Document:

Separation Agreement and General Release of Claims

 Exhibit 10.1.1 
 Separation Agreement and General Release of Claims 
 I, Michael E. McFerrin, have received, carefully read, and fully understand all of the provisions
in this Separation Agreement and General Release of Claims (this “Release”). In entering into this Release, I am relying on my own judgment and knowledge and not on representations or statements made by the Federal Home Loan Bank of
Chicago (the “Bank”), its employees, or agents. I acknowledge that the Bank advised me to consult with an attorney about the terms of this Release before signing it. 
  

	 	(a)	I understand that my employment with the Bank is terminated effective July 7, 2008 (the “Termination Date”) based on a corporate reorganization. I acknowledge that this letter
constitutes the “written notice” required under Section 6(e) of the Employment Agreement referred to below. 

  

	 	(b)	In exchange for my agreement set forth in this Release, I understand that I will receive certain payments from the Bank, which are being made to me pursuant to and in full satisfaction of the
terms of the Employment Agreement dated January 29, 2008 between the Bank and me (the “Employment Agreement”): 

  

	 	(i)	The Bank will pay me salary continuation payments for period of three (3) years, from which payments the Bank will deduct all applicable state and federal taxes and other mandatory
deductions. The amount of each semi-monthly salary continuation payment will be $20,833.34, for an aggregate gross payment of $1,500,000.00. This amount will be payable in installments on the Bank’s regular payroll dates beginning on the first
payroll date that occurs at least five (5) business days following expiration of the seven-day Revocation Period described below; 

  

	 	(ii)	If I elect to continue group medical insurance coverage after the Termination Date under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Bank
will pay the employer’s portion of the premiums for such continuation coverage for a period of twelve (12) months, subject to the following conditions. 

  

	 	·	 	 If I sign this Release, I may elect to continue my health care through COBRA coverage for a period of twelve months (the “health insurance coverage period”) at the
employee contribution rate, which is subject to adjustment. The Bank will continue to pay the employer’s portion of the premiums for health care coverage during the health insurance coverage period. 

  

	 	·	 	 If I have not signed this Release, my health care coverage will end on July 31, 2008 unless I elect COBRA coverage. If I elect COBRA coverage, I will have to pay the
entire cost of health insurance coverage plus a 2% administrative fee for any month of COBRA coverage beginning August 1, 2008. 

  

	 	·	 	 If I sign this Release after electing COBRA coverage, the Bank will reimburse me for the employer’s portion of the premiums I already paid, if any, and will pay the
employer’s portion of the premiums going forward for the balance of the health insurance coverage period; and 

  

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	 	(iii)	Under the terms of Section 7(b)(iv) of the Employment Agreement, I understand that I will continue to be eligible for a bonus for calendar year 2008 under the Bank’s Management
Incentive Compensation Plan dated April 24, 2007 (or any successor thereto that applies to the 2008 calendar year) as if I had continued my employment through December 31, 2008. I further understand and agree that all awards under such
Incentive Compensation Plan are subject to the achievement of a variety of performance objectives and the approval of the Bank’s Board of Directors and are, with respect to all participants, discretionary. If I am awarded a bonus under such
Incentive Compensation Plan, the Bank will pay the bonus to me, less mandatory deductions, no later than March 15, 2009. In the event that no bonus is payable to me for the 2008 calendar year, the Bank will inform me of that decision no later
than March 15, 2009. 

  

	 	(c)	The payments described in paragraphs (b)(i), (b)(ii), and (b)(iii) above are collectively referred to herein as the “Employment Agreement Payment”. I understand that the Employment
Agreement Payment will be payable only after the expiration of the seven-day Revocation Period described below and only if I have not revoked my acceptance of the terms of this Release, and will be paid on the applicable dates as are specified in
paragraph (b) above. 

  

	 	(d)	The Bank agrees that I am entitled to certain other payments, benefits, and entitlements whether or not I sign this Release. Those payments, benefits, and entitlements are as follows:

  

	 	(i)	At the end of the health insurance coverage period, or as of August 1, 2008 if I do not sign this Release, I may continue COBRA coverage at a cost equal to the COBRA premium plus a 2%
administrative fee for the remainder of the COBRA continuation period (normally 18 months from my separation date) if I want the coverage to continue. 

