Document:

Exhibit

EXHIBIT 10.7

FHLBANK SAN FRANCISCO

EXECUTIVE INCENTIVE PLAN

	
			
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FEDERAL HOME LOAN BANK OF SAN FRANCISCO
EXECUTIVE INCENTIVE PLAN
TABLE OF CONTENTS

	
				
	 
	 
	PAGE
	

	Article I
	INTRODUCTION
	1
	

	 
	 
	 

	Section 1.1
	Purpose
	1
	

	Section 1.2
	Effective Date
	1
	

	Section 1.3
	Supplements
	1
	

	 
	 
	 

	Article II
	ELIGIBILITY AND PARTICIPATION
	1
	

	 
	 
	 

	Section 2.1
	Eligibility
	1
	

	Section 2.2
	Participation
	1
	

	 
	 
	 

	Article III
	AWARDS
	2
	

	 
	 
	 

	Section 3.1
	Awards
	2
	

	Section 3.2
	Performance Goals and Qualifiers
	2
	

	Section 3.3
	Vesting of Awards for Participants
	3
	

	Section 3.4
	Gap Year Awards for Participants
	4
	

	Section 3.5
	Effect of Termination of Employment
	5
	

	Section 3.6
	Effect of Change in Control
	8
	

	Section 3.7
	Payment of Awards
	8
	

	Section 3.8
	Reduction or Forfeiture of Awards
	9
	

	 
	 
	 

	Article IV
	ADMINISTRATION
	10
	

	 
	 
	 

	Section 4.1
	Appointment of the President and CEO
	10
	

	Section 4.2
	Powers and Responsibilities of the Administrator
	10
	

	Section 4.3
	Income and Employment Tax Withholding
	11
	

	Section 4.4
	Plan Expenses
	11
	

	 
	 
	 

	Article V
	BENEFIT CLAIMS
	11
	

	 
	 
	 

	Article VI 
	AMENDMENT AND TERMINATION OF THE PLAN
	11
	

	 
	 
	 

	Section 6.1
	Amendment of the Plan
	11
	

	Section 6.2
	Termination of the Plan
	11
	

	 
	 
	 

	Article VII
	MISCELLANEOUS
	12
	

	
			
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	Section 7.1
	Governing Law
	12
	

	Section 7.2
	Headings and Gender
	12
	

	Section 7.3
	Spendthrift Clause
	12
	

	Section 7.4
	Counterparts
	12
	

	Section 7.5
	No Enlargement of Employment Rights
	12
	

	Section 7.6
	Limitations on Liability
	12
	

	Section 7.7
	Incapacity of Participant
	13
	

	Section 7.8
	Evidence
	13
	

	Section 7.9
	Action by Bank
	13
	

	Section 7.10
	Severability
	13
	

	Section 7.11
	Information to be Furnished by a Participant
	13
	

	Section 7.12
	Attorneys’ Fees
	13
	

	Section 7.13
	Binding on Successors
	14
	

	 
	 
	 

	APPENDIX I: 2017 Performance Period Goals & Qualifiers & Awards Scale/Awards

	APPENDIX II: Awards and Goals Applicable to 2020 Gap Year (2017-2019 LTIP)

	APPENDIX III: Form of Non-Solicitation and Non-Disclosure Agreement

	
			
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ARTICLE I
INTRODUCTION
Section 1.1    Purpose.  The purpose of the Federal Home Loan Bank of San Francisco Executive Incentive Plan (the “Plan”) is to attract and retain key executives of the Federal Home Loan Bank of San Francisco (the “Bank”) and to motivate and focus their efforts on achieving the Bank’s business plan and accomplish its goals and objectives while maintaining the safety and soundness of the Bank.  The Plan is a cash-based incentive plan that provides award opportunities based on achievement of performance goals.
Section 1.2    Effective Date.  The “Effective Date” of the Plan is January 1, 2017.
Section 1.3    Supplements.  The provisions of the Plan may be modified by supplements to the Plan that are approved by the Board or a committee delegated by the Board.  The terms and provisions of each supplement are a part of the Plan and supersede any other provisions of the Plan to the extent necessary to eliminate any inconsistencies between the supplement and any other Plan provisions.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
Section 2.1    Eligibility.  Any senior executive officer (specifically, the President and CEO, Executive Vice President and each Senior Vice President) of the Bank, hired/employed as a regular full-time employee before October 1st of the calendar year, will become a “Participant” in the Plan on a prorated basis for that calendar year, excluding the Senior Vice President and Director of Internal Audit, who participates in the Federal Home Loan Bank of San Francisco Executive Internal Audit Incentive Plan.  Participants must have an executed agreement on file with the Bank containing non-disclosure, non-disparagement, and non-solicitation provisions in a form similar to the form provided in Appendix III to the Plan (“Non-Solicitation Agreement”).
Section 2.2    Participation.  A senior executive officer will become a Participant as of the later of the Effective Date, the senior executive officer’s date of hire/employment, or the date on or after the Effective Date the senior executive officer satisfies the automatic eligibility provisions described in Section 2.1.  Any Participant may be removed as an active Participant by the Board effective as of any date.

	
			
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ARTICLE III
AWARDS
Section 3.1    Awards.  No later than the beginning of each Performance Period, the Board will establish Award Levels (as defined in Section 3.1(b) for eligible Participants.  For each Performance Period, the Award Levels established by the Board will be set forth in Appendices to the Plan, each of which shall be incorporated into the Plan.  As described in this Article, Awards may be Annual Awards (as defined in subsection 3.3(a)), Deferred Awards (as defined in subsection 3.3(b)), or Gap Year Awards (as defined in subsection 3.4(a)).  Each Award will be equal to a percentage of the Participant’s annual Compensation.  “Compensation” means the Participant’s annual base salary as of February 1 of the first calendar year in each Performance Period. 
(a)    Performance Periods.  A “Performance Period” is the one-calendar year period over which an Annual Award can be earned and vested pursuant to subsection 3.3(a).  A “Deferral Performance Period” is the three-calendar year period over which a Deferred Award can be vested pursuant to subsection 3.3(b).  A Deferral Performance Period begins on the January 1st immediately following the applicable Performance Period.
(b)    Award Levels.  Participants are eligible to receive Awards for each Performance Period, subject to deferral of fifty percent (50%) of the Annual Award (the Deferred Award) over the Deferral Performance Period.
(c)    Final Award.  The “Final Award” is the amount of an earned and vested Annual Award, Deferred Award, and Gap Year Award, as may be adjusted based upon the level at which the Performance Goals and Qualifiers have been achieved, that is ultimately paid to a Participant under the Plan.  The amount of a Final Award may be modified at the Board’s discretion to account for performance that is not captured in the relevant Performance Goals and Qualifiers for the applicable Award.  The Board, in its discretion, may also consider Extraordinary Occurrences when assessing performance results and determining Final Awards.  “Extraordinary Occurrences” mean those events that, in the opinion and discretion of the Board, are outside the significant influence of the Participant or the Bank and are likely to have a significant unanticipated effect, whether positive or negative, on the Bank’s operating and/or financial results.

Section 3.2    Performance Goals and Qualifiers.  “Performance Goals and Qualifiers” are the factors established by the Board for each Performance Period, Deferral Performance Period and Gap Year Performance Period, as set forth in the applicable Appendices to the Plan, which are taken into consideration in determining the amount of an Annual Award, Deferred Award or Gap Year Award.  The Board may adjust the Performance Goals and Qualifiers for a Performance Period, Deferral Performance Period or Gap Year Performance Period to ensure the purposes of the Plan are served.

	
			
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(a)    Establishment of Performance Goals and Qualifiers.  Performance Goals and Qualifiers for Performance Periods, Deferral Performance Periods and the Gap Year Performance Period commencing on and after January 1, 2017, will be communicated to Participants following approval by the Board.
(b)    Achievement Levels.  Four achievement levels will be defined for each Performance Goal in determining how much of an Award is earned.
(i)    Threshold (75% of Target).  Minimum level of performance that must be achieved for awards to be paid.
(ii)    Meets (Target – 100% of Plan).  Performance that is expected under the Bank’s Plan.
(iii)    Exceeds (125% of Target). An optimistic achievement level that exceeds expected performance.
(iv)    Far Exceeds (150% of Target).  The most optimistic achievement level that far exceeds expected performance.
(c)    Interpolation.  Achievement levels between Threshold – Target; Target – Exceeds; and, Exceeds – Far Exceeds will be interpolated in a manner as determined at the sole discretion of the Board.
(d)    Considerations in Establishing Performance Goals and Qualifiers.  In determining appropriate Performance Goals and Qualifiers and the relative weight of each Performance Goal, the Board will:
(i)    Balance risk and financial results in a manner that does not encourage Participants to expose the Bank to imprudent risks;
(ii)    Make such determination in a manner designed to ensure that a Participant’s overall compensation is balanced and not excessive in amount and that the Annual Awards, Deferred Awards and Gap Year Awards are consistent with the Bank’s policies regarding such compensation arrangements; and
(iii)    Monitor the success of the Performance Goals and Qualifiers and weighting established in prior years, alone and in combination with other incentive compensation awarded to the same Participants, and make appropriate adjustments in future calendar years as needed so that payments appropriately incentivize Participants, appropriately reflect risk and align with regulatory guidance.
Section 3.3    Vesting of Awards for Participants.
(a)    Vesting of Annual Awards.  For each Performance Period, except the Gap Performance Period, fifty percent (50%) of an Annual Award to a Participant will become vested on the last day of the Performance Period, provided the Board determines the following requirements are met (an “Annual Award”):

	
			
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(i)    The applicable Performance Goals and Qualifiers for the Performance Period are achieved;
(ii)    The Participant received a satisfactory (at least meets expectations) performance rating for the Performance Period; and,
(iii)    The Participant is actively employed on the last day of the Performance Period, except as otherwise provided in subsection 3.5(b) or 3.5(c) or Section 3.6.
(b)    Vesting of Deferred Awards.  The remaining fifty percent (50%) of an Award to a Participant will become vested on the last day of the Deferral Performance Period, provided the Board determines that the following requirements are met (a “Deferred Award”):
(i)    The applicable Qualifiers for the Deferral Performance Period are satisfied;
(ii)    The Participant received a satisfactory (at least meets expectations) performance rating for the Deferral Performance Period, and
(iii)    The Participant is actively employed on the last day of the Deferral Performance Period, unless otherwise provided in subsection 3.5(b) or 3.5(c) or Section 3.6.
(c)    Calculation of Awards.  The amount of Awards to Participants will be determined at the sole discretion of the Board in accordance with the applicable Appendix to the Plan.  If the Qualifiers are achieved an annual compounding interest rate of 6% is applied to Deferred Awards.
Section 3.4    Gap Year Awards for Participants.
(a)    Background.  The Board has determined it is appropriate to establish a Gap Year Award for Participants for long-term performance during the calendar years 2017 through 2019 (a “Gap Year Award”) to address a gap in payment of deferred incentive compensation during calendar year 2020 which arises as a result of the discontinuation in 2017 of the Executive Performance Unit Plan (the “Long-Term Incentive Plan”) and the implementation of this Plan.
(b)    Vesting of Gap Year Award.  A Gap Year Award will become vested over a three-year period beginning on January 1, 2017 and ending on December 31, 2019 (the “Gap Year Performance Period”) to the extent the Board determines that:
(i)    The Performance Goals and Qualifiers for the Gap Year Performance Period, as set forth in the applicable Appendix to the Plan, are satisfied;
(ii)    The Participant received a satisfactory (meets expectations) performance rating for the Gap Year Performance Period, and

	
			
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(iii)    The Participant is actively employed on the last day of the Gap Year Performance Period, except as otherwise provided in subsection 3.5(b) or 3.5(c) or Section 3.6.
(c)    Calculation of Awards.  The amount of Gap Year Awards will be calculated in the sole discretion of the Board in accordance with the applicable Appendix to the Plan.

