Document:

2014 LTIP

Exhibit 10.1

FEDERAL HOME LOAN BANK OF DALLAS
2014 LONG TERM INCENTIVE PLAN
 
Effective as of January 1, 2014

And for the Period

January 1, 2014 to December 31, 2016

(Approved by the Board of Directors on December 4, 2013.)

FEDERAL HOME LOAN BANK OF DALLAS
2014 LONG TERM INCENTIVE PLAN
TABLE OF CONTENTS
	
				
	 
	 
	PAGE
	

	 
	 
	 

	Article I
	INTRODUCTION
	1
	

	 
	 
	 

	Section 1.1
	Purpose
	1
	

	Section 1.2
	Effective Date
	1
	

	Section 1.3
	Administration
	1
	

	Section 1.4
	Addendums
	1
	

	Section 1.5
	Definitions
	1
	

	 
	 
	 

	Article II
	ELIGIBILITY AND PARTICIPATION
	2
	

	 
	 
	 

	Section 2.1
	Eligibility
	2
	

	Section 2.2
	Participation
	2
	

	 
	 
	 

	Article III 
	AWARDS
	2
	

	 
	 
	 

	Section 3.1
	Awards
	2
	

	Section 3.2
	Performance Goals
	4
	

	Section 3.3
	Earning and Vesting of Awards
	4
	

	Section 3.4
	Effect of Termination of Service
	4
	

	Section 3.5
	Effect of Reorganization
	5
	

	Section 3.6
	Payment of Awards 
	6
	

	Section 3.7
	Forfeiture and/or Reduction of Awards
	6
	

	 
	 
	 

	Article IV
	ADMINISTRATION
	7
	

	 
	 
	 

	Section 4.1
	Appointment of the Committee
	7
	

	Section 4.2
	Powers and Responsibilities of the Committee 
	7
	

	Section 4.3
	Income and Employment Tax Withholding
	8
	

	Section 4.4
	Plan Expenses
	8
	

	 
	 
	 

	Article V
	BENEFIT CLAIMS
	8
	

	 
	 
	 

	Article VI 
	AMENDMENT AND TERMINATION OF THE PLAN 
	8
	

	 
	 
	 

	Section 6.1
	Amendment of the Plan
	8
	

	Section 6.2
	Termination of the Plan
	8
	

	 
	 
	 

	Article VII
	MISCELLANEOUS 
	8
	

	 
	 
	 

	Section 7.1
	Governing Law
	8
	

	Section 7.2
	Headings and Gender 
	9
	

	Section 7.3
	Spendthrift Clause
	9
	

	Section 7.4
	Counterparts 
	9
	

	Section 7.5
	No Enlargement of Employment Rights
	9
	

	Section 7.6
	Limitations on Liability
	9
	

	Section 7.7
	Incapacity of Participant
	9
	

	Section 7.8
	Evidence
	9
	

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	Section 7.9
	Action by Bank 
	9
	

	Section 7.10
	Severability 
	9
	

	Section 7.11
	Information to be Furnished by a Participant
	10
	

	Section 7.12
	Attorneys’ Fees
	10
	

	Section 7.13
	Binding on Successors
	10
	

	Section 7.14
	Awards Not Compensation for Other Plans
	10
	

	 
	 
	 

	APPENDIX A   
	FORM OF AWARD AGREEMENT & PARTICIPANTS
	A-1
	

	 
	 
	 

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

	 
	 
	 

	APPENDIX C
	2014 PERFORMANCE PERIOD 
	 C-1
	

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ARTICLE I

INTRODUCTION

Section 1.1    Purpose.  The purpose of the Federal Home Loan Bank of Dallas 2014 Long Term Incentive Plan (the “Plan”) is to attract, retain and motivate certain key employees of the Federal Home Loan Bank of Dallas (the “Bank”) and to align their interests to member/shareholders measured by retained earnings, MVE of equity, capacity to pay dividends, external audit and FHFA examination findings, and the overall performance of the Bank in achieving its annual objectives during the plan cycle. The Plan is a cash-based long-term incentive plan that provides award opportunities based on achievement of performance goals over a three-year period.

Section 1.2    Effective Date.  The “Effective Date” of the Plan is January 1, 2014.

Section 1.3    Administration.  The Plan will be administered by the Compensation and Human Resources Committee of the Board.  Day-to-day responsibilities of plan administration may be delegated to the Bank’s management and human resources function.  The Committee, from time to time, may adopt any rules and procedures it deems necessary or desirable for the proper and efficient administration of the Plan that are consistent with the terms of the Plan.  Any notice or document required to be given or filed with the Committee will be properly given or filed if delivered to or mailed by registered mail, postage paid, to the Corporate Secretary of the Board of Directors, Federal Home Loan Bank of Dallas, 8500 Freeport Parkway South, Suite 100, Irving, TX  75063.

Section 1.4    Addendums.  The provisions of the Plan may be modified by addendums to the Plan.  The terms and provisions of each addendum are a part of the Plan and supersede any other provisions of the Plan to the extent necessary to eliminate any inconsistencies between the addendum and any other Plan provisions.

