FEDERAL HOME LOAN BANK OF SEATTLE

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Bank Incentive Compensation Plan (BICP) - Long-Term Incentive Plan



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FEDERAL HOME LOAN BANK OF SEATTLE

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Executive Long-Term Incentive Plan



TABLE OF CONTENTS



|                                           |  |                                                                  |  |     
|------------------------------------------ |  | ---------------------------------------------------------------- |  | ----
|                                           |  |                                                                  |  | Page
|1.0                                        |  | Plan Objectives                                                  |  | 1   
|2.0                                        |  | Definitions                                                      |  | 1   
|3.0                                        |  | Eligibility                                                      |  | 3   
|4.0                                        |  | Base Award Opportunity                                           |  | 3   
|5.0                                        |  | Performance Measures                                             |  | 4   
|6.0                                        |  | Final Award Determination                                        |  | 4   
|7.0                                        |  | Administrative Control                                           |  | 5   
|8.0                                        |  | Miscellaneous Conditions                                         |  | 5   
|                                           | 
|Appendix A: 2005 - 2007 Performance Period |  | 9                                                               
|                                           |  | Performance Period                                               |  | 10  
|                                           |  | Base Award Opportunity                                           |  | 10  
|                                           |  | Value of Performance Unit                                        |  | 10  
|                                           |  | Value of Performance Unit at Interim & End of Performance Period |  | 10  
|                                           |  | Goals & Performance Measures                                     |  | 11  



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FEDERAL HOME LOAN BANK OF SEATTLE

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Executive Long-Term Incentive Plan



PLAN DOCUMENT



1.0 Plan Objectives



| | 1.1 | The purpose of the Federal Home Loan Bank of Seattle Executive Long-Term Incentive Plan is to achieve five objectives:
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| | 1.1.1 | Promote the achievement of the Banks business goals;
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| | 1.1.2 | Link executive compensation to specific long-term performance measures;
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| | 1.1.3 | Provide a competitive reward structure for senior officers and other key employees;
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| | 1.1.4 | Provide a vehicle for closer Board involvement and communication with management regarding the Banks long-term strategic plans; and
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| | 1.1.5 | Promote loyalty and dedication to the Bank and its objectives.
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| | 1.2 | The Plan is a cash-based, long-term incentive plan that establishes individual Base Award Opportunities related to achievement of Bank performance over certain three-year
Performance Periods.
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| | 1.3 | The Base Award Opportunity, Performance Measures, value of a Performance Unit at the beginning and end of a Performance Period, and other relevant information are set forth in the
attached Appendix.
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2.0 Definitions



| | 2.1 | When used in this Plan, the words and phrases below shall have the following meanings:
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| | 2.1.1 | Bank means the Federal Home Loan Bank of Seattle.
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| | 2.1.2 | Base Award Opportunity means the award that may be earned during a Performance Period for achieving target performance levels under each Performance Measure.
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| | 2.1.3 | Base Salary is defined as the Participants normal rate of pay before any other add-ons (ie. Bonuses, incentive pay, etc.).
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| | 2.1.4 | Boardmeans the Banks Board of Directors.
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| | 2.1.5 | Committeemeans the Organizational Development Committee of the Board.
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| | 2.1.6 | Disabledmeans the Participant is receiving benefits under the Federal Home Loan Bank of Seattles Long Term Disability Plan.
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| | 2.1.7 | Extraordinary Occurrences means those events that, in the opinion and discretion of the Board, are outside the significant influence of the Participants or the Bank and are
likely to have a significant unanticipated effect, whether positive or negative, on the Banks operating and/or financial results, including, without limit changes in financial strategies or policies, or significant change in Bank membership.
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| | 2.1.8 | Final Award means the amount ultimately paid to a Participant under the Plan for a Performance Period.
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| | 2.1.9 | Interim Performance Periodmeans a single 12 month calendar year period of which three make up a Performance Period (see Section 2.1.13).
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| | 2.1.10 | Performance Measure means each performance factor that is taken into consideration under the Plan in determining the value of the Final Award.
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| | 2.1.11 | Participantmeans an employee who participates in the Plan pursuant to Section 3.1.
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| | 2.1.12 | Periodic Plan Awardmeans an amount that is provisionally determined at the end of the Interim Performance Period.
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| | 2.1.13 | Performance Period means a certain three-year period over which Bank performance is measured.
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| | 2.1.14 | Performance Unit means a unit, the value of which shall be determined in accordance with the Appendix - Initial Value of Performance Unit.
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| | 2.1.15 | Plan means this Executive Long-Term Incentive Plan.
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| | 2.1.16 | Plan Award means an amount that is provisionally determined at the end of the Performance Period subject to adjustment as provided in Section 6.
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| | 2.1.17 | President means the President of the Bank.
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| | 2.1.18 | Termination for cause means the participants malfeasance, including the commisision of any fraud or felony, or the Participants material breach of his or her employment
obligations, as determined by the Board.
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3.0 Eligibility



