provisions of this Agreement shall control. 
  
 (b) If within thirty (30) days after any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the Termination, the parties shall promptly proceed to arbitration as provided in (a) above. Notwithstanding the pendency of any such dispute, the Bank shall continue to pay the
Executive his base salary and provide such other compensation and benefits, all as in effect immediately prior to the Notice of Termination. If it is determined that the Executive is not entitled to any compensation under Section 4 of this
Agreement, the Executive shall return all cash amounts to the Bank promptly following the date of resolution by arbitration, with interest thereon commencing as of the date of the resolution of the dispute by arbitration at the prime rate of
interest as published by the Wall Street Journal from time to time. Any cash amounts paid to the Executive pending the resolution of the dispute by arbitration shall offset any amounts determined to be due to the Executive under Section 4.

  
 14. Miscellaneous. 
  
 (a) No Modification. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the party or parties hereto to be bound. 
  

(b) No Waiver. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 
  

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 (c) Entire Agreement. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. 
  
 (d) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana (excluding
conflicts of laws principles), except to the extent such law is preempted by the laws of the United States. 
  
 (e) Headings. Section or paragraph headings contained herein are for convenience of reference only and are not to be considered a
part of this Agreement. 
  
 (f) Validity.
The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 
  
 (g) Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 
  
 IN WITNESS WHEREOF, this Agreement is executed as of the date first above written and is effective as of January 1, 2001. 
  

					
	 THE EXECUTIVE:
	 	 FEDERAL HOME LOAN BANK OF INDIANAPOLIS:

	 	 	 	 	 
			
	  

	 	 By:
	 	  

	 	 	 	 	 Chair, Board of Directors

			
	 	 	 By:
	 	  

	 	 	 	 	 Vice Chair, Board of Directors

  

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 FIRST AMENDMENT OF KEY EMPLOYEE 
 SEVERANCE AGREEMENT 
  
 WHEREAS, the FEDERAL HOME LOAN BANK OF INDIANAPOLIS, a corporation organized under the laws of the United States (the “Bank”) and
                                     (the
“Executive”), entered into a Key Employee Severance Agreement (the “Agreement”) on
                                    ,
            ; and 
  
 WHEREAS, the Board of Directors of the Bank has determined, in its best business judgment, that the Agreement should be amended to replace the Agreement’s definition of “Disability” with a definition
that is provided in Section 409A of the Internal Revenue Code of 1986, as amended; and 
  
 WHEREAS, the Executive also desires to amend the definition of “Disability” provided in the Agreement; and 
  
 WHEREAS, pursuant to the authority contained in Section 14(a) of the Agreement, the Bank and the Executive may amend the Agreement by a writing
executed by both the Bank and the Executive; 
  
 NOW, THEREFORE,
pursuant to the amending authority under Section 14(a) of the Plan, the Agreement is hereby amended by replacing the definition of “Disability” in Section 1 of the Agreement with the following definition, effective as of the
earlier of January 1, 2005 or the effective date of the Agreement: 
  
 “Disability shall mean the Executive (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 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 the Bank’s employees.” 
  
 The Agreement shall remain the same in all other respects. 
  
 IN WITNESS WHEREOF, the Bank, by its duly authorized officers, and the
Executive, have executed this First Amendment this              day of             , 2005, but effective as stated
herein. 
  

					
	THE EXECUTIVE:	 	 FEDERAL HOME LOAN BANK OF
 INDIANAPOLIS:

			
	  

	 	By:	 	  

	 	 	 	 	Chairman, Board of Directors
			
	 	 	By:	 	  

