Document:

Written Agreement

 Exhibit 10.1 
  
 WRITTEN AGREEMENT BETWEEN 
 THE FEDERAL HOME LOAN BANK OF SEATTLE 
 AND 
 THE FEDERAL HOUSING FINANCE BOARD 
  

  
 WHEREAS,
the Federal Home Loan Bank of Seattle (Bank) and the Federal Housing Finance Board (Finance Board) have as common goals that the Bank maintains its safe and sound condition, operates in a prudential manner, and meets or exceeds all requirements of
the Federal Home Loan Bank Act (Bank Act) and Finance Board regulations and policies; and 
  
 WHEREAS, during the regular 2004 examination of the Bank conducted by staff of the Office of Supervision (Examiners) and during a subsequent supplemental review, the Examiners
developed findings regarding certain practices of the Bank related to governance, risk management, and financial performance and have summarized their findings in a Report of Examination and supplemental letter (collectively, the 2004 ROE); and

  
 WHEREAS, the Bank, acting
through its Board of Directors (“Seattle Board”), has expressed its intent to address the findings made in the 2004 ROE and work constructively with the Finance Board to enhance the Bank’s financial performance; and 
  
 WHEREAS, the Finance Board and the Bank
agree that it is advisable and appropriate to enter into a written agreement (Agreement) setting forth measures to redress the deficiencies in the Bank’s practices identified by the Office of Supervision; and 
  
 WHEREAS, by Resolution No. 2004-17,
dated December 8, 2004, the Board of Directors of the Finance Board duly authorized Stephen M. Cross, Director, Office of Supervision (OS Director), to enter into this Agreement on behalf of the Finance Board. 
  

 NOW THEREFORE, the Bank and the Finance Board agree
as follows: 
  
 Article 1: General Provisions 
  
 1. This Agreement constitutes a “written agreement entered into by the
Bank with the agency” as used in 12 U.S.C. 1422b(a)(5), and a “written agreement” for purposes of the public disclosure requirements under 12 U.S.C. 1422b(a)(5) and 12 C.F.R. § 908.13(a)(1). 
  
 2. Any report, plan, or consultant’s report to be submitted by the Bank
or the Seattle Board under this Agreement shall be sent to: 
  

			
	 	  	 Stephen M. Cross
 Director, Office of
Supervision
 Federal Housing Finance Board
 1777 F Street,
N.W.
 Washington, D.C. 20006

  
 The OS Director may designate any
other Office of Supervision employee to receive any plan or report required under this Agreement or other communication concerning this Agreement by notifying the Bank in writing of such designation. 
  
 3. Any approval, disapproval, agreement, or disagreement to be given to the
Bank by the Office of Supervision shall be provided in writing by the OS Director or by such other person designated by him and shall set forth the basis for any disapproval or disagreement. 
  
 4. For purposes of this Agreement, an independent, outside consultant shall
be a person or entity not controlled by, or affiliated with, the Bank or any officer or board member of the Bank. Such consultants may have previously been engaged by the Bank, and may be engaged to perform more than one of the functions required by
the provisions of this Agreement. 
  
 5. All communications
provided by the Finance Board to the Bank related to or concerning this Agreement shall be directed to: 
  

			
	 	  	 David A. Bley
 Executive Vice President
 Federal Home Loan Bank of Seattle
 1501 Fourth Avenue
 Suite 1900
 Seattle, Washington 98101

  

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 The Bank may designate any other officer or director of the Bank to receive any communication from the Finance Board
related to or concerning this Agreement by notifying the OS Director, or his designee, in writing of such designation. 
  
 Article 2: Compliance with the Agreement 
  
 1. The Seattle Board shall be responsible for monitoring and coordinating the Bank’s adherence to the provisions of this Agreement. The Seattle Board
also shall be responsible for ensuring that the Bank has adequate processes, personnel, and control systems needed for the Bank to adhere to the provisions of the Agreement. 
  
 2. Not later than January 31, 2005, the Seattle Board shall submit to the OS Director an action plan acceptable to the OS
Director, including timeframes and action steps, for addressing each of the Articles and provisions of this Agreement, as appropriate. Such steps shall include the identification of specific timeframes for the redress of each finding in the 2004
ROE. 
  
 3. Following the submission of an action plan acceptable
to the OS Director, the Seattle Board shall prepare and submit to the OS Director a written progress report at the end of each subsequent month setting forth in detail: 
  
 (a) Actions taken up to the date of the report to comply with each Article of this Agreement, including actions taken to
implement recommendations made by the independent consultants that are hired pursuant to Articles 5 and 6 of this Agreement; 
  
 (b) The results of those actions; 
  
 (c) A description of the actions still needed to achieve full compliance with each Article of this Agreement; and 
  

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 (d) Any other information that the OS Director deems appropriate and reasonably related to the scope of
this Agreement that is requested by the OS Director in writing at least ten (10) days prior to the date on which such written progress report is due to be filed. 
  