Section 3.5    Effect of Termination of Employment.
(a)    In General.  If a Participant incurs a Termination of Employment for any reason other than a reason set forth in subsection 3.5(b) or 3.5(c) or Section 3.6, the Participant’s unvested Awards will be forfeited effective as of the date of such Termination of Employment and the Bank will have no obligation to pay the Participant any portion of such forfeited, unvested Award amount.
(b)    Termination Due to Death or Disability.
(i)    Notwithstanding the provisions of Sections 3.3 and 3.4 and subsection 3.5(a), if a Participant incurs a Termination of Employment due to death or Disability during a Deferral Performance Period, then the Participant’s Deferred Awards will be treated as vested and shall be paid pursuant to Section 3.7(a)(i).
(ii)    Notwithstanding the provisions of Sections 3.3 and 3.4 and subsection 3.5(a), if a Participant incurs a Termination of Employment during a Performance Period or Gap Year Performance Period due to death or Disability, any Annual Award or Gap Year Award which has not been vested for the year of the Participant’s Termination of Employment due to death or Disability, will be treated as vested for the portion of the Performance Period or Gap Year Performance Period during which the Participant was employed based on the assumption the Bank would have achieved the Performance Goals and Qualifiers at the Target achievement level for the Performance Period or Gap Year Performance Period.
(c)    Termination Due to Other Events.
(i)    Subject to Section 3.7(a)(ii), but notwithstanding the provisions of Sections 3.3 and 3.4 and subsection 3.5(a), if a Participant incurs a Termination of Employment during a Performance Period, Deferral Performance Period or Gap Year Performance Period due to:
(A)    Retirement;
(B)    a termination by Participant for Good Reason;
(C)    a termination by the Bank without Cause due to the elimination of an individual job or position;

	
			
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(D)    the elimination of one or more jobs or positions as a result of a reduction in force or department reorganization; or
(E)    a substantial job modification resulting in the incumbent being, in the judgment of the Bank, unqualified for or unable to perform the revised job;
then the relevant pro rata portion of an Annual Award or Gap Year Award will be treated as vested for the portion of the Performance Period or Gap Year Performance Period during which the Participant was employed to the extent determined by the Board that the Performance Goals and Qualifiers for the Performance Period or Gap Year Performance Period are satisfied and a Deferred Award will be treated as fully vested as of the date of Termination of Employment.  Any Payment of any Award pursuant to this Section 3.5(c) will be made according to the normal scheduled date under Section 3.7(b).
(d)    Definitions.
(i)    “Cause” means (A) continued failure of a Participant to perform his or her duties with the Bank (other than any such failure resulting from Disability), (B) personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, or willful violation of any law, rule or regulation (other than -traffic infractions or similar non-violent infractions), or (C) removal of the Participant for cause by the Federal Housing Finance Agency (“FHFA”) or at the direction of the FHFA pursuant to 12 U.S.C. 1422b(a)(2), or by any successor agency to the FHFA pursuant to a similar statute.
(ii)    “Disability” means the Participant is: (A) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (B) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under the Bank’s long-term disability plan.  Medical determination of Disability under (A) shall be made by the Social Security Administration.  The Participants may be required to submit proof of the determination by the Social Security Administration or the Bank’s insurer, as applicable, upon the request of the Bank.
		
	(iii)
	“Good Reason” means a Termination of Employment by a Participant under any of the following circumstances:

(A)    a material change in the Participant’s status, position and job title or principal duties and responsibilities as a key employee of the Bank which does not represent a promotion from the Participant’s status and position as in effect as of the date hereof (“Position”);

	
			
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(B)    the assignment to the Participant of any duties or responsibilities (or removal of any duties or responsibilities), which assignment or removal is materially inconsistent with such Position;
(C)    any removal of the Participant from such Position (including, without limitation, all demotions), except in connection with the termination of the Participant’s employment for Cause or Disability, or as a result of the Participant’s death; or
(D)    any material breach by the Bank of any provisions of this Plan or any agreement under which the Participant provides services to the Bank.
Notwithstanding the foregoing in this Section 3.5(d)(iii), a Participant shall not be considered to have a Termination of Employment for Good Reason unless the Participant provides the Bank with written notice no later than 90 days after the first occurrence of an event listed above and the Bank has a period of 30 days to cure such event.
(iv)    “Reduction in Force” means an involuntary Termination of Employment of a Participant by the Bank in connection with a financial and/or strategic decision by the Bank to reduce the number of Bank employees and not due to the Participant’s performance.
(v)    “Retirement” means the Participant’s planned and voluntary termination of employment on or after the Participant has either: (A) attained age 55 with 10 years of service or (B) attained age 65 with 5 years of service.
(vi)     “Termination of Employment or Terminates Employment” Participant’s separation from service within the meaning of Treasury Regulation Section 1.409A-1(h).  Whether a Termination of Employment has occurred is based on whether the facts and circumstances indicate that the Participant and the Bank reasonably anticipated that no further services would be performed after a certain date.  A Termination of Employment will not be deemed to have occurred if a Participant continues to provide services to the Bank as an employee, independent contractor or otherwise, and if the Participant is providing such services at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediate preceding 36 months with the Bank (or if less, such lesser period); provided, however, that a Termination of Employment will be deemed to have occurred if a Participant’s service with the Bank is reduced to an annual rate that is equal to or less than twenty percent (20%) of the services rendered, on average, during the immediately preceding 36 months with the Bank (or if less, such lesser period).  In addition to the foregoing, the employment of a Participant shall not be deemed to be terminated while the Participant is on military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six (6) months, or if longer, so long as the Participant’s right to reemployment with the Bank is provided by either statute or contract.  If the period of leave exceeds six (6) months and the Participant’s right to reemployment is not provided by either statute or contract, then the Participant is deemed to have a Termination of Employment on the first day immediately following such six-month period.

	
			
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Section 3.6    Effect of Change in Control.
(a)    Notwithstanding the provisions of Sections 3.3 and 3.5, if a Change in Control of the Bank occurs prior to the date of vesting of an Award, then an Annual Award or Gap Year Award will be paid on a pro-rated basis based on the assumption the Bank would have achieved the Performance Goals and Qualifiers at the Target achievement level for the Performance Period and/or the Gap Year Performance Period, while any Deferred Award which has not otherwise become vested as of the date of the Change in Control will be treated as one hundred percent (100%) vested effective as of the date of the Change in Control. Any interest accrued on the Deferred Award through the Change in Control date will be added to the Final Award.
(b)    “Change in Control” of the Bank will mean the occurrence at any time of any of the following events:
(i)    The merger, reorganization, or consolidation of the Bank with or into another Federal Home Loan Bank or other entity;

(ii)    The sale or transfer of all or substantially all of the business or assets of the Bank to another Federal Home Loan Bank or other entity;
(iii)    The purchase by the Bank or transfer to the Bank of all or substantially all of the business or assets of another Federal Home Loan Bank; or
(iv)    The liquidation of the Bank.
The term “reorganization” shall not include any reorganization that is mandated by federal statute, rule, regulation, or directive, including 12 U.S.C. § 1421, et seq., as amended, and 12 U.S.C. § 4501 et seq., as amended, and which the Director of the FHFA (or successor agency) has determined should not be a basis for making payment under this Plan, by reason of the capital condition of the Bank or because of unsafe or unsound acts, practices, or condition ascertained in the course of the Agency's supervision of the Bank or because any of the conditions identified in 12 U.S.C. § 4617(a)(3) are met with respect to the Bank (which conditions do not result solely from the mandated reorganization itself, or from action that the Agency has required the Bank to take under 12 U.S.C. § 1431(d)).

Section 3.7    Payment of Awards.
(a)    Payments Related to Termination of Employment.  The following provisions apply to Final Awards payable as a result of a Termination of Employment.

	
			
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(i)    In the event of a Termination of Employment due to death or Disability, one hundred percent (100%) of a Final Award will be paid in a single sum within 74 days of the date of Termination of Employment.
(ii)    In the event of a Termination of Employment Due to Other Events, payment of a Final Award will be made in a single sum within 74 days following the end of the Performance Period, Deferral Performance Period or Gap Year Performance Period, as applicable.  Notwithstanding the foregoing, in the event of an elimination of an individual job or position, a reduction in force or department reorganization, or a substantial job modification resulting in the incumbent being unqualified for or unable to perform the revised job, a Participant must execute the severance agreement offered by the Bank in order to be eligible to receive payment.
(b)    Payments Not Related to a Termination of Employment.  Final Awards which become vested for reasons other than a Termination of Employment will be paid in a single sum within 74 days following the end of the Performance Period, Deferral Performance Period or Gap Year Performance Period, as applicable.
(c)    Notwithstanding the foregoing provisions of this Section, Final Awards will be paid upon approval by the Board.  However, in the event of a Change in Control, payment of a Final Award will be made in a single sum on the date on which the Change in Control occurs; provided however, if a Participant is eligible for Retirement as of the date of a Change in Control, then the Final Award of such Participant shall be made no sooner than the earliest to occur of (i) a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as defined under Treasury Regulation Section 1.409A-3(i)(5); (ii) the Participant’s Termination of Employment; or (iii) the payment date under Section 3.7(b) of this Plan.
Section 3.8    Reduction or Forfeiture of Awards.
(a)    By resolution, the Board may reduce or eliminate any Award not yet paid, if the Board finds that a serious, material safety-soundness problem, or a serious, material risk-management deficiency exists at the Bank, or if: (i) errors or omissions result in material revisions to the Bank’s financial results, information submitted to a regulatory or a reporting agency, or information used to determine incentive compensation payouts; (ii) information submitted to a regulatory or a reporting agency is untimely; or, (iii) the Bank does not make appropriate progress, as determined by the Board, in the timely remediation of examination, monitoring, or other supervisory findings and matters requiring attention.
(b)    If during the Deferral Performance Period actual losses or other measures or aspects of performance related to the Performance Period or Deferral Performance Period are realized which would have caused a reduction in amount of the Final Award calculated for the Performance Period or Deferral Performance Period, then the remaining amount of the Final Award to be paid at the end of the Deferral Performance Period may be reduced to reflect this additional information.

	
			
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(c)    Notwithstanding any other provision of the Plan, if a Participant breaches the terms of a Non-Solicitation Agreement, all of his/her unpaid vested and unvested Awards may be forfeited as of the effective date of the Board’s determination that such breach has occurred, which effective date shall be no sooner than the expiration of the cure period under Section 3.8(e) below.  Any future payments for a vested Award will cease and the Bank will have no further obligation to make such payments.
(d)    Notwithstanding any other provision of the Plan, if during the most recent examination of the Bank by the FHFA, the FHFA identified an unsafe or unsound practice or condition that is material to the financial operation of the Bank within the Participant’s area(s) of responsibility and such unsafe or unsound practice or condition is not subsequently resolved to the satisfaction of the Board, then upon expiration of the cure period under Section 3.8(e) below all or a portion of a Participant’s vested and unvested Awards may be forfeited as determined in the sole discretion of the Board.  Any future payments for a vested Award will cease and the Bank will have no further obligation to make such payments.
(e)    Notwithstanding any provision of this Section 3.8 to the contrary, prior to any reduction, elimination or forfeiture of any Participant Award, the applicable Participant shall be given notice of the determination under this Section 3.8 to reduce, eliminate or forfeit the Award and such Participant shall have a period of no less than 30 days to present information contrary to such decision or information showing that the issue or event causing the reduction, elimination or forfeiture has been cured to the satisfaction of the Board.
ARTICLE IV
ADMINISTRATION
Section 4.1    Appointment of the President and CEO.  Except for those powers expressly reserved to the Board, including determinations regarding eligibility and the amount of all Awards, under the Plan, the President and CEO, or a duly authorized officer of the Bank delegated by the President and CEO to act on his or her behalf, is hereby appointed to administer the Plan (the “Administrator”), and the President and the Administrator will be charged with the full power and the responsibility for administering the Plan in all its details.
Section 4.2    Powers and Responsibilities of the Administrator.  The Administrator will have all powers necessary to administer the Plan, including the power to construe and interpret the Plan document; to determine the manner and timing of any distribution of benefits under the Plan; to resolve any claim for benefits in accordance with Article V, and to appoint or engage advisors, including legal counsel, to render advice with respect to any of the Administrator’s responsibilities under the Plan.  Any construction, interpretation, or application of the Plan by the Administrator will be final, conclusive and binding.
(a)    Records and Reports.  The Bank will be responsible for maintaining sufficient records to determine each Participant’s eligibility to participate in the Plan.

	
			
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(b)    Rules and Decisions.  The Bank may adopt such rules as it deems necessary, desirable, or appropriate in the administration of the Plan.  All rules and decisions of the Bank will be applied uniformly and consistently to all Participants in similar circumstances.  When making a determination or calculation, the Board and the Bank will be entitled to rely upon information furnished by a Participant, the Bank or the legal counsel of the Bank.
(c)    Application for Benefits.  The Bank may require a Participant to complete and file with it an application for a benefit, and to furnish all pertinent information requested by it.  The Bank may rely upon all such information so furnished to it, including the Participant’s current mailing address.  Any notice or document required to be given or filed with the Bank will be properly given or filed if delivered to or mailed by registered mail, postage paid, to the Director of Human Resources, Federal Home Loan Bank of San Francisco, P.O. Box 7948, San Francisco, CA 94120.
Section 4.3    Income and Employment Tax Withholding.  The Bank will withhold from payments to Participants of their Awards, to the extent required by law, all applicable federal, state, city and local taxes.

Section 4.4    Plan Expenses.  The expenses incurred for the administration and maintenance of the Plan will be paid by the Bank.
ARTICLE V
BENEFIT CLAIMS
While a Participant need not file a claim to receive his or her Award under the Plan, if he/she wishes to do so, a claim must be made in writing and filed with the Administrator (a claim by the President and CEO shall be filed with the Board).  If a claim is denied, the Administrator will furnish the claimant with written notice of its decision.  A claimant may request a full and fair review of the denial of a claim for awards by filing a written request with the Administrator.
ARTICLE VI
AMENDMENT AND TERMINATION OF THE PLAN
Section 6.1    Amendment of the Plan.  The Bank, acting through the Board, may amend the Plan at any time in its sole discretion.  Notwithstanding the foregoing, the Bank may not amend the Plan to reduce a Participant’s vested Award as determined on the day preceding the effective date of the amendment or to otherwise retroactively impair or adversely affect the rights of a Participant.
Section 6.2    Termination of the Plan.  The Bank, acting through the Board, may terminate the Plan at any time in its sole discretion.  Absent an amendment to the contrary, Plan benefits that were earned and vested prior to the termination will be paid at the times and in the manner provided for by the Plan at the time of the termination.

