MFB CORP
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<TYPE>EX-10
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<FILENAME>guaranteeagreements.txt
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1218505.1
MFB Corp./Guarantee Agreement





                               GUARANTEE AGREEMENT

                                 by and between

                                    MFB CORP.

                                       and

                            WILMINGTON TRUST COMPANY

                            Dated as of July 29, 2005






<PAGE>


                                       16
1218505.1
MFB Corp./Guarantee Agreement


1218505.1
MFB Corp./Guarantee Agreement
                               GUARANTEE AGREEMENT

         This GUARANTEE AGREEMENT (this "Guarantee"), dated as of July 29, 2005,
is executed and delivered by MFB Corp., an Indiana corporation (the
"Guarantor"), and Wilmington Trust Company, a Delaware banking corporation, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of MFBC
Statutory Trust I, a Delaware statutory trust (the "Issuer").

         WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of the date hereof among Wilmington Trust Company, not
in its individual capacity but solely as institutional trustee, the
administrators of the Issuer named therein, the Guarantor, as sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof those undivided beneficial
interests, having an aggregate liquidation amount of $5,000,000.00 (the "Capital
Securities"); and

         WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay to the Holders of Capital
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein;

         NOW, THEREFORE, in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.

ARTICLE I

                         DEFINITIONS AND INTERPRETATION

Section 1.1.Definitions and Interpretation.  In this Guarantee, unless the
context otherwise requires:
                  ------------------------------

(a) capitalized terms used in this Guarantee but not defined in the preamble
above have the respective meanings assigned to them in this Section 1.1;

(b) a term defined anywhere in this Guarantee has the same meaning throughout;

(c) all references to "the Guarantee" or "this Guarantee" are to this Guarantee
as modified, supplemented or amended from time to time;

(d) all references in this Guarantee to "Articles" or "Sections" are to Articles
or Sections of this Guarantee, unless otherwise specified;

(e) terms defined in the Declaration as at the date of execution of this
Guarantee have the same meanings when used in this Guarantee, unless otherwise
defined in this Guarantee or unless the context otherwise requires; and

(f) a reference to the singular includes the plural and vice versa.

         "Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.

         "Beneficiaries" means any Person to whom the Issuer is or hereafter
becomes indebted or liable.

         "Capital Securities" has the meaning set forth in the recitals to this
Guarantee.

         "Common Securities" means the common securities issued by the Issuer to
the Guarantor pursuant to the Declaration.

         "Corporate Trust Office" means the office of the Guarantee Trustee at
which the corporate trust business of the Guarantee Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Guarantee is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-1600, Attention: Corporate Trust
Administration.

         "Covered Person" means any Holder of Capital Securities.
          --------------

         "Debentures" means the debt securities of the Guarantor designated the
Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures due 2035
held by the Institutional Trustee (as defined in the Declaration) of the Issuer.

         "Declaration Event of Default" means an "Event of Default" as defined
in the Declaration.

         "Event of Default" has the meaning set forth in Section 2.4(a).

         "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration) which are required to be paid on such Capital Securities to
the extent the Issuer shall have funds available therefor, (ii) the Redemption
Price to the extent the Issuer has funds available therefor, with respect to any
Capital Securities called for redemption by the Issuer, (iii) the Special
Redemption Price to the extent the Issuer has funds available therefor, with
respect to Capital Securities redeemed upon the occurrence of a Special Event,
and (iv) upon a voluntary or involuntary liquidation, dissolution, winding-up or
termination of the Issuer (other than in connection with the distribution of
Debentures to the Holders of the Capital Securities in exchange therefor as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Capital Securities to the
date of payment, to the extent the Issuer shall have funds available therefor,
and (b) the amount of assets of the Issuer remaining available for distribution
to Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution").

         "Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.

         "Guarantor" means MFB Corp. and each of its successors and assigns.
          ---------

         "Holder" means any holder, as registered on the books and records of
the Issuer, of any Capital Securities; provided, however, that, in determining
whether the Holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.

         "Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Guarantee
Trustee.