  

	 	(ii)	My eligibility for disability coverage will cease at the close of business on July 7, 2008. Life insurance coverage will continue through the close of business on July 7, 2008;
however, I have a right to convert the policy to an individual policy according to the terms of the Bank’s life insurance plan. Also, my beneficiary may be eligible to receive a life insurance payment if I die within 31 days after my Bank life
insurance ends. 

  

	 	(iii)	My vacation allotment for the full year is twenty (20) days, accrued quarterly; I will be paid a lump sum in the payroll period following my last day of work for any vacation due me but
not taken, calculated based on the Vacation Termination Table contained in the Bank’s Employee Handbook. As of June 30, 2008, it is estimated that the lump sum amount for this accrued vacation is approximately $104,000.00.

  

	 	(iv)	If I sign this Release I may also continue making contributions to the health care flexible spending account on a pre-tax basis through the end of 2008 if I wish. If I do not sign this
Release, I may elect to continue to make contributions on an after-tax basis through the end of 2008. I elect not to continue such contributions following my Termination Date. 

  

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	 	(v)	I will earn Service Credit (as defined in the Financial Institutions Retirement Plan (the “Retirement Plan”)) through July 7, 2008. If I sign this Release, I will receive three
additional months of Service Credit. Following my termination I will receive information from Pentegra, the administrator of the Retirement Plan, regarding my payment options. Please call Aaron Smith at 312-565-5314 to discuss payments from the
plan. Pentegra may also be contacted directly at 1-800-USA-FIRF. 

  

	 	(vi)	My contributions to the Financial Institutions Thrift Plan will end on June 30, 2008. Following my termination I will receive information from Pentegra regarding my options with respect
to my 401(k) plan. Please call Aaron Smith at 312-565-5314 to discuss payments from the plan. Pentegra may also be contacted directly at 1-800-USA-FIRF. 

  

	 	(vii)	I will receive a lump-sum payment, less taxes and mandatory deductions, of all amounts in my Benefit Equalization Plan account within 90 days of the termination of my employment.

 I understand and agree that I am signing this Release pursuant to the Employment Agreement. I further understand and agree that, pursuant to the terms
of the Employment Agreement, I am not entitled to any payments or other benefits pursuant to the terms of the Federal Home Loan Bank of Chicago Employee Severance Plan effective May 1, 2007 (“Bank Severance Plan”). I further
understand that the purpose of this Release is to assure the Bank that in return for the Employment Agreement Payment, the Bank and its directors, officers, employees, agents and representatives will not be put to the expense and inconvenience of
defending any claim, charge, or lawsuit asserted by me in connection with my employment or the termination from my position. 
 I understand that this Release is a
legally binding document of serious legal significance. I acknowledge that I have had a period of not less than twenty-one (21) calendar days after today’s date (the “Review Period”) to review this Release and consider acceptance
of this Release and the Employment Agreement Payment in exchange for releasing any and all claims that I may have against the Bank and for acknowledging the continuation of certain provisions of the Employment Agreement as specified in Paragraph 5
below. I understand that (i) the 60-day notice period required by Section 6(e) of the Employment Agreement and (ii) the Review Period hereunder will both begin running on the day I receive this Release. 
 I have been informed of my right to revoke this Release without penalty in the seven (7) calendar days immediately following the date on which I sign this Release. This
seven-day period is called the “Revocation Period”. I understand that I may revoke this Release by delivering written notice of revocation to Mary Jane Brown of the Human Resources Department of the Bank within the Revocation Period. I
further understand that this Release is not effective or enforceable until the Revocation Period has expired. I further understand that the Employment Agreement Payment will not be paid to me until after the Revocation Period has expired and in any
event as further specified in paragraphs (b)(i), (b)(ii), (b)(iii), and (b)(iv) above. 
  

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 I hereby inform the Bank that, in exchange for the Employment Agreement Payment, I have decided to release and discharge, knowingly
and voluntarily, any and all claims, demands or actions, known and unknown, that I may have against the Bank. 
 Further, I understand the conditions of my release from
the Bank, and I agree: 
  

	 	1.	The provisions of this Release, including the Employment Agreement Payment, are in full satisfaction of any claims, liabilities, demands, or causes of action, known or unknown, fixed or
contingent, that I may have or claim to have, against the Bank and its directors, officers, employees, agents and representatives at present or in the future in connection with the termination of my employment with the Bank; provided that such
released claims shall not include any claims to enforce my rights under, or with respect to, this Release. Claims of discrimination, any claims under the Employment Agreement, the Bank Severance Plan, and any other claims, other than for vested
benefits (including, but not limited to, benefits under the Benefit Equalization Plan), are hereby released and discharged. 

