Document:

Federal Home Loan Bank of Chicago Benefit Equalization Plan

 Exhibit 10.8.4 
  
 FEDERAL HOME LOAN BANK OF CHICAGO 
  
 BENEFIT EQUALIZATION PLAN 
  
 Effective January 1, 1994 
  
 AS AMENDED JANUARY 1, 2004 

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page

	 ARTICLE I
	  	 DEFINITIONS
	  	1
			
	 ARTICLE II
	  	 MEMBERSHIP
	  	2
			
	 ARTICLE III
	  	 AMOUNT AND PAYMENT OF PENSION BENEFITS
	  	3
			
	 ARTICLE IV
	  	 AMOUNT AND PAYMENT OF THRIFT BENEFITS
	  	4
			
	 ARTICLE V
	  	 SOURCE OF PAYMENTS
	  	7
			
	 ARTICLE VI
	  	 DESIGNATION OF BENEFICIARIES
	  	7
			
	 ARTICLE VII
	  	 ADMINISTRATION OF THE PLAN
	  	8
			
	 ARTICLE VIII
	  	 AMENDMENT AND TERMINATION
	  	9
			
	 ARTICLE IX
	  	 GENERAL PROVISIONS
	  	9

  

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 FEDERAL HOME LOAN BANK OF CHICAGO 
 BENEFIT EQUALIZATION PLAN 
  
 Effective January 1, 1994, the FEDERAL HOME LOAN BANK OF CHICAGO (the “Bank”) established this Benefit Equalization Plan (the “Plan”). 
  
 INTRODUCTION 
  
 The purpose of this Plan is to provide to certain employees of the Bank the benefits which would have been payable under the Comprehensive Retirement Program of the
Financial Institutions Retirement Fund (the “Retirement Fund”), and benefits equivalent to the salary reduction contributions and matching contributions which would have been available under the Financial Institutions Thrift Plan (the
“Thrift Plan”), but for (i) the limitations placed on benefits and matching contributions for employees by Sections 401(a)(17), 401(k)(3)(A)(ii), 402(g) and 415 of the Internal Revenue Code of 1986, as amended, (ii) the amounts deferred
under Sections 4.01 and 4.02 of this Plan from the definition of “Base Salary” under the Retirement Fund and the Thrift Plan; and (iii) amounts deferred from bonus and incentive compensation. 
  
 This Plan is intended to constitute a nonqualified unfunded deferred compensation plan for a
select group of management or highly compensated employees under Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA). All benefits payable under this Plan shall be paid solely out of the general assets of the Bank. No
benefits under this Plan shall be payable by or from the Retirement Fund or its assets or the Thrift Plan or its assets. 
  
 ARTICLE I. DEFINITIONS 
  
 When used in the Plan, the following terms shall have the following meanings: 
  

	1.01	“Account” means the account established and maintained hereunder to record the contributions deemed to be made by the Member and the Bank, as well as the increase
in value attributable to the earnings thereon, all as described hereafter. 

  

	1.02	“Actuary” means the independent consulting actuary retained by the Bank to assist the Committee in its administration of the Plan. 

  

	1.03	“Adoption Date” means the date the Plan is adopted by the Board of Directors. 

  

	1.04	“Bank” means the Federal Home Loan Bank of Chicago. 

  

	1.05	“Beneficiary” means the beneficiary or beneficiaries designated in accordance with Article VI of the Plan to receive the benefit, if any, payable upon the death of
a Member of the Plan. 

  

	1.06	“Board of Directors” means the Board of Directors of the Bank. 

  

	1.07	“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto. 

	1.08	“Code Limitations” means the cap on compensation taken into account by a plan under Code Section 401(a)(17), the limitations on salary deferral contributions
necessary to meet the average deferral percentage (“ADP”) test under Code Section 401(k)(3)(A)(ii), the limitations on employee and matching contributions necessary to meet the average contribution percentage (“ACP”) test under
Code Section 401(m), the dollar limitations on elective deferrals under Code Section 402(g) and the overall limitations on contributions and benefits imposed on qualified plans by Code Section 415, as such provisions may be amended from time to
time, and any similar successor provisions of federal tax law. 

  

	1.09	“Committee” means the Personnel and Compensation Committee of the Board of Directors of the Bank, which is authorized to administer the Plan.

  

	1.10	“Deferral Agreement” means the agreement under which a Member elects to defer compensation under the Plan in accordance with the provisions of Section 4.01.

  

	1.11	“Effective Date” means January 1, 1994. 

  

	1.12	“Eligible Executive” means an employee of the Bank who is a corporate officer and who has been selected to be an Eligible Executive by the Committee.

  

	1.13	“Member” means any person included in the membership of the Plan as provided in Article II. 

  

	1.14	“Plan” means the Federal Home Loan Bank of Chicago Benefit Equalization Plan, as set forth herein or as it may be amended or restated from time to time.

  

	1.15	“Retirement Fund” means the Comprehensive Retirement Program of the Financial Institutions Retirement Fund, a qualified and tax-exempt defined benefit pension plan
and trust under Sections 401 (a) and 501 (a) of the Code, as adopted and amended by the Bank. 

  

	1.16	“Thrift Plan” means the Financial Institutions Thrift Plan, a qualified and tax-exempt defined contribution plan and trust under Sections 401(a) and 501(a) of the
Code, as adopted and amended by the Bank. 

  
 ARTICLE II. MEMBERSHIP 
  

	2.01	Each Eligible Executive of the Bank shall become a Member of the Plan for purposes of Article III on the latest of (i) the date on which he is included in the membership of the
Retirement Fund, (ii) the date he is selected as an Eligible Executive, or (iii) the Effective Date. 

