Exhibit 10.14
INDEMNIFICATION AGREEMENT
     THIS INDEMNIFICATION AGREEMENT made and entered into as of this
                     day of                      2008 (the “Agreement”), by and
between FEDERAL HOME LOAN BANK OF DALLAS, a federally chartered corporation
(“Bank”), and                      (the “Director”).
RECITALS:
     WHEREAS, the Board of Directors of the Bank (the “Board”) believes that it
is reasonable, prudent, and necessary for the Bank contractually to obligate
itself to indemnify the Director to the fullest extent permitted by applicable
law in order to induce the Director to serve or continue to serve the Bank,
including the Director’s service as an officer, director, trustee, or other
official of organizations with which the Bank may have a contractual or other
relationship, free from undue concern that the Director will not be so
indemnified; and
     WHEREAS, Article VIII of the Bank’s Bylaws provides that the Bank will
indemnify officers and directors of the Bank in connection with their service as
officers, directors, and trustees of organizations on which they serve as
officers, directors, or trustees on behalf of or for the benefit of the Bank;
and
     WHEREAS, the Director is willing to serve, continue to serve, and take on
additional service for, or on behalf of, the Bank on the condition that the
Director be so indemnified as more fully set forth herein;
     NOW, THEREFORE, in consideration of the promises and the covenants in this
Agreement, and intending to be legally bound, the Bank and the Director do
hereby covenant and agree as follows:
     SECTION 1. Definitions. For purposes of this Agreement:
          (a) “Agent” shall mean any person who (i) is or was a director of the
Bank; or (ii) is or was serving at the request of, for the convenience of, or to
represent the interest of the Bank (including, without limitation, the Council
of Federal Home Loan Banks and any Federal Home Loan Bank System committee, and
their successors) as a director, officer, partner, employee, member, manager,
trustee or agent of another corporation, partnership, limited liability company,
joint venture, trust, agency, instrumentality or other enterprise.
          (b) “Business Day” shall mean any day that the Bank is open for
business.
          (c) “Disinterested Director” shall mean a director of the Bank who is
not and was not a party to the Proceeding in respect of which indemnification or
advancement of Expenses is being sought by the Director or any similar
Proceeding then pending.
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          (d) “Expenses” shall be broadly construed and shall include all direct
and indirect costs (including, without limitation, attorneys’ fees and
retainers, court costs, transcription costs, fees of experts, witness fees,
travel expenses, food and lodging expenses while traveling, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service, and
freight or other transportation fees and expenses) actually and reasonably
incurred, in connection with the investigation of, defense of, settlement of,
appeal of, or being or preparing to be a witness in (including being deposed or
preparing to be deposed) a Proceeding or the establishment or enforcement of a
right to indemnification under this Agreement, applicable law or otherwise;
provided, however, that “Expenses” shall not include any judgments, fines, or
amounts paid in settlement to the extent any amounts paid in respect of any
thereof are prohibited to be indemnified against by applicable law.
          (e) “Independent Counsel” shall mean a law firm or a member of a law
firm that neither is presently nor in the past three years has been retained to
represent (i) the Bank or the Director in any matter material to either party or
(ii) any other party to the Proceeding giving rise to a claim for
indemnification under this Agreement. Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who, under the applicable
standards of professional conduct then prevailing, would have a conflict of
interest in representing either the Bank or the Director in an action to
determine the Director’s right to indemnification under this Agreement.
          (f) “Liabilities” shall mean liabilities of any type whatsoever,
including, but not limited to, judgments, assessments, fines, taxes and
penalties (including those payable pursuant to the Employee Retirement Income
Security Act), and amounts paid in settlement (including, but not limited to,
all interest, assessments, fines, or other charges paid or payable in connection
with any of the foregoing).
          (g) “Proceeding” shall mean any threatened, pending or completed
action, hearing, claim, suit, arbitration, alternate dispute resolution
mechanism, investigation, administrative hearing, or any other proceeding,
whether civil, criminal, arbitrative, administrative or investigative
(including, without limitation, any action, suit, or proceeding by or in the
right of the Bank to procure a judgment in its favor) and whether formal or
informal, arising by reason of the fact that the Director is or was an Agent or
by reason of anything done or not done by the Director in the Director’s
capacity as an Agent.
     SECTION 2. Service as a Director. The Director agrees to serve as a
director of the Bank so long as the Director is qualified in accordance with the
applicable provisions of the charter and bylaws of the Bank and the Federal Home