	
			
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ARTICLE VII
MISCELLANEOUS
Section 7.1    Governing Law.  Except to the extent superseded by laws of the United States, the laws of California will be controlling in all matters relating to the Plan without regard to the choice of law principles therein.
The Plan shall be construed in a manner that is consistent and compliant with, or exempt from, Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and any regulations promulgated thereunder.  Any provision that is noncompliant with Section 409A of the Code is void or deemed amended to comply with Section 409A of the Code.  The Plan is to be construed as a totally discretionary plan.  This Plan shall be administered and interpreted to maximize the short-term deferral exemption to Code Section 409A, and a Participant shall not, directly or indirectly, designate the taxable year of an award payment under this Plan.  The portion of any payment under this Plan that is paid within the short-term deferral period (within the meaning of Code Section 409A) shall be treated as a short-term deferral and not aggregated with other payments.  To the extent applicable, any payment dates or events provided for in this Plan shall be deemed to incorporate any “grace periods” within the meaning of Code Section 409A.  The Bank does not guarantee or warrant the tax consequences of the Plan, and the Participants shall in all cases be liable for any taxes due with respect to the Plan.
Section 7.2    Headings and Gender. The headings and subheadings in the Plan have been inserted for convenience of reference only and will not affect the construction of the Plan provisions.  In any necessary construction, the masculine will include the feminine and the singular the plural, and vice versa.
Section 7.3    Spendthrift Clause.  No benefit or interest available under the Plan will be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or attachment by creditors of a Participant, either voluntarily or involuntarily.
Section 7.4    Counterparts.  This Plan may be executed in any number of counterparts, each one constituting but one and the same instrument, and may be sufficiently evidenced by any one counterpart.
Section 7.5    No Enlargement of Employment Rights.  Nothing contained in the Plan is intended to alter a Participant’s “at will” employment and is not to be construed as a contract of employment between the Bank and any person, nor may the Plan be deemed to give any person the right to be retained in the employ of the Bank or limit the right of the Bank to employ or discharge any person with or without cause.
Section 7.6    Limitations on Liability.  The individual members of the Board will, in accordance with the Bank’s by-laws, be indemnified and held harmless by the Bank with respect to any alleged breach of responsibilities performed or to be performed hereunder.  In addition, notwithstanding any other provision of the Plan, neither the Bank nor any individual acting as an employee or agent of the Bank will be liable to a Participant for any claim, loss, liability or expense incurred in connection with the Plan, except when the 

	
			
	Approved 12/23/2016
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same has been affirmatively determined by a court order or by the affirmative and binding determination of an arbitrator, to be due to the gross negligence or willful misconduct of that person.
Section 7.7    Incapacity of Participant.  If any person entitled to receive a distribution under the Plan is physically or mentally incapable of personally receiving and giving a valid receipt for any payment due (unless a prior claim for the distribution has been made by a duly qualified guardian or other legal representative), then, unless and until a claim for the distribution has been made by a duly appointed guardian or other legal representative of the person, the distribution may be made to any other individual or institution then contributing toward or providing for the care and maintenance of the person.  Any payment made for the benefit of the person under this Section will be a payment for the account of such person and a complete discharge of any liability of the Bank and the Plan.
Section 7.8    Evidence.  Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person relying on the evidence considers pertinent and reliable, and signed, made or presented by the proper party or parties.
Section 7.9    Action by Bank.  Any action required of or permitted by the Bank under the Plan will be by resolution of the Board or by a person or persons authorized by resolution of the Board.
Section 7.10    Severability.  In the event any provisions of the Plan are held to be illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and endorsed as if the illegal or invalid provisions had never been contained in the Plan.
Section 7.11    Information to be Furnished by a Participant.  A Participant, or any other person entitled to benefits under the Plan, must furnish the Bank with any and all documents, evidence, data or other information the Bank considers necessary or desirable for the purpose of overseeing and administering the Plan.  Benefit payments under the Plan are conditioned on a Participant (or other person who is entitled to benefits) furnishing full, true and complete data, evidence or other information to the Bank, and on the prompt execution of any document reasonably related to the administration of the Plan requested by the Bank.
Section 7.12    Attorneys’ Fees.  If any action is commenced to enforce the provisions of the Plan, payment of attorneys’ fees will be governed by the terms set forth in the “Agreement to Arbitrate” entered into between the Bank and the Participant.

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

	
			
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	14
	 

	
								
	APPENDIX I

2017 PERFORMANCE PERIOD GOALS & QUALIFIERS & AWARDS SCALE/AWARDS

	2017 Goals
	2017 Goal Components
	Goal Weight
	Goal Component Weight
	2017 Goal Measures

	1) RISK MANAGEMENT
	 
	20%
	 
	In the event of a Significant Deficiency or Material Weakness in internal control over financial reporting, a significant operations loss, or a significant noncompliance with Bank policy as described in the Bank’s Risk Management Policy, the Board of Directors will assess the impact and appropriate adjustment to the Risk Management goal achievement level, if any.

	 
	A) Technology Resiliency
	 
	50%
	  75%:  Complete the End User Computing Modernization initiative, which moves 
            Microsoft Windows and Office platforms to the cloud (Office 365) to increase
            resiliency as well as productivity
100%:  Certify that the build of the data center infrastructure servicing the Bank has been
             completed
125%:  Migrate 50% of the Bank’s environment to the new data center
150%:  Migrate 100% of the Bank’s environment to the new data center

	

	B) Business Continuity /
     Crisis Management
	 
	50%
	  75%: 1 Crisis Mgmt. Team Tabletop (1 external threat scenario) 
100%: 2 Crisis Mgmt. Team Tabletops (1 Cyber & 1 external threat scenario) 
125%: 3 Crisis Mgmt. Team Tabletops (1 Cyber & 2 external threats) and 1 Cyber 
            Incident Response Team Tabletop scenario                                           
150%: 3 Crisis Mgmt. Team Tabletops (1 Cyber & 2 external threats) and 2 Cyber
            Incident Response Team Tabletop scenarios            

	2) FRANCHISE ENHANCEMENT
	 
	40%
	 
	 

	 
	A) Financial Performance
	 
	25%
	Adjusted Return on Capital Spread (AROC)

	 
	 
	75%
	100%
	125%
	150%

	 
	 
	2.81%
	3.06%
	3.31%
	3.56%

	 
	 
	[Achievement level targets and measured performance exclude OTTI charges]

	

	B) Operating Cost
     Efficiency Initiative
	 
	25%
	  75%:  
100%:                
125%:                
150%:           
	} Subjective assessment by the Board of Directors

	 
	C) Member Business 
	 
	25%
	Member Advances and Letters of Credit (LC) Volume

	75%
	100%
	125%
	150%

	$53.7
	$60.0
	$62.0
	$64.0

	

25%
	Member Engagement

	 
	 
	 
	75%
	100%
	125%
	150%

	 
	 
	 
	40%
	45%
	50%
	55%

	3) COMMUNITY INVESTMENT
	 
	20%
	 
	 

	 
	A) CIP/ACE/HPA
     Advances, Letters of
     Credit & AHEAD
      (# of Members)
	 
	

100%

	(# of Members)

	75%
	100%
	125%
	150%

	38
	41
	44
	47

	4) ORG. HEALTH / DIVERSITY & INCLUSION
	 
	20%
	 
	 

	 
	A) Diversity &
     Inclusion
	 
	100%
	  75%:  Provide two (semi-annual) Bank-wide D&I training events [e.g., workplace,
            supplier/contracting diversity]   
100%:  Develop and implement a formal supplier diversity program
125%:  Present Leadership Series for key groups of women and minorities in Bank leadership
             positions
•    Women in Leadership Series and Minorities in Leadership Series
           Provide 2 events in each series for a total of 4 events
150%: Develop and implement a formal MWD internship program

	
			
	Approved 12/23/2016
	1
	 

Incentive Award Opportunities 
	
													
	 
	Total Incentive Award as % of Compensation (Base Salary)
	Year-End Incentive Award as % of Compensation (Base Salary)
	Deferred Incentive Award as % of Compensation (Base Salary)

	 
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds

	CEO/EVP/SVPs
	40%
	80%
	96%
	100%
	20%
	40%
	48%
	50%
	20%
	40%
	48%
	50%

Goal Weights
	
					
	 
	CEO/EVP/SVPs
	SVP, Chief Risk Officer

	 
	Corporate Goal Weights
	Goal Weight (includes individual goals)
	Corporate Goal Weights
	Goal Weight (includes individual goals)

	Individual
	N/A
	10.0%
	N/A
	10.0%

	Risk Management
	20.0%
	18.0%
	50.0%
	45.0%

	Franchise Enhancement
	40.0%
	36.0%
	30.0%
	27.0%

	Community Investment
	20.0%
	18.0%
	10.0%
	9.0%

	Organizational Health / Diversity and Inclusion
	20.0%
	18.0%
	10.0%
	9.0%

	Total
	100.0%
	100.0%
	100.0%
	100.0%

Qualifiers
The following are the performance qualifiers for any Award: (i) no submission of material information to a regulatory or a reporting agency is significantly past due; (ii) the Bank makes sufficient progress, as determined by the Board, in the timely remediation of significant examination, monitoring and other supervisory findings; (iii) no material risk-management deficiency exists at the Bank; (iv) no operational errors or omissions result in material revisions to the financial results, information submitted to the FHFA, or data used to determine incentive payouts; (v) the Bank has sufficient capital to pay dividends and the ability to repurchase member stock.

	
			
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APPENDIX II 
AWARDS AND GOALS APPLICABLE TO 2020 GAP YEAR (2017-2019 LTIP)
Incentive Award Opportunities
	
					
	 
	

Long-Term Incentive Award as a % of Compensation (Base Salary effective February 1, 2017)

	Position
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds

	

CEO/EVP/SVPs
	20%
	40%
	48%
	

50%

Awards are based on the level at which the following three-year performance goals and metrics have been achieved. 
Goals
		
	1.
	3-Year Average Adjusted Return on Capital Spread: Adjusted Return on Capital Spread (AROCS) is the primary measure the Bank uses to determine total rate of return to shareholders. The Meets (Target) AROCS achievement level has been set at 2.43% and represents the projected average for the performance period (January 1, 2017 through December 31, 2019) and is consistent with the Bank’s Strategic Plan forecast.  Threshold AROCS has been set at 2.18%, Exceeds achievement level has been set at 2.68% and Far Exceeds achievement level has been set at 2.93%.

		
	2.
	3-Year Average Risk Management: Risk Management is based on the 3-year average of the actual Risk Management goal achievement levels for 2017, 2018, and 2019, and will be set at the end of the performance period.

Goals / Weights / Measures
	
						
	Goals
	Goal Weight
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds

	

AROCS Goal (3-Year Average Spread Over Benchmark 

	

30%
	

2.18%
	

2.43%
	

2.68%
	

2.93%

	

Risk Management

	

70%
	Based on the 3-year average of the actual Risk Management goal achievement levels for 2017, 2018, and 2019

	
			
	Approved 12/23/2016
	 
	 

APPENDIX III
FORM OF NON-SOLICITATION AND NON-DISCLOSURE AGREEMENT
This Agreement is entered into as of the ____ day of _____________, 201_, by and between the FEDERAL HOME LOAN BANK OF SAN FRANCISCO, a corporation organized under the laws of the United States (the “Bank”) and ____________________ (the “Executive”).
WHEREAS, the Bank sponsors the Federal Home Loan Bank of San Francisco Executive Incentive Plan (the “Plan”); and
WHEREAS, as a condition of participation in the Plan, the Bank requires that the Executive agree to the terms and conditions found within this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual promises and agreements contained herein and other good and valuable consideration, the receipt, legal adequacy and sufficiency of which are hereby acknowledged, the parties agree as follows:
1.Non-Disclosure; Return of Confidential Information and Other Property.
(a)    Access to Confidential Information.  The Executive understands, acknowledges and agrees that during the course of his or her employment with the Bank he or she has gained or will gain information regarding, knowledge of, and familiarity with, the Confidential Information of the Bank (as defined in subsection (c)) that would cause irreparable damage and harm to the Bank if it was disclosed.  The Executive understands, acknowledges and agrees that the Confidential Information has substantial economic value because it is not known or readily ascertainable by proper means by others who could obtain economic value from it.  The Executive also acknowledges and agrees that the Bank uses reasonable means to maintain the secrecy and confidentiality of the Confidential Information.
(b)    Non-Disclosure.  At all times while the Executive is employed by the Bank, and at all times thereafter, the Executive will not (i) directly or indirectly disclose, provide or discuss any Confidential Information with or to any Person (as defined in subsection (d)) other than those directors, officers, employees, representatives and agents of the Bank who need to know such Confidential Information for a proper corporate purpose, and (ii) directly or indirectly use any Confidential Information (A) to compete against the Bank, or (B) for the Executive’s own benefit, or for the benefit of any Person other than the Bank.
(c)    Confidential Information Defined.  For purposes of this Agreement, the term “Confidential Information” means any and all:
(i)    materials, records, data, documents, lists, writings and information (in each case, whether in writing, printed, verbal, electronic, computerized or otherwise) (A) relating or referring in any manner to the business, operations, affairs, financial condition, results of operation, cash flow, assets, liabilities, sales, revenues, income, estimates, projections, policies, strategies, techniques, methods, products, developments, suppliers, regulators, members, relationships and/or customers of the Bank that are confidential, proprietary or not otherwise publicly available, in any event not without a breach of this Agreement, or (B) that the Bank has deemed confidential, proprietary, nonpublic or not otherwise publicly available without breaching this Agreement;
(ii)    trade secrets of the Bank, as defined in California Civil Code Section 3426.1(d), as amended, or any successor statute; and

	
			