 4. Upon receipt of the action plan, the OS Director shall review it and determine whether it complies with the terms of this
Agreement. If the OS Director determines that the action plan does not comply with the terms of this Agreement, he shall provide the Seattle Board with written notice setting forth the basis for such conclusion and the opportunity to amend and
resubmit its action plan. The Seattle Board shall then submit a revised action plan acceptable to the OS Director within 30 days of receipt of such notice. 
  
 Article 3: Redress of Examination Findings 
  
 The Seattle Board shall take all necessary steps to ensure that the Bank redresses each finding arising from the 2004 ROE to the satisfaction of the OS
Director. The preparation of the action plan contemplated by Article 2, paragraph 2 shall not suspend or delay the Bank’s obligation to begin immediately to redress all such findings. 
  
 Article 4: Business and Capital Management Plan 
  
 1. The Seattle Board shall submit to the OS Director by no later than
February 28, 2005, a three-year business and capital management plan that is acceptable to the OS Director. The business and capital management plan shall: 
  
 (a) Not increase the market, credit, or operational risk profiles of the Bank; 
  
 (b) Specify a minimum capital ratio of the sum of the paid-in value of the Bank’s Class B(1) and B(2) stock (as such
amounts are determined for purposes of calculating the Bank’s permanent capital, as defined in 12 C.F.R. § 930.1) plus retained earnings to 

  

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total assets that the Bank shall achieve and maintain consistent with the business strategy presented in the business and capital management plan; and

  
 (c) Establish capital stock, retained earnings, and dividend
policies appropriate for the Bank’s business strategies. 
  
 2. The business plan required by this Article also shall include, at a minimum: 
  
 (a) Projections for asset and capital growth that reflect a detailed analysis of the appropriate levels for and relationships among the Bank’s assets, liabilities, earnings, and off-balance sheet activities;

  
 (b) Identification of any new activities or expansion of
existing activities contemplated by the Bank; and 
  
 (c) A
detailed analysis and projections for the sources of additional capital, as required to meet the Bank’s needs under its business and capital management plan, and the timing for when such capital will be acquired. 
  
 3. Upon receipt of the business and capital management plan, the OS Director
shall review it and determine whether it complies with the terms of this Agreement. If the OS Director determines that the business and capital management plan does not comply with the terms of this Agreement, the OS Director shall provide the
Seattle Board with a written notice detailing the basis for such conclusion and the opportunity to amend and resubmit its business and capital management plan. The Seattle Board shall submit a revised business and capital management plan acceptable
to the OS Director within 30 days of receipt of such notice. 
  
 4. Until the Seattle Board submits a business and capital management plan that is acceptable to the OS Director, the Bank shall maintain a capital ratio, calculated as described in paragraph 1(b) of this Article 4, of not less than four and
fifteen hundredths percent (4.15%). 
  

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 Article 5: Independent Review of Bank Management and the Seattle Board 
  
 1. The Seattle Board shall engage, by no later than February 15, 2005, an
independent, outside management consultant to review the Bank’s management and the Seattle Board’s oversight of the Bank. 
  
 2. The consultant shall complete a study of the Bank’s management, organizational structure and staffing, and the Seattle Board’s oversight by
April 29, 2005. The findings and any recommendations of the consultant shall be set forth in a written report to the Seattle Board and management. 
  
 3. At a minimum, the report shall contain: 
  
 (a) An assessment of the adequacy and the quality of the skills and expertise of management in light of current duties; 
  
 (b) An assessment of the adequacy and the quality of management, management
organization and structure, and staffing for each functional area of the Bank; 
  
 (c) An assessment of the adequacy and the quality of information regarding the operation of the Bank that the Seattle Board receives relative to its fiduciary responsibilities to ensure that the Bank operates in a
safe and sound manner and other responsibilities under law; 
  
 (d) An assessment of the adequacy and the quality of information regarding the operation of the Bank that the Bank’s management generates or receives; and 
  
 (e) Recommendations on how to correct any deficiencies noted by the consultant, and any recommendations of ways to otherwise
enhance management and improve the Seattle Board’s performance. 
  

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 4. For purposes of this Article, “management” shall be defined to include the Bank’s Vice
President – Asset/Liability Manager, and all persons holding a title of senior vice president or above. 
  
 5. Until this Agreement is terminated pursuant to Article 10, paragraph 5, the name and qualifications of any person being considered for employment in a
management capacity and any other information related to such person that the OS Director requests shall be submitted to the OS Director. The OS Director shall have the right to reject the proposed employment of any such management official within
ten (10) business days of receipt of all information concerning the management candidate requested by the OS Director. The failure to exercise this right shall not constitute approval or endorsement by the Office of Supervision or the Finance Board
of the person in question. 
  
 Article 6: Independent Review of Risk Management

  
 1. The Seattle Board shall engage, by February 15, 2005,
an independent, outside consultant to review the Bank’s risk management policies, procedures, and practices. 
  