Section 1.5    Definitions.  The following terms are defined in the Plan in the following Sections:

	
		
	Term
	Plan Section

	Award
	3.1(b)

	Award Agreement
	3.1(b)

	Bank
	1.1

	Board
	1.3

	Cause
	3.4(b)(iii)

	Committee
	1.3

	Disability
	3.4(b)(i)

	Discretionary Award
	3.1(d)

	Effective Date
	1.2

	Extraordinary Occurrences
	3.1(e)

	Final Award
	3.1(e)

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	Level I Participant
	3.1(c)

	Level II Participant
	3.1(c)

	Level III Participant
	3.1(c)

	Maximum
	3.2(b)(iii)

	Non-Solicitation Agreement
	2.1

	Participant
	2.1

	Performance Goals
	3.2

	Performance Period
	3.1(a)

	Plan
	1.1

	Reorganization
	3.5

	Retirement
	3.4(b)(ii)

	Termination of Service
	3.4(a)

	Target
	3.2(b)(ii)

	Threshold
	3.2(b)(i)

ARTICLE II

ELIGIBILITY AND PARTICIPATION

Section 2.1    Eligibility.  Any employee of the Bank is eligible to become a “Participant” in the Plan, provided the employee is designated as a Participant by the Board in writing and he or she executes an agreement containing non-solicitation and non-disclosure provisions in the form provided as Appendix B to the Plan (“Non-Solicitation Agreement”).  The CEO is automatically eligible to participate in the plan subject to Board approval, others may be nominated by the CEO and require Board approval.  (See Appendix A, Schedule B.)

Section 2.2    Participation. A designated employee or otherwise eligible employee will become a Participant as of the later of the Effective Date, the date specified by the Board, or the date, on or after the Effective Date, that the employee satisfies the automatic eligibility provisions described in Section 2.1.  Any Participant may be removed as an active Participant by the Board effective as of any date.  

ARTICLE III

AWARDS

Section 3.1    Awards.  At the beginning of each Performance Period, the Board will decide on the level of Award opportunities that can be potentially earned by an eligible Participant.  Each Award will be equal to a percentage of the Participant’s average annual base salary during the 3-year plan cycle.

		
	(a)
	Performance Period.  A “Performance Period” is a rolling three-calendar year period over which an Award can be earned and also referred to plan cycle.

		
	(b)
	Award Agreement.  An “Award” to a Participant will be evidenced by a written “Award Agreement” issued by the Bank to a Participant that specifies the 

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Performance Goals, the Performance Period and other necessary terms and conditions applicable to the Award. 

		
	(c)
	Award Levels.  Participants will receive varying Awards based on their position and salary grade level with the Bank.  The actual award opportunities under the Plan shall be the same as those provided under the applicable short-term incentive plan (“STIP”) and are established as a percentage of “plan salary”.  Plan salary is defined as the average annual salary for the Participant during the 3-year plan cycle. 

		
	(d)
	Discretionary Award.  The Board has delegated to the President the authority to grant an additional discretionary Award (the “Discretionary Award”) to a Participant to address external market considerations, including for recruiting purposes.  The aggregate pool of funds available for Discretionary Awards will not exceed ten percent of the total long-term incentive awards.

		
	(e)
	Final Award.  The “Final Award” is the amount of an Award as adjusted based upon the level at which the Performance Goals have been achieved, including any Discretionary Award, that is ultimately paid to a Participant under the Plan for a Performance Period.  In deciding upon approving payouts under the Plan, the Board will base its decision on the following qualifiers: (i) the consistent ability to pay quarterly dividends to members throughout the 3-year plan cycle; (ii) the consistent ability to repurchase excess capital stock throughout the 3-year plan cycle; and (iii) the maintenance of the Bank’s triple-A credit rating from Moody’s and S&P.  Final Awards may be modified up or down at the Board’s discretion to account for performance that is not captured in the Performance Goals.  The Board in its discretion may also consider Extraordinary Occurrences when assessing performance results and determining Final Awards.  “Extraordinary Occurrences” mean those events that, in the opinion and discretion of the Board, are outside the significant influence of the Participant or the Bank and are likely to have a significant unanticipated effect, whether positive or negative, on the Bank’s operating and/or financial results.

		
	•
	For each potential Final Award payment, the results of the STIP objective goal achievement for the prior year and the Long Term Incentive Plan (“LTIP”) goal achievement for the 3-year plan cycle that ends with the prior year and applied to the Participant’s maximum award level will be weighted to determine the total incentive award payout.  The weighting shall be 50% for the STIP and 50% for the LTIP. 

		
	•
	For LTIP goal achievement above the Threshold level in a given plan cycle, the Plan will provide for an additional bonus payment as follows:  

		
	•
	LTIP goal achievement of 80% for the 3-year plan cycle will increase the related Final Award payout level as a percentage of base salary by 10%; and

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	•
	LTIP goal achievement of 90% for the 3-year plan cycle will increase the related Final Award payout level as a percentage of base salary by 15%.

Section 3.2    Performance Goals.  “Performance Goals” are the performance factors established by the Board and set forth in an Appendix to the Plan and that are taken into consideration under the Plan in determining the value of an Award.  The Board may adjust the Performance Goals for a Performance Period to ensure that the purpose of the Plan is served.  

		
	(a)
	Establishment of Performance Goals.  Performance Goals for the Performance Period commencing on January 1, 2014, will be established as of the date the Plan is adopted.  Performance Goals for Performance Periods commencing on and after January 1, 2014, will be communicated to Participants in writing after they have been established by the Board.  

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

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

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

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

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

Section 3.3    Earning and Vesting of Awards.  Generally, an Award will become vested, if:

		
	(a)
	the applicable Performance Goals for the Performance Period are satisfied; and 

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

The value of Awards will be calculated in accordance with the applicable Appendix to the Plan and the applicable Award Agreement.
Section 3.4    Effect of Termination of Service.  

		
	(a)
	In General.  If a Participant incurs a Termination of Service for any reason other than a reason set forth in subsection 3.4(b), then any portion of an Award which has not otherwise become vested as of the date of Termination of Service will be forfeited, effective as of the date of such termination.  For purposes of the Plan,

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 “Termination of Service” means the occurrence of any act or event or any failure to act, that actually or effectively causes or results in a Participant ceasing, for whatever reason, to be an employee of the Bank, including, but not limited to, death, Disability, Retirement, termination by the Bank of the Participant’s employment (whether for Cause or otherwise), termination by the Participant of his or her employment with the Bank for Good Reason and voluntary resignation or termination by the Participant of his or her employment.