	Approved 12/23/2016
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(iii)    any and all copies, summaries, analyses and extracts which relate or refer to or reflect any of the items set forth in (i) or (ii) above.  The Executive agrees that all Confidential Information is confidential and is and at all times will remain the property of the Bank.
(d)    Person Defined.  For purposes of this Agreement, the term “Person” will mean any natural person, proprietorship, partnership, corporation, limited liability company, bank, organization, firm, business, joint venture, association, trust or other entity and any government agency, body or authority.
(e)    Return of Confidential Information and Other Property.  The Executive covenants and agrees:
(i)    to keep all Confidential Information subject to the Bank’s custody and control and to promptly return to the Bank all Confidential Information that is still in the Executive’s possession or control at the termination of the Executive’s employment with the Bank; and
(ii)    promptly upon termination of the Executive’s employment with the Bank, to return to the Bank, at the Bank’s principal office, all vehicles, equipment, computers, credit cards and other property of the Bank and to cease using any of the foregoing.
(f)    Exceptions from Confidentiality Obligations.  Section 1 shall not be deemed to prevent the Executive from making disclosures required or made permissible by applicable statute or regulation. Section 1 shall also not be deemed to prevent the Executive from making disclosure required by agency or court order, to the extent that prior to disclosure, the Executive provides the Bank with timely written notice of order , to the extent such prior notice is not prohibited, so as to allow the Bank to contest the order.
2.    Non-Disparagement.  The Executive agrees to not communicate disparaging remarks to third parties about the Bank, its directors, officers or employees.  Likewise, the Bank agrees not to disparage the Executive or his or her skills or job performance to third parties.  However, nothing in this paragraph shall prohibit the Bank or the Executive from testifying truthfully under oath.  In addition, Section 2 shall not be deemed to prevent the Executive from making disclosures required or made permissible by applicable statute or regulation. Section 2 shall also not be deemed to prevent the Executive from making disclosure required by agency or court order, to the extent that prior to disclosure, the Executive provides the Bank with timely written notice of order, to the extent such prior notice is not prohibited, so as to allow the Bank to contest the order.
3.    Non-Solicitation.  The Executive hereby understands, acknowledges and agrees that, by virtue of his or her position with the Bank, the Executive has and will have advantageous familiarity and personal contacts with the employees of the Bank and has and will have advantageous familiarity with the business, operations and affairs of the Bank.  In addition, the Executive understands, acknowledges and agrees that the business of the Bank is highly competitive.  Accordingly, at all times while the Executive is employed by the Bank and for a twelve-month period following termination of employment, the Executive will not, directly or indirectly, or individually or together with any other Person, as owner, shareholder, investor, member, partner, proprietor, principal, director, officer, Executive, manager, agent, representative, independent contractor, consultant or otherwise induce, request or attempt to influence any Bank employee who was employed by the Bank during the twelve-month period prior to termination of employment, to terminate his or her employment with the Bank.  
4.    Periods of Noncompliance and Reasonableness of Periods.  The restrictions and covenants contained in Section 3 will not run during all periods of noncompliance and will apply during the Term of this Agreement and for the full periods specified in Section 3.  The Bank and the Executive understand, acknowledge and agree that the restrictions and covenants contained in Section 3 are reasonable in view of the nature of the business in which the Bank is engaged, the Executive’s position with the Bank and the Executive’s advantageous knowledge and familiarity with, the Bank’s employees, business, operations, affairs and customers.

	
			
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The Bank’s obligation to pay an award to the Executive pursuant to the Federal Home Loan Bank of San Francisco Incentive Plan will immediately terminate in the event the Executive breaches any of the provisions of Section 1 or 3 and all outstanding awards will be forfeited.  Notwithstanding the foregoing:
(a)    the Executive’s covenants set forth in Sections 1 or 3 will continue in full force and effect and be binding upon the Executive;
(b)    the Bank will be entitled to the remedies specified in Section 6; and
(c)    the Bank will be entitled to its damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) resulting from or relating to the successful prosecution of the Executive’s breach of any of the provisions of Section 1 or 3.
5.    Survival of Certain Provisions.  Upon any termination of the Executive’s employment with the Bank, the Executive and the Bank hereby expressly agree that the provisions of Sections 1, 3, 4 and 6 will continue to be in full force and effect and binding upon the Executive and the Bank in accordance with the applicable respective provisions of such Sections.
6.    Remedies.  The Executive agrees that the Bank will suffer irreparable damage and injury and will not have an adequate remedy at law in the event of any actual, threatened or attempted breach by the Executive of any provision of Section 1 or 3.  Accordingly, in the event of a threatened, attempted or actual breach by the Executive of any provision of Section 1 or 3, in addition to all other remedies to which the Bank is entitled at law, in equity or otherwise, the Bank may be entitled to a temporary restraining order and a permanent injunction or a decree of specific performance of any provision of Section 1 or 3.  The foregoing remedies will not be deemed to be the exclusive rights or remedies of the Bank for any breach of or noncompliance with this Agreement by the Executive but will be in addition to all other rights and remedies available to the Bank at law, in equity or otherwise.
7.    Severability.  In case any one or more of the provisions (or any portion thereof) contained herein will, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provision of this Agreement, but this Agreement will be construed as if such invalid, illegal or unenforceable provision or provisions (or portion thereof) had never been contained herein.  If any provision of this Agreement will be determined by a court of competent jurisdiction to be unenforceable because of the provision’s scope, duration or other factor, then such provision will be considered divisible and the court making such determination will have the power to reduce or limit (but not increase or make greater) such scope, duration or other factor or to reform (but not increase or make greater) such provision to make it enforceable to the maximum extent permitted by law, and such provision will then be enforceable against the appropriate party hereto in its reformed, reduced or limited form; provided, however, that a provision will be enforceable in its reformed, reduced or limited form only in the particular jurisdiction in which a court of competent jurisdiction makes such determination.
8.    Entire Agreement.  This Agreement sets forth the entire understanding of the parties hereto with respect to its subject matter, merges and supersedes all prior and contemporaneous understandings with respect to its subject matter, and may not be waived or modified, in whole or in part, except in writing signed by each of the parties hereto.  No waiver of any provision of this Agreement in any instance will be deemed to be a waiver of the same or any other provision in any other instance.  The recitals set forth above are incorporated herein by this reference.
9.    Effect and Modification.  No statement or promise, except as set forth herein, has been made with respect to the subject matter of this Agreement. No modification or amendment will be effective unless in writing and signed by the Executive and an officer of the Bank (other than the Executive).

	
			
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10.    Non-Waiver.  The Bank’s or the Executive’s failure or refusal to enforce all or any part of, or the Bank’s or the Executive’s waiver of any breach of this Agreement, will not be a waiver of the Bank’s or the Executive’s continuing or subsequent rights under this Agreement, nor will such failure or refusal or waiver have any effect on the subsequent enforceability of this Agreement.
11.    Non-Assignability.  This Agreement contemplates that the Executive will personally provide the services described herein, and accordingly, the Executive may not assign the Executive’s rights or obligations hereunder, whether by operation of law or otherwise, in whole or in part, without the prior written consent of the Bank.
12.    Notice.  Any notice, request, instruction or other document to be given hereunder to any party will be in writing and delivered by hand, telegram, registered or certified United States mail return receipt requested, or other form of receipted delivery, with all expenses of delivery prepaid, as follows:
	
		
	If to the Executive
	 

	 
	 

	 
	 

	 
	 

	 
	 

	 
	 

	If to the Bank
	 

	 
	Federal Home Loan Bank of San Francisco

	 
	c/o General Counsel and Corporate Secretary

	 
	P.O. Box 7948

	 
	San Francisco, CA 94120

13.    Governing Law.  This Agreement is being delivered in and will be governed by the laws of the State of California without regard to the choice of law principles thereof.  Any dispute regarding this Agreement will be brought in any California state or federal court having jurisdiction in the matter and the Executive expressly consents to the jurisdiction of such courts.
14.    Prior Agreements.  The Executive represents and warrants to the Bank that the Executive is not a party to or otherwise bound by any agreement that would restrict in any way the performance by the Executive of the Executive’s duties, services and obligations under this Agreement, that the Executive has disclosed to the Bank all employment type agreements to which the Executive has been bound, including without limitation employment agreements, consulting agreements, non-compete agreements or covenants, confidentiality or non-disclosure agreements or covenants, and intellectual property assignment agreements, and that the Bank will not have any liability to any third party arising out of the Executive entering into this Agreement or performing hereunder.
15.    Effect of Headings.  The descriptive headings of the Sections and, where applicable, subsections, of this Agreement are inserted for convenience and identification only and do not constitute a part of this Agreement for purposes of interpretation.
16.    Counterparts.  This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which collectively will constitute one and the same instrument.
17.    Miscellaneous.  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Plan.

	
			
	Approved 12/23/2016
	4
	 

IN WITNESS WHEREOF, the Bank, by its officer thereunder duly authorized, and the Executive, have caused this Non-Solicitation and Non-Disclosure Agreement to be executed as of the day and year first above written.
	
				
	FEDERAL HOME LOAN BANK
	 
	 

	OF SAN FRANCISCO
	 
	EXECUTIVE

	 
	 
	 
	 

	By:
	 
	 
	 

	 
	 
	 
	 

	Its:
	 
	 
	 

	 
	 
	 
	 

	By:
	 
	 
	 

	 
	 
	 
	 

	Its:
	 
	 
	 

	
			
	Approved 12/23/2016
	5
	 

	
								
	FEDERAL HOME LOAN BANK OF SAN FRANCISCO

Executive Incentive Plan
APPENDIX IV

2018 Performance Period Goals, Qualifiers, and Awards Scale

	2018 Goals
	2018 Goal Components
	Goal Weight
	Goal Component Weight
	2018 Goal Measures

	1) Risk Management
	20%
	 
	In the event of a significant deficiency or material weakness in internal control over financial reporting, a significant operational loss, or a significant noncompliance with Bank policy as described in the Bank’s Risk Management Policy, the Board of Directors will assess the impact and will make appropriate adjustments to the Risk Management goal achievement level.

	 
	Cyber-security Threat Management
	 
	100%
	  75%:  Enhance cyber-security threat metrics
100%:  Threshold plus conduct one internal and one external cyber-security threat table top exercise
125%:  Meets plus operationalize system hardening
150%:  Exceeds plus meet SLA for critical vulnerabilities with public exploits, and reduce backlog of critical vulnerabilities by 80%

	2) Franchise Enhancement
	40%
	 
	 

	 
	A) Financial Performance
	 
	25%
	Adjusted Return on Capital Spread

	75%
	100%
	125%
	150%

	2.13%
	2.43%
	2.73%
	3.03%

	 
	B) Operating Expense Efficiency
	 
	25%
	Actual 2018 Core Operating Expenses ($Mils.)

	75%
	100%
	125%
	150%

	$128.4
	$127.4
	$126.4
	$125.4

	 
	C) Advances and Letters of Credit
	 
	25%
	Member Advances and Letters of Credit (Average Daily Balance ($Bils.)

	75%
	100%
	125%
	150%

	$69.1
	$77.5
	$80.0
	$82.5

	 
	D) Member Engagement (RMS and Specialists - Total)
	 
	12.5%
	Count

	75%
	100%
	125%
	150%

	132
	149
	165
	182

	(Specialists-15% of Total)
	12.5%
	20
	22
	25
	27

	3) Community Investment
	20%
	 
	 

	 
	CIP/ACE/HPA Advances, Letters of Credit & AHEAD
	 
	

100%

	Number of Members

	75%
	100%
	125%
	150%

	39
	47
	50
	55

	4) Diversity & Inclusion
	20%
	 
	 

	 
	Diversity and Inclusion Strategic Plan
	 
	100%
	  75%:  Develop 2018-2020 Diversity and Inclusion (D&I Strategic Plan)
100%:  Threshold plus target (100%) level of achievement against D&I initiatives
125%:  Meets plus Exceed level of achievement against D&I initiatives
150%:  Exceeds plus deliver Capital markets hosted outreach seminar for diverse broker/dealers and complete one diverse supplier incubator partnership

	
			
	Approved 12/1/2017
	1
	 

Incentive Award Opportunities 
	
													
	 
	Total Incentive Award as % of Compensation (Base Salary)
	Year-End Incentive Award as % of Compensation (Base Salary)
	Deferred Incentive Award as % of Compensation (Base Salary)

	 
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds
	Threshold
	Meets (Target)
	Exceeds
	Far Exceeds

	CEO/EVP/SVPs
	40%
	80%
	96%
	100%
	20%
	40%
	48%
	50%
	20%
	40%
	48%
	50%

Goal Weights
	
					
	 
	CEO/SVPs
	SVP, Chief Risk Officer

	 
	Corporate Goal Weights
	Goal Weight (includes individual goals)
	Corporate Goal Weights
	Goal Weight (includes individual goals)

	Individual
	N/A
	20.0%*
	N/A
	20.0%*

	Risk Management
	20.0%
	16.0%
	50.0%
	40.0%

	Franchise Enhancement
	40.0%
	32.0%
	25.0%
	20.0%

	Community Investment
	20.0%
	16.0%
	10.0%
	8.0%

	Diversity and Inclusion
	20.0%
	16.0%
	15.0%
	12.0%

	Total
	100.0%
	100.0%
	100.0%
	100.0%

Qualifiers
The following are the performance qualifiers for any Award: (i) no submission of material information to a regulatory or a reporting agency is significantly past due; (ii) the Bank makes sufficient progress, as determined by the Board, in the timely remediation of significant examination, monitoring and other supervisory findings; (iii) no material risk-management deficiency exists at the Bank; (iv) no operational errors or omissions result in material revisions to the financial results, information submitted to the FHFA, or data used to determine incentive payouts; (v) the Bank has sufficient capital to pay dividends and the ability to repurchase member stock.
* In support of the 20 percent goal weights, management is developing individual goal descriptions and quantifying measures for EIP participants, which will be presented to the Board for review and approval in January 2018, subject to Finance Agency review.