Loan Bank Act and the rules and regulations promulgated thereunder and until
such time as the Director resigns or is removed from the Director’s position or
is disqualified to continue in the Director’s position (subject to any other
contractual obligation or other obligation imposed by operation of law). The
Bank shall have no obligation under this Agreement to continue the Director in
any position.
     SECTION 3. Indemnification. The Bank shall, to the fullest extent permitted
by applicable law and regulations, indemnify the Director whenever the Director
is or becomes a
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party, whether as a plaintiff acting with the approval of the Board, or as a
defendant, or is threatened to be made a party to or is involved (including,
without limitation, as a witness) in any Proceeding, including without
limitation any Proceeding brought by or in the right of the Bank, against all
Liabilities, loss, and Expenses actually and reasonably incurred or suffered by
the Director in connection with any Proceeding if, as determined in accordance
with Section 5, the Director acted in good faith and in a manner the Director
reasonably believed to be in or not opposed to the best interests of the Bank,
and, with respect to any Proceeding, had no reasonable cause to believe the
Director’s conduct was unlawful, except such Liabilities and Expenses as a court
of competent jurisdiction holds in a final, non-appealable judgment may not be
indemnified against or are incurred because of (a) the Director’s breach of the
Director’s duty of loyalty to the Bank or its stockholders, (b) any act or
omission by the Director which involves willful misconduct or knowing violation
of the criminal law, or (c) any transaction from which the Director derived any
improper personal benefit. No initial finding by the Board or its counsel,
Independent Counsel, arbitrators, or the stockholders of the Bank shall be
effective to deprive the Director of the protection of this indemnity, nor shall
a court to which the Director may apply for enforcement of this indemnity give
any weight to any such adverse finding in deciding any issue before it, as it is
intended that the Director shall be paid promptly by the Bank all amounts
necessary to effectuate the foregoing indemnity in full. The rights of
indemnification of the Director provided under this Agreement shall include,
without limitation, those rights set forth in Sections 4, 7, and 8 below.
     SECTION 4. Advancement of Expenses. All reasonable Expenses incurred by or
on behalf of the Director in defending a Proceeding, whether prior to or after
final disposition of a Proceeding (including without limitation any Proceeding
brought by or in the right of the Bank), shall be advanced by the Bank to the
Director within 10 Business Days after the receipt by the Secretary of the Bank
of (a) a written affirmation by the Director of the Director’s good faith belief
that the Director acted in good faith and in a manner the Director reasonably
believed to be in or not opposed to the best interests of the Bank, and, with
respect to any Proceeding, had no reasonable cause to believe the Director’s
conduct was unlawful and (b) a written undertaking by or on behalf of the
Director to repay all amounts paid or reimbursed only if it shall ultimately be
determined that the Director is not entitled to be indemnified by the Bank. The
Director’s entitlement to advancement of Expenses shall include Expenses
incurred in connection with any Proceeding that seeks a determination,
adjudication, or award in arbitration pursuant to this Agreement. The Director
shall not be required to repay any amounts paid or reimbursed by the Bank until
a final, non-appealable determination has been made that the Director is not
entitled to be indemnified by the Bank. The requests under this Section 4 shall
reasonably evidence the Expenses incurred by the Director in connection
therewith. The undertaking required by clause (b) of this Section 4 (i) shall be
an unlimited general obligation of such person, (ii) need not be secured, and
(iii) shall be accepted without reference to financial ability of the Director
to make repayment. Notwithstanding any other provision in this Agreement, to the
extent that the Director has been successful on the merits or otherwise in
defense of any Proceeding, the Director shall be indemnified against, and
entitled to reimbursement of, all Expenses actually and reasonably incurred by
the Director in connection therewith.
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     SECTION 5. Procedure for Determination of Entitlement to Indemnification.
          (a) Whenever the Director believes that the Director is entitled to
indemnification pursuant to this Agreement, the Director shall submit a written
request for indemnification to the Secretary of the Bank. The request shall
include all documentation or information necessary for the determination of
entitlement to indemnification that is reasonably available to the Director.
Determination of the Director’s entitlement to indemnification shall be made by
the Board or Independent Counsel not later than 30 Business Days after the date
on which a written request from the Director was received by the Secretary of
the Bank. The Secretary of the Bank shall, promptly upon receipt of the
Director’s request for indemnification, advise the Board in writing that the