  

	2.02	Each Eligible Executive of the Bank shall become a Member of the Plan for purposes of Article IV on the latest of (i) the date on which he is credited with an elective contribution
under the Thrift Plan, (ii) the date he is selected as an Eligible Executive, or (iii) the Effective Date. 

  

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	2.03	A benefit shall be payable under the Plan to or on account of a Member only upon the Member’s retirement, death or other termination of employment with the Bank, except as
provided in Section 4.08. 

  

	2.04	No employee shall have the automatic right to be selected as an Eligible Executive for any year, or, having been selected as an Eligible Executive for one year, be considered an
Eligible Executive for any other year. If a Member ceases to be an Eligible Executive but continues to be employed by the Bank, he shall not be eligible to defer any further portion of his compensation under Sections 4.01 or 4.02 until he shall
again become an Eligible Executive, and the Member shall cease to accrue any further pension benefit under Section 3.01(a)(ii). 

  
 ARTICLE III. AMOUNT AND PAYMENT OF PENSION BENEFITS 
  

	3.01	The amount, if any, of the annual pension benefit payable to or on account of a Member pursuant to the Plan shall equal the excess of (a) over (b), as determined by the Committee,
where: 

  

	 	(a)	is the annual pension benefit (as calculated by the Retirement Fund on the basis of the “Regular Form” of payment, as defined in the Retirement Fund) that would otherwise
be payable to or on account of the Member by the Retirement Fund if its provisions were administered: 

  

	 	(i)	without regard to the Code Limitations; 

  

	 	(ii)	with the inclusion in the definition of “Base Salary” for the year deferred of any amounts deferred by a Member under Sections 4.01 and 4.02 of this Plan;

  

	 	(b)	is the annual pension benefit (as calculated by the Retirement Fund on the basis of the Regular Form of payment) that is payable to or on account of the Member under the Retirement
Fund. 

  
 For purposes of this Section 3.01
“annual pension benefit” includes any “Active Service Death Benefit”, “Retirement Adjustment Payment”, “Annual Increment” and “Single Purchase Fixed Percentage Adjustment” which the Bank elected to
provide its employees under the Retirement Fund. 
  

	3.02	The benefit payable to or on account of a Member pursuant to Section 3.01 shall be paid in the same form as elected by the Member under the Retirement Fund. Notwithstanding the
foregoing, a Member shall be entitled to receive a lump sum payment under the terms of this Plan if he has filed an irrevocable election to that effect with the Committee at least 12 full calendar months prior to his date of retirement. In the event
a Member elects to receive his benefit under the Retirement Fund in the form of a lump sum payment and has failed to make the election required by the preceding sentence, the Member’s pension benefit payable under this Plan shall be payable to
or on account of the Member in the Regular Form of payment unless the Committee, in its sole discretion, decides to pay the benefit in a lump sum. 

  

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 If the Members benefit is not payable in the Regular Form under this Section 3.02, the benefit payable in
an optional form shall be of equivalent actuarial value to the benefit otherwise payable in the Regular Form. For this purpose, equivalent actuarial value shall be determined by the Actuary under the same actuarial factors and assumptions then used
by the Retirement Fund to determine actuarial equivalence under the Retirement Fund. 
  

	3.03	If a Member dies after the date his benefit payments under the Plan had commenced, the only death benefit payable under the Plan in respect of said Member shall be the amount, if
any, payable under the form of payment which the Member had elected unless the Committee, in its sole discretion, decides to pay the benefit in a lump sum. 

  

	3.04	If a Member to whom an annual pension benefit is payable under the Plan dies while in active service or following retirement or other termination of employment but prior to the
commencement of his benefit payments under this Plan, the death benefit will be computed as under the Retirement Fund with the adjustments provided under Section 3.01 above and any amount which may not be paid under the Retirement Fund shall be
payable under this Plan in the form of payment provided under the Retirement Fund or, in the discretion of the Committee, in a lump sum. 

  

	3.05	If a Member is restored to employment with the Bank, payment of any benefits shall cease. Upon his subsequent retirement or termination of employment with the Bank, his benefit
under the Plan shall be recomputed in accordance with Section 3.01, but shall be reduced by the equivalent actuarial value of the amount of any benefit paid by the Plan in respect of his previous retirement or termination of employment, and such
reduced benefit shall be paid to the Member in accordance with the provisions of the Plan. For purposes of this Section 3.05, the equivalent actuarial value of the benefit paid in respect of the Member’s previous retirement or termination of
employment shall be determined by the Actuary utilizing for that purpose the same actuarial factors and assumptions then used by the Retirement Fund to determine actuarial equivalence under the Retirement Fund. 

  

	3.06	Notwithstanding any other provision of this Plan, if, on the date payment under the Plan would otherwise commence, the lump sum settlement value of a Member’s benefit
determined by the Actuary does not exceed $5000, or such other amount as may be determined under Section 411(a)(11) of the Code, then that Members benefit shall automatically be paid in the form of a lump sum settlement. 

  

	3.07	All annual pension benefits under the Plan shall be paid in monthly, quarterly, or annual installments, as determined by the Committee in its discretion. Benefits shall commence as
soon as practicable following the Members retirement date under the Retirement Fund, except that no benefits shall be paid prior to the date that benefits under the Plan can be definitely determined by the Committee. 