		
	(b)
	Termination Due to Death, Disability, Retirement or Other Events.  Notwithstanding the provisions of Section 3.3 and subsection 3.4(a), if a Participant incurs a Termination of Service (i) due to death, (ii) due to Disability, (iii) due to Retirement or (iv) special circumstances as solely determined and approved by the Board any portion of his or her Award eligible to become earned and vested in the Performance Periods in which the termination occurs will, to the extent the Performance Goals for such Performance Periods are satisfied, be treated as earned and vested in a pro rata manner equivalent to the period of time during the Performance Periods the Participant participated in the Plan.  The Award will become vested effective as of the last day of such Performance Periods in which the Termination of Service occurs.

		
	(i)
	For purposes of the Plan, “Disability” means, as a result of the Participant’s incapacity due to physical or mental illness, the Participant has been absent from his or her duties with the Bank for an aggregate of 12 out of 15 consecutive months and, within 30 days after a written notice of termination is thereafter given by the Bank to the Participant, the Participant does not return to the full-time performance of the Participant’s duties.

		
	(ii)
	For purposes of the Plan, “Retirement” means the planned and voluntary termination of the Participant’s employment on or after the Participant has attained age 55 with ten “Years of Service.”  To be credited with a Year of Service, a Participant must complete 1,000 “hours of service” for the Bank during such year.

		
	(iii)
	For purposes of the Plan, “Special Circumstances” may include, but not limited to a significant change in a participant’s job responsibilities other than for cause.

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

5

		
	(a)
	The Bank is merged or consolidated with or reorganized into or with another FHLBank or other entity, or another FHLBank or other entity is merged or consolidated into the Bank;

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

		
	(c)
	The liquidation or dissolution of the Bank.

Section 3.6    Payment of Awards.  Unless payment of a Final Award has been properly deferred by a Participant, a Final Award will be paid in a single sum cash payment no later than March 15th of the year following the year in which the Award becomes earned and vested.  However, in the event of a Reorganization, unless payment has been properly deferred, payment of a Final Award will be made in a single sum on the date on which the Reorganization occurs.

Section 3.7    Forfeiture and/or Reduction of Awards

		
	(a)
	Notwithstanding any other provision of the Plan, if a Participant violates a Non-Solicitation Agreement, all of his unpaid vested and unvested Awards will be forfeited effective as of the date the Board determines such violation has occurred and notifies the Participant of such determination.  Any future payments for a vested Award will cease and the Bank will have no further obligation to make such payments.

		
	(b)
	A participant is not eligible to receive their LTIP award if the participant has committed a Code of Conduct violation during the plan cycle.  If it is determined that a participant has a Code of Conduct violation and is not eligible to receive their award, they may appeal the decision to the Bank’s President.  The Bank President has the authority to waive the ineligibility and provide payment to the participant.

		
	(c)
	Notwithstanding any other provision of the Plan, if during the most recent examination of the Bank by the FHFA, the FHFA identified an unsafe or unsound practice or condition with regard to the Bank within the Participant’s area(s) of responsibility and such unsafe or unsound practice or condition is not subsequently resolved in favor of the Bank, then all of a Participant’s vested and unvested Awards will be forfeited.  Any future payments for a vested Award will cease and the Bank will have no further obligation to make such payments.

		
	(d)
	Claw-back Provision.  “Final Awards” not yet paid, regardless of vesting status, are subject to cancellation, if awards are subsequently determined to be based on fraud or material financial misstatements.  The Board in its sole discretion shall determine the meaning of fraud and/or material financial misstatement. 

		
	(e)
	Reduction in Named Executive Officer (‘NEO”) Awards.  The Board of Directors will utilize its discretion to reduce the amount of one or more NEO awards if during the 3-year plan cycle it determines that:

6

		
	(i)
	operational errors or omissions result in material revisions to the financial results, information submitted to the Federal Housing Finance Agency (“FHFA”), or data used to determine incentive award payment amounts;  

		
	(ii)
	the submission of information to the SEC, the Office of Finance, and/or the FHFA has not been provided in a timely manner; or

		
	(iii)
	the Bank fails to make sufficient progress, as determined by the FHFA and communicated to Bank management and/or the Board of Directors by the FHFA, in the timely remediation of examination, monitoring, and other supervisory findings and matters requiring executive management’s attention.  

ARTICLE IV

ADMINISTRATION

Section 4.1    Appointment of the Committee.  The Committee, or a duly authorized officer or officers of the Bank empowered by the Committee to act on its behalf under sub-section 4.2(d), will be responsible for administering the Plan, and the Committee will be charged with the full power and the responsibility for administering the Plan in all its details; provided that the power to determine eligibility pursuant to Article II is reserved to the Board.

Section 4.2    Powers and Responsibilities of the Committee.  The Committee will have all powers necessary to administer the Plan, including the power to construe and interpret the Plan document; to decide all questions relating to an individual’s eligibility to participate in the Plan; to determine the amount, manner and timing of any distribution of benefits under the Plan; to resolve any claim for benefits in accordance with Article V, and to appoint or employ advisors, including legal counsel, to render advice with respect to any of the Committee’s responsibilities under the Plan.  Any construction, interpretation, or application of the Plan by the Committee will be final, conclusive and binding.

		
	(a)
	Records and Reports.  The Committee will be responsible for maintaining sufficient records to determine each Participant’s eligibility to participate in the Plan.