 2. The consultant shall complete a study of the Bank’s risk management program by April 29, 2005. The findings and any recommendations of the
consultant shall be set forth in a written report to the Seattle Board and management. 
  
 3. At a minimum, the report shall: 
  
 (a) Identify the market, credit, and operational risks faced by the Bank, and provide a written analysis of each of those risks; 
  
 (b) Assess the Bank’s management information systems and the Bank’s processes for measuring business line profitability; 
  

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 (c) Recommend risk measurement tools and controls for specific risk variables most appropriate for the
Bank’s current lines of business and operations; and 
  
 (d)
Describe policies, procedures, and practices, consistent with the business and capital management plan required under Article 4 of this Agreement and the Bank’s financial position, that the Bank should adopt and that: (i) are designed to ensure
the strategic direction and risk tolerances are effectively communicated and followed throughout the Bank; and (ii) identify the actions to be taken whenever noncompliance with risk policies is found. 
  
 Article 7: Responses to Consultants’ Reports 
  
 Within thirty (30) days of completion of each consultant’s report
required by Articles 5 and 6 of this Agreement, the Seattle Board shall provide to the OS Director its responses to the consultants’ reports, including any proposed amendments to its action plan and business and capital management plan to
address the applicable recommendations in such reports. The OS Director shall determine, in his sole discretion, whether the responses are acceptable. If the OS Director determines that the proposed responses are unacceptable he shall provide the
Seattle Board with a written notice detailing the basis for such conclusion and the opportunity to submit a revised response. The Seattle Board shall submit a revised response acceptable to the OS Director within 30 days of receipt of such notice.

  
 Article 8: Provisions Affecting the Retention of Independent, Outside
Consultants 
  
 1. Prior to the engagement of a consultant
pursuant to Articles 5 and 6 of this Agreement, the name and qualifications of the consultant being considered for these engagements, along with the corresponding proposed contract or engagement letter, shall be submitted to the OS Director. The OS
Director shall have the right to reasonably expand or 

  

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otherwise modify the scope of the proposed contract or engagement letter or to reject the proposed contract or engagement letter and the engagement of the
proposed consultant. The OS Director’s failure to exercise any right conferred by this paragraph shall not constitute approval or endorsement by the Office of Supervision or the Finance Board of the consultant, and the consultant shall not be
deemed to be an employee, contractor, service provider or agent of the Finance Board. 
  
 2. A copy of each draft report and each final report required by Articles 5 and 6 shall be submitted to the OS Director at the same time that the report or draft is provided to the Bank. 
  
 3. Each consultant engaged pursuant to Articles 5 and 6 of this Agreement
shall consider, and may accept, comments from the Bank’s management or the Seattle Board concerning drafts of the consultant’s report, but must ensure and certify in its report that its findings and recommendations have been made
independently. The Seattle Board shall furnish the OS Director with a copy of all written comments submitted to a consultant concerning drafts of the consultant’s reports at the same time that the comments are provided to the consultant.

  
 Article 9: Additional Limitations on the Bank’s Activities

  
 1. Without the prior agreement of the OS Director, the
Bank shall not increase the Acquired Member Assets (AMA) on its books, either in whole loans, participations, or any other manner, greater than ten (10) percent per annum from the aggregate net book value of such assets on November 18, 2004. Any
increase in the Bank’s AMA consistent with this Article shall not by itself be deemed a violation of the requirements of paragraph 1(a) in Article 4. 
  
 2. Without the prior agreement of the OS Director, from and after the effective date of this Agreement, the Bank shall not acquire any additional
consolidated obligations for which 

  

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another Federal Home Loan Bank is the primary obligor. Any such investments on the Bank’s books as of the effective date of this Agreement shall not be
deemed a violation of this Article.  
  
 Article 10: Closing Provisions

  
 1. Notwithstanding that this Agreement requires the Bank
to submit certain plans or reports to the Office of Supervision for review or approval, the Seattle Board has the ultimate responsibility for proper and sound management of the Bank. 
  
 2. The Finance Board shall have the sole discretion to determine whether any plan adopted and implemented by the Seattle
Board or the Bank under an Article of this Agreement meets the requirements and the purposes of the Article and this Agreement. 
  
 3. The Bank’s failure to undertake or complete any commitment made in a plan submitted by the Bank and approved by the Office of Supervision pursuant
to the Agreement, or the Bank’s violation of any terms or conditions in such a plan shall be deemed a violation of this Agreement, subject to all remedies applicable to a violation of a “written agreement entered into by the Bank with the
agency” under the Bank Act and Finance Board regulations. Prior to taking any action with respect to the failure of the Bank or the Seattle Board to comply with any obligation under this Agreement, the OS Director shall notify the Bank in
writing of the nature of the defect and provide the Bank with a reasonable opportunity to cure such defect. The preceding sentence shall not create additional rights to cure where such rights are already provided for in this Agreement. 