  
 ARTICLE IV. AMOUNT AND PAYMENT OF THRIFT BENEFITS 
  

	4.01	 If the employees salary reduction account contributions under the Thrift Plan for such year have reached the maximum permitted by the Code Limitations as determined
by the 

  

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Committee, and if the employee has elected to reduce his compensation for the current calendar year in accordance with the provisions of Section 4.03, then
such employee shall be credited with an elective contribution addition under this Plan equal to the reduction in his compensation made in accordance with such election; provided, however, that the sum of all such elective contribution additions for
an employee with respect to any single calendar year shall not be greater than the excess of (a) over (b), where: 

  

	 	(a)	is an amount equal to the maximum salary reduction account contributions permitted under the Thrift Plan for the calendar year as determined under the Thrift Plan if its provisions
were administered without regard to the Code Limitations and if compensation as defined in the Thrift Plan included any deferrals made under this Section 4.01 or Section 4.02 plus, any bonus or incentive payments allowed by the Committee to be
deferred under the Plan for such calendar year; and 

  

	 	(b)	is an amount equal to his regular account and salary reduction-account contributions actually made under the Thrift Plan for the calendar year. 

  
 If the reduction in an employee’s compensation under such election is
determined to exceed the maximum allowable elective contribution additions for such year, the excess and any related earnings credited under Section 4.04 shall be paid to such employee within the first two and one-half months of the succeeding
calendar year. 
  

	4.02	If a portion of an employee’s regular account contribution or salary reduction account contribution to the Thrift Plan for the preceding year is returned to an employee after
the end of such preceding year on account of the Code Limitations, and if the employee has elected in accordance with the provisions of Section 4.03 to reduce his compensation for the current year by the amount of such Thrift Plan contributions and
related earnings returned to him for the preceding year, then such employee shall be credited with a make up contribution addition under this Plan equal to the reduction in his compensation made in accordance with such election.

  

	4.03	A Member’s elections under Sections 4.01 and 4.02 shall be made in accordance with the following provisions: 

  

	 	(a)	 The Committee shall provide each Member with a Base Salary Deferral Agreement prior to the commencement of the calendar year in which compensation is to be earned
and paid. Each Member shall execute and deliver the Deferral Agreement to the Committee no later than the last business day preceding the calendar year in which compensation is to be earned and paid. The Committee shall provide each Member
designated by the Committee to be allowed to defer bonus and incentive compensation with a Bonus/Incentive Deferral Agreement prior to the determination of such bonus or incentive payments for such calendar year, but not later than October
1st of such year. Such Member shall execute and deliver the Bonus/Incentive Deferral Agreement to the Committee no
later than November 1st of such calendar year. 

  

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Notwithstanding the above, an Eligible Executive who becomes eligible to participate during a calendar year may execute a Deferral Agreement with respect to
his elections under Section 4.01 and 4.02 within 30 days of the date he becomes eligible to participate. An individual who is an Eligible Executive immediately prior to the Adoption Date may file a Deferral Agreement with the Committee within such
period prior to the Adoption Date and in such manner as the Committee may prescribe. With respect to Sections 4.01 and 4.02, the Deferral Agreement shall only apply to compensation earned by the Member in the payroll periods beginning on or after
the later of the date such Agreement is submitted to the Committee or the Adoption Date. 

  

	 	(b)	The Deferral Agreement shall provide for separate elections with respect to elective contribution additions under Section 4.01 and make-up contribution additions under Section 4.02.
Any Member who has been designated by the Committee to be allowed to defer bonus and incentive compensation under the Plan shall complete a separate Bonus/Incentive Deferral Agreement. 

  

	 	(c)	An Eligible Executive’s elections on his Deferral Agreement of the rates at which he authorizes deferrals under Sections 4.01 and 4.02 shall be irrevocable for the calendar
year for which the deferral is elected. Notwithstanding the foregoing, a Member may, in the event of an unforeseeable emergency which results in a severe financial hardship, request a suspension of his salary deferrals under the Plan. The request
shall be made in a time and manner determined by the Committee. The suspension shall be effective with respect to the portion of the calendar year remaining after the Committees determination that the Member has incurred a severe financial hardship.
The Committee shall apply standards, to the extent applicable, identical to those described in Section 4.08 in making its determination. 

  

	4.04	For each salary reduction contribution addition credited to a Member under Section 4.01 (except amounts deferred as bonus and incentive deferrals), such Member shall also be
credited with a matching contribution addition under this Plan equal to the matching contribution, if any, that would be credited under the Thrift Plan with respect to such amount if contributed to the Thrift Plan, determined as if the Thrift Plan
were administered in accordance with its terms up to the maximum Code Limitations, and determined after taking into account the Member’s actual salary reduction contributions to and actual matching contributions under the Thrift Plan.

  
 For each make-up contribution addition credited
to a Member under Section 4.02, such Member shall also be credited with a matching contribution addition under this Plan equal to the matching contribution, if any, that was lost under the Thrift Plan with respect to the contributions returned for
the preceding calendar year. 
  

	4.05	 The Committee shall maintain an Account on the books and records of the Bank for each employee who is a Member by reason of amounts credited under Sections 4.01 and
4.02. The salary reduction contribution additions, make-up contribution additions and matching contribution additions of a Member under Sections 4.01, 4.02 and 4.03 shall be credited 

  

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to the Member’s Account as soon as practical after the date that the compensation reduced under Section 4.01 or 4.02 would otherwise have been paid to
such Member. In addition, the Account of a Member shall be credited as of the end of each calendar quarter with interest at the same rate as the Bank’s net return on equity after REFCO during each corresponding quarter. In lieu of such rate,
the Committee may designate from time to time, such other indices of investment performance or investment funds as the measure of investment performance under this Section 4.05. A Member shall at all times be 100% vested in his Account.