| | 3.1 | A Bank employee who is nominated by the President and approved by the Boardas an officer of Vice President or above during the Performance Period shall participate in the
Plan.
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| | 3.2 | Eligibility shall generally be limited to officers (i) whose functional responsibilities encompass the establishment of strategic direction and tactical action plans for the Bank,
and (ii) who have received at least meets basic expectations rankings on annual performance reviews over a Performance Period.
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| | 3.3 | Due to its unique role for the Bank and reporting relationship to the Board, the Director of Internal Audit (and any qualified auditor staff) will not be included as an eligible
position under the Plan, but will be eligible for a similar plan administered by the Audit Committee of the Board.
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4.0 Base Award Opportunity



| | 4.1 | At the beginning of each Performance Period, the Bank will provide a Base Award Opportunity to Participants. The Base Award Opportunity is equal to a percentage of each
Participants annual base salary at the beginning of the Performance Period as described in Appendix A. Certain executive positions have a greater and more direct impact than others on the annual success of the Bank; therefore, these
differences are recognized by varying award opportunities for each Participant level.
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| | 4.2 | Each Participant in a Performance Period shall be granted a number of Performance Units for that Performance Period determined by dividing the Base Award Opportunity by the value of
a Performance Unit at the beginning of a Performance Period as described in the applicable Appendix.
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| | 4.3 | There will be four levels of award opportunities:
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Level I: President



Level II: Executive Vice President



Level III: Senior Vice President



Level IV: Vice President



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5.0 Performance Measures



| | 5.1 | Three achievement levels will be established for each Performance Measure:
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| | Threshold | The minimum achievement level accepted for the Performance Measure.
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| | Target | The planned achievement level for the Performance Measure.
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| | Maximum | The achievement level for the Performance Measure that substantially exceeds the planned level of achievement.
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| | 5.2 | At the beginning of each Performance Period, Performance Measures for the Performance Period, Performance Units, and the Performance Unit initial values will be established by the
Committee with Board approval.
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6.0 Award Determination



| | 6.1 | Periodic Plan Award determinations will be performed annually (Interim Performance Period) during the three-year Performance Period cycle and will be based on the achievement level
for each annual Bank Performance Measure(s). However, if the Bank fails to achieve the Threshold level for a Performance Measure, no award will be made for that Interim Performance Period of the three-year Performance Period.
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Final Plan Awards will be determined after the
end of the three-year Performance Period and will equal the sum of the Periodic Plan Awards for each Interim Performance Period of the three-year Performance Period.



| | 6.2 | A Participants Periodic Plan Award for an Interim Performance Period equals one third of the number of his or her Performance Units for the three-year Performance Period
multiplied by the value of a Performance Unit at the end of the Performance Period as determined in accordance with Table 1 - Appendix A.
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| | 6.3 | If a Federal Housing Finance Board (FHFB) (or successor entity) examination identifies an unsafe or unsound practice or condition in a Participants area of responsibility, the
Participant will not be eligible for an award under the Plan for the Performance Period in which the unsafe and unsound condition existed unless the practice or condition took place prior to start of employment, comes to the attention of said
Participant and is not continued. However, the Participant may receive an award under the Plan in the Boards sole discretion provided that the finding of an unsafe or unsound practice or condition is subsequently resolved within the
Performance Period in favor of the Bank by the FHFB. The Board, in its sole discretion may take into consideration mitigating factors to approve the award as noted in Section 8.13 (Miscellaneous Conditions).
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| | 6.4 | Any Participant receiving a written warning for performance or misconduct at any time during the Performance Period will not receive an award unless approved by the President.
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| | 6.5 | After a Performance Period, Plan Awards for the Performance Period shall be determined by the Board in its sole discretion based upon the Plan Award under Section 6.1.
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| | 6.6 | A Participants Final Award will consist of his or her Plan Award as determined by the Board in its sole discretion promptly after the Performance Period. The Board in its sole
discretion may consider Extraordinary Occurrences when assessing performance results and determining Final Awards and may adjust the Performance Measures to ensure that the purpose of the Plan is served.
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7.0 Administrative Control