  

	 	2.	This Release includes, but is not limited to, claims allegedly arising under the Employment Agreement, the Bank Severance Plan, the Age Discrimination in Employment Act, as amended, 29 U.S.C.
§ 621, et seq.; Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. §§ 791, 793 and 794; the Civil Rights
Enforcement Statutes, 42 U.S.C. §§ 1981 through 1988; Sarbanes-Oxley Act of 2002, 18 U.S.C. §1514A, et seq.; the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.; the National
Labor Relations Act, 29 U.S.C. 151 et seq.; and any other federal, state or local statute, ordinance or regulation dealing in any respect with discrimination in employment, breach of contract or wrongful discharge, including those
rights and claims arising under any alleged legal restrictions on the Bank’s rights to terminate the employment of its employees. I understand and agree that this Release and waiver applies to any and all forms of monetary or other relief that
I might seek in connection with my employment or the circumstances of the termination from my position except for receipt of unemployment compensation benefits. 

  

	 	3.	I acknowledge that, as of the date of this Release, I have not suffered any on the job injuries, occupational diseases or wage or overtime claims relating to my employment at the Bank or any
other claims pursuant to the Fair Labor Standards Act or the Family and Medical Leave Act. 

  

	 	    	Further, I acknowledge that this Release does not prohibit me from filing a charge or complaint with the Equal Employment Opportunity Commission or participating in any investigation or
proceeding with the Equal Employment Opportunity Commission in good faith. However, pursuant to this Release, I do waive the right to recover any money damages in connection with such a charge, complaint, investigation or proceeding. 

  

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	 	4.	I agree not to disclose the terms of this Release that have not previously become part of the public domain (other than due to my violation of this provision) to any third party apart from my
attorney, accountant, financial advisor, or members of my immediate family. I understand and agree that the breach of this confidentiality provision constitutes a breach of this entire Release for which the Bank may seek appropriate legal action.

  

	 	5.	I and the Bank acknowledge and agree that the provisions of the Employment Agreement under Sections 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, and 18 shall continue in effect notwithstanding the
termination of my employment. In addition, pursuant to the Bank’s bylaws and in accordance with the provisions thereof, I shall continue to be indemnified by the Bank for my acts and omissions as an employee and officer of the Bank.

  

	 	6.	I further understand that the parties’ participation in this Release is not to be construed as an admission of any wrongdoing or liability whatsoever by or on behalf of the Bank, or any
of its directors, officers, employees, agents or representatives. 

  

	 	7.	This Release shall be construed and enforced in accordance with the laws of the State of Illinois. This Release constitutes the entire agreement between the parties. 

By signing below, I acknowledge that I have read, fully understand and voluntarily agree to all of the provisions contained in this Release. I understand that by waiving the
above, I intend and do so release and discharge known and unknown claims in exchange for the Employment Agreement Payment. 
  

			
	Date    July 7, 2008	  	 /s/    Michael E. McFerrin

		  	Signature

 Please return this completed Release to the Human Resources Department of the Bank no earlier than
July 7, 2008 and no later than the close of business on July 10, 2008 (which is the end of the Review Period). The Employment Agreement Payment will not be paid until this Release is signed and returned to the Human
Resources Department of the Bank, until after the expiration of the seven-day Revocation Period, and otherwise in accordance with the provisions of this Release. 
  

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 Review Receipt 
 for the 
 Separation Agreement and General Release of Claims 
 I, Michael E. McFerrin, have received a copy of the Separation Agreement and General Release of Claims (the “Release”) to be entered into between myself
and the Federal Home Loan Bank of Chicago (the “Bank”). 
 I received the Agreement on May 5, 2008. I understand that I have until
July 10, 2008, which is at least twenty-one(21) calendar days after receiving the Release, to review the Release and consider whether I wish to accept the Release and the Employment Agreement Payment (as defined in the Release) in exchange for
releasing any and all claims that I may have against the Bank. 
  