		
	(b)
	Rules and Decisions.  The Committee may adopt such rules as it deems necessary, desirable, or appropriate in the administration of the Plan.  All rules and decisions of the Committee will be applied uniformly and consistently to all Participants in similar circumstances.  When making a determination or calculation, the Committee will be entitled to rely upon information furnished by a Participant, the Bank or the legal counsel of the Bank.

		
	(c)
	Application for Benefits.  The Committee may require a Participant to complete and file with it an application for a benefit, and to furnish all pertinent information requested by it.  The Committee may rely upon all such information so furnished to it, including the Participant’s current mailing address.

7

		
	(d)
	Delegation.  The Committee may authorize one or more officers of the Bank to perform administrative responsibilities on its behalf under the Plan.  Any such duly authorized officer will have all powers necessary to carry out the administrative duties delegated to such officer by the Committee.

Section 4.3    Income and Employment Tax Withholding.  The Bank will withhold from payments to Participants of their Awards, to the extent required by law, all applicable federal, state, city and local taxes.

Section 4.4    Plan Expenses.  The expenses incurred for the administration and maintenance of the Plan will be paid by the Bank.

ARTICLE V

BENEFIT CLAIMS

While a Participant need not file a claim to receive his or her benefit under the Plan, if he or she wishes to do so, a claim must be made in writing and filed with the Committee.  If a claim is denied, the Committee will furnish the claimant with written notice of its decision.  A claimant may request a full and fair review of the denial of a claim for benefits by filing a written request with the Committee.
ARTICLE VI

AMENDMENT AND TERMINATION OF THE PLAN

Section 6.1    Amendment of the Plan.  The Board of Directors may amend the Plan at any time in its sole discretion.

Section 6.2    Termination of the Plan.  The Board of Directors may terminate the Plan at any time in its sole discretion.  Absent an amendment to the contrary, Plan benefits that had accrued and vested prior to the termination will be paid at the times and in the manner provided for by the Plan at the time of the termination.

ARTICLE VII

MISCELLANEOUS

Section 7.1    Governing Law.  Except to the extent superseded by laws of the United States, the laws of Texas will be controlling in all matters relating to the Plan without regard to the choice of law principles therein.  The Plan and all Award Agreements are intended to comply, and will be construed by the Bank in a manner which they are exempt from or comply with the applicable provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).  To the extent there is any conflict between a provision of the Plan or an Award Agreement and a provision of Code Section 409A, the applicable provision of Code Section 409A will control.

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Section 7.2    Headings and Gender.  The headings and subheadings in the Plan have been inserted for convenience of reference only and will not affect the construction of the Plan provisions.  In any necessary construction, the masculine will include the feminine and the singular the plural, and vice versa.

Section 7.3    Spendthrift Clause.  No benefit or interest available under the Plan will be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of a Participant, either voluntarily or involuntarily.

Section 7.4    Counterparts.  This Plan may be executed in any number of counterparts, each one constituting but one and the same instrument, and may be sufficiently evidenced by any one counterpart.

Section 7.5    No Enlargement of Employment Rights.  Nothing contained in the Plan may be construed as a contract of employment between the Bank and any person, nor may the Plan be deemed to give any person the right to be retained in the employ of the Bank or limit the right of the Bank to employ or discharge any person with or without cause.

Section 7.6    Limitations on Liability.  The individual members of the Board will, in accordance with the Bank’s by-laws, be indemnified and held harmless by the Bank with respect to any alleged breach of responsibilities performed or to be performed hereunder.  In addition, notwithstanding any other provision of the Plan, neither the Bank nor any individual acting as an employee or agent of the Bank will be liable to a Participant for any claim, loss, liability or expense incurred in connection with the Plan, except when the same has been affirmatively determined by a court order or by the affirmative and binding determination of an arbitrator, to be due to the gross negligence or willful misconduct of that person.

Section 7.7    Incapacity of Participant.  If any person entitled to receive a distribution under the Plan is physically or mentally incapable of personally receiving and giving a valid receipt for any payment due (unless a prior claim for the distribution has been made by a duly qualified guardian or other legal representative), then, unless and until a claim for the distribution has been made by a duly appointed guardian or other legal representative of the person, the Committee may provide for the distribution to be made to any other individual or institution then contributing toward or providing for the care and maintenance of the person.  Any payment made for the benefit of the person under this Section will be a payment for the account of such person and a complete discharge of any liability of the Bank and the Plan.

Section 7.8    Evidence.  Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person relying on the evidence considers pertinent and reliable, and signed, made or presented by the proper party or parties.

Section 7.9    Action by Bank.  Any action required of or permitted by the Bank under the Plan will be by resolution of the Board or by a person or persons authorized by resolution of the Board.

Section 7.10    Severability.  In the event any provisions of the Plan are held to be illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the

9

 Plan, and the Plan will be construed and endorsed as if the illegal or invalid provisions had never been contained in the Plan.

Section 7.11    Information to be Furnished by a Participant.  A Participant, or any other person entitled to benefits under the Plan, must furnish the Committee with any and all documents, evidence, data or other information the Committee considers necessary or desirable for the purpose of administering the Plan.  Benefit payments under the Plan are conditioned on a Participant (or other person who is entitled to benefits) furnishing full, true and complete data, evidence or other information to the Committee, and on the prompt execution of any document reasonably related to the administration of the Plan requested by the Committee.

Section 7.12    Attorneys’ Fees.  If any action is commenced to enforce the provisions of the Plan, payment of attorneys’ fees will be governed by the terms set forth in the mandatory “Agreement to Arbitrate” entered into between the Bank and the Participant.