         "Indenture" means the Indenture dated as of the date hereof between the
Guarantor and Wilmington Trust Company, not in its individual capacity but
solely as trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued to the institutional trustee of the Issuer.

         "Issuer" has the meaning set forth in the opening paragraph to this
Guarantee.

         "Liquidation Distribution" has the meaning set forth in the definition
of "Guarantee Payments" herein.

         "Majority in liquidation amount of the Capital Securities" means
Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Capital
Securities then outstanding.

         "Obligations" means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer other than obligations of
the Issuer to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.

         "Officer's Certificate" means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:

(a)      a statement that the officer signing the Officer's Certificate has read
         the covenant or condition and the definitions relating thereto;

(b)      a brief statement of the nature and scope of the examination or
         investigation undertaken by the officer in rendering the Officer's
         Certificate;

(c)      a statement that the officer has made such examination or investigation
         as, in such officer's opinion, is necessary to enable such officer to
         express an informed opinion as to whether or not such covenant or
         condition has been complied with; and

(d)      a statement as to whether, in the opinion of the officer, such
         condition or covenant has been complied with.

         "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

         "Redemption Price" has the meaning set forth in the Indenture.

         "Responsible Officer" means, with respect to the Guarantee Trustee, any
officer within the Corporate Trust Office of the Guarantee Trustee including any
Vice President, Assistant Vice President, Secretary, Assistant Secretary or any
other officer of the Guarantee Trustee customarily performing functions similar
to those performed by any of the above designated officers and also, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.

         "Special Event" has the meaning set forth in the Indenture.

         "Special Redemption Price" has the meaning set forth in the Indenture.

         "Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

   "Trust Securities" means the Common Securities and the Capital Securities.
          ----------------

ARTICLE II

                          POWERS, DUTIES AND RIGHTS OF
                                GUARANTEE TRUSTEE

Section 2.1.      Powers and Duties of the Guarantee Trustee.

(a)      This Guarantee shall be held by the Guarantee Trustee for the benefit
         of the Holders of the Capital Securities, and the Guarantee Trustee
         shall not transfer this Guarantee to any Person except a Holder of
         Capital Securities exercising his or her rights pursuant to Section
         4.4(b) or to a Successor Guarantee Trustee on acceptance by such
         Successor Guarantee Trustee of its appointment to act as Successor
         Guarantee Trustee. The right, title and interest of the Guarantee
         Trustee shall automatically vest in any Successor Guarantee Trustee,
         and such vesting and cessation of title shall be effective whether or
         not conveyancing documents have been executed and delivered pursuant to
         the appointment of such Successor Guarantee Trustee.

(b)      If an Event of Default actually known to a Responsible Officer of the
         Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
         shall enforce this Guarantee for the benefit of the Holders of the
         Capital Securities.

(c)      The Guarantee Trustee, before the occurrence of any Event of Default
         and after curing all Events of Default that may have occurred, shall
         undertake to perform only such duties as are specifically set forth in
         this Guarantee, and no implied covenants shall be read into this
         Guarantee against the Guarantee Trustee. In case an Event of Default
         has occurred (that has not been waived pursuant to Section 2.4) and is
         actually known to a Responsible Officer of the Guarantee Trustee, the
         Guarantee Trustee shall exercise such of the rights and powers vested
         in it by this Guarantee, and use the same degree of care and skill in
         its exercise thereof, as a prudent person would exercise or use under
         the circumstances in the conduct of his or her own affairs.

(d)      No provision of this Guarantee shall be construed to relieve the
         Guarantee Trustee from liability for its own negligent action, its own
         negligent failure to act, or its own willful misconduct, except that:

(i)      prior to the occurrence of any Event of Default and after the curing or
         waiving of all such Events of Default that may have occurred:

(A)      the duties and obligations of the Guarantee Trustee shall be determined
         solely by the express provisions of this Guarantee, and the Guarantee
         Trustee shall not be liable except for the performance of such duties
         and obligations as are specifically set forth in this Guarantee, and no
         implied covenants or obligations shall be read into this Guarantee
         against the Guarantee Trustee; and