	 	 	 	 	Vice Chairman, Board of DirectorsExhibit 10.1

                               WAIVER AND CONSENT

THIS WAIVER AND CONSENT, dated as of February 9, 2006 (this "Waiver"), to CREDIT
AGREEMENT, dated as of January 7, 2005 and amended September 19, 2005 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among NOVELIS INC., a corporation organized under
the Canada Business Corporations Act (the "Company" or the "Canadian Borrower"),
NOVELIS CORPORATION, a Texas corporation (the "US Borrower"), NOVELIS
DEUTSCHLAND GMBH, a limited liability company (GmbH) organized under the laws of
Germany (the "German Borrower"), NOVELIS UK LIMITED, a limited company organized
under the laws of England and Wales with registered number 00279596 (the "UK
Borrower"), NOVELIS AG, a stock corporation (AG) organized under the laws of
Switzerland (the "Swiss Borrower" and, together with the Canadian Borrower, the
US Borrower, the German Borrower and the UK Borrower, the "Borrowers"), the
Lenders and Issuers party thereto and CITICORP NORTH AMERICA, INC. ("Citicorp"),
as administrative agent and collateral agent for the Lenders and the Issuers (in
such capacity, the "Administrative Agent"). Capitalized terms used herein but
not defined herein are used as defined in the Credit Agreement as amended.

                              W i t n e s s e t h:

WHEREAS, the Company has requested a waiver of certain reporting covenants under
the Credit Agreement as herein set forth; and

WHEREAS, the Lenders signatory to a consent (an "Acknowledgment and Consent")
and the Administrative Agent have agreed to consent to such waiver on the terms
and subject to the conditions herein provided.

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
obligations herein set forth and other good and valuable consideration, the
adequacy and receipt of which is hereby acknowledged, and in reliance upon the
representations, warranties and covenants herein contained, the parties hereto,
intending to be legally bound, hereby agree as follows:

     Section 1. Waiver. As of the Effective Date, the Administrative Agent and
each Lender signatory to an Acknowledgment and Consent hereby (a) consent to (i)
the delivery of the Financial Statements required by Section 6.1(a)(Quarterly
Reports) and the related Compliance Certificate required by Section
6.1(c)(Compliance Certificate) (x) for the Fiscal Quarter ended September 30,
2005, on or prior to April 14, 2006 (or, if earlier, the 59th day after written
notice with respect to such default is given to the Company under Section
6.01(d) of the Indenture governing the Senior Notes) and (y) for the Fiscal
Quarter ended March 31, 2006, on or prior to June 15, 2006 and (ii) the delivery
of the Financial Statements and related accountant's certificate required by
Section 6.1(b)(Annual Reports) and the related Compliance Certificate required
by Section 6.1(c)(Compliance Certificate) for the Fiscal Year ended December 31,
2005, on or prior to May 31, 2006 and (b) waive any Default or Event of Default
arising under Section 6.1(a)(Quarterly Reports), Section 6.1(b)(Annual Reports)
or Section 6.1(c)(Compliance Certificate) solely as a result of the delay in
delivery of the reports required thereunder as contemplated hereunder; provided,
however, that nothing contained in this Waiver shall be construed as a waiver of
any other Default or Event of Default, including, without limitation, any such
Default or Event of Default arising under Section 9.1(e) (Events of Default).

<PAGE>

     Section 2. Conditions Precedent. This Waiver shall become effective as of
the date (the "Effective Date") on which each of the following conditions
precedent shall have been satisfied or duly waived:

     (a)  Certain Documents. The Administrative Agent shall have received each
of the following, in form and substance satisfactory to the Administrative
Agent:

          (i)   this Waiver, duly executed by the Company, on behalf of itself
 and each Loan Party, and the Administrative Agent;

          (ii)  an Acknowledgment and Consent, in the form set forth hereto as
Exhibit A, duly executed by each of the Requisite Lenders;

          (iii) such additional documentation as the Administrative Agent may
reasonably require.

     (b)  Payment of Fees Costs and Expenses. The Administrative Agent and the
Lenders shall have received payment of all fees, costs and expenses, including,
without limitation, all fees, costs and expenses of the Administrative Agent and
the Lenders (including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent) in connection
with this Waiver, the Credit Agreement and each other Loan Document, as required
by Section 4 and Section 5 hereof.

     (c)  Representations and Warranties. Each of the representations and
warranties contained in Section 3 below shall be true and correct.

     (d)  No Default or Event of Default. After giving effect to this Waiver, no
Default or Event of Default shall have occurred and be continuing.

     Section 3. Representations and Warranties. The Company, on behalf of itself
and each Loan Party, hereby represents and warrants to the Administrative Agent
and each Lender, with respect to all Loan Parties, as follows:

     (a)  After giving effect to this Waiver, each of the representations and
warranties in the Credit Agreement and in the other Loan Documents are true and
correct in all material respects on and as of the date hereof as though made on
and as of such date, except to the extent that any such representation or
warranty expressly relates to an earlier date and except for changes therein
expressly permitted by the Credit Agreement.