Section 7.13    Binding on Successors.  The Plan will be binding upon and inure to the benefit of the Bank and its successors and assigns, and the successors, assigns, designees and estates of a Participant.  The Plan will also be binding upon and inure to the benefit of any successor organization succeeding to substantially all of the assets and business of the Bank, but nothing in the Plan will preclude the Bank from merging or consolidating into or with, or transferring all or substantially all of its assets to, another organization which assumes the Plan and all obligations of the Bank hereunder.  The Bank agrees that it will make appropriate provision for the preservation of a Participant’s rights under the Plan in any agreement or plan which it may enter into to effect any merger, consolidation, reorganization or transfer of assets.  Upon such a merger, consolidation, reorganization, or transfer of assets and assumption of Plan obligations of the Bank, the term “Bank” will refer to such other organization and the Plan will continue in full force and effect.

Section 7.14    Awards Considered Compensation for Other Plans.    Final Award payments received by a Participant shall be considered as compensation for purposes of determining benefits under the Bank’s qualified Defined Benefit Pension Plan.

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APPENDIX A

FORM OF AWARD AGREEMENT

THIS AWARD AGREEMENT (the “Award Agreement”) is made and entered into this ________ day of __________, 2014, but effective as of January 1, 2014, between Federal Home Loan Bank of Dallas (the “Bank”), and __________________ (the “Participant”).
WITNESSETH:
WHEREAS, the Bank has adopted the Federal Home Loan Bank of Dallas 2014 Long Term Incentive Plan (the “Plan”) to attract, retain and motivate designated key employees of the Bank and to focus their efforts on continued improvement in the profitability of the Bank; and
WHEREAS, the Participant is eligible to receive an Award;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Bank and the Participant agree as follows:
1.Awards.  The Bank will hereby award to the Participant, upon the completion of the 3-year performance period, the Award specified in Schedule A to this Agreement which is incorporated herein as if fully set forth, subject to the terms of this Award Agreement and the provisions of the Plan (the “Award”).  All provisions of the Plan, including defined terms, are incorporated herein and are expressly made a part of this Award Agreement by reference.  If any provision of this Award Agreement conflicts with a provision of the Plan, the provision of the Plan will control.

2.Deferral of Awards.  If the Participant participates in the Federal Home Loan Bank of Dallas Deferred Compensation Plan, he or she has the right to make a deferral election to defer any Final Award earned under the Plan.

3.Non-Solicitation and Non-Disclosure Provisions. The Participant will execute a Non-Solicitation Agreement in the form attached to the Plan as Appendix B.

4.Income and Employment Tax Withholding.  The Participant will be responsible for (and, where required by applicable law, the Bank will withhold from any amounts payable under the Plan) all required federal, state, city and local taxes.

5.Nontransferability.  During the Participant’s lifetime, Awards will be payable only to him or her.  Neither an Award nor any rights and privileges pertaining thereto, may be transferred, assigned, pledged or hypothecated by the Participant in any way, whether by operation of law or otherwise, and are not subject to execution, attachment or similar process.

6.Condition Precedent.  In no event will the Bank be obligated to make payment for a vested Award until it is satisfied that all conditions precedent to the payment of the Award, as provided in the Plan and this Award Agreement, have been performed and completed.

7.Acknowledgments.  The Participant acknowledges receiving, reading and fully understanding all of the provisions of the Plan and this Award Agreement and that the execution

A-1

 and delivery of this Award Agreement constitutes his or her unequivocal acceptance of all of the terms and conditions thereof.

IN WITNESS WHEREOF, the Bank, by its officer thereunder duly authorized, and the Participant, have executed this Award Agreement on the day and year first above written, but effective as of January 1, 2014.
	
				
	 	FEDERAL HOME LOAN BANK OF
DALLAS
	 
	PARTICIPANT

	 
	 	 
	 
	 

	 	 
	 
	 

	 	 
	 
	 

	 	 
	 
	 

	 	 
	 
	 

	 	 
	 
	 

	 	 
	 
	 

	 	 
	 
	 

            

A-2

SCHEDULE A
FINAL AWARD AGREEMENT UNDER
FEDERAL HOME LOAN BANK OF DALLAS
2014 LONG TERM INCENTIVE PLAN
Name of Participant: ______________________________________
I.   STIP Determination
(a)  STIP Goal Achievement percentage for _______ Plan Year:  _____%
(b)  STIP Award based on Group Level as a percentage of base salary:  ______%
(c)  STIP Plan Salary ($             ) times STIP Award %:  $__________
(d)  STIP Weighting Factor:  50%
(e)  STIP Final Award Amount  (c x d):  $__________

II.  LTIP determination for the Performance Period January 1, 20__and ended December 31, 20__.
(a)  LTIP Goal Achievement percentage for _______ Plan Year:  ______%
(b)  LTIP Award based on Group Level as a percentage of base salary:  ______%
(c)  LTIP Plan Salary ($             ) times LTIP Award %:   $__________
(d)  LTIP Weighting Factor:  50%
(e)  LTIP Initial Award Amount  (c x d):  $__________

(f)  Additional LTIP bonus percentage for goal achievement above Threshold:  ______%
(g)  LTIP Plan Salary ($             ) times LTIP bonus percentage  _$___________
(h)  LTIP Award Amount (e + g):  $__________  

III.  LTIP Discretionary Award:  $__________

IV.   Total Incentive Compensation Award:  $__________

A-3svlt_ex101.htm

EXHIBIT 10.1

 

CONSULTING SERVICES AGREEMENT

 

THIS AGREEMENT dated the 15th day of January, 2014

 

BETWEEN:

 

Sunvault Energy Inc., a body corporate duly incorporated under the laws of the state of Nevada and having its offices at 150 W Axton Road, Bellingham WA 98226

 

(the "Company")

 

AND:

 

Franzi Tschurtschenthaler an individual having his residence at 1402 Black Mountain Crescent, Kelowna, BC, V1P 1P6

 

(the "Executive")

 

RECITALS

 

WHEREAS, the Executive is willing to provide his service to the Company upon the terms and conditions set forth in this Agreement.