(B)      in the absence of bad faith on the part of the Guarantee Trustee, the
         Guarantee Trustee may conclusively rely, as to the truth of the
         statements and the correctness of the opinions expressed therein, upon
         any certificates or opinions furnished to the Guarantee Trustee and
         conforming to the requirements of this Guarantee; but in the case of
         any such certificates or opinions that by any provision hereof are
         specifically required to be furnished to the Guarantee Trustee, the
         Guarantee Trustee shall be under a duty to examine the same to
         determine whether or not they conform to the requirements of this
         Guarantee;

(ii)     the Guarantee Trustee shall not be liable for any error of judgment
         made in good faith by a Responsible Officer of the Guarantee Trustee,
         unless it shall be proved that such Responsible Officer of the
         Guarantee Trustee or the Guarantee Trustee was negligent in
         ascertaining the pertinent facts upon which such judgment was made;

(iii)    the Guarantee Trustee shall not be liable with respect to any action
         taken or omitted to be taken by it in good faith in accordance with the
         written direction of the Holders of not less than a Majority in
         liquidation amount of the Capital Securities relating to the time,
         method and place of conducting any proceeding for any remedy available
         to the Guarantee Trustee, or relating to the exercise of any trust or
         power conferred upon the Guarantee Trustee under this Guarantee; and

(iv)     no provision of this Guarantee shall require the Guarantee Trustee to
         expend or risk its own funds or otherwise incur personal financial
         liability in the performance of any of its duties or in the exercise of
         any of its rights or powers, if the Guarantee Trustee shall have
         reasonable grounds for believing that the repayment of such funds is
         not reasonably assured to it under the terms of this Guarantee or
         security and indemnity, reasonably satisfactory to the Guarantee
         Trustee, against such risk or liability is not reasonably assured to
         it.

Section 2.2.      Certain Rights of Guarantee Trustee.

(a)      Subject to the provisions of Section 2.1:

(i)      The Guarantee Trustee may conclusively rely, and shall be fully
         protected in acting or refraining from acting upon, any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         direction, consent, order, bond, debenture, note, other evidence of
         indebtedness or other paper or document believed by it to be genuine
         and to have been signed, sent or presented by the proper party or
         parties.

(ii)     Any direction or act of the Guarantor contemplated by this Guarantee
         shall be sufficiently evidenced by an Officer's Certificate.

(iii)    Whenever, in the administration of this Guarantee, the Guarantee
         Trustee shall deem it desirable that a matter be proved or established
         before taking, suffering or omitting any action hereunder, the
         Guarantee Trustee (unless other evidence is herein specifically
         prescribed) may, in the absence of bad faith on its part, request and
         conclusively rely upon an Officer's Certificate of the Guarantor which,
         upon receipt of such request, shall be promptly delivered by the
         Guarantor.

(iv)     The Guarantee Trustee shall have no duty to see to any recording,
         filing or registration of any instrument (or any re-recording, refiling
         or re-registration thereof).

(v)      The Guarantee Trustee may consult with counsel of its selection, and
         the advice or opinion of such counsel with respect to legal matters
         shall be full and complete authorization and protection in respect of
         any action taken, suffered or omitted by it hereunder in good faith and
         in accordance with such advice or opinion. Such counsel may be counsel
         to the Guarantor or any of its Affiliates and may include any of its
         employees. The Guarantee Trustee shall have the right at any time to
         seek instructions concerning the administration of this Guarantee from
         any court of competent jurisdiction.

(vi)    The  Guarantee  Trustee  shall be under no obligation to exercise any
        of the rights or powers vested in it
        by this  Guarantee at the request or direction  of any Holder,  unless
        such Holder shall have  provided to
        the Guarantee  Trustee such security and  indemnity,  reasonably
        satisfactory  to the Guarantee  Trustee,
        against the costs,  expenses  (including  attorneys'  fees and expenses
        and the expenses of the  Guarantee
        Trustee's  agents,  nominees or custodians) and liabilities that might
        be incurred by it in complying with
        such request or  direction,  including  such  reasonable  advances as
        may be  requested  by the  Guarantee
        Trustee;  provided,  however,  that  nothing  contained  in this
        Section  2.2(a)(vi)  shall  relieve  the
                   --------   -------
         Guarantee  Trustee,  upon the occurrence of an Event of Default,  of
         its obligation to exercise the rights
         and powers vested in it by this Guarantee.