  

	4.06	The balance credited to a Member’s Account shall be paid to him in a lump sum payment as soon as reasonably practicable after his retirement or other termination of employment
with the Bank. 

  

	4.07	If a Member dies prior to receiving the balance credited to his Account under Section 4.06 above, the balance in his Account shall be paid to his Beneficiary in a lump sum payment
as soon as reasonably practicable after his death. 

  

	4.08	While employed by the Bank, a Member may, in the event of an unforeseeable emergency, request a withdrawal from his Account. The request shall be made in a time and manner
determined by the Committee, shall not be for an amount greater than the lesser of (i) the amount required to meet the financial hardship, or (ii) the amount of his Account, and shall be subject to approval by the Committee. For purposes of this
Section 08, an unforeseeable emergency means a financial hardship as defined under the Thrift Plan, which hardship the Member is unable to satisfy with funds reasonably available from other sources. The circumstances that will constitute an
unforeseeable emergency will depend upon the facts of each case as determined by the Committee. 

  
 ARTICLE V. SOURCE OF PAYMENTS 
  

	5.01	All payments of benefits under the Plan shall be paid from, and shall only be a general claim upon, the general assets of the Bank, notwithstanding that the Bank, in its discretion,
may establish a bookkeeping reserve or a grantor trust (as such term is used in Code Sections 671 through 677) to reflect or to aid it in meeting its obligations under the Plan with respect to any Member or prospective Member or Beneficiary. No
benefit provided by the Plan shall be payable from the assets of the Retirement Fund or the Thrift Plan. 

  

	5.02	No Member shall have any right, title or interest whatever in or to any investments which the Bank may make or any specific assets which the Bank may reserve to aid it in meeting
its obligations under the Plan. To the extent that any person acquires a right to receive payments from the Bank under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Bank. 

  
 ARTICLE VI. DESIGNATION OF BENEFICIARIES 
  

	6.01	 Each Member of the Plan may file with the Committee a written designation of one or more persons as the Beneficiary who shall be entitled to receive the amount, if
any, payable under the Plan upon his death. The Member may, from time to time, revoke or 

  

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change his Beneficiary designation without the consent of any prior Beneficiary by filing a new designation with the Committee. The last such designation
received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Member’s death, and in no event shall it be effective as
to a date prior to such receipt. 

  

	6.02	If no such Beneficiary designation is in effect at the time of a Member’s death, or if no designated Beneficiary survives the Member, or if, in the opinion of the Committee,
such designation conflicts with applicable law, the Member’s estate shall be deemed to have been designated his Beneficiary and shall be paid the amount, if any, payable under the Plan upon the Member’s death. If the Committee is in doubt
as to the right of any person to receive such amount, the Committee may retain such amount, without liability for any interest thereon, until the rights thereto are determined, or the Committee may pay such amount into any court of appropriate
jurisdiction and such payment shall be a complete discharge of the liability of the Plan and the Bank therefore. 

  
 ARTICLE VII. ADMINISTRATION OF THE PLAN 
  

	7.01	The Committee shall have general authority over and responsibility for the administration and interpretation of the Plan. The Committee shall have full power and discretionary
authority, subject to Board approval, to interpret and construe the Plan, to make all determinations considered necessary or advisable for the administration of the Plan and any trust referred to in Article V, and the calculation of the amount
of benefits payable thereunder, and to review claims for benefits under the Plan. The Committee’s interpretations and constructions of the Plan and its decisions or actions thereunder shall be binding and conclusive on all persons for all
purposes. 

  

	7.02	The Committee shall arrange for the engagement of the Actuary, and if the Committee deems it advisable, it shall arrange for the engagement of legal counsel and certified public
accountants (who may be counsel or accountants for the Bank), and other consultants, and make use of agents and clerical or other personnel, for purposes of the Plan. The Committee may rely upon the written opinions of such Actuary, counsel
accountants and consultants, and upon any information supplied by the Retirement Fund or the Thrift Plan for purposes of Sections 3.01, 4.01 and 4.02 of the Plan, and delegate to any agent or to any sub-committee or Committee member its authority to
perform any act hereunder, including without limitations those matters involving the exercise of discretion; provided, however, that such delegation shall be subject to revocation at any time at the discretion of the Committee. The Committee shall
report to the Board, or to a committee designated by the Board, at such intervals as shall be specified by the Board or such designated committee, with regard to the matters for which it is responsible under the Plan. 

  

	7.03	No Committee member shall be entitled to act on or decide any matters relating solely to such member or any of his rights or benefits under the Plan. 

  

 8 

	7.04	A Committee member shall be reimbursed for any reasonable expenses incurred in connection with his services as a Committee member. No bond or other security need be required of the
Committee or any member thereof in any jurisdiction. 

  

	7.05	All claims for benefits under the Plan shall be submitted in writing to the Chairman of the Committee. Written notice of the decision on each such claim shall be furnished with
reasonable promptness to the Member or his Beneficiary (the claimant). The claimant may request a review by the Committee of any decision denying the claim in whole or in part. Such request shall be made in writing, and filed with the Committee
within 30 days of such denial. A request for review shall contain all additional information which the claimant wishes the Committee to consider. The Committee may hold any hearing or conduct any independent investigation which it deems desirable to
render its decision, and the decision on review shall be made as soon as feasible after the Committee’s receipt of the request for review. Written notice of the decision on review shall be furnished to the claimant. For all purposes under the
Plan, such decisions on claims (where no review is requested) and decisions on review (where review is requested) shall be final, binding and conclusive on all interested persons as to all matters relating to the Plan. 