 
 4. It is expressly understood that if, at any time, the Finance Board
deems it appropriate in fulfilling the responsibilities placed upon it by the Bank Act to undertake any action affecting the Bank, nothing in this Agreement shall in any way inhibit, estop, bar, or otherwise prevent the Finance Board from doing so.
This Agreement does not relieve the Bank 

  

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of any responsibility it has to comply with the Bank Act or with Finance Board regulations or policies or to comply with any other actions requested or
directed by the Finance Board. 
  
 5. The effective date of this
Agreement shall be December 10, 2004, and the provisions shall continue in full force and effect until such provisions are amended in writing by mutual consent of the parties to the Agreement or excepted, waived, or terminated in writing by the OS
Director. 
  
 6. Any time limitations imposed by this Agreement
shall begin to run from the effective date of this Agreement. Such time requirements may be waived or extended in writing by the OS Director or his designee, for good cause. 
  
 7. This Agreement expressly does not form, and may not be construed to form, a contract binding on the Finance Board or the
United States. Notwithstanding the absence of mutuality of obligation, or of consideration, or of a contract, the Finance Board may enforce any of the commitments or obligations herein undertaken by the Bank under its supervisory powers, including
12 U.S.C. 1422b(a)(5), and not as a matter of contract law. The Bank expressly acknowledges that neither the Bank nor the Finance Board has any intention to enter into a contract. The Bank also expressly acknowledges that no Finance Board officer or
employee has statutory or other authority to bind the United States, the Finance Board, or any other federal regulatory agency or entity, or any officer or employee of those entities to a contract affecting the Finance Board’s exercise of its
supervisory responsibilities. The terms of this Agreement, including this paragraph, are not subject to amendment or modification by any extraneous expression, prior agreements or arrangements, or negotiations between the parties, whether oral or
written. 
  

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 8. This Agreement may be executed in one or more counterparts, which may be delivered by facsimile. The
original signature page signed by each Seattle Board member is to be delivered to the OS Director as soon as practicable. 
  
 9. Unless otherwise expressly required by the OS Director or his designee, all written communications to the OS Director may be sent by electronic mail.

  
 IN WITNESS
WHEREOF, the undersigned, authorized by the Federal Housing Finance Board, has hereunto set his hand on behalf of the Federal Housing Finance Board. 
  

					
			
	/s/    STEPHEN M. CROSS        	 	 	 	 12/10/04

	Stephen M. Cross	 	 	 	Date
	Director, Office of Supervision	 	 	 	 
	Federal Housing Finance Board	 	 	 	 

  
 IN
WITNESS WHEREOF, the undersigned, as the duly elected or appointed members of the Seattle Board, have hereunto set their hands on behalf of the Bank. 
  

					
			
	/s/    MICHAEL P. RADWAY        	 	 	 	 12/9/04

	Chairman	 	 	 	Date
			
	/s/    DANIEL L. STEVENS        	 	 	 	 12/9/04

	Vice Chairman	 	 	 	Date
			
	/s/    CARMEN JULIA
AGUIAR        	 	 	 	 12/9/04

	 	 	 	 	Date
			
	/s/    HECTOR R. ARICEAGA        	 	 	 	 12/9/04

	 	 	 	 	Date

  

 12 

					
			
	/s/    CRAIG E. DAHL        	 	 	 	 12/9/04

	 	 	 	 	Date
			
	/s/    MIKE DALY        	 	 	 	 12/9/04

	 	 	 	 	Date
			
	/s/    DANIEL R. FAUSKE        	 	 	 	 12/9/04

	 	 	 	 	Date
			
	/s/    ROBERT L.
FENSTERMACHER        	 	 	 	 12/9/04

	 	 	 	 	Date
			
	/s/    HAROLD G. GILKEY        	 	 	 	 12/9/04

	 	 	 	 	Date
			
	/s/    W. DAVID HEMINGWAY        	 	 	 	 12/9/04

	 	 	 	 	Date
			
	/s/    JAMES R. IRVINE        	 	 	 	 12/9/04

	 	 	 	 	Date
			
	/s/    ALLAN R. LANDON        	 	 	 	 12/9/04

	 	 	 	 	Date
			
	/s/    WILLIAM A. LONGBRAKE        	 	 	 	 12/9/04

	 	 	 	 	Date

  

 13 

					
			
	/s/    JACK T. RIGGS, MD        	 	 	 	 12/9/04

	 	 	 	 	Date
			
	/s/    JAMES H. STROSAHL        	 	 	 	 12/13/04

	 	 	 	 	Date
			
	/s/    VICKI VARELA        	 	 	 	 12/9/04

	 	 	 	 	Date
			
	/s/    ROY M. WHITEHEAD        	 	 	 	 12/9/04

	 	 	 	 	Date
			
	/s/    RANDAL S. YOSHIDA        	 	 	 	 12/8/04

	 	 	 	 	Date

  

 14Resignation and Release Agreement

 Exhibit 10.2 
  
 RESIGNATION AND RELEASE AGREEMENT 
  
 This Resignation and Release Agreement is entered into by and between the Federal Home Loan Bank of Seattle
(“FHLB-Seattle”), and Kelli Bono (“Ms. Bono”) to set forth the terms and conditions of the Ms. Bono’s resignation from her employment and position as an officer of FHLB-Seattle. 
  