Director has made such a request for indemnification.
          (b) The determination that indemnification of the Director is proper
in the circumstances shall be made (i) by the Board by a majority vote of a
quorum of the Disinterested Directors or (ii) if such a quorum is not
obtainable, or, even if obtainable, a quorum of Disinterested Directors so
directs, by Independent Counsel selected by the Board, which Independent Counsel
shall make the required determination in a written opinion, a copy of which
shall be furnished to the Bank, the Director, and each member of the Board.
     The Bank agrees to bear all Expenses actually and reasonably incurred by
the Director and all Expenses actually incurred by the Bank in connection with
the Director’s successfully establishing the Director’s right to indemnification
or advancement of Expenses, in whole or in part.
     SECTION 6. Presumption and Effect of Certain Proceedings. Upon making a
request for indemnification, the Director shall be presumed to be entitled to
indemnification under this Agreement and advancement of Expenses in connection
with any Proceeding, and the Bank shall have the burden of proof to overcome
that presumption in reaching any contrary determination. No initial finding by
the Board or by Independent Counsel shall be effective to deprive the Director
of the protection of this indemnity nor shall a court or other forum to which
the Director may apply for enforcement of this indemnity give any weight to any
such adverse finding in deciding any issue before it. If the person or persons
empowered to make the determination shall have failed to make the requested
determination within 30 Business Days after the date on which a written request
from the Director was received by the Secretary of the Bank, the required
determination of entitlement to indemnification shall be deemed to have been
made and the Director shall be absolutely entitled to indemnification and
advancement of Expenses in connection with any Proceeding under this Agreement,
absent (i) misrepresentation by the Director of a material fact in the request
for indemnification or advancement of Expenses in connection with any Proceeding
or (ii) a specific finding that all or any part of such indemnification or
advancement of Expenses in connection with any Proceeding is expressly
prohibited by law or this Agreement. The termination of any Proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that (i) the person
did not act in good faith and in a manner which the person reasonably believed
to be in or not opposed to the best interests of the Bank or (ii) with respect
to any Proceeding, had reasonable cause to believe that the person’s conduct was
unlawful.
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     SECTION 7. Remedies of the Director in Cases of Determination Not To
Indemnify or To Advance Expenses.
          (a) In the event that (i) the Bank denies the Director’s written claim
for indemnification, (ii) the Bank has not paid in full within 10 Business Days
after the requirements for the advancement of Expenses set forth in this
Agreement have been satisfied, (iii) the Bank has not paid an indemnification
claim in full within 10 Business Days after the Board or court determines that
indemnification of the Director is proper, or (iv) the Director otherwise seeks
enforcement of this Agreement, the Director may at any time thereafter apply to
any court of competent jurisdiction for an order directing the Bank to provide
indemnification or to make an advancement of Expenses.
          (b) If an initial determination is made or deemed to have been made
pursuant to the terms of this Agreement that the Director is entitled to
indemnification or advancement of Expenses or both, the Bank shall be bound by
such determination in the absence of (i) a misrepresentation of a material fact
by the Director or (ii) a specific finding (by a court of competent jurisdiction
that has become final) that all or any part of such indemnification is expressly
prohibited by law.
          (c) The Bank shall be precluded from asserting that the procedures and
presumptions of this Agreement are not valid, binding, and enforceable. The Bank
shall stipulate in any court or before any arbitrator that the Bank is bound by
all the provisions of this Agreement.
          (d) All Expenses actually and reasonably incurred by the Director in
connection with the Director’s request for indemnification under, seeking
enforcement of, or recovery of damages for breach of this Agreement shall be
borne and advanced by the Bank.
     SECTION 8. Other Rights to Indemnification. The Director’s rights of
indemnification and advancement of Expenses provided by this Agreement shall not
be deemed exclusive of any other rights to which the Director may now or in the
future be entitled under applicable law, the charter or bylaws of the Bank,
agreement, vote of directors or members, insurance or other financial
arrangements of the Bank with respect to the matters that are the subject of
this Agreement, or otherwise.
     SECTION 9. Limitations on Indemnity. The Bank shall not be liable under
this Agreement to make any payment to the Director to the extent that the
Director has already been reimbursed pursuant to such liability insurance as the
Bank may maintain for the Director’s benefit. Notwithstanding the availability
of such insurance, the Director also may claim indemnification from the Bank