			
	Date    July 7, 2008	  	 /s/    Michael E. McFerrin

		  	Signature

  

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 Revocation Receipt 
 for the 
 Separation Agreement and General Release of Claims 
 Pursuant to the terms of the Separation Agreement and General Release of Claims (“Agreement”) entered into between Michael E. McFerrin (the
“Employee”) and the Federal Home Loan Bank of Chicago (“Bank”), I, Mary Jane Brown, of the Human Resources Department of the Bank do hereby state that as of July 15, 2008, which is after the expiration of the seven-day
Revocation Period provided for in the Agreement, I have not received any written notification from the Employee stating that he/she is exercising his/her right to revoke the Agreement. The Agreement was executed on July 7, 2008 and the
seven-day Revocation Period expired on July 14, 2008 (which is seven days after the execution of the Agreement by the Employee). 
  

			
	Date    July 7, 2008	  	 /s/    Mary Jane Brown

		  	Signature
		  	Senior Vice President and Director of Human Resources

  

 7Federal Home Loan Bank of Chicago Senior Executive Long-Term Incentive Comp

 Exhibit 10.1.2 
 Federal Home Loan Bank of Chicago 
 Senior Executive Long Term 
 Incentive Compensation Plan 
 I.    Purpose 
 The purpose of the Federal Home Loan Bank of Chicago Senior Executive Long Term Incentive Compensation Plan (the “Plan”) is to provide additional incentive for the
required sustained efforts, decisions, innovation and discipline from certain Bank employees who significantly contribute to the attainment of long-term goals of the Federal Home Loan Bank of Chicago (“Bank”), and to enhance the retention
of such employees by providing such employees with a competitive compensation opportunity which aligns their interests with those of the Bank’s members. 
 II.    Definitions 
 The following terms shall have the meanings stated below unless the context clearly indicates otherwise.

  

	 	a.	“Code” shall mean the Internal Revenue Code of 1986, as amended, and all Regulations and pronouncements issued thereunder. 

  

	 	b.	“Change of Control” of the Bank shall mean the occurrence at any time of any of the following events: 

  

	 	(1)	any person, more than one person acting as a “group” (as defined in section 1.409A-3(i)(5) of the Regulations), acquires ownership of equity securities of the Bank that, together
with equity securities held by such person or group, constitutes more than 50% of the total voting power of the equity securities of the Bank; provided, however, that if any person or group, is considered to own more than 50% of the total
voting power of the equity securities of the Bank, the acquisition of additional equity securities by the same person or group will not be considered a Change of Control under this Agreement. An increase in the percentage of equity securities of the
Bank owned by any person or group as a result of a transaction in which the Bank acquires its own equity securities in exchange for property will be treated as an acquisition of equity securities of the Bank for purposes of this paragraph; or

  

	 	(2)	during any period of twelve (12) consecutive months, individuals who at the beginning of such period constituted the Board (together with (a) any new or replacement directors whose
election by the Board, or (b) whose nomination for election by the Bank’s shareholders, was approved by a vote of at least a majority of the directors then still in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; or 

  

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	 	(3)	the Bank sells or transfers 95% or more of its business and/or assets to another bank or other entity. 

  

	 	c.	“Disability” shall mean 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 (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 an accident and health plan
covering employees of the Bank. 

  

	 	d.	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended and all Regulations and pronouncements issued thereunder. 

  

	 	e.	“Good Reason” shall mean either of the following: 

  

	 	(1)	a reduction by the Bank in the Participant’s base salary, unless such reduction: (i) is associated with a “General Reduction” in compensation among employees in the same
job grade or employees who are similarly situated and such reduction is in response to adverse or declining economic conditions; and (ii) does not exceed 5% of the Participants’ base salary amount in effect at the time of the reduction; or

  

	 	(2)	the relocation of the Participant’s principal office assignment to a location more than fifty (50) miles from its location on the date hereof. 

  

	 	f.	“Normal Retirement Age” means the date the Participant attains age sixty-five (65). 

  

	 	g.	“Participant” shall mean the Bank’s President and Chief Executive Officer and each other employee of the Bank designated by the Committee to be eligible to
participate in the Plan. 

  

	 	h.	“Performance Based Compensation” means compensation that is based on services over a period of at least twelve (12) months and which satisfies the requirements
for “performance based compensation” as such term is used in Section 409A(a)(4) of the Code. 