 RECITALS 
  
 Ms. Bono has been employed by FHLB-Seattle as its Executive Vice-President and Chief Financial Officer. 
  
 FHLB-Seattle and Ms. Bono have agreed that Ms. Bono will resign her position
with FHLB-Seattle as of December 1, 2004 and that she no longer will be actively employed by FHLB-Seattle pursuant to this Agreement. 
  
 AGREEMENT 
  
 In order to provide Ms. Bono with separation benefits to assist her in the transition to other opportunities, to compensate her for certain retirement
benefits she will lose as a result of her resignation, and to fully and finally resolve any and all issues regarding Ms. Bono’s employment with FHLB-Seattle and the termination of that employment, Ms. Bono and FHLB-Seattle agree as follows:

  
 1. Resignation. Effective as of November 30,
2004, Ms. Bono resigns her positions as an employee and as Executive Vice President and Chief Financial Officer of FHLB-Seattle. Such resignations are accepted by FHLB-Seattle. Ms. Bono’s last day of work will be November 30, 2004. 

 
 2. Severance Benefits. FHLB-Seattle agrees to provide Ms. Bono with
severance benefits, as follows: 
  
 (a)
Separation Pay. For the one-year period beginning December 1, 2004 and ending November 30, 2005, (“the Severance Period”), FHLB-Seattle will pay Ms. Bono an amount equal to her base salary of $315,000.00, less required withholding
and deductions at the same intervals as FHLB-Seattle pays salary to its executives (“Separation Pay”). 
  
 (b) Bonus. To the extent that other senior executives of FHLB-Seattle receive bonuses for the year 2004, FHLB-Seattle will also pay
Ms. Bono her full 2004 bonus calculated as though she had continued to be employed through December 31, 2004, at the same time as the bonus, if any, is paid to other senior executives in February, 2005. Ms. Bono will not be eligible for any bonus
for 2005. 
  

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 (c) Retirement Benefits. In addition to the vested retirement benefits Ms. Bono
has accrued as of November 30, 2004 under the Financial Institutions Retirement Fund (FIRF) pursuant to the terms of that plan, FHLB-Seattle agrees to pay Ms. Bono from its general assets an amount agreed to be the equivalent to the difference
between such accrued FIRF early retirement benefit as of November 30, 2004 and the accrued FIRF benefit she would have been entitled to had she continued to be employed by FHLB-Seattle until her age and years of vesting service with FHLB-Seattle
totaled seventy (70) (“FIRF Supplement”). This FIRF Supplement will be determined using her High-3 Average Salary as of November 30, 2004, and is estimated to be approximately Five Hundred Fifty Thousand Dollars ($550,000.00). Upon
confirmation of the exact amount of the FIRF Supplement by FHLB’s benefits consultant Pentegra, which shall be completed no later than December 1, 2004 and provided to Ms. Bono for her review, such FIRF Supplement, plus an additional gross
amount of $59,000.00 to compensate Ms. Bono for additional tax liabilities resulting from the FIRF Supplement, shall be payable to Ms. Bono from the general assets of FHLB-Seattle monthly over a three-year period beginning December 1, 2005 in gross
total monthly installments of approximately $16,917.00 (or such other figure as is determined when the exact amount of the FIRF Supplement has been determined such that the total payment is spread evenly over thirty-six (36) monthly payments), less
any required deductions or withholding. Ms. Bono shall also maintain the vested retirement benefits she has accrued as of November 30, 2004 under the FHLB-Seattle Retirement Fund Benefit Equalization Plan (based on her FIRF retirement benefits
accrued through November 30, 2004), the FHLB-Seattle Thrift Plan Benefit Equalization Plan, and the FHLB-Seattle 401(k) Thrift Plan, pursuant to the terms of those plans. Ms. Bono shall be liable for any Federal income tax consequences, if any, to
her resulting from these retirement benefits. The additional payment of $59,000 described above shall be FHLB-Seattle’s only obligation with respect to any Federal income tax consequences of these retirement benefits to Ms. Bono. 
  
 (d) Outplacement Benefits. FHLB-Seattle will pay up
to Fifteen Thousand Dollars ($15,000) to a mutually agreeable outplacement consultant to assist Ms. Bono in finding other suitable employment. 
  