(vii)    The Guarantee Trustee shall not be bound to make any investigation into
         the facts or matters stated in any resolution, certificate, statement,
         instrument, opinion, report, notice, request, direction, consent,
         order, bond, debenture, note, other evidence of indebtedness or other
         paper or document, but the Guarantee Trustee, in its discretion, may
         make such further inquiry or investigation into such facts or matters
         as it may see fit.

(viii)   The Guarantee Trustee may execute any of the trusts or powers hereunder
         or perform any duties hereunder either directly or by or through
         agents, nominees, custodians or attorneys, and the Guarantee Trustee
         shall not be responsible for any misconduct or negligence on the part
         of any agent or attorney appointed with due care by it hereunder.

(ix)     Any action taken by the Guarantee Trustee or its agents hereunder shall
         bind the Holders of the Capital Securities, and the signature of the
         Guarantee Trustee or its agents alone shall be sufficient and effective
         to perform any such action. No third party shall be required to inquire
         as to the authority of the Guarantee Trustee to so act or as to its
         compliance with any of the terms and provisions of this Guarantee, both
         of which shall be conclusively evidenced by the Guarantee Trustee's or
         its agent's taking such action.

(x)      Whenever in the administration of this Guarantee the Guarantee Trustee
         shall deem it desirable to receive instructions with respect to
         enforcing any remedy or right or taking any other action hereunder, the
         Guarantee Trustee (i) may request instructions from the Holders of a
         Majority in liquidation amount of the Capital Securities, (ii) may
         refrain from enforcing such remedy or right or taking such other action
         until such instructions are received, and (iii) shall be protected in
         conclusively relying on or acting in accordance with such instructions.

(xi)     The Guarantee Trustee shall not be liable for any action taken,
         suffered, or omitted to be taken by it in good faith, without
         negligence, and reasonably believed by it to be authorized or within
         the discretion or rights or powers conferred upon it by this Guarantee.

(b)      No provision of this Guarantee shall be deemed to impose any duty or
         obligation on the Guarantee Trustee to perform any act or acts or
         exercise any right, power, duty or obligation conferred or imposed on
         it, in any jurisdiction in which it shall be illegal or in which the
         Guarantee Trustee shall be unqualified or incompetent in accordance
         with applicable law to perform any such act or acts or to exercise any
         such right, power, duty or obligation. No permissive power or authority
         available to the Guarantee Trustee shall be construed to be a duty.

Section 2.3. Not Responsible for Recitals or Issuance of Guarantee. The recitals
contained in this Guarantee shall be taken as the statements of the Guarantor,
and the Guarantee Trustee does not assume any responsibility for their
correctness. The Guarantee Trustee makes no representation as to the validity or
sufficiency of this Guarantee.

Section 2.4.      Events of Default; Waiver.

(a) An Event of Default under this Guarantee will occur upon the failure of the
Guarantor to perform any of its payment or other obligations hereunder.

(b) The Holders of a Majority in liquidation amount of the Capital Securities
may, voting or consenting as a class, on behalf of the Holders of all of the
Capital Securities, waive any past Event of Default and its consequences. Upon
such waiver, any such Event of Default shall cease to exist, and shall be deemed
to have been cured, for every purpose of this Guarantee, but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon.

Section 2.5.      Events of Default; Notice.

(a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event
of Default, transmit by mail, first class postage prepaid, to the Holders of the
Capital Securities and the Guarantor, notices of all Events of Default actually
known to a Responsible Officer of the Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, however, that the
Guarantee Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Guarantee Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the Capital
Securities.

(b) The Guarantee Trustee shall not be deemed to have knowledge of any Event of
Default unless the Guarantee Trustee shall have received written notice from the
Guarantor or a Holder of the Capital Securities (except in the case of a payment
default), or a Responsible Officer of the Guarantee Trustee charged with the
administration of this Guarantee shall have obtained actual knowledge thereof.

ARTICLE III

                                GUARANTEE TRUSTEE

Section 3.1.      Guarantee Trustee; Eligibility.