  

	 	i.	“Performance Period” shall mean the period of time selected to measure achievement of Performance Goals. 

  

	 	j.	“Performance Period Award” has the meaning given to such term in Article V. 

  

	 	k.	“Separation from Service” shall mean the earliest date on which a Participant has incurred a “separation from service,” within the meaning of
Section 409A(a)(2) of the Code, with the Bank. For purposes of the foregoing: 

  

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	 	(1)	a Participant shall be considered to have incurred a Separation from Service with the Bank if the Participant dies, retires, or otherwise has a termination of employment with the Bank, and
except as otherwise provided in applicable Regulations, the employment relationship shall be treated as continuing intact while the individual 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 individual retains a right to reemployment with the Bank under an applicable statute or by contract; 

  

	 	(2)	a Participant shall not be deemed to have incurred a termination of employment unless the Participant and the Bank reasonably anticipated that the level of bona fide services the Participant
would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or as an
independent contractor) over the immediately preceding thirty-six (36) month period (or the full period of services to the Bank if the Participant has been providing services to the Bank for less than thirty-six (36) months) of the average
level of bona fide services performed (whether as an employee or as an independent contractor) over the immediately preceding twelve (12) month period (or the full period of services to the Bank if the Participant has been providing services to
the Bank for less than twelve (12) months); 

  

	 	(3)	for purposes of this paragraph (e), the term “Bank” shall mean the Bank and any affiliated bank, provided that in applying Section 1563(a)(1), (2), and (3) of the
Code for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language “at least fifty percent (50%)” shall be used instead of “at least eighty percent (80%)” each time it appears
in Section 1563(a)(1), (2), and (3) of the Code and in applying Treasury Regulation §1.414(c)-2 for purposes of determining trades or business (whether or not incorporated) that are under common control for purposes of
Section 414(c) of the Code, “at least fifty percent (50%)” is used instead of “at least eighty percent (80%)” each place it appears in Regulation §1.414(c)-2; and 

  

	 	(4)	where, as part of a sale or other disposition of assets by the Bank to an unrelated service recipient, a Participant would otherwise experience a Separation from Service, the seller and the
buyer may specify whether the Participant providing the services to the seller immediately before the asset purchase transaction and providing services to the buyer after and in connection with the asset purchase transaction has experienced a
Separation from Service, provided that the asset purchase transaction results from bona fide, arm’s length negotiations, all Participants providing services to the seller immediately before the asset purchase transaction and providing
services to the buyer after and in connection with the asset purchase transaction are treated consistently for purposes of applying the provisions of any nonqualified deferred compensation plan, and such treatment is specified in writing no later
than the closing date of the asset purchase transaction. 

  

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 III.    Administration 
 The Plan shall be administered by the Personnel and Compensation Committee of the Board of Directors of the Bank (the “Committee”). In addition to any authority granted from time to time to the Committee by the Board of Directors
of the Bank (the “Board”), the Committee shall have the authority to: (a) prescribe, amend and rescind Plan rules, regulations and procedures consistent with the Plan; (b) approve Performance Goals and Performance Periods
(subject to Board approval); (c) determine from time to time the eligibility of employees of the Bank for participation in the Plan; (d) delegate from time to time the performance of functions in connection with the administration of the
Plan to such person or persons as it deems appropriate; and (e) take all other action necessary or appropriate for the administration of the Plan. All such actions by the Committee shall also be consistent with the terms and provisions of the
Plan. 
 The Committee shall operate and administer the Plan, for purposes of applying the provisions of Section 409A of the Code, by adhering to the following
rules: 
  

	 	a.	Separate Payments. Each separately identified amount to which the Participant is entitled under the Plan shall be treated as a “separate payment.”

  

	 	b.	Right to a Series of Separate Payments. To the extent permissible under Section 409A of the Code, any series of installment payments under the Plan shall be treated as a
“right to a series of separate payments.” 

  

	 	 c.
	 Short-Term Deferral Exception. Unless otherwise required to comply with Section 409A of the Code, a payment
shall not be treated as a “deferral of compensation” (as such term is described in §1.409A-1(b) of the Regulations) if the Participant actually or constructively receives such payment no later than within two and one-half (2 1/2) months after the end of the later of the taxable year of the Participant or Bank in which the payment is no longer subject to a
“substantial risk of forfeiture” (as such term is described in §1.409A-1(d) of the Regulations). 