  

	7.06	All expenses incurred by the Committee in its administration of the Plan shall be paid by the Bank. 

  
 ARTICLE VIII. AMENDMENT AND TERMINATION 
  

	8.01	The Board of Directors may amend, suspend or terminate, in whole or in part, the Plan without the consent of the Committee, any Member, beneficiary or other person, except that no
amendment, suspension or termination shall retroactively impair or otherwise adversely affect the rights of any Member, Beneficiary or other person to benefits under the Plan which have accrued prior to the date of such action, as determined by the
amendment or take any other action which may be necessary or appropriate to facilitate the administration, management and interpretation of the Plan or to conform the Plan thereto, provided any such amendment or action does not have a material
effect on the then currently estimated cost to the Bank of maintaining the Plan. 

  
 ARTICLE IX. GENERAL PROVISIONS 
  

	9.01	 The Plan shall be binding upon and inure to the benefit of the Bank and its successors and assigns and the Members, and the successors, assigns, designees and
estates of the Members. The Plan shall also be binding upon and inure to the benefit of any successor bank or organization succeeding to substantially all of the assets and business of the Bank, but nothing in the Plan shall preclude the Bank from
merging or consolidating into or with, or transferring all or substantially all of its assets to, another bank which assumes the Plan and all obligations of the Bank hereunder. The Bank agrees that it will make appropriate provision for the
preservation of Members’ rights under the Plan in any agreement or plan which it may enter into to effect any merger, consolidation reorganization or transfer of assets. In such a merger, consolidation, reorganization, or 

  

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transfer of assets and assumption of Plan obligations of the Bank, the term Bank shall refer to such other bank and the Plan shall continue in full force and
effect. 

  

	9.02	Neither the Plan nor any action taken thereunder shall be construed as giving to a Member the right to be retained in the employ of the Bank or as affecting the right of the Bank to
dismiss any Member from its employ. 

  

	9.03	The Bank shall withhold or cause to be withheld from all benefits payable under the Plan all federal, state, local or other taxes required by applicable law to be withheld with
respect to such payments. 

  

	9.04	No right or interest of a Member under the Plan may be assigned, sold, encumbered transferred or otherwise disposed of and any attempted disposition of such right or interest shall
be null and void. Further, no right or interest of a Member may be reached by any creditor of the Member. 

  

	9.05	If the Committee shall find that any person to whom any amount is or was payable under the Plan is unable to care for his affairs because of illness or accident or because he is a
minor then any payment, or any part thereof, due to such person (unless a prior claim therefor has been made by a duly appointed legal representative), may, if the Committee is so inclined, be paid to such person’s spouse, child or other
relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be in complete discharge of
the liability of the Plan and the Bank therefor. 

  

	9.06	All elections, designations, requests, notices, instructions, and other communications from a Member, Beneficiary or other person to the Committee required or permitted under the
Plan shall be in such form as is prescribed from time to time by the Committee and shall be mailed by first class mail or delivered to such location as shall be specified by the Committee and shall be deemed to have been given and delivered only
upon actual receipt thereof at such location. 

  

	9.07	The benefits payable under the Plan shall be in addition to all other benefits provided for employees of the Bank and shall not be deemed salary or other compensation by the Bank
for the purpose of computing benefits to which he may be entitled under any other plan or arrangement of the Bank. 

  

	9.08	 No Committee member shall be personally liable by reason of any instrument executed by him or on his behalf, or action taken by him, in his capacity as a Committee
member nor for any mistake of judgment made in good faith. The Bank hereby indemnifies and holds harmless the Retirement Fund, the Thrift Plan and each Committee member and each employee, officer or director of the Bank, the Retirement Fund or the
Thrift Plan, to whom any duty, power, function or action in respect of the Plan may be delegated or assigned, or from whom any information is requested for Plan purposes, against any cost or expense (including fees of legal counsel) and liability
(including any sum paid in settlement of a claim or legal action with the approval of the Bank) arising out of 

  

 10 

	 	 
anything done or omitted to be done in connection with the Plan, unless arising out of such person’s fraud or bad faith. 

 

	9.09	As used in the Plan, the masculine gender shall be deemed to refer to the feminine, and the singular person shall be deemed to refer to the plural, wherever appropriate.

  

	9.10	The captions preceding the Sections of the Plan have been inserted solely as a matter of convenience and shall not in any manner define or limit the scope or intent of any
provisions of the Plan. 

  

	9.11	The Plan shall be construed according to the laws of the State of Illinois in effect from time to time. 

  
 IN WITNESS WHEREOF, the FEDERAL HOME LOAN BANK OF CHICAGO has caused the amended Plan to be executed effective as of January
1, 2004. 
  

	
	 Approved by the Board of Directors this 16th day
 of December, 2003.

	
	 /s/ Peter E. Gutzmer

	
	 Corporate Secretary

  

 11Federal Home Loan Bank of Chicago Employee Severance and Retention Plan

 Exhibit 10.8.5 
  
 FEDERAL HOME LOAN BANK 
  

OF CHICAGO 
  
 EMPLOYEE SEVERANCE 
  
 AND 
  
 RETENTION PLAN 

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page

	 SECTION 1.
	  	PLAN NAME AND EFFECTIVE DATE	  	1
			
	 SECTION 2.
	  	PURPOSE	  	1
			
	 SECTION 3.
	  	DEFINITIONS	  	1
			
	 SECTION 4.
	  	ELIGIBILITY	  	2
			
	 SECTION 5.
	  	SEVERANCE PAYMENT CALCULATION; PAYMENT AND BENEFIT CONTINUATION	  	3
			
	 SECTION 6.
	  	RETENTION BONUS PAYMENT CALCULATION; PAYMENT AND BENEFIT CONTINUATION	  	3
			
	 SECTION 7.
	  	ADMINISTRATION	  	4
			
	 SECTION 8.
	  	CLAIMS PROCEDURE	  	5
			
	 SECTION 9.
	  	GENERAL INFORMATION	  	5
			
	 SECTION 10.
	  	ERISA RIGHTS STATEMENT	  	6
			
	 SECTION 11.
	  	GOVERNING LAW	  	7

  