(a)      There shall at all times be a Guarantee Trustee which shall:

(i)      not be an Affiliate of the Guarantor, and

(ii)    be a  corporation  organized  and doing  business  under the laws of the
        United  States of America or any
        State or  Territory  thereof or of the  District  of  Columbia,  or
        Person  authorized  under such laws to
        exercise  corporate  trust  powers,  having a combined  capital  and
        surplus of at least  50 million  U.S.
        dollars  ($50,000,000),  and subject to  supervision  or  examination
        by Federal,  State,  Territorial or
        District of Columbia  authority.  If such  corporation  publishes
        reports of condition at least annually,
        pursuant to law or to the  requirements  of the  supervising  or
        examining  authority  referred to above,
        then, for the purposes of this Section  3.1(a)(ii),  the combined
        capital and surplus of such corporation
        shall be  deemed  to be its  combined  capital  and  surplus  as set
        forth in its most  recent  report of
        condition so published.

(b)      If at any time the Guarantee Trustee shall cease to be eligible to so
         act under Section 3.1(a), the Guarantee Trustee shall immediately
         resign in the manner and with the effect set out in Section 3.2(c).

(c)      If the Guarantee Trustee has or shall acquire any "conflicting
         interest" within the meaning of Section 310(b) of the Trust Indenture
         Act, the Guarantee Trustee shall either eliminate such interest or
         resign to the extent and in the manner provided by, and subject to this
         Guarantee.

Section 3.2.      Appointment, Removal and Resignation of Guarantee Trustee.

(a) Subject to Section 3.2(b), the Guarantee Trustee may be appointed or removed
without cause at any time by the Guarantor except during an Event of Default.

(b) The Guarantee Trustee shall not be removed in accordance with Section 3.2(a)
until a Successor Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Guarantee Trustee
and delivered to the Guarantor.

(c) The Guarantee Trustee appointed to office shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.

(d) If no Successor Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 3.2 within 60 days after delivery of an
instrument of removal or resignation, the Guarantee Trustee resigning or being
removed may petition any court of competent jurisdiction for appointment of a
Successor Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.

(e) No Guarantee Trustee shall be liable for the acts or omissions to act of any
Successor Guarantee Trustee.

(f) Upon termination of this Guarantee or removal or resignation of the
Guarantee Trustee pursuant to this Section 3.2, the Guarantor shall pay to the
Guarantee Trustee all amounts owing to the Guarantee Trustee under Sections 7.2
and 7.3 accrued to the date of such termination, removal or resignation.

ARTICLE IV

                                    GUARANTEE

Section 4.1.      Guarantee.

(a) The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense (except the defense
of payment by the Issuer), right of set-off or counterclaim that the Issuer may
have or assert. The Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Issuer to pay such amounts to the Holders.

(b) The Guarantor hereby also agrees to assume any and all Obligations of the
Issuer and in the event any such Obligation is not so assumed, subject to the
terms and conditions hereof, the Guarantor hereby irrevocably and
unconditionally guarantees to each Beneficiary the full payment, when and as
due, of any and all Obligations to such Beneficiaries. This Guarantee is
intended to be for the benefit of, and to be enforceable by, all such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.

Section 4.2. Waiver of Notice and Demand. The Guarantor hereby waives notice of
acceptance of this Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.

Section 4.3. Obligations Not Affected. The obligations, covenants, agreements
and duties of the Guarantor under this Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:

(a) the release or waiver, by operation of law or otherwise, of the performance
or observance by the Issuer of any express or implied agreement, covenant, term
or condition relating to the Capital Securities to be performed or observed by
the Issuer;

(b) the extension of time for the payment by the Issuer of all or any portion of
the Distributions, Redemption Price, Special Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Capital Securities
or the extension of time for the performance of any other obligation under,
arising out of or in connection with, the Capital Securities (other than an
extension of time for payment of Distributions, Redemption Price, Special
Redemption Price, Liquidation Distribution or other sum payable that results
from the extension of any interest payment period on the Debentures or any
extension of the maturity date of the Debentures permitted by the Indenture);

(c) any failure, omission, delay or lack of diligence on the part of the Holders
to enforce, assert or exercise any right, privilege, power or remedy conferred
on the Holders pursuant to the terms of the Capital Securities, or any action on
the part of the Issuer granting indulgence or extension of any kind;

(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;

(e) any invalidity of, or defect or deficiency in, the Capital Securities;

(f) the settlement or compromise of any obligation guaranteed hereby or hereby
incurred; or

(g) any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a guarantor, it being the intent of this
Section 4.3 that the obligations of the Guarantor hereunder shall be absolute
and unconditional under any and all circumstances.