	
			
	Approved 12/1/2017
	2Exhibit

EXHIBIT 10.12

FEDERAL HOME LOAN BANK OF SAN FRANCISCO
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Amended and Restated Effective January 1, 2018 

TABLE OF CONTENTS
	
				
	ARTICLE 1.  INTRODUCTION
	1
	

	1.1
	Establishment of Plan
	1
	

	1.2
	Purpose of the Plan
	1
	

	ARTICLE 2.  DEFINITIONS
	2
	

	2.1
	Definitions
	2
	

	2.2
	Number and Gender
	8
	

	ARTICLE 3.  PARTICIPATION AND SERVICE
	9
	

	3.1
	General
	9
	

	3.2
	Date of Participation
	9
	

	3.3
	Duration; Rehire
	9
	

	3.4
	Contribution Credit Service
	10
	

	3.5
	Vesting Service
	10
	

	ARTICLE 4.   RETIREMENT BENEFITS
	11
	

	4.1
	Account
	11
	

	4.2
	Contribution Credits and Special Contribution Credits
	12
	

	4.3
	Annual Indexation Credits
	13
	

	4.4
	Special Rules For Determining Balance of Accounts and for Crediting Contribution Credits and Annual Indexation Credits
	14
	

	4.5
	Vesting
	16
	

	4.6
	Forfeiture
	17
	

	ARTICLE 5.   PAYMENT OF BENEFITS; DEATH BENEFITS
	18
	

	5.1
	Amount of Benefit
	18
	

	5.2
	Automatic Form of Benefit Payment
	18
	

	5.3
	Optional Forms of Benefit Payments
	18
	

	5.4
	Automatic Time of Benefit Payment
	20
	

	5.5
	Optional Time of Benefit Payment
	20
	

	5.6
	Manner and Time of Elections
	21
	

	5.7
	Death Benefits
	22
	

	5.8
	Beneficiary Designation
	23
	

	ARTICLE 6.   SOURCE OF PAYMENTS
	24
	

	ARTICLE 7.   ADMINISTRATION
	24
	

	7.1
	Committee
	24
	

	7.2
	Procedures for Requesting Benefit Payments
	26
	

	ARTICLE 8.   AMENDMENT AND TERMINATION
	26
	

	8.1
	Amendment of the Plan
	26
	

	8.2
	Termination of the Plan
	27
	

	8.3
	Change in Control
	28
	

	8.4
	Dissolution or Bankruptcy
	28
	

	ARTICLE 9.   MISCELLANEOUS PROVISIONS
	29
	

	9.1
	Employment Rights
	29
	

i

	
				
	9.2
	No Examination or Accounting
	29
	

	9.3
	Records Conclusive
	29
	

	9.4
	Severability
	29
	

	9.5
	Counterparts
	30
	

	9.6
	Taxes
	30
	

	9.7
	Binding Effect
	30
	

	9.8
	Assignment
	31
	

	9.9
	Incapacity
	31
	

	9.10
	Unsecured Creditors
	32
	

	9.11
	Notice
	32
	

	9.12
	Benefits Not Salary
	32
	

	9.13
	Captions
	33
	

	9.14
	Governing Law
	33
	

	9.15
	Addresses
	33
	

	FEDERAL HOME LOAN BANK OF SAN FRANCISCO SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN  Schedule A
	A-1
	

	FEDERAL HOME LOAN BANK OF SAN FRANCISCO SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN  Schedule B
	B-1
	

	FEDERAL HOME LOAN BANK OF SAN FRANCISCO SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN  Schedule C
	C-1
	

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ARTICLE 1.   INTRODUCTION
		
	1.1
	Establishment of Plan

Federal Home Loan Bank of San Francisco, incorporated under the laws of the United States, first established the Federal Home Loan Bank of San Francisco Supplemental Executive Retirement Plan effective January 1, 2003, then amended and restated the Plan effective January 1, 2005, January 1, 2009, and July 1, 2013.  This is an amendment and restatement of the Plan effective January 1, 2018.
		
	1.2
	Purpose of the Plan

The purpose of this Plan is to provide supplemental retirement benefits for a select group of management or highly compensated employees of the Bank.  Payments under the Plan shall be made from the general assets of the Bank or from the assets of the trust, if any, established as part of the Plan.  It is intended that the Plan remain at all times a nonqualified plan and that the trust, if any, shall constitute a grantor trust under Sections 671 through 679 of the Code.  Until paid, any and all assets of any vehicle used for payment of benefits under this Plan shall remain owned by the Bank, subject to the claims of its general creditors in the event of the Bank’s insolvency.
This Plan, as amended and restated, is intended to meet the requirements of Code Section 409A and the Treasury Regulations issued thereunder.

1

ARTICLE 2.   DEFINITIONS
		
	2.1
	Definitions

Whenever used in this Plan, the following words and phrases shall have the meanings set forth below unless a different meaning is expressly provided or plainly required by the context:
(a)    “Account” means the account established for a Participant pursuant to Section 4.1 of the Plan.
(b)    “Actuarial Equivalent” means a benefit having the same value as the benefit for which it is substituted.  The determination of the Actuarial Equivalent of any benefit as provided for under this Plan shall be made based on the factors specified in the definition of Actuarial Equivalent in the Cash Balance Plan.
(c)    “Annual Indexation Credit” means the credit to an Account described in Section 4.3.
(d)    “Bank” means Federal Home Loan Bank of San Francisco and any successor thereto that agrees to assume the duties and obligations of the Bank hereunder.
(e)    “Beneficiary” means the person or entity designated by a Participant or Former Participant pursuant to Section 5.8 to receive any death benefit payable under this Plan.  If no Beneficiary is properly designated at the time of the Participant’s or Former Participant’s death, or if no person so designated shall have survived the Participant or Former Participant, the Beneficiary shall be the surviving spouse, or if there is no surviving spouse, the Participant’s or Former Participant’s estate.  A Beneficiary designation will not become effective unless it is made on the form designated by the Bank and it is received by the Bank prior to the Participant’s death.  

2

(f)    “Benefit Equalization Plan” means the Federal Home Loan Bank of San Francisco Benefit Equalization Plan, as amended from time to time.
(g)    “Board of Directors” means the Board of Directors of the Bank.
(h)    “Cash Balance Plan” means the Federal Home Loan Bank of San Francisco Cash Balance Plan, as amended from time to time.
(i)    “Cause” means any of the following:
(1)    Criminal or other willful misconduct of the Participant or Former Participant that materially violates any laws, regulations or orders of any government agency, including without limitation any laws, regulations or orders applicable to the Bank; or
(2)    Deliberate material failures of the Participant or Former Participant to comply with the Bank’s policies and procedures or with any directive of the Board of Directors. 
(j)    “Code” means the Internal Revenue Code of 1986, as amended from time to time.
(k)    “Change in Control” means a transaction described in 12 United States Code Section 1446(26), so long as that transaction also qualifies as a change in ownership or effective control or a change in ownership of a substantial portion of assets under Code Section 409A and the regulations promulgated thereunder.
(l)    “Committee” means the committee appointed by the Board of Directors in accordance with Section 7.1 of this Plan.
(m)    “Compensation” means the base salary and other wages, “Annual Award” as defined under the Federal Home Loan Bank of San Francisco Executive Incentive Plan (“EIP”), any other short-term incentive compensation, commissions, and other taxable remuneration payable to a 

3

Participant by the Bank for a Plan Year or other period taken into account in making the determination.  In applying this definition, Compensation shall also include any salary reduction elected by the Participant under Code Sections 125, 401(k) and 132(f)(4), and any deferrals or contributions made by the Participant under any nonqualified deferred compensation or excess benefit plans maintained by the Bank, including, without limitation, the Deferred Compensation Plan and the Benefit Equalization Plan.  The foregoing notwithstanding, in determining a Participant’s Compensation, all “Deferred Awards” and “Gap Year Awards” as defined under the EIP, any other long-term incentive compensation, reimbursements and expense allowances, moving expenses, fringe benefits, income attributable to group-term life insurance, long-term disability payments, meals and lodging, contributions made by the Bank on behalf of the Participant to, and all distributions from, qualified plans, nonqualified deferred compensation plans, and excess benefit plans (including, without limitation, the Cash Balance Plan, the Savings Plan, the Deferred Compensation Plan and the Benefit Equalization Plan) shall be excluded.
(n)    “Contribution Credit” means the credit to an Account described in Section 4.2(a).
(o)    “Contribution Credit Service” means the service described in Section 3.4.
(p)    “Deferred Compensation Plan” means the Federal Home Loan Bank of San Francisco Deferred Compensation Plan, as amended from time to time.
(q)    “Disability” means that a Participant:
(1)    is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or

4

(2)    is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under any accident and health plan covering employees of the Participant’s employer.
The determination of the existence of a Disability shall be made by the Bank in accordance with Code Section 409A.
(r)    “Final Average Pay” means the highest average annual Compensation of a Participant during any three (3) consecutive calendar years completed during which an individual is a Participant in the period preceding the determination date.  If the Participant received Compensation for fewer than three (3) consecutive complete calendar years while a Participant, Final Average Pay shall be determined taking into account either the Participant’s last three (3) completed calendar years as a Participant, or, if fewer than three (3) calendar years have been completed as a Participant, the Participant’s entire completed service with the Bank.
(s)    “Former Participant” means either:
(1)    Any former employee of the Bank who has a vested Account under the Plan; or
(2)    Any current employee of the Bank who was a Participant under the Plan without regard to whether such individual’s Account is vested or nonvested.
(t)    “Participant” means an employee who becomes a Participant as provided in Article 3.
(u)    “Pay Limitation” means the target annualized Compensation plus target Deferred Award and Gap Year Award under the EIP and any other target long-term incentive compensation of a Participant on the Participant’s date of hire by the Bank, and adjusted for annual increases in target 

5

Compensation and target Deferred Award and Gap Award and any other target long-term incentive compensation, all as determined in the sole discretion of the Board of Directors. 
(v)    “Plan” means the Federal Home Loan Bank of San Francisco Supplemental Executive Retirement Plan, as established by this document and as amended from time to time.
(w)    “Plan Year” means the calendar year.
(x)    “Savings Plan” means the Federal Home Loan Bank of San Francisco Savings Plan, as amended from time to time.
(y)    “Special Contribution Credits” means the credit to an Account described in Section 4.2(b). 
(z)    “Spouse” means:
		
	(a)
	The person to whom a Participant is legally married under the laws of any state or other jurisdiction; or

		
	(b)
	A person of the same gender as the Participant with whom the Participant has entered into a valid domestic partnership pursuant to the laws of the state of California.

All uses of the word “spouse” (including a surviving spouse) in this Plan document are deemed to be capitalized and to refer to this defined term “Spouse.”

(aa)    “Termination of Employment” means the Participant (or Former Participant) ceasing to be employed in any capacity by the Bank for any reason whatsoever, voluntary or involuntary, including by reason of death.  Whether a Termination of Employment has occurred is based on whether the facts and circumstances indicate that the Member and the Bank reasonably anticipated 

6

that no further services would be performed after a certain date.  A Termination of Employment will not be deemed to have occurred if a Participant (or Former Participant) continues to provide services to the Bank as an employee, independent contractor or otherwise, at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediate preceding 36 months with the Bank (or if less, such lesser period); provided, however, that a Termination of Employment will be deemed to have occurred if the Participant’s (or Former Participant’s) service with the Bank, as an employee, independent contractor or otherwise, is reduced to an annual rate that is less than twenty percent (20%) of the services rendered, on average, during the immediately preceding 36 months with the Bank (or if less, such lesser period).
In addition to the foregoing, the employment of a Participant (or Former Participant) shall not be deemed to be terminated while the Participant (or Former Participant) is on military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six (6) months or, if longer, so long as the Participant’s (or Former Participant’s) right to reemployment with the Bank is provided by either statute or contract.  If the period of leave exceeds six (6) months and the Participant’s (or Former Participant’s) right to reemployment is not provided by either statute or contract, then the employee is deemed to have a Termination of Employment on the first day immediately following such six (6) month period.
For the purposes of this definition only, the term Bank includes Federal Home Loan Bank of San Francisco and its entire controlled group within the meaning of Code Section 414(b) and 414(c), using the 80% standard instead of the 50% standard outlined in Treasury Regulations interpreting Code Section 409A.

7

(bb)    “Total Retirement Income” means the amount determined under (1) and (2) below projected using the assumptions, and in the manner, set forth in Section 4.4 below, determined as the Actuarial Equivalent of a single life annuity commencing at the later of the Participant’s Normal Retirement Date (as defined in the Cash Balance Plan) and the date of Termination of Employment with the Bank.
(1)    all benefits accrued by a Participant or Former Participant under the Cash Balance Plan, the Financial Institutions Retirement Fund and this Plan (excluding any Special Contribution Credits and Annual Indexation Credits related to any Special Contribution Credits), plus
(2)    all benefits contributed by the Bank on behalf of a Participant or Former Participant under the Deferred Compensation Plan and the Benefit Equalization Plan with the exception of any matching contributions contributed by the Bank on behalf of a Participant or Former Participant and any deferrals or contributions made at the direction of the Participant or Former Participant.
(cc)    “Vesting Service” means the service described in Section 3.5.
		