 -i- 

 FEDERAL HOME LOAN BANK OF CHICAGO 
 EMPLOYEE SEVERANCE AND RETENTION PLAN 
  

	SECTION	1. PLAN NAME AND EFFECTIVE DATE 

  
 1.1 The name of the Plan is the Federal Home Loan Bank of Chicago Employee Severance and Retention Plan. The effective date of the Plan shall be June 30,
2004. 
  

	SECTION	2. PURPOSE 

  
 2.1 The purpose of the Plan is to (a) provide severance pay to eligible Employees under the conditions set forth in this Plan and (b) provide an incentive
for current Employees to continue in their current positions with the Bank through a period of organizational change. Severance payments under the Plan are designed to provide the Employee with funds while seeking other employment. The retention
bonus is designed to encourage Employees to continue providing valuable service to the Bank during a transition period. 
  

	SECTION	3. DEFINITIONS 

  
 3.1 Bank shall mean the Federal Home Loan Bank of Chicago. 
  

3.2 Board shall mean the Board of Directors (or a Committee thereof) of the Bank. 
  
 3.3 Cause shall mean: (a) a material violation by the Employee of any applicable law or regulation respecting the
business of the Bank; (b) the Employee being found guilty of a felony or an act of dishonesty in connection with the performance of his duties as an employee of the Bank; or (c) the willful or negligent failure of the Employee to fulfill the duties
and responsibilities of his position. The Employee shall be entitled to at least seven (7) days’ prior written notice of the Bank’s intention to terminate his or her employment for any Cause specifying the grounds for such termination and
the means to rectify such conduct, if any, and seven (7) days to rectify or appeal in writing to the Board regarding the existence of such Cause. 
  
 3.4 Constructive Discharge shall mean any one of the following events: (i) the Employee is moved from the position(s) held with the Bank as of the
Effective Date, other than as a result of the Employee’s appointment to one or more position(s) of equal or superior scope and responsibility; or (ii) the Employee shall fail to be vested by the Bank with the powers authority and support
services of any of such position(s); or (iii) the Bank otherwise commits a material breach of its obligations under this Plan. 
  
 3.5 Employee shall mean a regular, active full-time or Part-time Plus employee of the Bank, but excludes an employee who has a written employment
agreement, severance agreement or similar agreement with the Bank providing for severance payment(s) in the event of termination of employment. 
  

 3.6 Participant shall mean an Employee who satisfies the eligibility requirements as set forth in
Section 4.1 with respect to severance payments or Section 4.2 with respect to retention bonus payments, as the case may be. 
  
 3.7 Pay shall mean the base or regular compensation rate as of the calendar month preceding the employment termination date. 
  
 3.8 Payment Period shall mean the number of weeks of Pay a Participant
is entitled to under Section 5.1. The Payment Period is not dependent on whether a benefit payment under Section 5 is made periodically or in a lump sum. 
  
 3.9 Plan shall mean this Federal Home Loan Bank of Chicago Employee Severance and Retention Plan as it may be amended from time to time.

  
 3.10 Retention Period shall mean the period of time
commencing on June 30, 2004 and ending on June 30, 2005. 
  
 3.11
Service shall mean all employment with the Bank, or any successor thereof.  
  
 SECTION 4. ELIGIBILITY 
  
 4.1 An Employee shall be eligible for severance payments and employee benefits under the Plan, as set forth in Section 5, if: 
  

(a) the Employee is selected for inclusion by the Board; and 
  
 (b) the Employee is terminated by the Bank, other than for Cause; and 
  
 (c) the Employee signs a general release waiving any
employment related claims against the Bank in a form provided by the Bank. 
  
 4.2 An Employee shall be eligible for the retention bonus payment and employee benefits under the Plan, as set forth in Section 6, if: 
  
 (a) the Employee is selected for inclusion by the Board; and 
  
 (b) the Employee remains employed by the Bank during the
Retention Period; and 
  
 (c) the Employee signs
a Retention Agreement in the form of Annex I to this Plan; and 
  
 (d) the Employee signs a general release waiving any employment related claims against the Bank in a form provided by the Bank, provided that this clause (d) shall only apply in the case of an Employee whose
employment is terminated pursuant to Section 6.3. 
  

 2 

 SECTION 5. SEVERANCE PAYMENT CALCULATION; PAYMENT AND BENEFIT CONTINUATION 
  
 5.1 A Participant under the Plan shall be eligible to receive the following
severance payment: 
  
 Management Committee – the
greater of (a) four (4) weeks’ Pay for each full calendar year of Service, or (b) one (1) year’s Pay; or 
  
 Senior Vice President and Vice President – the greater of (a) three (3) weeks’ Pay for each full calendar year of Service, or (b) nine
(9) months’ Pay; 
  
 5.2 The Bank reserves the right to
offset the payments described in Section 5.1 above against any monies the Participant owes the Bank. 
  
 5.3 Payments under the Plan shall be made during the Payment Period in accordance with the regular payroll schedule of the Bank or, at the discretion of
the Board, in a lump sum within five (5) business days after the date the Participant’s employment with the Bank is terminated, subject to any necessary or required benefit or tax withholding. 
  