         There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

Section 4.4.      Rights of Holders.

(a) The Holders of a Majority in liquidation amount of the Capital Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee in respect of this Guarantee
or to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under this Guarantee; provided, however, that (subject to Section 2.1)
the Guarantee Trustee shall have the right to decline to follow any such
direction if the Guarantee Trustee being advised by counsel determines that the
action or proceeding so directed may not lawfully be taken or if the Guarantee
Trustee in good faith by its board of directors or trustees, executive
committees or a trust committee of directors or trustees and/or Responsible
Officers shall determine that the action or proceedings so directed would
involve the Guarantee Trustee in personal liability.

(b) Any Holder of Capital Securities may institute a legal proceeding directly
against the Guarantor to enforce the Guarantee Trustee's rights under this
Guarantee, without first instituting a legal proceeding against the Issuer, the
Guarantee Trustee or any other Person. The Guarantor waives any right or remedy
to require that any such action be brought first against the Issuer, the
Guarantee Trustee or any other Person before so proceeding directly against the
Guarantor.

Section 4.5. Guarantee of Payment. This Guarantee creates a guarantee of payment
and not of collection.

Section 4.6. Subrogation. The Guarantor shall be subrogated to all (if any)
rights of the Holders of Capital Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee, if, after
giving effect to any such payment, any amounts are due and unpaid under this
Guarantee. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.

Section 4.7. Independent Obligations. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Issuer with
respect to the Capital Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee notwithstanding the occurrence of any event referred to
in subsections (a) through (g), inclusive, of Section 4.3 hereof.

Section 4.8. Enforcement by a Beneficiary. A Beneficiary may enforce the
obligations of the Guarantor contained in Section 4.1(b) directly against the
Guarantor and the Guarantor waives any right or remedy to require that any
action be brought against the Issuer or any other person or entity before
proceeding against the Guarantor. The Guarantor shall be subrogated to all
rights (if any) of any Beneficiary against the Issuer in respect of any amounts
paid to the Beneficiaries by the Guarantor under this Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee, if at the
time of any such payment, and after giving effect to such payment, any amounts
are due and unpaid under this Guarantee.

ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

Section 5.1. Limitation of Transactions. So long as any Capital Securities
remain outstanding, if (a) there shall have occurred and be continuing an Event
of Default or a Declaration Event of Default or (b) the Guarantor shall have
selected an Extension Period as provided in the Declaration and such period, or
any extension thereof, shall have commenced and be continuing, then the
Guarantor shall not and shall not permit any Affiliate to (x) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Guarantor's or such Affiliate's
capital stock (other than payments of dividends or distributions to the
Guarantor) or make any guarantee payments with respect to the foregoing or (y)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Guarantor or any Affiliate that
rank pari passu in all respects with or junior in interest to the Debentures
(other than, with respect to clauses (x) and (y) above, (i) repurchases,
redemptions or other acquisitions of shares of capital stock of the Guarantor in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Guarantor (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the occurrence of the Event of Default, Declaration Event of Default or
Extension Period, as applicable, (ii) as a result of any exchange or conversion
of any class or series of the Guarantor's capital stock (or any capital stock of
a subsidiary of the Guarantor) for any class or series of the Guarantor's
capital stock or of any class or series of the Guarantor's indebtedness for any
class or series of the Guarantor's capital stock, (iii) the purchase of
fractional interests in shares of the Guarantor's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) any declaration of a dividend in connection with
any stockholders' rights plan, or the issuance of rights, stock or other
property under any stockholders' rights plan, or the redemption or repurchase of
rights pursuant thereto, (v) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with or junior to such
stock and any cash payments in lieu of fractional shares issued in connection
therewith, or (vi) payments under this Guarantee).