 3. Medical Insurance. During the Severance Period, FHLB-Seattle will continue Ms. Bono’s coverage under the FHLB-Seattle group medical, dental
and vision plans on the same terms and conditions as other senior executives of FHLB-Seattle. Beginning at the end of the Severance Period, Ms. Bono and her eligible dependents have the opportunity to continue group medical, dental and vision
insurance through FHLB-Seattle at her or their expense for a period of 18 months. Ms. Bono or her eligible dependents must pay all applicable premiums for that continuation coverage. FHLB-Seattle will provide Ms. Bono and her eligible dependents
with a separate notice summarizing her continuation coverage rights and obligations, as well as an election form. 
  

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 4. No Additional Compensation. Ms. Bono and FHLB-Seattle agree that, except as expressly set forth
in this Agreement, and subject to Ms. Bono’ rights, if any, in the FHLB-Seattle 401(k) Plan, Ms. Bono shall not be entitled to receive any additional compensation, bonuses, incentive compensation, employee benefits or other consideration from
FHLB-Seattle. Ms. Bono shall not be entitled to make contributions to the FHLB-Seattle 401(k) Plan from the Separation Pay. 
  
 5. Return of FHLB-Seattle Property. Ms. Bono represents and warrants that no later than November 30, 2004, she will return to FHLB-Seattle
all FHLB-Seattle property including, without limitation, her laptop computer, keys, access cards, parking pass, credit cards, cellular telephones, books, manuals, files, computer software, disks and the like, as well as all paper and electronic
copies of materials and documents in her possession or under her direct or indirect control relating to FHLB-Seattle, its business, employees, and customers, and that she has not retained copies, in whatever form, of any such materials or documents.
Notwithstanding anything to the contrary set forth herein, FHLB-Seattle hereby acknowledges and agrees that Ms. Bono may retain, as her own property, her copies of her individual personnel documents, such as her payroll and tax records, and similar
personal records. 
  
 6. Covenant Not to Sue. Ms. Bono
represents that she has not filed any Claim that was released in this Agreement against FHLB-Seattle or its Released Parties with any court or government agency, and that she will not, to the extent allowed by applicable law, do so at any time in
the future; provided, however, that this will not limit Ms. Bono from filing a Claim to enforce the terms of this Agreement. If any government agency brings any claim or conducts any investigation against FHLB-Seattle, nothing in this Agreement
forbids Ms. Bono from cooperating in such proceedings, but by this Agreement, Ms. Bono waives and agrees to relinquish any damages or other individual relief that may be awarded as a result of any such proceedings. 
  
 7. Complete Release of Claims by Ms. Bono Against FHLB-Seattle.
In consideration of the separation benefits set forth above, which are given to her specifically in exchange for this release as a result of negotiations between herself and FHLB-Seattle, Ms. Bono, on behalf of herself, her marital community, and
their heirs, successors and assigns, release and discharge the Federal Home Loan Bank of Seattle, its employee benefit plans including but not limited to FIRF and/or its current or former directors, officers, agents, insurers, employees and
attorneys, any and each of their successors and assigns and predecessors (“Released Parties”), from any and all claims, charges, causes of action and damages (including attorneys’ fees and costs actually incurred), known and unknown,
(“Claims”), including those Claims related in any way to Ms. Bono’s employment with FHLB-Seattle, or the termination of her employment relationship or positions as an officer of FHLB-Seattle, arising prior to the effective date of
this Agreement. It is understood and agreed that the waivers in this Agreement are not intended to waive Ms. Bono’s rights: (a) to indemnification pursuant to any applicable provision of FHLB-Seattle’s 

  

 3 

 
Bylaws, or pursuant to applicable law; (b) under ERISA to receive her accrued vested benefits and the benefits specifically reserved for her in this
Agreement; or (c) respecting FHLB-Seattle’s obligations under this Agreement. 
  
 For the purposes of implementing a full and complete release and discharge of FHLB-Seattle and the other Released Parties, and each of them, Ms. Bono expressly acknowledges that this Resignation, and Release Agreement is intended to include
in its affect, without limitation, all Claims which she does not know or suspect to exist in her favor at the time she signs this Agreement, and that this Agreement is intended to fully and finally resolve any such Claim or Claims. 
  
 This Release specifically includes but is not limited to rights and claims under the local,
state or federal laws prohibiting discrimination in employment, including the Civil Rights Acts, The Americans with Disabilities Act, the Age Discrimination in Employment Act, The Washington Law Against Discrimination, the Family and Medical Leave
Act, the Employee Retirement Income Security Act (except as otherwise stated herein), as well as any other state or federal laws or common law theories relating to discrimination in employment, the termination of employment, or personal injury,
including without limitation all claims for breach of contract, fraud, defamation, loss of consortium, infliction of emotional distress, additional compensation, back pay or benefits (other than as provided for in this Agreement). 
  