	2.2
	Number and Gender

Except when otherwise indicated by the context, any use of any term in the singular or plural shall also include the opposite number.  As used in the Plan, the masculine gender shall be deemed to refer to the feminine whenever appropriate.

8

ARTICLE 3.   PARTICIPATION AND SERVICE
		
	3.1
	General

Participation in the Plan is limited solely to a select group of management or highly compensated employees who hold positions that are designated by the Board of Directors as covered under the Plan.
		
	3.2
	Date of Participation

An individual shall automatically become a Participant on the later of:
(a)    January 1, 2003, or
(b)    the date that the individual first begins service in a position that the Board of Directors has designated as covered under the Plan.
		
	3.3
	Duration; Rehire

(a)    Participant.  An employee who becomes a Participant shall continue to be a Participant until the employee has a Termination of Employment with the Bank or until the employee no longer serves in a position which the Board of Directors has designated as covered under the Plan.
(b)    Former Participant.  An individual shall continue to be a Former Participant until payment of his or her Account is made in full, begins, is forfeited pursuant to Section 4.6, or unless he or she once again becomes a Participant pursuant to Section 3.3(c).
(c)    Rehire.  A former employee who was a Participant in the Plan and is subsequently rehired by the Bank shall once again become a Participant on the date he or she begins service in a position 

9

that the Board of Directors has designated as covered under the Plan.  Such individual’s Contribution Credit Service and Vesting Service shall be determined in accordance with the provisions of Sections 3.4 and 3.5.
		
	3.4
	Contribution Credit Service

Except as otherwise provided in this Section, Contribution Credit Service shall include the Participant’s aggregate periods of employment (including years and fractions thereof) with the Bank or with an entity covered by the Financial Institutions Retirement Fund on and after January 1, 1996.  Notwithstanding the foregoing, for Plan Years commencing before January 1, 2018, all employment with the Bank necessary to complete six (6) months of Vesting Service as defined in, and required for participation under, the Cash Balance Plan shall be excluded from Contribution Credit Service for purposes of this Plan.
		
	3.5
	Vesting Service

Vesting Service with respect to any Contribution Credit or Special Contribution Credit and the Annual Indexation Credits associated therewith shall include a Participant’s aggregate periods of employment (including years and fractions thereof) with the Bank from the date such Participant became a Participant under the Plan; provided, however, that for Plan Years commencing prior to January 1, 2018, Vesting Service with respect to a particular Contribution Credit and the Annual Indexation Credits associated therewith shall include a Participant’s aggregate periods of employment (including years and fractions thereof) with the Bank from the date such Contribution Credit is credited to the Participant’s Account.

10

ARTICLE 4.   RETIREMENT BENEFITS
		
	4.1
	Account

(a)    The Bank shall establish and maintain an Account on its books for each Participant (and Former Participant) in the Plan.  The balance of a Participant’s (or Former Participant’s) Account as of any date shall be equal to the sum of the Participant’s (or Former Participant’s) (i) Contribution Credits and related Annual Indexation Credits, if any, as of that date, as adjusted pursuant to Sections 4.4(b) and 4.4(c) below and, if applicable, Section 4.1(b) and (ii) Special Contribution Credits and related Annual Indexation Credits, if any, as of that date, as adjusted, if applicable, under Section 4.1(b), but without adjustments under Sections 4.4(b) and (c).  As of the date payment of benefits is made or commences under this Plan, the Participant’s or Former Participant’s Account shall be reduced to zero (0), such individual shall cease to be a Participant or Former Participant, and, subject to other applicable provisions of the Plan, benefits shall be paid under the automatic form of benefit payment provided under Section 5.2 or, if applicable, the optional form of benefit payment elected by the Participant or Former Participant under Section 5.3.
(b)    Rehired Individuals.  If an individual, in accordance with the provisions of Section 3.3(c), once again becomes a Participant, then such individual’s Account shall be determined as follows:  upon the date such individual once again becomes a Participant such individual’s Account shall be redetermined (without regard to any distribution previously made or scheduled to be made) and shall be credited only with those amounts which were unvested at the time of the earlier termination and which were not a part of any distribution or scheduled distribution.  Any such unvested amounts shall be subject to the vesting requirements set forth in Section 4.5.

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	4.2
	Contribution Credits and Special Contribution Credits

(a)    Crediting Accounts.  A Contribution Credit shall be credited to the Account of each Participant as follows:
(1)    The Contribution Credit for a Plan Year shall be credited to the Account of each Participant as of the last day of each Plan Year, beginning in 2003.  No Contribution Credit shall be credited to the Account of any Participant for, or with respect to, any year prior to 2003.
(2)    A Contribution Credit shall be credited to a Participant who has a Termination of Employment or who ceases to be a Participant but otherwise remains employed by the Bank during the course of a Plan Year solely for that portion of Plan Year during which the individual was a Participant.  The Contribution Credit for a Participant who has a Termination of Employment shall be credited as of the date of termination.  The Contribution Credit for a Participant who ceases to be a Participant but otherwise remains employed by the Bank shall be credited as of December 31 of the applicable Plan Year.
(3)    Subject to Section 4.4 and other applicable provisions of the Plan, the amount of the Contribution Credit credited to the Account of Participants shall be determined in accordance with Schedule A attached hereto unless the Board of Directors specifically provides that the amount of the Contribution Credit to a particular Participant’s Account shall be determined in accordance with Schedule B or Schedule C attached hereto.  Additionally, the Board of Directors may, in its discretion and from time to time, designate that the amount of the Contribution Credit credited to the Account of a particular Participant or Participants for a Plan Year shall be determined in accordance with a separate Schedule, which Schedule shall be attached hereto.  In no circumstances, however, shall the Account of a Participant be credited with Contribution Credits for a Plan Year under more than 

12

one Schedule.  The Board of Directors must designate any such alternative schedule (other than Schedules A, B or C attached hereto) on or before December 31 of the Plan Year to which the schedule will apply to any Participant or group of Participants.
(b)    Special Contribution Credits.  The Board of Directors may, in its sole discretion, approve up to three Special Contribution Credits to be credited to a Participant’s Account.  Except as otherwise provided in Schedule C, the amount of all Special Contribution Credits for a single Participant credited to such Participant’s Account may not exceed the Participant’s Pay Limitation for the applicable Plan Year. 
(c)    Former Participants.  No Contribution Credits or Special Contribution Credits shall be credited to the Account of any Former Participant with respect to any period of time such individual was not a Participant.
		
	4.3
	Annual Indexation Credits

(a)    Crediting Accounts.  Annual Indexation Credits shall be credited to the Accounts of Participants and Former Participants as follows: 
(1)    The Annual Indexation Credit for a Plan Year shall be credited to the Account of Participants and Former Participants as of the last day of each Plan Year beginning in 2004.  No Annual Indexation Credit shall be credited to the Account of any Participant or Former Participant or with respect to any year prior to 2004.
(2)    Subject to Section 4.4 and other applicable provisions of the Plan, the amount of the Annual Indexation Credit credited to the Account of Participants and Former Participants shall be 

13

six percent (6%) of the balance of the Account determined as of the first day of the applicable Plan Year.
(b)    Proration; Cessation of Annual Indexation Credits.  The Annual Indexation Credit for the Plan Year in which a Participant or Former Participant receives, or begins receiving, payment of his or her benefit under this Plan shall be prorated as provided in Section 4.4(a) below and no further Annual Indexation Credits shall be credited to such Participant or Former Participant.
		
	4.4
	Special Rules For Determining Balance of Accounts and for Crediting Contribution Credits and Annual Indexation Credits

(a)    Proration.  If the Account of a Participant or Former Participant is determined as of a date during the Plan Year, the rules set forth in Section 4.2 and 4.3 shall be applied by treating the date of determination as the end of a short Plan Year.  In such a case, the Participant’s Compensation for the Plan Year to the calculation date shall be used in determining Compensation and the Contribution Credit, and the Annual Indexation Credit shall be prorated to reflect the portion of the year that has been completed as of the date of determination.  
(b)    Total Retirement Income – Current Limitation.  Notwithstanding anything in this Plan to the contrary, the Total Retirement Income of a Participant or Former Participant shall be limited to fifty percent (50%) of the Participant’s or Former Participant’s Final Average Pay, and a Participant’s or Former Participant’s Contribution Credits and/or Annual Indexation Credits, as applicable, under this Plan shall be adjusted as set forth in Section 4.4(d) below in order to ensure that such limit is observed.  For this purpose Total Retirement Income shall be determined as of the earlier of the last day of the current Plan Year and the date payments begin, and Final Average 

14

Pay shall be determined as of the earliest of the last day of the current Plan Year, Termination of Employment (if any), and the date the Participant ceases to be a Participant (if any).
(c)    Total Retirement Income – Projected Limitation.  Notwithstanding anything in this Plan to the contrary, the projected Total Retirement Income of a Participant shall be limited to fifty percent (50%) of the Participant’s projected Final Average Pay, and a Participant’s Contribution Credits and/or Annual Indexation Credits, as applicable, under this Plan shall be adjusted as set forth in Section 4.4(d) below in order to ensure that such limit is observed.  For this purpose, in the case of a Participant who has not yet attained age 65, Total Retirement Income and Final Average Pay shall be projected from the last day of the current Plan Year to the date the Participant attains age 65 by assuming four percent (4%) annual pay increases and that the Participant remains a Participant until such projected date.  The projected limitation under this Section 4.4(c) shall not apply unless the Participant remains a Participant until the last day of the Plan Year.
(d)    If, pursuant to Section 4.4(b), a Participant’s or Former Participant’s Total Retirement Income exceeds the fifty percent (50%) limits set forth in Sections 4.4(b), then Contribution Credits and/or Annual Indexation Credits related to Contribution Credits, as applicable, for the current and, if necessary, prior Plan Years shall be reduced as necessary to limit Total Retirement Income accordingly.  If such Participant’s or Former Participant’s Total Retirement Income subsequently falls below the fifty percent (50%) limits set forth in Section 4.4(b), then any Contribution Credits and/or Annual Indexation Credits related to such Contribution Credits previously reduced shall be restored as necessary.  For purposes of clarity, Section 4.4(d) does not at any time reduce any Special Contribution Credits and/or Annual Indexation Credits related to such Special Contribution Credits that have been credited to a Participant’s Account.

15

(e)    If, pursuant to Section 4.4(c), a Participant’s or Former Participant’s Total Retirement Income is projected to exceed the fifty percent (50%) limits set forth in Section 4.4(c), then the projected future Contribution Credits and/or Annual Indexation Credits related to such Contribution Credits, as applicable, shall be reduced, and, if necessary, Contribution Credits and/or Annual Indexation Credits related to such Contribution Credits for the current Plan Year, and then any prior Plan Years, shall be reduced to the extent required to limit the projected Total Retirement Income accordingly.  If such Participant’s or Former Participant’s Total Retirement Income subsequently is projected to fall below the fifty percent (50%) limits set forth in 4.4(c), then any Contribution Credits and/or Annual Indexation Credits related to such Contribution Credits previously reduced shall be restored as necessary, first with respect to any prior Plan Years in order of the most recently reduced, and second with respect to projected Plan Years.  For purposes of clarity, Section 4.4(d) does not at any time reduce any Special Contribution Credits and/or Annual Indexation Credits related to such Special Contribution Credits that have been credited to a Participant’s Account.
4.5    Vesting
The interest of each Participant in his or her Account shall vest as follows:
(a)    Vesting of Contribution Credits.  Each Participant shall become fully vested in all Contribution Credits in the Participant’s Account upon the completion of five (5) years of Vesting Service; provided, however, that for Contribution Credits made to a Participant’s Account for any Plan Year that commenced before January 1, 2018, each Participant shall become fully vested in a particular Contribution Credit upon the completion of three (3) years of Vesting Service following 

16

the beginning of the Plan Year (or portion thereof) with respect to which such Contribution Credit is credited to the Participant’s Account.
(b)    Special Contribution Credits.  Each Participant shall become fully vested in all Special Contribution Credits in the Participant’s Account upon the completion of three (3) years of Vesting Service.
(c)    Vesting of Annual Indexation Credits.  Each Participant shall become fully vested in that portion of each Annual Indexation Credit which has been credited to his or her Account with respect to a particular Contribution Credit or Special Contribution Credit at the same time such Participant becomes fully vested in such Contribution Credit or Special Contribution Credit and all further Annual Indexation Credits with respect to a particular vested Contribution Credit or Special Contribution Credit shall be fully vested.
(d)    Attainment of Age 62.  Notwithstanding any other provision of this Plan to the contrary, each Participant shall become fully vested in his or her Account on the date such Participant attains age 62 and all further Contribution Credits, Special Contribution Credits and Annual Indexation Credits to such Participant’s Account shall be fully vested.
		
	4.6
	Forfeiture

Notwithstanding any other provision of this Plan to the contrary, each Participant shall forfeit his or her entire unvested Account if the Participant has a Termination of Employment for Cause.  For purposes of the Plan, Cause shall be determined by the Bank in its sole discretion using the definition set forth in Section 2.1(i).