 5.4 If a Participant dies before receiving a payment due under the Plan, such
payment shall continue to be paid to the beneficiary designated by the Participant. 
  
 5.5 A Participant who elects to continue health insurance coverage after termination of employment under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), shall have the
premium for such continuation coverage paid by the Bank. The period of such payment, if any, shall be the Payment Period. After the end of the Payment Period (if applicable), the Participant will be required to pay the full COBRA premium for such
coverage until the end of the COBRA continuation period. 
  
 5.6
In the event of an involuntary termination for Cause, the voluntary termination by the Employee of his or her employment during the Retention Period for any reason other than a Constructive Discharge, or termination of employment after the Plan
terminates, the Employee will not be entitled to any compensation or benefits under this Section 5, other than compensation and benefits up to the date of termination. 
  
 SECTION 6. RETENTION BONUS PAYMENT CALCULATION; PAYMENT AND BENEFIT CONTINUATION 
  
 6.1 If the Employee has continued in his or her employment with the Bank
during the Retention Period, the Bank shall pay to the Employee in a lump sum within 30 days of the end of the Retention Period an amount equal to the Target Award Percentage payable under the Federal Home Loan Bank of Chicago Management Incentive
Compensation Plan or the Bankwide Incentive Compensation Plan, as may be applicable, based upon the Plan Worksheet established for the Employee for the 2004 Plan Year as in effect on the Effective Date. The Bank shall 

  

 3 

 
withhold from amounts payable to the Employee hereunder, any federal, state or local withholding or other taxes or changes which it is required to withhold.

  
 6.2 During the Retention Period, the Employee shall continue
to receive compensation at his or her annual base salary rate, and shall be entitled to participate in all plans and benefits including, but not limited to, incentive compensation, disability income, life insurance, medical and hospitalization
insurance, severance pay, and similar or comparable plans, and also receive perquisites extended to similarly situated employees, at the greatest amount and level as was paid or provided to similarly situated employees during the Retention Period.

  
 6.3 If, during the Retention Period, the Employee’s
employment is either (a) terminated by the Bank for any reason other than Cause or (b) voluntarily terminated by the Employee because the Employee as a result of a Constructive Discharge, then the Employee will be entitled to payment of the
retention bonus as provided for under Section 4 hereof; provided, however, that payment of the retention bonus will be made to the Employee within 30 days of the Employee’s last day of work. 
  
 6.4 In the event of an involuntary termination for Cause or the voluntary
termination by the Employee of his or her employment during the Retention Period for any reason other than a Constructive Discharge, the Employee will not be entitled to any compensation or benefits under this Section 6, other than compensation and
benefits up to the date of termination. 
  
 6.5 The provisions of
Sections 8, 9, and 10 shall not apply to Section 6.  
  
 SECTION 7. ADMINISTRATION 
  
 7.1
The Plan is sponsored and shall be administered by the Bank. The Human Resources Director of the Bank shall be the named fiduciary under the Plan. 
  
 7.2 The Bank may at any time delegate to a person or body, or reserve therefor, any of the fiduciary responsibilities or administrative duties with
respect to the Plan. The Bank, or any such delegate, shall have the complete discretion and authority to interpret the Plan, including matters regarding eligibility and benefit entitlement. 
  
 7.3 Subject to the limitation of the provisions of the Plan, the Bank may
establish such rules for the administration of the Plan as the Board may deem desirable. 
  
 7.4 The expenses of administering the Plan, including the benefits, shall be paid by the Bank out of its general assets. 
  
 7.5 The Plan and all of its records shall be kept on a calendar year basis, beginning January 1 and ending December 31 of each calendar year. 

 
 7.6 Except as required by applicable law, benefits provided under the Plan
shall not be subject to assignment or alienation, since they are primarily for the support and maintenance of the Participants. Likewise, such benefits shall not be subject to attachment by creditors of or through legal process against the Bank or
any Participant. 
  

 4 

 7.7 The Bank reserves the right to change or amend the Plan in order to carry out the intent hereof by a
resolution adopted by a majority of the Board. Participants will be notified of any changes, and all changes will be subject to the Plan’s provisions and applicable laws. The Plan will automatically terminate on June 30, 2005. 
  
 7.8 Nothing herein shall be construed as giving to any Employee of the Bank
any right to remain in the employ of the Bank, nor shall it provide or be construed as providing any right to claim any pension or other benefit or allowance after termination of employment with the Bank. 
  
 SECTION 8. CLAIMS PROCEDURE 
  
 8.1 Employees normally do not need to take any action to receive benefits
under the Plan. Employees will normally be contacted by the Bank or its delegate concerning the receipt of benefits. Employees who are not so contacted, and who believe they are entitled to benefits under the Plan, must submit a written claim to the
Bank within sixty (60) days of the date of the alleged occurrence giving rise to the claim. If the Bank or any delegate believes that the claim should be denied, the Employee shall be notified in writing of the denial of the claim within ninety (90)
days after the Bank’s receipt of the claim. Such notice shall (a) set forth the specific reason or reasons for the denial, making reference to the pertinent provisions of the Plan on which the denial is based; (b) describe any additional
material or information that should be received before the claim may be acted upon favorably and explain the reason why such material or information, if any, is needed; (c) inform the Employee of his or her right pursuant to this section to request
review of the decision by the Bank; and (d) explain the Plan’s claims review procedure and the time limits applicable to such procedures, including a statement of the Employee’s right to bring a civil action under Section 502(a) of ERISA
following an adverse determination on review. An Employee who believes that he or she has submitted all available and relevant information may appeal the denial of a claim to the Bank by submitting a written request for review within sixty (60) days
after the date on which such denial is received. Such period may be extended by the Bank for good cause shown. During this period, the Employee making the request for review may examine the Plan documents, records and other information relevant to
the Employee’s claim for benefits. The Bank shall decide whether or not to grant the claim within sixty (60) days after receipt of the request for review, but this period may be extended by the Bank for up to an additional sixty (60) days in
special circumstances. The Bank’s decision shall be in writing, shall include specific reasons for the decision, shall refer to pertinent provisions of the Plan on which the decision is based, and shall be conclusive and binding on all persons.