 8. Announcement; Reference Responses. On or about October 25,
2004, Mr. Norm Rice, President of FHLB-Seattle, and Ms. Bono will jointly announce that Ms. Bono has resigned her position. FHLB-Seattle and Ms. Bono will cooperate in releasing a mutually agreeable form of communication to FHLB-Seattle staff
regarding her resignation which shall include Ms. Bono’s announcement in the form attached as Exhibit A, and Norm Rice’s announcement in the form attached as Exhibit B. Any communication to media shall be based on Exhibit A and B. Ms. Bono
agrees to direct any requests for references regarding her employment with FHLB-Seattle to the FHLB’s Director of Human Resources. FHLB-Seattle will also provide Ms. Bono with a letter of reference from Mr. Norm Rice, President of FHLB-Seattle.

  
 9. Future Cooperation. Ms. Bono agrees to make herself
reasonably available to FHLB-Seattle in connection with any claims, disputes, investigations, regulatory examinations or actions, lawsuits or administrative proceedings relating to matters in which she was substantially involved during the period in
which she was Executive Vice-President/CFO, and to provide information, give depositions or testimony, and otherwise cooperate in the investigation, defense or prosecution of such actions. Upon submission of appropriate documentation, FHLB-Seattle
will pay for any reasonable expenses Ms. Bono incurs in connection with any such efforts, including lost salary, wages, or vacation pay. 
  

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 10. Voluntary Agreement; Full Understanding; Advice of Counsel. Ms. Bono understands and
acknowledges the significance of this Agreement and acknowledges that this Agreement is voluntary and has not been given as a result of any coercion. Ms. Bono also acknowledges that she has been given full opportunity to review and negotiate this
Agreement, that she has been specifically advised to consult with legal counsel prior to signing it, that she has in fact carefully reviewed it with her attorney before signing it, and that she executes this Agreement only after full reflection and
analysis. 
  
 11. No Representations. Ms. Bono
acknowledges that, except as expressly set forth herein, no representations of any kind or character have been made to her by FHLB-Seattle or by any of FHLB-Seattle’ agents, representatives or attorneys to induce the execution of this
Agreement. 
  
 12. Waiting Period. Ms. Bono has 21 days to
consider this Agreement before signing it. Ms. Bono may use as much or as little of this 21-day period as she wishes before signing. The 21-day period expires November 9, 2004, at 5:00 p.m. If Ms. Bono has not signed and returned this Agreement to
Karen Aliabadi at FHLB-Seattle by that date, Ms. Bono will not be eligible to receive the severance benefits provided for in Section 2. 
  
 13. Revocation Period. Ms. Bono understands and acknowledges that she has seven (7) days after signing this Agreement to revoke it. To revoke this
Agreement, Ms. Bono must deliver a written notice of revocation to Ms. Karen Aliabadi at FHLB-Seattle no later than 5:00 pm on the seventh day after Ms. Bono signs the Agreement. This Agreement shall not become effective or enforceable until the
revocation period has expired. If Ms. Bono revokes this Agreement, she will not receive the severance benefits described above. 
  
 14. Nonadmission. This Resignation and Release Agreement shall not be construed as an admission of wrongdoing or evidence of any noncompliance with
or violation of any statute or law by FHLB-Seattle or Ms. Bono. 
  
 15. Confidential Information. 
  
 (a) Acknowledgement of Receipt of Confidential Information. Ms. Bono acknowledges that she has occupied a position of the highest trust and confidence with FHLB-Seattle, and during Ms. Bono’s employment with
FHLB-Seattle, she has become familiar with FHLB-Seattle’s trade secrets, business plans and strategies, and with other proprietary and confidential information concerning FHLB-Seattle, its business, employees and members. Ms. Bono agrees that
(a) the agreements and covenants contained in this paragraph are essential to protect FHLB-Seattle and the goodwill of its business; (b) FHLB-Seattle would be irreparably damaged if Ms. Bono were to disclose confidential information in violation of
these provisions of this Agreement; and (c) the separation benefits provided her under this Agreement are given to her in part in exchange for her agreement to the restrictions set forth below. As used in this Agreement, “Confidential
Information” shall mean any information relating to the business or 

  

 5 

 
affairs of FHLB-Seattle or its customers, including but not limited to information relating to financial statements, identities of members and potential
members, employees, suppliers, software tools, business methods, equipment, programs, methodologies, strategies and information, analyses, reports, models, calculations, profit margins, or other proprietary information used by FHLB-Seattle in
connection with its business, provided, however, that Confidential Information shall not include any information which is in the public domain or becomes known in the industry through no wrongful act on the part of Ms. Bono. Ms. Bono acknowledges
that the Confidential Information is vital, sensitive, confidential and proprietary to FHLB-Seattle. 
  
 (b) Agreement to Maintain Confidentiality of FHLB-Seattle Information. Ms. Bono shall keep secret and retain in strictest
confidence, and shall not, without the prior written consent of FHLB-Seattle, furnish, make available or disclose to any third party (except in furtherance of FHLB-Seattle’s business activities and for the sole benefit of FHLB-Seattle) or use
for the benefit of herself or any third party, any Confidential Information. 
  