| | 7.1 | The Banks Human Resources Department will administer the Plan, and the Board will have ultimate authority over the structure and goals of the plan, and any incentive payouts
from the Plan.
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| | 7.2 | In addition to the authority expressly provided in the Plan, the Board shall have such authority in its sole discretion to control and manage the operation of the Plan and shall
have all authority necessary to accomplish these purposes, including, but not limited to, the authority to interpret the terms of the Plan, and to decide questions regarding the Plan and the eligibility of any person to participate in the Plan and
to receive benefits under the Plan. The Boards determinations and interpretations regarding the Plan shall be final, binding, and conclusive.
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8.0 Miscellaneous Conditions



| | 8.1 | Except as provided in Section 8.4, a Participant will not become vested in an award under this Plan unless the Participant is employed by the Bank on the date the Board determines
and authorizes the payment of the Participants Final Award, and such payment will be no later than 2 1⁄2 months after the three-year Performance Period ends, except as provided under Section 8.4 below.
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| | 8.2 | If a Participant voluntarily or involuntarily terminates employment prior to the date the Board determines and authorizes the payment of the Participants final award, no award will
be made to the Participant, except as provided in Section 8.4 below.
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| | 8.3 | The President will be eligible for the full award for the Plan initiated for 2005. Other Employees of the Bank who are hired, transferred, or promoted into an eligible position
during a Performance Period may (i) be nominated for participation in the Plan in accordance with Section 3.1, and (ii) be eligible to receive a prorated Base Award Opportunity upon vesting in accordance with Section 8.1 or 8.4.
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| | 8.4 | A Participant who retires on or after age 65 or achieving Rule of 70, dies or becomes Disabled while still employed by the bank, or is involuntarily terminated without cause during
the Performance Period may receive a prorated Plan Award (paid in cash, lump-sum), but only if the President nominates and the Board approves such action at the end of the Interim Performance Period during which such event occurs. If the President
does not make such a recommendation or the Board does not approve such action, the Participant will not be entitled to an award. If a Participant becomes entitled to receive a prorated award under this section, the prorated Final Award will be paid
to the Participant no later than 21⁄2 months following the end of the calendar year in which such event occurred (see also Section 8.1). If a Participant terminates service with the Bank for any reason other than retirement on or after age 65 or
achieving Rule of 70, death or Disability while still employed by the bank, or involuntary termination without cause during the Performance Period, the Participant will not be eligible to receive an award under the Plan.
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| | 8.5 | The amount of any prorated award will be determined by dividing the number of months that an employee was a Participant in the Plan during the Performance Period by thirty-six and
multiplying such quotient by the Plan Award.
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| | 8.6 | If a Participant ceases employment after the Performance Period but before the Board approves the Final Award for that Performance Period, the President may nominate and the Board
may approve that the Participant receive an award. However, if the President does not make such a recommendation or the Board does not approve such action, the Participant will not be entitled to an award.
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| | 8.7 | Notwithstanding any Plan provision to the contrary, mere participation in the Plan will not entitle a Participant to an award.
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| | 8.8 | The designation of an employee as a Participant in the Plan does not guarantee employment. Nothing in this Plan shall be deemed (i) to give any employee or Participant any legal or
equitable rights against the Bank, except as expressly provided herein or provided by law; or (ii) to create a contract of employment with any employee or Participant, to obligate the Bank to continue the service of any employee or Participant, or
to affect or modify any employees or Participants term of employment in any way.
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| | 8.9 | The right of the Bank to discipline or discharge a Participant shall not be affected by any provision of this Plan.
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| | 8.10 | All Final Awards will be paid out in a lump sum in cash through regular payroll and will be subject to applicable payroll tax withholdings and other appropriate deductions.
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| | 8.11 | No Final Award received by a Participant shall be considered as compensation under any employee benefit plan of the Bank, except as otherwise determined by the Bank.
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| | 8.12 | Final Awards will be made as soon as practical following the end of the Performance Period, but no later than 21⁄2 months following the calendar year that the Participant became
entitled to the Final Award pursuant to Section 8.1, except as otherwise provided in Section 8.4.
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| | 8.13 | The Board has the right to revise, modify, or terminate the Plan in whole or in part at any time or for any reason, and the right to modify any recommended award amount (including
the determination of a lesser award or no award), for any reason, without the consent of any Participant.
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| | 8.14 | Since no employee has a guaranteed right to any award under this Plan, any attempt by an employee to sell, transfer, assign, pledge, or otherwise encumber any anticipated award
shall be void, and the Bank shall not be liable in any manner for or subject to the debts, contracts, liabilities, engagements or torts of any person who might anticipate an award under this program.
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| | 8.15 | This Plan shall at all times be entirely unfunded and no provision shall at any time be made with respect to segregating assets of the Bank for payment of any award under this
program.
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| | 8.16 | The Plan shall be construed, regulated, and administered in accordance with the laws of the state of Washington, unless otherwise preempted by the laws of the United States.
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| | 8.17 | If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability shall not affect any other provision of the Plan, and the Plan shall be construed
and enforced as if such provision had not been included herein.
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| | 8.18 | If a Participant dies before receiving his or her award, any amounts determined to be paid under this Plan shall be paid to the Participants surviving spouse, if any, or if
none, to the Participants estate. The Banks determination as to the identity of the proper payee of any amount under this Plan shall be binding and conclusive and payment in accordance with such determination shall constitute a complete
discharge of all obligations on account of such amount.
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| | 8.19 | Claims and Appeals Procedures. A Participant (such Participant being referred to below as a Claimant) may deliver to the Committee a written claim
for a determination with respect to any claim as to which the Committee has jurisdiction under this Plan. If such a claim relates to the contents of a notice
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| |  | received by the Claimant, the claim must be made within sixty days after such notice was received by the Claimant. The claim must state with particularity the determination desired
by the Claimant.
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The Committee shall consider
a Claimants claim within a reasonable time, but no later than ninety days after receiving the claim. If the Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension
shall be furnished to the Claimant prior to the termination of the initial ninety-day period. Upon reaching its decision, the Committee shall notify the Claimant in writing.