 

NOW THEREFORE, in consideration of the premises and mutual covenants and agreements herein set forth, the parties hereto mutually covenant and agree as follows:

 

CONTRACT FOR SERVICES

 

1.1 The Company hereby engages Executive to be the Chief Technical Officer of the Company and the Executive hereby agrees to supply his services as Chief Technical Officer to the Company. The Executive shall perform all duties incident to such position of Chief Technical Officer and other duties as may reasonably be required from time to time by the Board of Directors.

 

1.2 In addition, during the term of this Agreement the Company may also request that the Executive assume senior executive management roles with its associated companies pursuant to the terms of agreements executed between its associated companies.

 

LOCATION

 

2. The Executive shall perform his duties out of his offices at 1402 Black Mountain Crescent, Kelowna, BC, V1P 1P6 but the Company may, in its discretion, direct that the duties be provided on occasion in other locations maintained by the Company, provided that any permanent relocation of the Executive the parties agree to renegotiate the terms of this Agreement.

 

EXTENT OF SERVICE

 

3. The Executive shall, during the term of this contract, devote at least 40 hours per work week to the business of the Company, but may continue as a director or consultant to any other company, firm, or individual that is not in competition with the Company, so long as his association with such company, firm or individual does not interfere with his attention to the Company's business.

 

FEES AND EXPENSES

 

4.1 In consideration the Executive providing services to the Company, the Company shall pay to the Executive a fee, plus applicable taxes, in equal semi-monthly instalments, at $10,000.00 USD per month. The commencement of the 40 hours per week and the full fee is commensurate with the Company receiving adequate funding. Until that time the Executive may be called on from time to time and for those intermittent services the Company will issue from treasury at the end of each month common stock in the form of a treasury order for the monthly services value determined amount of $3000.00 USD. The Company shall reimburse the Executive directly for all reasonable, necessary and approved travel and other expenses incurred by the Executive in connection with the provision of services hereunder; however, for all such expenses the Executive shall furnish statements and receipts. Any payments for change of control, termination without cause do not come into effect until the Executive receives full fee for full service.

 

  

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4.2 The Executive will be responsible for the payment of all withholdings for Federal and Provincial income tax, Employment Insurance and Canada Pension Plan that may be required in respect of the Executive and shall make and remit same as and when required. The Executive shall indemnify and hold harmless the Company and each of its officers and Directors from any liability in respect thereof.

 

OPTIONS

 

5. In addition to the fees provided for in Section 4 and all other amounts payable to the Executive hereunder, the Executive shall be entitled to participate in other company incentive plans or employee incentive stock options in respect of un-issued Common shares in the capital stock of the Company and its associated companies, such options to be exercisable for a minimum period of five years from the date of grant, a maximum vesting period of three (3) years and with such other conditions as are determined by the Board of Directors of each company and as are prescribed by the policies of the stock exchanges on which the Common shares of the each company are listed.

 

ABSENCE

 

6. The Executive shall be entitled to temporarily cease providing the services from time to time without any abatement or reduction of the fees payable herein, provided that such decrease does not exceed:

 

(a) 4 weeks per year during the first year of the term of this Agreement; and

 

(b) 5 weeks per year thereafter.

 

While the Company shall endeavour to accommodate the Executive’s wishes with respect to the timing of such absences, they shall be taken at such time as the Company shall determine having regard to the requirements of the Company's business.

 

CONFIDENTIAL INFORMATION

 

7. The Executive shall well and faithfully provide the service to the Company, and use best efforts to promote the interest thereof and shall not disclose (either during the term of this Agreement or at any time thereafter) the private affairs of the Company or any trade secret of the Company, to any persons other than the Directors of the Company and shall not use (either during the continuance of this Agreement or at any time thereafter) for their own purposes, or for any purposes other than those of the Company, any information their may acquire with respect to the Company's affairs. The Executive further agrees to execute such further and other agreements concerning the secrecy of the affairs of the Company, as the Directors of the Company shall reasonably request. Furthermore, without restricting the generality of the foregoing, the Executive shall not either during the term of this Agreement or any time thereafter, directly or indirectly divulge to any person, firm or corporation:

 

(a) any intellectual property, proprietary information, know-how, trade secrets, processes, product specifications, new product information or methods of doing business acquired in the course of providing the services hereunder;

 

(b) any information with respect of Company personnel or organization, or any of the financial affairs or business plans of the Company; or

 

DISABILITY

 

8. If the Executive shall, at any time, by reason of illness or mental or physical disability, be incapacitated from providing all or a material part of the services required by of this Agreement, the Executive shall furnish the Directors of the Company with medical evidence to prove such incapacity and cause thereof, and thereupon the Executive shall be entitled to receive the fees payable pursuant to Section 4 without abatement or reduction for a maximum period of 180 days from the commencement of the disability. If the Executive is unable to return to the performance of the services at the standard they were performed prior to the incapacity, the Company may terminate the Agreement at any time after the 180 days, by written notice.

 

9. This Agreement shall become effective on the 15th day of January, 2014, and shall continue thereafter unless terminated upon mutual consent of the Executive and the Company, or until termination by the Executive or the Company in accordance with Sections 10 or 11, whichever is earlier.