 (c) Remedies. Ms. Bono acknowledges and agrees that the covenants set forth in this paragraph 15 are reasonable and necessary for the protection of FHLB-Seattle’s business interests, that
irreparable injury will result to FHLB-Seattle if Ms. Bono breaches of any of her confidentiality obligations under this Agreement, and that in the event of Ms. Bono’s actual or threatened breach of such confidentiality obligations,
FHLB-Seattle will have no adequate remedy at law. Ms. Bono accordingly agrees that in the event of any actual or threatened breach by her of any of her confidentiality obligations under this paragraph, FHLB-Seattle shall be entitled to immediate
temporary injunctive and other equitable relief, without bond and without the necessity of showing actual monetary damages, subject to hearing as soon thereafter as possible. Nothing contained herein shall be construed as prohibiting FHLB-Seattle
from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of any damages which it is able to prove. 
  
 16. Mutual Confidentiality of Agreement. Ms. Bono and FHLB-Seattle may acknowledge to third persons that their parting was on
mutually satisfactory terms. Ms. Bono agrees that she will keep the fact, terms, conditions, and contents of this Agreement completely confidential and will not publicize or disclose the fact, terms, conditions, or contents of this Agreement in any
manner, in writing or orally, to any persons, directly or indirectly, or by or through an agent, representative, attorney, or any other person unless required by law, regulation, or court order. Ms. Bono may, however, disclose the terms of this
Agreement to her spouse, her attorney, or to her tax advisors and accountants, as necessary. FHLB-Seattle likewise agrees to keep the fact, terms, conditions, and contents of this Agreement confidential and will not publicize or disclose the fact,
terms, conditions, or contents of this Agreement in any manner, in writing or orally, to any persons, directly or indirectly, or by or through an agent, representative, attorney, or any other person unless required by law, regulation, or court
order. FHLB-Seattle may, however, 

  

 6 

 
disclose the fact, terms and conditions of this Agreement to its senior management, Board of Directors, regulators, attorneys, and accountants, or if
required by law, regulation or court order. 
  
 17. Applicable
Law; Venue; Attorneys’ Fees; Interpretation. This Agreement shall be interpreted in accordance with the laws of the State of Washington, without regard to its conflict of laws. Any lawsuit between the parties arising out of this Agreement
shall be brought in King County Superior Court in Seattle, Washington. The prevailing party in such action shall be awarded attorneys’ fees and costs (whether or not taxable under any applicable statute) including fees and costs incurred prior
to suit, in any administrative proceedings, and on appeal. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against either party. 
  
 18. Complete Agreement. This Agreement represents and contains
the entire understanding between the parties in connection with the subject matter of this Agreement. This Agreement shall not be modified or varied except by a written instrument signed by Ms. Bono and the President and CEO of FHLB-Seattle. It is
expressly acknowledged and recognized by all parties that all prior written or oral agreements, understandings or representations between the parties are merged into this Agreement. 
  
 19. Invalidity. It is understood and agreed that if any provisions of this Agreement are held to be invalid or
unenforceable, the remaining provisions of the Agreement shall nevertheless continue to be fully valid and enforceable.  
  
 20. Execution. This Agreement may be executed with duplicate original counterparts with faxed signatures, each of which shall constitute an
original and which together shall constitute one and the same document. 
  
 PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES 
 A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

  

									
	FEDERAL HOME LOAN BANK OF SEATTLE	 	 	 	KELLI BONO
					
	By	 	/s/    NORMAN RICE        	 	 	 	 	 	/s/    KELLI BONO        
	 	 	Norman Rice	 	 	 	 Date:
	 	 10/25/04

	 Its
	 	President & CEO	 	 	 	 	 	 
					
	 Date:
	 	 10/25/04
	 	 	 	 	 	 

  

 7 

  
 EXHIBIT A 

 
 As we all know, the bank and its environment have changed tremendously over the past five
years. For the bank to be successful in the future will require even greater commitment from all of its employees going forward. After much reflection, I have come to the difficult decision that the demands of the CFO position have grown beyond what
is manageable for me and my family. So it is with mixed emotions that I have decided to leave the bank after 20 very rewarding years, effective December 1st. 
  
 I feel very fortunate to have worked at the bank and with all of you. I would like to express my appreciation especially to Norm, for giving me the opportunity to be the
CFO of a bank I have dearly loved, and the Finance managers, without whom none of what we’ve accomplished over the past five years would have been possible. I wish the bank every success in the future. 
  

 8 

  
 Exhibit B 
  
 Kelli Bono will be leaving the bank effective December 1st, 2004. I personally wish to thank Kelli for her 20 years of dedicated service to the bank. It is not very common to find the combination of financial
savvy and pure drive that propels an organization through the financial and regulatory complexities that our bank has. Kelli has that combination, and her shoes will be tough to fill. 
  
 With that said, please be assured that I am working on a transition plan to address this key departure and will share this plan as we move
forward. Please join me in wishing Kelli and her family the very best as she begins a new chapter in her life. 
  

 9

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