  
 SECTION 9. GENERAL INFORMATION 
  
 9.1 The Plan administrative contact and agent for service of process is the
Bank’s Director of Human Resources, who can be contacted at: 
  
 Federal Home Loan Bank of Chicago 
 111 East Wacker Drive 
 Chicago, IL 60601 
 (312) 565-5700 

 

 5 

 9.2 The Bank Employer Identification Number is 36-6001019 and the Plan number is 510. 
  
 SECTION 10. ERISA RIGHTS STATEMENT 
  
 10.1 As a Participant in the Plan, you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that you are entitled to: 
  

	 	•	 	Examine, without charge at the office of the Plan administrator, all Plan documents, including copies of all documents filed by the Plan with the U.S. Department of Labor, such as
annual reports; 

  

	 	•	 	Obtain copies of the Plan document and other documents governing the operation of the Plan upon written request to the Plan administrator. The administrator may make a reasonable
charge for the copies. 

  
 In addition to creating rights for plan
participants, ERISA imposes duties upon the people who are responsible for the operation of an employee benefit plan. The people who operate your Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of
you and other participants. 
  
 No one may fire you or otherwise discriminate
against you in any way to prevent you from obtaining a benefit or exercising your rights under ERISA. 
  
 If your claim for a benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have the Plan administrator review and reconsider your claim.

  
 Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan administrator and do not receive them within thirty (30) days, you may file suit in a federal court. In such case, the court may require the Plan administrator to provide the materials and pay up to
$110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan administrator. 
  
 If you have a claim for a benefit which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that Plan
fiduciaries misuse the Plans assets, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file a suit in federal court. 
  
 The court will decide who should pay court costs and legal fees. If you are successful, the
court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees if, for example, it finds your claim is frivolous. 
  
 If you have questions about the Plan, you should contact the Plan administrator. If you have any questions about this statement or your
rights under ERISA, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your 

  

 6 

 
telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200
Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications under ERISA by calling the publications hotline of the Employee Benefits Security Administration. 
  
 SECTION 11. GOVERNING LAW 
  
 11.1 The Plan and the rights of the parties hereunder shall be governed by
and interpreted in accordance with federal law, and the laws of the State of Illinois. The invalidity or unenforceability of any provision or any part of any provision, hereof shall in no way effect the validity or enforceability of any other
provision or part hereof. 
  

			
	 Approved by the Personnel & Compensation Committee

	 of the Board of Directors this 30th day of June, 2004

	
	FEDERAL HOME LOAN BANK OF CHICAGO
		
	By:	 	 /s/ Peter E. Gutzmer

		
	 	 	 Its Corporate Secretary

  

 7 

 ANNEX I 
 TO 
 EMPLOYEE SEVERANCE PAY AND RETENTION BONUS PLAN 
  
 RETENTION BONUS AGREEMENT 
  
 This RETENTION BONUS AGREEMENT (this “Agreement”) is made and
entered into as of the 30th day of June, 2004 (the “Effective Date”) by and between THE FEDERAL HOME LOAN BANK OF CHICAGO (the “Bank”), and
                                 (the “Employee”) 
  
 RECITALS 
  
 A. The Employee is a valued and valuable member of the workforce of the Bank.

  
 B. The Bank recognizes that an organizational change at the
Bank may cause uncertainty of employment which uncertainty may result in the loss of the valuable services of the Employee. 
  
 C. The Bank desires to continue to employ the Employee through the date of any organizational change and the Employee is willing to continue such
employment. 
  
 D. The Employee has been selected as a Participant
in the Federal Home Loan Bank of Chicago Employee Severance Pay and Retention Bonus Plan (the “Plan”) and the execution of this Agreement is a condition to the Employees receipt of certain benefits under the Plan. 
  
 NOW THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, it is covenanted and agreed by and between the parties hereto as follows: 
  
 AGREEMENT 
  
 1. Definitions. All capitalized terms used but not otherwise defined in this Agreement shall have the respective meanings given to such terms in the Plan. 
  
 2. Position and Duties. The Employee hereby agrees to remain in the employ of the Bank throughout the Retention Period in his
or her current capacity. During the period of the Employees employment hereunder, the Employee shall devote his or her best efforts and full business time, energy, skills and attention to the business and affairs of the Bank. 
  
 3. Retention Bonus Payment; Compensation and Benefits. The Employee shall be
entitled to receive the payment, compensation and other benefits specified in Section 6 of the Plan, all pursuant to and in accordance with the terms of the Plan. 

 4. Governing Law. This Agreement shall be construed and the legal relations of the parties hereto shall be
determined in accordance with the laws of the State of Illinois without regard to the law regarding conflicts of law. 
  
 5. Amendment. This Agreement may not be amended or modified except by written agreement signed by the Employee and the Bank. 
  
 IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date. 
  

									
	 FEDERAL HOME LOAN
 BANK OF
CHICAGO
	 	 	 	EMPLOYEE
	 	 	 	 	 
				
	 By:  
	 	 	 	 	 	 
					
	 Its
	 	 	 	 	 	 	 	 

  

 2

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