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ARTICLE 5.   PAYMENT OF BENEFITS; DEATH BENEFITS
		
	5.1
	Amount of Benefit

The benefit payable under this Plan to a Participant or Former Participant shall be equal to such individual’s vested Account balance at the time payment is made or commences.  
		
	5.2
	Automatic Form of Benefit Payment

Unless a Participant or Former Participant elects, in the manner prescribed in Section 5.6, an optional form of benefit payment set forth in Section 5.3 within 30 days of first becoming a Participant, the automatic form of benefit payment under the Plan shall be a single lump sum.
		
	5.3
	Optional Forms of Benefit Payments

A Participant or Former Participant may elect in accordance with Sections 5.5 and 5.6 to receive his or her benefits in one of the following optional forms of payment (which shall be the Actuarial Equivalent of the automatic form provided in Section 5.2) to the extent applicable:
(a)    A Life Annuity Option.  A life annuity payable to the Participant or Former Participant as of the first day of each month until (and including) the month in which the Participant or Former Participant dies.
(b)    A Life Annuity Option with 20-Year Certain Guarantee.  An annuity payable to the Participant or Former Participant as of the first day of each month until (and including) the later of the month in which the Participant or Former Participant dies or two hundred and forty (240) months.

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(c)    A Life Annuity Option with 10-Year Certain Guarantee.  An annuity payable to the Participant or Former Participant as of the first day of each month until (and including) the later of the month in which the Participant or Former Participant dies or one hundred and twenty (120) months.
(d)    A One-Half Life Annuity and One-Half Lump Sum.  One half of the value of the Participant’s Account is paid in a single lump sum and the remaining value of the Participant’s Account is paid in a life annuity payable to the Participant or Former Participant as of the first day of each month until (and including) the month in which the Participant or Former Participant dies.
(e)    A One-Half Life Annuity and One-Half Fixed Ten-Year Payout.  One half of the value of the Participant’s Account is paid in fixed equal monthly installments over of period of one hundred and twenty (120) months, and the remaining value of the Participant’s Account is paid in a life annuity payable to the Participant or Former Participant as of the first day of each month until (and including) the month in which the Participant or Former Participant dies.
(f)    A Contingent fifty Percent (50%) Annuitant Option.  An annuity payable as of the first day of each month to the Participant or Former Participant, for life, with a continuing annuity to the Beneficiary if the Beneficiary survives the Participant or Former Participant, in an amount which is fifty percent (50%) of the monthly annuity payable to the Participant or Former Participant, beginning with the first day of the month following the Participant’s or Former Participant’s death and continuing for the Beneficiary’s lifetime.

19

		
	5.4
	Automatic Time of Benefit Payment

(a)    Automatic Time.  Unless a Participant or Former Participant elects, in the manner prescribed in Section 5.6, an optional time of benefit payment within 30 days of first becoming a Participant, the automatic time of payment of a benefit under the Plan shall be the earlier of the Participant’s Termination of Employment, death or Disability.
(b)    Date Payment is Made.  Payment of a benefit under the Plan shall begin as soon as administratively practicable, but not later than 90 days, following Termination of Employment, death or Disability.  The Bank shall decide, in its sole discretion, when the exact date payment shall begin within such 90-day period.
		
	5.5
	Optional Time of Benefit Payment

Notwithstanding Section 5.4(b) above, if a Participant has a Termination of Employment at age 45 or older he may elect to defer payment of benefits under the Plan beyond such Termination of Employment, provided such election is made in accordance with Section 5.6 and the distribution is to be made on a specified date, death or Disability.  No payment of benefits may be made under this Plan prior to Termination of Employment, death or Disability.  Notwithstanding the foregoing, distributions shall commence no later than the April 1 following the end of the calendar year in which the later of the two following events occur: (1) the Participant reaches age 70 1⁄2, or (2) the Participant has a Termination of Employment.

20

		
	5.6
	Manner and Time of Elections

(a)    The election of an optional form or time of benefit payment shall be made on such forms as may be prescribed by the Bank.  Except as provided in Section 5.6(b), a Participant must make an election regarding the optional form of benefit and the optional time of benefit payment within 30 days of first becoming a Participant and such election shall be irrevocable on the beginning of the 31st day after becoming a Participant.  If no election is made within such 30 days, the automatic form of benefit payment and automatic time of benefit payment rules will apply.  A Participant (or Former Participant) may modify his election or the automatic form and time of benefit but the date the modification is submitted to the administrator must be at least twelve (12) months prior to the Participant’s (or Former Participant’s) scheduled distribution date, the modification shall not be effective for twelve (12) months after it becomes irrevocable and the first payment under the modified distribution date must occur at least five (5) years after the date such payment would have been made absent the modification; provided, however, that the additional five (5) years shall not apply to payments elected to be made upon death or to any change in the form of payment between annuities that are Actuarial Equivalents.  The election to modify in the preceding sentence shall be irrevocable twelve (12) months prior to the scheduled distribution date absent the modification.
(b)    The rules regarding elections apply to rehired employees described in Section 4.1(b), in the same way it applies to newly eligible employees.
(c)    Notwithstanding any other provision in the Plan to the contrary, during 2008 a Participant may modify the form of distribution and the distribution date elected under Section 5.6(a), provided 

21

that the election is made not later than December 31, 2008.  No election under this Section shall: (1) change the payment date of any distribution otherwise scheduled to be paid in 2008 or cause a payment to be paid in 2008, or (2) be permitted after December 31, 2008.
(d)    Notwithstanding any other provision of the Plan to the contrary, no distribution shall be made from the Plan that would constitute an impermissible acceleration of payment as defined in Section 409A(a)(3) of the Code and the regulations promulgated thereunder.
(e)    The Committee may delay any payment to a Participant or Former Participant upon the Committee’s reasonable anticipation of one or more of the following: (i) making such payment would jeopardize the Bank’s ability to continue as a going concern and the payment is made to the Participant during the first taxable year in which making the payment would not have such effect on the Bank; or (ii) making such payment would violate Federal securities laws or other applicable law.
		
	5.7
	Death Benefits

(a)    In the case of a Participant or Former Participant:
(1)    who has a vested interest in his or her Account balance; and
(2)    who dies before benefit payment has been made in the case of the lump sum automatic form of payment pursuant to Section 5.2, or who has elected an optional form of payment pursuant to Section 5.3 (other than 5.3(f)) and dies before any payment has begun, the amount of the vested Account balance shall be paid in a lump sum to the Participant’s or Former Participant’s Beneficiary eighteen (18) months after the death of the Participant or Former Participant.  In order to change the form or the time of the payment, the Beneficiary must make an election within six (6) months 

22

after the Participant’s or Former Participant’s death to receive a distribution in a form that is available to Beneficiaries under Section 5.3, such election shall be irrevocable on the six (6) month anniversary of the Participant’s death and shall not be effective for twelve (12) months after the date such election becomes irrevocable.  If the Beneficiary fails to make a timely election, the Beneficiary will receive the benefit in the form of a lump sum at the end of the eighteen (18) month period.  The Beneficiary cannot elect to receive: (1) payment past the date that is the April 1 following the end of the calendar year in which the Participant would have attained age 70 1⁄2, (2) benefits in a form not allowed under the Cash Balance Plan and (3) benefits before the end of the eighteen (18) month period.
(b)    In the case of a Participant or Former Participant:
(1)    who has a vested interest in his or her Account balance; and
(2)    who has elected the contingent fifty percent (50%) annuitant option pursuant to Section 5.3(b) and who dies either before or after benefit payment has begun, the amount of the vested Account balance shall be paid or continue to be paid in the form of the contingent fifty percent (50%) annuitant option described in Section 5.3(f).
(c)    In no other case shall any amount be paid to a Participant’s or Former Participant’s Beneficiary.
		
	5.8
	Beneficiary Designation

A Participant or Former Participant may designate a person or other entity as the Beneficiary to receive any death benefit payable under the Plan.  Each Beneficiary designation shall be in the form prescribed by the Bank, shall be effective only when properly filed in writing with the Bank 

23

before the earlier of the Participant’s or Former Participant’s death or the time payment is made or commences, and shall revoke all prior designations by the Participant or Former Participant.
ARTICLE 6.   SOURCE OF PAYMENTS
All benefits payable under the Plan shall be paid as they become due and payable by the Bank out of its general assets.  Nothing contained in this Plan shall be deemed to create a trust of any kind for the benefit of Participants, Former Participants or their Beneficiaries or create a fiduciary relationship between the Bank and the Participants, Former Participants or their Beneficiaries. To the extent that any person acquires a right to receive benefits under the Plan, such rights shall be no greater than the right of any unsecured general creditors of the Bank.  Notwithstanding the foregoing, the Bank may, in its sole discretion, execute a trust agreement with a trustee, or enter into one or more contracts with an insurance company or companies, or adopt a combination of both methods of funding.  Any such trust so established shall be a “rabbi” grantor trust under Sections 671 through 679.
ARTICLE 7.   ADMINISTRATION
		
	7.1
	Committee

(a)    General.  The Committee, subject to those powers which the Board of Directors has reserved as described in Article 8 below, shall have general authority over, and responsibility for, the administration and interpretation of the Plan.  The Committee shall have full power, authority and discretion to interpret and construe the Plan, to make all determinations considered necessary or advisable for the administration of the Plan and the trust, if any, the calculation of the amount of benefits payable under the Plan, and to review claims for benefits 

24

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.
(b)    Composition.  The Committee shall consist of at least three individuals, each of whom shall be appointed by the Board of Directors.  Any Committee member may resign by delivering his or her written resignation to the Committee no later than fifteen (15) days before the effective date of the resignation.  The Board of Directors may remove any member of the Committee at any time and for any reason with or without advance written notice.  Vacancies in the Committee arising by resignation, death, removal or otherwise shall be filled by the Board of Directors.
(c)    Committee Procedures.  The Committee shall elect or designate one of its own members as Chair, establish its own procedures and the time and place for its meetings and provide for the keeping of minutes of all meetings.  A majority of the members of the Committee shall constitute a quorum for the transaction of business by the Committee.  Any action of the Committee may be taken upon the affirmative vote of a majority of the members at a meeting or, at the direction of its Chair, without a meeting by mail or telephone, provided that all of the Committee members are informed in writing of the matter to be voted upon.  The Committee may establish procedures pursuant to which a Committee member may elect not to participate in a Committee proceeding in which such member has an interest.  No Committee member shall be entitled to act on or decide any matters relating solely to such Committee member as a Participant or any of his or her rights or benefits under the Plan.
(d)    Expenses.  All expenses incurred by the Committee in its administration of the Plan shall be paid by the Bank.  The Committee members shall not receive any special compensation for 

25

serving in such capacity but shall be reimbursed for any reasonable expenses actually incurred in connection therewith.  No bond or other security is required of the Committee or any member thereof in any jurisdiction.
(e)    Liability; Indemnification.  No Committee member shall be personally liable by reason of any instrument executed by such Committee member, or action taken by the member in his or her capacity as a Committee member, acting in good faith and exercising reasonable care, nor for any mistake of judgment made in good faith.  Committee members may be entitled to indemnification for certain costs, expenses and liabilities to the fullest extent permitted by applicable law and regulations and the charter and bylaws of the Bank, and subject to the terms and conditions set forth in such bylaws.
		
	7.2
	Procedures for Requesting Benefit Payments

To obtain Plan benefits, a Participant, Former Participant or Beneficiary must file a written application with the Bank.  Procedures for filing a claim in the event that Plan benefits are denied in whole or in part may be obtained from the Bank.
ARTICLE 8.   AMENDMENT AND TERMINATION
		
	8.1
	Amendment of the Plan

The Bank reserves the right to amend the Plan at any time and in any respect whatsoever by action of its Board of Directors or by such other means as may be prescribed by the Board of Directors.  The President of the Bank shall have authority to make administrative and other amendments to the Plan as may be necessary or appropriate to facilitate the administration, management, and interpretation of the Plan or to conform the Plan thereto (including any such 

26

amendments as necessary or appropriate from time to time to conform the Plan to changes in applicable laws), provided that any such amendment or action does not have a material effect on the then currently estimated cost to the Bank of maintaining the Plan.  All amendments to the Plan that have a material effect on the then currently estimated cost to the Bank of maintaining the Plan must be approved by the Board of Directors.  Retroactive Plan amendments may not decrease the Account balance of any Participant or Former Participant determined as of the time the amendment is adopted, unless the Participant or Former Participant consents in writing.
		
	8.2
	Termination of the Plan

While it is the intent of the Bank to maintain the Plan indefinitely, it reserves the right to terminate the Plan in whole or in part by action of the Board of Directors (or by such other means as may be prescribed by the Board of Directors) at any time.
Upon termination of the Plan, no further benefits shall accrue under the Plan to any Participant or Former Participant.  In the event of a termination of the Plan, the Bank may determine that the Accounts will be distributed.  If the Board of Directors determines that the Plan is to be terminated and distributions are to be made, the Accounts will be distributed within the period beginning twelve (12) months after the date the Plan was terminated and ending twenty-four (24) months after the date the Plan was terminated, or pursuant to Article 5 of the Plan, if earlier, and otherwise in accordance with Treasury Regulation § 1.409A-3(j)(4)(ix)(C).  Any liquidation and termination of the Plan will not occur proximate to a downturn in the financial health of the Bank, as prohibited by Code Section 409A.  If the Plan is terminated and Accounts are distributed, the Bank shall: (1) terminate all arrangements for Participants that are required to be aggregated with the Plan under Code Section 409A and (2) not adopt a new plan for Participants that would be 

27

aggregated with the Plan under Code Section 409A, at any time within three (3) years following the date of the termination of the Plan.
		