pursuant to this Agreement by assigning to the Bank any claims under such
insurance to the extent the Director is paid by the Bank. The Director shall
reimburse the Bank for any sums the Director receives as indemnification from
other sources to the extent of any amount paid to the Director for that purpose
by the Bank. In addition to the foregoing limitation, except as otherwise
expressly provided in this Agreement, in connection with all or any part of a
Proceeding that is initiated or maintained by, against, or on behalf of the
Director,
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or any Proceeding by the Director against the Bank or any of its Agents, the
Bank shall not be liable under this Agreement to make any payment to the
Director in connection with any such Proceeding, unless such payment is
expressly required to be made under applicable law, was authorized by a majority
of the Disinterested Directors or is provided by the Bank, in its sole
discretion, pursuant to the powers vested in the Bank under applicable law.
     SECTION 10. Duration and Scope of Agreement; Binding Effect. This Agreement
shall continue so long as the Director shall be subject to any possible
Proceeding by reason of the fact that the Director is or was an Agent and shall
be applicable to Proceedings commenced or continued after execution of the
Agreement, except that the Agreement may be terminated or withdrawn by the Bank
upon 90 days’ prior written notice to the Director, but then only as to
Proceedings arising out of acts taken or failed to be taken more than 90 days
after such notice is actually received by the Director. If this Agreement is
terminated or withdrawn, the Director shall nevertheless be fully entitled to
the indemnification provided by this Agreement as to all actions taken or failed
to be taken prior to the expiration of such 90 days. This Agreement shall be
binding upon the Bank and its successors and assigns and shall inure to the
benefit of the Director and the Director’s spouse, assigns, heirs, devisees,
executors, administrators, and other legal representatives whether or not the
Director has ceased to be a director of the Bank. The Bank shall require and
cause any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all or substantially all of the Bank’s business
or assets expressly 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 if no
such succession had taken place.
     SECTION 11. Severability. If any provision of this Agreement (or any
portion thereof) shall be held to be invalid, illegal or unenforceable for any
reason whatsoever: (a) the validity, legality, and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby; and (b) to the fullest extent possible, the provisions of this
Agreement shall be construed so as to give effect to the intent manifested by
the provision held invalid, illegal, or unenforceable.
     SECTION 12. Identical Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against which enforceability is
sought need be produced to evidence the existence of this Agreement.
     SECTION 13. Interpretation of Agreement. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Director to the fullest extent now or hereafter permitted
by law.
     SECTION 14. Headings. The headings of the sections and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect its construction.
     SECTION 15. Modification and Waiver. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties to this
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Agreement. No waiver of any provision of this Agreement shall be deemed to
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver.
     SECTION 16. Notice and Defense of Claims. The Director agrees to notify the
Bank promptly in writing upon being notified of any matter that may be subject
to indemnification or advancement of Expenses hereunder or upon being served
with any summons, citation, subpoena, complaint, indictment, information, or
other document relating to any matter which may be subject to indemnification or
advancement of Expenses hereunder, whether civil, criminal, administrative, or
investigative; but the omission to notify the Bank will not relieve the Bank
from any obligation it may have to indemnify the Director if such omission does
not prejudice the Bank’s rights, and, if such omission does prejudice the Bank’s
rights, it will relieve the Bank from any obligation to indemnify the Director
only to the extent of such prejudice; nor will such omission relieve the Bank
from any obligation it may have to the Director other than under this Agreement.
With respect to any Proceeding about which the Director notifies the Bank:
          (a) The Bank will be entitled to participate in the Proceeding at its
own expense.
          (b) Except as otherwise provided below, the Bank jointly with any
other indemnifying party similarly notified will be entitled to assume the
defense of any or all of the Proceeding, with counsel reasonably satisfactory to
the Director. After notice from the Bank to the Director of its election to
assume the defense of any or all of the Proceeding, the Bank will not be liable
to the Director under this Agreement for any Expenses subsequently incurred by
the Director in connection with the defense of the Proceeding other than
reasonable costs of investigation or as otherwise provided in clauses (i), (ii),
and (iii) below.
          (i) The Director shall have the right to employ the Director’s own