     (b)  The execution, delivery and performance by the Company of this Waiver
have been duly authorized by all requisite corporate, action and will not
violate the articles of incorporation or bylaws (or other constituent documents)
of the Company.

     (c)  After giving effect to this Waiver, no Default or Event of Default has
occurred and is continuing as of the date hereof.

     Section 4. Fees. As consideration for the execution of this Waiver, the
Company, on behalf of each Borrower, agrees to pay to the Administrative Agent
for the account of each Lender for which the Administrative Agent shall have
received (by facsimile or otherwise) an executed Acknowledgment and Consent (or
a release from escrow of an Acknowledgment and Consent previously delivered in
escrow) with respect to this Waiver by 12 p.m. (New York Time) on February 8,
2006 (or such later date or time as the Administrative Agent and the Borrowers
may agree), a waiver fee equal to 0.075% of such Lender's aggregate Commitments
then in effect.

                                        2
<PAGE>

     Section 5. Costs and Expenses. As provided in Section 11.3(a) (Costs and
Expenses) of the Credit Agreement, the Company, on behalf of each Borrower,
agrees to reimburse the Administrative Agent for all reasonable fees, costs and
expenses, including the reasonable fees, costs and expenses of counsel or other
advisors for advice, assistance or other representation in connection with this
Waiver.

     Section 6. Reference to and Effect on the Loan Documents.

     (a)  As of the Effective Date, each reference in the Credit Agreement and
the other Loan Documents to "this Agreement," "hereunder," "hereof," "herein,"
or words of like import, and each reference in the other Loan Documents to the
Credit Agreement (including, without limitation, by means of words like
"thereunder", "thereof" and words of like import), shall mean and be a reference
to the Credit Agreement as amended and as waived hereby with respect to the
certain requirements outlined above, and this Waiver and the Credit Agreement
shall be read together and construed as a single instrument.

     (b)  Except as expressly amended hereby, all of the terms and provisions of
the Credit Agreement and all other Loan Documents are and shall remain in full
force and effect and are hereby ratified and confirmed.

     (c)  The execution, delivery and effectiveness of this Waiver shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of the Administrative Agent, any Lender or any Issuer under the Credit
Agreement or any Loan Document, or constitute a waiver or amendment of any other
provision of the Credit Agreement or any Loan Document except as and to the
extent expressly set forth herein.

     (d)  The Company, on behalf of itself and each Loan Party, hereby confirms
that the guaranties, security interests and liens granted pursuant to the Loan
Documents continue to guarantee and secure the Obligations as set forth in the
Loan Documents and that such guaranties, security interests and liens remain in
full force and effect.

     Section 7. Counterparts. This Waiver may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Receipt by the
Administrative Agent of a facsimile copy of an executed signature page hereof
shall constitute receipt by the Administrative Agents of an executed counterpart
of this Waiver.

     Section 8. Governing Law. This Waiver and the rights and obligations of the
parties hereto shall be governed by, and construed and interpreted in accordance
with, the law of the State of New York.

     Section 9. Headings. Section headings contained in this Waiver are included
herein for convenience of reference only and shall not constitute a part of this
Waiver for any other purposes.

                                        3
<PAGE>

     Section 10. Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS WAIVER OR
ANY OTHER LOAN DOCUMENT.

                            [SIGNATURE PAGES FOLLOW]

                                        4
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be executed by
their respective officers and members thereunto duly authorized, on the date
indicated below.

                                             NOVELIS INC.
                                             as Borrower and Guarantor

                                             By:  /s/  Orville Lunking
                                                  ------------------------------
                                                  Orville Lunking
                                                  Vice President and Treasurer

                                        5
<PAGE>

                                             CITICORP NORTH AMERICA, INC.,
                                             as Administrative Agent under the
                                             Credit Agreement

                                             By:  /s/  Arnold Y. Wong
                                                  ------------------------------
                                                  Arnold Y. Wong
                                                  Vice President
                                                  February 9, 2006

                                        6

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