 

  

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TERMINATION FOR CAUSE

 

10. Without prejudice to any remedy the Company may have against the Executive for any breach or non-performance of this Agreement, the Company may terminate this Agreement, subject to Section 16, for breach by the Executive at any time effective immediately and without notice and without any payment for any compensation either by way of anticipated earnings or damage of any kind to him whatsoever, save and except in respect of fees payable to the date of such termination. For the purposes of this paragraph, any one of the following events shall constitute breach of this Agreement sufficient for termination, provided however, that the following events shall not constitute the only reasons for termination:

 

(a) guilty of any material dishonesty or gross neglect in the provision of the services hereunder; or

 

(b) conviction of the Executive of any criminal offense, other than an offense which in the reasonable opinion of the Company does not affect the Executive's position as a representative of the Company; or

 

(c) bankruptcy of the Executive or making any arrangement or composition with its creditors; or

 

(d) alcoholism or drug addiction of the Executive which impairs his ability to provide the services required hereunder; or

 

(e) excessive and unreasonable absence of the Executive from the performance of the services for any reason other than for absence or incapacity specifically allowed hereunder.

 

TERMINATION WITHOUT CAUSE

 

11.1 The Executive shall be entitled to terminate this Agreement, at any time by giving four (4) weeks notice in writing to the Board of Directors of the Company.

 

11.2 The Company shall be entitled to terminate this Agreement at any time by the Company upon giving the Executive notice in writing of such termination and upon payment to the Executive of all fees and other amounts owing up to the date of termination and a termination payment in an amount equal to the fees due under Section 4.1 for a period of 18 months in full satisfaction of all claims that the Executive may have against the Company.

 

11.3 In the event of a change in control of the Company and for a period of 12 months after the closing of a change in control transaction, the Company shall be entitled to terminate this Agreement upon giving the Executive notice in writing of such termination and upon payment to the Executive of all fees and other amounts owing up to the date of termination and a termination payment in an amount equal to the fees due under Section 4.1 for a period of 18 months in full satisfaction of all claims that the Executive may have against the Company. For a period of 12 months following the change in control of the Company, at the option of the Executive, the Executive may terminate the Agreement upon giving notice to the Company and the Company will pay to the Executive all fees and other amounts owing up to the date of termination and a termination payment in an amount equal to the fees due under Section 4.1 for a period of 18 months in full satisfaction of all claims that the Executive may have against the Company.

 

INDEMNITY AND RESIGNATION

 

12.1 The Company hereby indemnifies the Executive, his heirs, executors, administrators and personal representatives (collectively, the "Indemnitees") to the maximum extent of the law and the Company's certificate of incorporation.

 

12.2 The Company hereby indemnifies the Indemnities and save the Indemnitees harmless against all cost, charges and expenses actually and reasonably incurred by the Indemnitees in law, in equity or under any statute or regulation in connection with any civil, criminal or administrative claim, action, proceeding or investigation to which the Indemnitees are made a party or in which they are otherwise involved as a witness or other participant by reason of the Executive being or having been an officer of the Company or its affiliated or associated companies, including any action brought by the Company or affiliated companies, if:

 

(a) the Executive acted honestly and in good faith with a view to the best interests of the Company or affiliated companies; and

 

  

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(b) in the case of a criminal or administrative claim, action, proceeding or investigation, the Executive had reasonable grounds for believing that his conduct was lawful.

 

12.3 The Executive hereby jointly and severally indemnifies the Company and its affiliated or associated companies (the "Group"), its officers, Directors and agents and save the Group harmless against all cost, charges and expenses actually and reasonably incurred by the Group in law, in equity or under any statute or regulation in connection with any civil, criminal or administrative claim, action, proceeding or investigation to which the Group are made a party or in which they are otherwise involved as a witness or other participant by reason of the Executive:

 

(a) having breached a non-competition agreement;

 

(b) having used or having caused, permitted, or acquiesce in the use by the Group of proprietary or confidential business information or intellectual property of a third party or third parties in contravention of any law or agreement to which the Executive, or the Group is subject or to which any is a party or by which any is bound;

 

(c) having an undisclosed conflict of interest; or

 

(d) having breached any term of this Agreement, or in the case of the Executive, having breached his fiduciary duty to the Company.

 

12.4 Without limiting. the generality of Section 12.2 and 12.3, the costs, charges and expenses against which the Group and the Executive will indemnify each other include:

 

(a) any and all fees, costs and expenses actually and reasonably incurred by the defending party in investigating, preparing for, defending against, providing evidence in, producing documents or taking any other action in connection with any commenced or threaten action, proceeding or investigation, including reasonable legal fees and disbursements, travel and lodging costs;

 

(b) any amounts reasonably paid in settlement of any action, proceeding or investigation;

 

(c) any amounts paid to satisfy a judgment or penalty, including interest and costs; and

 

(d) all costs, charges and expenses reasonably incurred by the defending party in establishing their right to be indemnified pursuant to this Agreement.

 

12.5 If the Indemnitees, the Group or any of them are required to include in their income, or in the income of the estate of the Executive, any payment made under this Section 12 for the purpose of determining income tax payable by the Indemnitees or the Group or any of them or the estate, the Company shall pay an amount by way of indemnity that will fully indemnify the Indemnitees or estate for the amount of all liabilities described in Section 12.2 and all income taxes payable as a result of the receipt of the indemnity payment and the Executive shall pay an amount by way of indemnity that will fully indemnify the Group for the amount of all liabilities described in Section 12.3 and all income taxes payable as a result of the receipt of the indemnity payment.

 

12.6 Any failure by the Executive in his capacity as an officer of the Company to comply with the provisions of the Act or of the Articles of Incorporation or Bylaws of the Company will not invalidate any indemnity to which he is entitled under this Agreement.

 

12.7 When practical, the Company will apply for an appropriate level of directors’ and officers’ liability insurance in support of the indemnity given herein.

 

12.8 Upon the termination of this Agreement, the Executive will tender to the Company his resignation as an officer and or Director of the Company or any affiliate of the Company.