counsel in any Proceeding, but the fees and expenses of such counsel incurred
after notice from the Bank of its assumption of the defense in such Proceeding
shall be at the expense of the Director unless (A) the employment of counsel by
the Director has been authorized by the Bank, (B) the Director shall have
reasonably concluded that (1) there is a conflict of interest between the Bank
and the Director in the conduct of the defense of the Proceeding, (2) there is a
conflict of interest between the Director and the other directors being
represented by a law firm as set forth in clause (ii) below, or (3) counsel is
not adequately representing the Director, or (C) the Bank shall not in fact have
employed counsel to assume the defense in such Proceeding, in each of which
cases the fees and expenses of the Director’s counsel shall be at the expense of
the Bank. The Bank shall not be entitled to assume the defense of any Proceeding
as to which the Director shall have reasonably made the conclusion provided for
in clauses (B)(1) and (B)(2) of the immediately preceding sentence.
          (ii) If (A) the Director together with a majority of all directors of
the Bank that are a party to the Proceeding or any similar Proceeding in respect
of which indemnification or advancement of Expenses is being sought by any of
such directors are
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able to agree on the selection of a law firm or a member of a law firm, the Bank
will pay the fees and expenses of such law firm or (B) the Director is the only
director of the Bank that is a party to a Proceeding in respect of which
indemnification or advancement of Expenses is being sought by a director of the
Bank, the Director may select a law firm or a member of a law firm and the Bank
will pay the fees and expenses of such law firm; provided, however, the Director
agrees that to the extent that the Director is added as a party to a Proceeding
to which another director of the Bank has already selected a law firm or a
member of a law firm, the Director may choose to be represented by such law firm
as well and the Bank will pay the fees and expenses of such law firm but if the
Director chooses to be represented by other counsel the fees and expenses of
such other counsel shall be at the expense of the Director.
          (iii) If the Bank or the Bank’s counsel shall determine that separate
counsel should be retained by the Director, the Director will retain such
separate counsel, and the Director agrees that the Bank’s counsel may continue
to represent the Bank in all matters.
          (c) The Bank shall not be liable to indemnify the Director under this
Agreement for any amounts paid in settlement of any action or claim effected
without the Bank’s written consent. The Bank shall not settle any action or
claim in any manner that would impose any penalty or limitation on the Director
without the Director’s prior written consent. Neither the Bank nor the Director
will unreasonably withhold consent to any proposed settlement.
     SECTION 17. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be unavailable to the
Director in whole or part, the Bank shall, in such an event, after taking into
account, among other things, contributions by other directors and officers of
the Bank pursuant to indemnification agreements or otherwise, and, in the
absence of personal enrichment, acts of intentional fraud or dishonesty, or
criminal conduct on the part of the Director, contribute to the payment of the
Director’s Expenses and Liabilities to the extent that, after other
contributions are taken into account, such Expenses and Liabilities exceed 5% of
the aggregate cash compensation paid to the Director for serving as a director
of the Bank during the 12 months preceding the commencement of the Proceeding.
     SECTION 18. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom the
notice or other communication shall have been directed or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is mailed:

         
     (a)
       If to the Director, to:    
 
       
 
 
 
   
 
       
 
 
 
   
 
       
 
 
 
   

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  (b)        If to the Bank, to:

Federal Home Loan Bank of Dallas
8500 Freeport Parkway South, Suite 600
Irving, Texas 75063
Attention: Secretary
With a copy to (which shall not constitute notice):
Federal Home Loan Bank of Dallas
8500 Freeport Parkway South, Suite 600
Irving, Texas 75063
Attention: General Counsel
or to such other address as may have been furnished to either party by the other
pursuant to this Section 18.
     SECTION 19. Subrogation. The Bank shall be subrogated to the rights of the
Director against third parties in respect of which (and to the extent) payments
of Expenses are made by the Bank hereunder for the benefit of the Director.
     SECTION 20. Governing Law. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
United States and, to the extent state law may be applicable, the laws of the
State of Texas.
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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

              BANK:       DIRECTOR:    
 
            FEDERAL HOME LOAN BANK OF DALLAS        
 
           
By:
      Signature:    
 
           
Name:
  Terry Smith        
Title:
  President and Chief Executive Officer        

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