On or before sixty days after receiving a notice from the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimants duly authorized representative) may file with the Committee a written request for a review of the denial of the claim. The Committee shall render its decision on review promptly, in writing, and deliver it to the
Claimant no later than sixty days after it receives the Claimants written request for a review of the denial of the claim.



| | 8.20 | Any agreements or representations, oral or otherwise, express or implied, with respect to the subject matter of this Plan which are not contained herein will have no effect or
enforceability.
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FEDERAL HOME LOAN BANK OF SEATTLE

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Executive Long-Term Incentive Plan



APPENDIX A

2005 - 2007 Performance
Period



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Performance Period



The Performance Period described in this Appendix shall be January 1, 2005 through December 31, 2007.



Base Award Opportunity



The Base Award Opportunity (as a percentage of January 1, 2005 base salary) for Levels I, II, III, and IV are:



|              |  |                       |  |                  |   |  |           |   |  |        |   |  |         |  
|------------- |  | --------------------- |  | ---------------- | - |  | --------- | - |  | ------ | - |  | ------- | -
|              |  |                       |  | Bank Performance |  
|Level         |  | IndividualPerformance |  | NoAward          |   |  | Threshold |   |  | Target |   |  | Maximum |  
|I - President |  |                       |  | 0                | % |  | 15        | % |  | 30     | % |  | 45      | %
|II - EVP      |  |                       |  | 0                | % |  | 12.5      | % |  | 25     | % |  | 37.5    | %
|III - SVP     |  |                       |  | 0                | % |  | 10        | % |  | 20     | % |  | 30      | %
|IV - VP       |  |                       |  | 0                | % |  | 7.5       | % |  | 15     | % |  | 22.5    | %