 

NON-COMPETITION

 

13.1 For a period of 12 months following the termination of this Agreement, for any reason whatsoever, the Executive shall not become employed by, or enter into a contract of service or for service or be involved with or assist in any way, whether directly or indirectly, with any company, person or other entity which competes directly with the Company unless waived by the board of directors.

 

  

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13.2 The Executive acknowledges and agrees that there can be no geographical limit to his covenant not to compete directly due to the nature of the business of the Company, the market for the Company's products, services and the technologies with which the Company is involved.

 

13.3 The parties to this Agreement recognize that a breach by the Executive of any of the covenants herein contained would result in damages to the Company and that the Company cannot be adequately compensated for such damages by monetary award. Accordingly, the Executive agrees that in the event of any such breach, in addition to all other remedies available to the Company at law or in equity, the Company shall be entitled as a matter of right to apply to a court of competent equitable jurisdiction for such relief by way of restraining order, injunction, decree or otherwise, as may be appropriate to ensure compliance with the provisions of this Agreement.

 

13.4 The Executive will execute the Company's standard non-competition agreement as required by all senior executive staff.

 

OWNERSHIP AND USE OF WORK PRODUCTS

 

14.1 The Executive agree that any work product produced by the Executive in furtherance of the business of the Company either developed solely by the Executive or jointly with any other party will be the sole and exclusive property of the Company.

 

14.2 The Company acknowledges that general knowledge and experience including general techniques, concepts, methods and formulae not developed for the Company's specific application or work gained by the Executive prior to or in the course of his association with the Company, may be used by the Executive at any time prior to, during or subsequent to his association with the Company, unless a specific agreement to the contrary is entered into by the Executive and the Company, as long as the Executive is not in breach of his covenants of non-competition contained herein.

 

14.3 This Agreement does not apply to general techniques, formulae, concepts or method for which no equipment, supplies, facility or other resources or trade secret information of the Company was used and which was developed entirely on the Executive's own time unless such general techniques, formulae, concepts or method relates directly to the actual or specifically targeted business of the Company.

 

14.4 At any and all times, either during the term of this Agreement or after termination hereof, the Executive will promptly, on the request of the Company, perform all such reasonable acts and execute and deliver all such documents that may be necessary to vest in the Company the entire right, title and interest in and to any such work products determined, by the Company, to be the exclusive property of the Company. Should any such services be rendered after termination of this Agreement, a reasonable fee, mutually agreed upon by the Executive and the Company will be paid to the Executive on a per diem basis in addition to reasonable traveling and accommodation expenses incurred as a result of rendering such services.

 

14.5 The Executive will execute the Company's standard invention assignment agreement as required by all senior executive staff.

 

RETURN OF PROPERTY

 

15.1 In the event of termination of this Agreement, the Executive agree to return to the Company any property, which may be in the possession or control of the Executive.

 

15.2 The Executive will execute the Company's standard non-solicitation agreement as required by all senior executive staff.

 

  

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NOTICE

 

16. Any notice or other communication (each a "Communication") to be given in connection with this Agreement shall be given in writing and will be given by personal delivery addressed as follows:

 

TO: Sunvault Energy Inc. - 150 W Axton Road, Bellingham WA 98226 Attention: President & CEO

 

TO: Franzi Tschurtschenthaler - 1402 Black Mountain Crescent, Kelowna, BC, V1P 1P6

 

or at such other address as shall have been designated by Communication by either party to the other. Any Communication shall be conclusively deemed to have been received on the date of delivery. If the party giving any Communication knows or ought reasonably to know of any actual or threatened interruptions of the mails, any such Communication shall not be sent by mail but shall be given by personal delivery.

 

ENTIRE AGREEMENT

 

17. This Agreement constitutes and expresses the whole agreement of the parties hereto with reference to the services of the Executive by the Company, and with reference to any of the matters or things herein provided for, or hereinbefore discussed or mentioned with reference to such services; all promises, representations, and understandings relative thereto being merged herein.

 

AMENDMENTS AND WAIVERS

 

18. No amendment of this Agreement shall be valid or binding unless set forth in writing and duly executed by all parties hereto. No waiver or any breach of any provision of this Agreement shall be effective or binding unless made in writing and signed by the party purporting to give the same and, unless otherwise provided in the written waiver, shall be limited to the specific breach waived.

 

BENEFIT OF AGREEMENT

 

19. The provisions of this Agreement shall enure to the benefit of and be binding upon the legal personal representatives of the Executive and the Company.

 

SEVERABILITY

 

20. If any provision of this Agreement is deemed to be void or unenforceable, in whole or in part, it shall not be deemed to affect or impair the validity of any other provision of this Agreement, and each and every section, subsection and provision of this Agreement is hereby declared and agreed to be severable from each other and every other section, subsection or provision hereof and to constitute separate and distinct covenants. the Executive hereby agree that all restrictions herein are reasonable and valid.

 

JURISDICTION

 

21. This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia. The Company, the Executive hereby irrevocably consent to the jurisdiction of the courts of the Province of British Columbia.

 

COPY OF AGREEMENT

 

22. The Executive hereby acknowledges receipt of a copy of this Agreement duly signed by the Company.

 

NUMBER AND GENDER

 

23. Wherever the singular is used in this Agreement it is deemed to include the plural and wherever the masculine is used it is deemed to include the feminine or body politic or corporate where the context or the parties so require.

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written:

 

 

Sunvault Energy Inc.

 

 

Authorized Signatory

 

Franzi Tschurtschenthaler

 

 

Signature

	
In the presence of:

 

----------------------------------------------------

Witness

 

----------------------------------------------------

Name

 

----------------------------------------------------

Address

 

 

 

 

 

 

 

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