Section 5.2. Ranking. This Guarantee will constitute an unsecured obligation of
the Guarantor and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined in the Indenture) of the
Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees
to the foregoing provisions of this Guarantee and the other terms set forth
herein.

         The right of the Guarantor to participate in any distribution of assets
of any of its subsidiaries upon any such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Guarantor may itself be recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under this
Guarantee will be effectively subordinated to all existing and future
liabilities of the Guarantor's subsidiaries, and claimants should look only to
the assets of the Guarantor for payments hereunder. This Guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of the
Guarantor, including Senior Indebtedness of the Guarantor, under any indenture
that the Guarantor may enter into in the future or otherwise.

ARTICLE VI

                                   TERMINATION

Section 6.1. Termination. This Guarantee shall terminate as to the Capital
Securities (i) upon full payment of the Redemption Price or Special Redemption
Price of all Capital Securities then outstanding, (ii) upon the distribution of
all of the Debentures to the Holders of all of the Capital Securities or (iii)
upon full payment of the amounts payable in accordance with the Declaration upon
dissolution of the Issuer. This Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any Holder of Capital
Securities must restore payment of any sums paid under the Capital Securities or
under this Guarantee.

ARTICLE VII

                                 INDEMNIFICATION

Section 7.1.      Exculpation.

(a) No Indemnified Person shall be liable, responsible or accountable in damages
or otherwise to the Guarantor or any Covered Person for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Guarantee and in a
manner that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee or by
law, except that an Indemnified Person shall be liable for any such loss, damage
or claim incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.

(b) An Indemnified Person shall be fully protected in relying in good faith upon
the records of the Issuer or the Guarantor and upon such information, opinions,
reports or statements presented to the Issuer or the Guarantor by any Person as
to matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who, if selected by such
Indemnified Person, has been selected with reasonable care by such Indemnified
Person, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Capital Securities might properly be paid.

Section 7.2.      Indemnification.

(a) The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any and all loss, liability, damage,
claim or expense incurred without negligence or willful misconduct on the part
of the Indemnified Person, arising out of or in connection with the acceptance
or administration of the trust or trusts hereunder, including, but not limited
to, the costs and expenses (including reasonable legal fees and expenses) of the
Indemnified Person defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of the
Indemnified Person's powers or duties hereunder. The obligation to indemnify as
set forth in this Section 7.2 shall survive the resignation or removal of the
Guarantee Trustee and the termination of this Guarantee.

(b) Promptly after receipt by an Indemnified Person under this Section 7.2 of
notice of the commencement of any action, such Indemnified Person will, if a
claim in respect thereof is to be made against the Guarantor under this Section
7.2, notify the Guarantor in writing of the commencement thereof; but the
failure so to notify the Guarantor (i) will not relieve the Guarantor from
liability under paragraph (a) above unless and to the extent that the Guarantor
did not otherwise learn of such action and such failure results in the
forfeiture by the Guarantor of substantial rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Indemnified
Person other than the indemnification obligation provided in paragraph (a)
above. The Guarantor shall be entitled to appoint counsel of the Guarantor's
choice at the Guarantor's expense to represent the Indemnified Person in any
action for which indemnification is sought (in which case the Guarantor shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person or Persons except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
Indemnified Person. Notwithstanding the Guarantor's election to appoint counsel
to represent the Guarantor in an action, the Indemnified Person shall have the
right to employ separate counsel (including local counsel), and the Guarantor
shall bear the reasonable fees, costs and expenses of such separate counsel if
(i) the use of counsel chosen by the Guarantor to represent the Indemnified
Person would present such counsel with a conflict of interest, (ii) the actual
or potential defendants in, or targets of, any such action include both the
Indemnified Person and the Guarantor and the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it and/or
other Indemnified Person(s) which are different from or additional to those
available to the Guarantor, (iii) the Guarantor shall not have employed counsel
satisfactory to the Indemnified Person to represent the Indemnified Person
within a reasonable time after notice of the institution of such action or (iv)
the Guarantor shall authorize the Indemnified Person to employ separate counsel
at the expense of the Guarantor. The Guarantor will not, without the prior
written consent of the Indemnified Persons, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the Indemnified Persons are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each Indemnified Person from all
liability arising out of such claim, action, suit or proceeding.