Value of Performance Unit



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



Value of Performance Unit at the Interim and End of
Performance Period



| | 1. | After each Interim Performance Period ends, evaluate the actual Bank performance against the Bank Performance Measure stated below.
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| | 2. | The value of the Performance Unit at the end of the Interim Performance Period equals the dollar value determined by the Profitability goal based on the threshold, target, and
maximum awards according to the following table:
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Table 1 -
Bank Performance Measure and Performance Unit Values



|                         |  |          |   |   |           |   |           |  |         |           |  |   |          
|------------------------ |  | -------- | - | - | --------- | - | --------- |  | ------- | --------- |  | - | ---------
|Bank Performance Measure |  | No Award |   |   | Threshold |   | Target    |  | Maximum
|Profitability            |  |          | 0 | % |           |   | see below |  |         | see below |  |   | see below
|Dollar Value at Hurdles  |  | $        | 0 |   |           | $ | 50        |  | $       | 100       |  | $ | 150      
|Total Value              |  | $        | 0 |   |           | $ | 50        |  | $       | 100       |  | $ | 150      



| | 3. | At the end of the Performance Period determine the Final Award by summing the Periodic Plan Awards for each Interim Performance Period.
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Goals & Performance Measures



The Bank Performance Measure for each Interim Performance Period of the overall Performance Period will mirror the Annual BICP Bank
Performance Measure.



For the 2005 Interim Performance Period, the achievement
level for the Bankwide performance measure shall be a Profitability goal based on the threshold, target, and maximum awards according to Table 2:



Table 2 - Bank Performance Measures



|                                                |  |                                               |  |                                                |  |                              
|----------------------------------------------- |  | --------------------------------------------- |  | ---------------------------------------------- |  | -----------------------------
|Bank Performance Measures                       |  | Threshold                                     |  | Target                                         |  | Maximum                      
|PROFITABILITY Adjusted Return on Average Equity |  | Greater than orequal to .25%and less than.75% |  | Greater than orequal to .75%and less than1.25% |  | Greater than orequal to 1.25%



Profitability - This measure is the
ratio of core earnings to average equity. Both the numerator and denominator would be based on income before assessments and members equity as measured under generally accepted accounting principles as a starting point. Certain
accounting adjustments would be deemed below the line as uncontrollable, nonrecurring items that should not either harm or benefit the reward to employees for successfully enhancing the financial performance of the enterprise. Some items
are listed for purposes of illustrating what would be above the line and what would be below the line.



The numerator, core earnings, is defined as the banks income before assessments for AHP and REFCORP with certain adjustments. Some of the adjustments that will be considered below the line included
but not limited to are as follows:



| |  |  | SFAS 91 retrospective adjustments for measuring level yield;
| | - |  | ------------------------------------------------------------

| |  |  | SFAS 133 fair value changes in freestanding derivatives;
| | - |  | --------------------------------------------------------

| |  |  | Losses on recharacterizing mortgage loans from held for investment to loans held for sale;
| | - |  | ------------------------------------------------------------------------------------------

| |  |  | Income from prepayment fees received on advances;
| | - |  | -------------------------------------------------

| |  |  | Costs associated with an exit from a line of business;
| | - |  | ------------------------------------------------------

| |  |  | Losses on termination of premises leases;
| | - |  | -----------------------------------------

| |  |  | Gains on pension curtailments;
| | - |  | ------------------------------

| |  |  | Interest on equity reclassified as debt under SFAS 150;
| | - |  | -------------------------------------------------------

| |  |  | Prior period adjustments or restatements.
| | - |  | -----------------------------------------



The denominator, Equity, will be adjusted to remove the effects of certain uncontrollable events that have an accounting impact, including but not limited to:



| |  |  | Other comprehensive income arising from holding available-for-sale securities and cash-flow hedges;
| | - |  | ---------------------------------------------------------------------------------------------------



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| |  |  | Equity reclassified as debt under SFAS 150
| | - |  | ------------------------------------------



The listed adjustments illustrate controllable versus uncontrollable events that trigger either accounting income or expense, or affect equity. The adjustments are not
intended to be comprehensive. Since there are likely to be accounting adjustments in the future that can not be predicted today, the Board, at its sole discretion may approve additional adjustments.



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