	8.3
	Change in Control

The Bank may terminate the Plan within 30 days prior to or twelve (12) months following a Change in Control and distribute the Accounts of the Participants or Former Participants within the twelve (12) month period following a termination of the Plan and otherwise in accordance with Treasury Regulation § 1.409A-3(j)(4)(ix)(B).  If the Plan is terminated and Accounts are distributed in connection with a Change in Control, the Bank shall: (1) terminate all arrangements for Participants that are required to be aggregated with the Plan under Code Section 409A and (2) not adopt a new plan for Participants that would be aggregated with the Plan under Code Section 409A, at any time within three years following the date of the termination of the Plan.
8.4    Dissolution or Bankruptcy
The Plan shall automatically terminate upon a corporate dissolution or bankruptcy provided that Participants’ (or Former Participant’s) Accounts are distributed and included in the gross income of the Participants (or Former Participants) by the latest of: (i) the Plan Year in which the Plan termination, (ii) the first Plan Year in which payment of the Accounts is administratively practicable, or (iii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture and otherwise in accordance with Treasury Regulation § 1.409A-3(j)(4)(ix)(C).  A corporate dissolution or bankruptcy will have occurred only if the transaction qualifies as both a liquidation or reorganization under 12 United States Code Section 1446(26) and a dissolution or bankruptcy under Code Section 409A and the regulations promulgated thereunder.

28

ARTICLE 9.   MISCELLANEOUS PROVISIONS
		
	9.1
	Employment Rights

Nothing contained in this Plan or any modification of the Plan or act done in pursuance of this Plan shall be construed as giving any Participant or Former Participant any legal or equitable right with respect to his or her employment against the Bank (or any director, officer or employee thereof), unless specifically provided in this Plan or under applicable law, or as giving any person a right to be retained in the employ of the Bank.  All employees shall remain subject to assignment, reassignment, promotion, transfer, layoff, reduction, suspension, and discharge to the same extent as if this Plan had never been established.
		
	9.2
	No Examination or Accounting

Neither this Plan nor any action taken under it shall be construed as giving any person the right to an accounting or to examine the books or affairs of the Bank, the Plan, or the Committee, except to the extent required by law.
		
	9.3
	Records Conclusive

The records of the Bank and the Committee shall be conclusive in respect to all matters involved in the administration of the Plan to the extent permitted by applicable law.
		
	9.4
	Severability

In the event any provision of this Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of this Plan, and it shall be construed and enforced as if such illegal or invalid provision had never been included.

29

		
	9.5
	Counterparts

This Plan may be executed in any number of counterparts, each of which shall be deemed to be an original.  All the counter parts shall constitute but one and the same instrument and may be sufficiently evidenced by any one counterpart.
		
	9.6
	Taxes

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 be withheld with respect to such payment.
		
	9.7
	Binding Effect

The Plan shall be binding upon and inure to the benefit of the Bank and its successors and assigns and the Participants, Former Participants, their Beneficiaries and estates.  The Plan shall also be binding upon and inure to the benefit of any successor organization succeeding to substantially all of the assets and business of the Bank, but nothing in the Plan shall preclude the Bank from merging or consolidating into or with, or transferring all or substantially all of its assets to, another organization which assumes the Plan and all obligations of the Bank thereunder.
In any agreement or plan which the Bank may enter into to effect any merger, consolidation, reorganization, or transfer of assets, except as provided in Section 8.3, the Bank agrees that it shall make appropriate provision for the preservation of the Participants’ and Former Participants’ benefits accrued under the Plan prior to such merger, consolidation, reorganization or transfer of assets.  Upon such a merger, consolidation, reorganization, or transfer of assets and assumption of the Plan 

30

obligations of the Bank, the term “Bank” shall refer to such other organization and the Plan shall continue in full force and effect.
		
	9.8
	Assignment

No Participant or Former Participant or Beneficiary shall have the right to assign, transfer, hypothecate, encumber or anticipate his or her benefits under the Plan, nor shall the benefits under this Plan be subject to any legal process to levy upon or attach the benefits for payment of any claim against the Participant or Former Participant or his or her Beneficiary.  In the event of any attempted assignment or transfer, the Bank shall have no further liability hereunder.  The foregoing notwithstanding, in accordance with procedures that are established by the Committee (including procedures requiring prompt notification to the affected Participant or Former Participant and each alternate payee of the receipt by the Plan or the Bank of a domestic relations order and its procedures for determining the qualified status of such order) and subject to Code Section 409A, a judicial order for purposes of or pertaining to domestic relations (which orders do not alter the amount, timing, or form of benefit other than to have it commence at the earliest permissible date) shall be honored by the Plan and the Bank if the Committee or its designee determines that such order would constitute a qualified domestic relations order (within the meaning of Section 414(p)(1)(B) of the Code) if the Plan were a qualified retirement plan under Section 401(a) of the Code.
		
	9.9
	Incapacity

If the Committee is presented with credible evidence that any person to whom any amount is or was payable under the Plan is unable to care for his or her affairs because of illness or accident, or is a minor, or has died, then any payment, or any part thereof, due to such person or his or her estate (unless a prior claim therefor has been made by a duly appointed legal representative), may, 

31

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.  In making such a finding the Committee may rely on the advice of experts chosen by the Committee in its sole discretion.  Any payment consequent on such finding shall be in complete discharge of the liability of the Plan and the Bank therefor.
		
	9.10
	Unsecured Creditor

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.
		
	9.11
	Notice

Any election, application, claim, designation, request, notice, instruction or other communication required or permitted to be made by a Participant, Former Participant, Beneficiary, or other person to the Committee shall be made in writing and in such form as is prescribed from time to time by the Committee and shall be mailed by first-class mail, postage pre-paid or delivered to such location as shall be specified by the Committee and shall be deemed to have been given and delivered only upon receipt thereof at such location.
		
	9.12
	Benefits Not Salary

The benefits payable under the Plan shall be independent of, and in addition to, any other benefits provided by the Bank and shall not be deemed salary or other remuneration by the Bank for the purpose of computing benefits to which any Participant or Former Participant may be entitled under any other plan or arrangement of the Bank.

32

		
	9.13
	Captions

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.
		
	9.14
	Governing Law

The Plan is intended to constitute an unfunded Plan for a select group of employees and rights thereunder shall be construed according to the laws of the State of California, without giving effect to the choice of law principles thereof, and the laws of the United States, as applicable.  The Plan shall be construed in a manner that is consistent and compliant with Section 409A of the Code, and any regulations promulgated thereunder.  Any provision that is noncompliant with Section 409A of the Code is void or deemed amended to comply with Section 409A of the Code.  The Bank does not guarantee or warrant the tax consequences of the Plan, and the Participants shall in all cases be liable for any taxes due with respect to the Plan.
		
	9.15
	Addresses

Each Participant or Former Participant must file with the Bank from time to time in writing his or her post office address and each change of post office address.  The communication, statement or notice addressed to a Participant or Former Participant at the last post office address filed with the Bank, or if no address is filed with the Bank, then at the last post office address as shown on the records of the Bank, shall be binding on the Participant or Former Participant and his or her Beneficiaries for all purposes of the Plan.  The Bank shall not be required to search for or locate a Participant, Former Participant or his or her Beneficiary.

33

IN WITNESS WHEREOF, the Federal Home Loan Bank of San Francisco has caused this amendment and restatement to the Federal Home Loan Bank of San Francisco Supplemental Executive Retirement Plan, effective January 1, 2018, to be executed by its duly authorized officers, this 27th day of February, 2018.

	
					
	 
	 
	FEDERAL HOME LOAN BANK OF SAN FRANCISCO

	 
	 
	 
	 
	 

	 
	 
	Signature:
	/s/ J. Gregory Seibly

	 
	 
	Name:
	J. Gregory Seibly

	 
	 
	Title:
	President and Chief Executive Officer

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	Signature:
	/s/ Janet M. Homan

	 
	 
	Name:
	Janet M. Homan

	 
	 
	Title:
	Senior Vice President, Chief Human Resources Officer

34

FEDERAL HOME LOAN BANK OF SAN FRANCISCO
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Schedule A
Subject to Sections 3.4, 4.2 and other applicable provisions of the Plan, for the Plan Year beginning in 2018 and for subsequent Plan Years, Contribution Credits shall be credited to the Account of each Participant as follows (unless the Board of Directors specifically designates that a different Schedule is applicable to such Participant):
		
	A.1
	20% of Compensation for Contribution Credit Service less than 5 years.

		
	A.2
	25% of Compensation for Contribution Credit Service of 5 or more.

Subject to Sections 3.4, 4.2 and other applicable provisions of the Plan, for the Plan Years beginning in 2003 and ending in 2017, Contribution Credits for Participants designated under Schedule A shall be credited to the Account of each Participant as follows:
A.1    8% of Compensation for Contribution Credit Service less than 10 years.
A.2    12% of Compensation for Contribution Credit Service of 10 or more but less than 15 years.
A.3    16% of Compensation for Contribution Credit Service of 15 years or more.
For purposes of this Schedule A, Compensation shall include only Compensation earned by the Participant during the applicable Plan Year while a Participant in the Plan.  Additionally, for purposes of this Schedule, Contribution Credit Service shall be determined as of the first day of the applicable Plan Year.  No Contribution Credits shall be credited to the Account of any Participant under this Schedule A for, or with respect to, any year prior to 2003.

A-1

FEDERAL HOME LOAN BANK OF SAN FRANCISCO
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Schedule B
Subject to Sections 3.4, 4.2 and other applicable provisions of the Plan, for the Plan Year beginning in 2003 and for subsequent Plan Years, the Account of each Participant to whom the Board of Directors has specifically designated this Schedule B applies shall be credited with Contribution Credits as follows:
		
	B.1
	10% of Compensation for Contribution Credit Service less than 10 years.

		
	B.2
	15% of Compensation for Contribution Credit Service of 10 or more but less than 15 years.

		
	B.3
	20% of Compensation for Contribution Credit Service of 15 years or more.

For purposes of this Schedule, Compensation shall include only Compensation earned by the Participant during the applicable Plan Year while a Participant in the Plan.  Additionally, for purposes of this Schedule, Contribution Credit Service shall be determined as of the first day of the applicable Plan Year.  No Contribution Credits shall be credited to the Account of any Participant under this Schedule B for or with respect to any year prior to 2003.

B-1

FEDERAL HOME LOAN BANK OF SAN FRANCISCO
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Schedule C
Subject to Sections 3.4, 4.2 and other applicable provisions of the Plan, for the Plan Year beginning in 2018 and for subsequent Plan Years, the Account of each Participant to whom the Board of Directors has specifically designated this Schedule C applies shall be credited with Contribution Credits as follows:
C.1    25% of Compensation for Contribution Credit Service less than 5 years.
C.2    35% of Compensation for Contribution Credit Service more than 5 years.
Subject to Sections 3.4, 4.2 and other applicable provisions of the Plan, for the Plan Year beginning in 2016 and ending in 2017, the Account of each Participant to whom the Board of Directors has specifically designated this Schedule C applies shall be credited with Contribution Credits as follows:
C.1    10% of Compensation for Contribution Credit Service less than 4 years.
C.2    15% of Compensation for Contribution Credit Service of 4 or more but less than 9 years.
C.3    20% of Compensation for Contribution Credit Service of 9 years or more.
For purposes of this Schedule, Compensation shall include only Compensation earned by the Participant during the applicable Plan Year while a Participant in the Plan.  No Contribution Credits shall be credited to the Account of any Participant under this Schedule C for or with respect to any year prior to 2016.

C-1

Additional Discretionary Contribution Credit
The amount of all Special Contribution Credits credited to the Account of a Participant, whom the Board of Directors has specifically designated that this Schedule C applies, may not exceed twice the Participant’s Pay Limitation for the applicable Plan Year.
Supplemental Three Year Contribution Credit
Subject to applicable provisions of the Plan and subject to prior review and non-objection by the Federal Housing Finance Agency, the Account of a Participant to whom the Board of Directors has specifically designated that the Supplemental Three Year Contribution Credit set forth on this Schedule C applies shall be credited with additional Contribution Credits as follows:
$200,000 Contribution Credit on the thirtieth (30th day) following the Participant’s employment commencement date with the Bank.
$200,000 Contribution Credit on the first anniversary of the Participant’s employment commencement date with the Bank.
$200,000 Contribution Credit on the second anniversary of the Participant’s employment commencement date with the Bank.
No Contribution Credit shall be made under this Supplemental Three Year Contribution Credit schedule on any date set forth herein if the Participant has a Termination of Employment prior to such date; provided, however, if the Participant has a Termination of Employment prior to the second anniversary of the Participant’s employment commencement date with the Bank solely by reason of the Participant’s death, Disability, or involuntary termination by the Bank without Cause, then on the Participant’s date of Termination of Employment the Participant’s Account will 

C-2

be credited with a pro rata portion of the next scheduled $200,000 Contribution Credit only, with such proration based on the ratio of (i) the number of days of the Participant’s employment with the Bank following the then most recent anniversary of the Participant’s employment commencement date with the Bank (or the employment commencement date itself if the Participant has not reached the Participant’s first anniversary) to (ii) 365 days.
Notwithstanding Section 4.5 of the Plan, each Contribution Credit under this Supplemental Three Year Contribution Credit schedule only shall be fully vested immediately upon its crediting date.

C-3

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