Section 7.3.     Compensation; Reimbursement of Expenses.  The Guarantor agrees:
                  ---------------------------------------

(a) to pay to the Guarantee Trustee from time to time such compensation for all
services rendered by it hereunder as the parties shall agree to from time to
time (which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust); and

(b) except as otherwise expressly provided herein, to reimburse the Guarantee
Trustee upon request for all reasonable expenses, disbursements and advances
incurred or made by it in accordance with any provision of this Guarantee
(including the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or willful misconduct.

         For purposes of clarification, this Section 7.3 does not contemplate
the payment by the Guarantor of acceptance or annual administration fees owing
to the Guarantee Trustee for services to be provided by the Guarantee Trustee
under this Guarantee or the fees and expenses of the Guarantee Trustee's counsel
in connection with the closing of the transactions contemplated by this
Guarantee. The provisions of this Section 7.3 shall survive the resignation or
removal of the Guarantee Trustee and the termination of this Guarantee.

ARTICLE VIII

                                  MISCELLANEOUS

Section 8.1. Successors and Assigns. All guarantees and agreements contained in
this Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Capital Securities then outstanding. Except in connection with any merger
or consolidation of the Guarantor with or into another entity or any sale,
transfer or lease of the Guarantor's assets to another entity, in each case, to
the extent permitted under the Indenture, the Guarantor may not assign its
rights or delegate its obligations under this Guarantee without the prior
approval of the Holders of at least a Majority in liquidation amount of the
Capital Securities.

Section 8.2. Amendments. Except with respect to any changes that do not
adversely affect the rights of Holders of the Capital Securities in any material
respect (in which case no consent of Holders will be required), this Guarantee
may be amended only with the prior approval of the Holders of not less than a
Majority in liquidation amount of the Capital Securities. The provisions of the
Declaration with respect to amendments thereof apply to the giving of such
approval.

Section 8.3. Notices. All notices provided for in this Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:

(a) If given to the Guarantee Trustee, at the Guarantee Trustee's mailing
address set forth below (or such other address as the Guarantee Trustee may give
notice of to the Holders of the Capital Securities and the Guarantor):

         Wilmington Trust Company
         Rodney Square North
         1100 North Market Street
         Wilmington, Delaware  19890-1600
         Attention:  Corporate Trust Administration
         Telecopy:  302-636-4140

(b) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the Holders
of the Capital Securities and to the Guarantee Trustee):

         MFB Corp.
         4100 Edison Lakes Parkway, Suite 300
         Mishawaka, Indiana  46546-0528
         Attention:  Charles J. Viater
         Telecopy:  574-273-7801

(c) If given to any Holder of the Capital Securities, at the address set forth
on the books and records of the Issuer.

         All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

Section 8.4. Benefit. This Guarantee is solely for the benefit of the
Beneficiaries and, subject to Section 2.1(a), is not separately transferable
from the Capital Securities.

Section 8.5. Governing Law. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW).

Section 8.6. Counterparts. This Guarantee may be executed in one or more
counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same instrument.

         Section 8.7 Separability. In case one or more of the provisions
contained in this Guarantee shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Guarantee, but this Guarantee
shall be construed as if such invalid or illegal or unenforceable provision had
never been contained herein.



                     Signatures appear on the following page



<PAGE>


         THIS GUARANTEE is executed as of the day and year first above written.



                                       MFB CORP., as Guarantor

                By: /s/ Charles J Viater
                  ------------------------------------------------------
                 Name: Charles J Viater
                 Title: President / CEO



                        WILMINGTON TRUST COMPANY, as Guarantee Trustee

               By: /s/ Christopher J Monigle
                 ------------------------------------------------------
               Name: Christopher J. Monigle
               Title: Assistant Vice President


</TEXT>
</DOCUMENT>