  

	 	d.	Separation Pay Exception. Unless otherwise required to comply with Section 409A of the Code, a payment shall not be treated as a “deferral of compensation” (as
such term is described in §1.409A-1(b) of the Regulations) if such payment satisfies the following requirements: 

  

	 	(1)	the payment is being paid or provided due to the Separation from Service of the Participant, provided, however, the Separation from Service was due to “involuntary
termination” of the Participant by the Bank; 

  

	 	(2)	the payment being paid or provided does not exceed two (2) times the lesser of: 

  

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	 	(A)	the Participant’s annualized compensation from the Bank for the calendar year in which the involuntary termination of the Participant’s employment occurs; and

  

	 	(B)	the maximum dollar amount that may be taken into consideration under a qualified plan pursuant to Section 401(a)(17) of the Code for the calendar year in which the involuntary
termination of the Participant’s employment occurs; and 

  

	 	(3)	the payment is required under the Plan to be paid no later than the last day of the second calendar year following the calendar year in which the involuntary termination of the
Participant’s employment occurs. 

 IV.    Eligibility 
 Participants in the Plan for each Performance Period shall be the President and Chief Executive Officer (the “President”) and those other Bank employees who are recommended by the President, as approved by the
Committee in its sole discretion. 
 Before the beginning of each Performance Period, the Committee shall approve those Bank employees who shall be eligible to
participate in the Plan for that Performance Period. The eligibility of any Participant for any Performance Period is at all times determined in the sole discretion of the Committee and may be subject to such restrictions as the Committee may in its
sole discretion from time to time determine. Restrictions on one Participant’s eligibility need not be applicable or the same as restrictions applicable to any other Participant’s eligibility. 
 Any employee who becomes a Participant under this Plan shall automatically be ineligible to participate in the Bank’s Long Term Supplemental Incentive Compensation Plan dated
January 22, 2008 for current and future plan periods and shall forfeit all Performance Units previously granted under such Supplemental Incentive Compensation Plan. 
 V.    Performance Periods and Goals 
 The initial Performance Period under this Plan shall be deemed to have commenced on
January 1, 2008 and shall end on December 31, 2010. Thereafter, the Committee shall establish the length of subsequent Performance Periods in its sole discretion. 
 As of the beginning of each Performance Period, the Committee, with the approval of the Board of Directors, shall establish performance criteria, performance goals, performance targets, and target values (collectively the “Performance
Goals”) consistent with the purposes of the Plan, as determined in the sole discretion of the Committee, for that Performance Period, and if appropriate, the weight to be given to each such Performance Goal for that Performance Period. The
Committee may, from time to time thereafter, make appropriate adjustments in Performance Goals to reflect major unforeseen transactions, events or circumstances which in the Committee’s opinion alter or affect such goals or the basis or
assumptions upon which such goals were determined. 
  

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 Within ninety (90) days of the beginning of each Performance Period, the Bank’s Human Resources Department shall send a
letter (“Notification Letter”) to each Participant who has been approved by the Committee to participate in this Plan for that Performance Period. The Notification Letter shall indicate for that Performance Period: (a) the Performance
Goals applicable for such Performance Period; and (b) such other information as may be relevant to such Performance Period. 
 As soon as practicable after the end
of each Performance Period, the Committee shall determine the extent to which the Performance Goals for that period were achieved. 
 Notwithstanding the foregoing,
payment to the President of any award determined to be payable under this Plan shall be subject to the satisfaction of any conditions precedent to such payment that may be contained in the Employment Agreement dated as of May 5, 2008 between
the President and the Bank, or any successor agreement. 
 Notwithstanding any provision in this Article IV to the contrary, the Committee shall take all reasonable
actions to qualify compensation that will be paid upon the satisfaction of Performance Goals as Performance-Based Compensation. 
 VI.    Vesting

 Except as provided below, if a Participant is actively employed by the Bank at the end of the Performance Period he shall be vested at the end of such
Performance Period in such Participant’s benefits under the Plan for that Performance Period as calculated pursuant to Section VI.a. (the “Performance Period Award”). 
 If a Participant dies, becomes Disabled, or incurs a Separation from Service on or after attaining his Normal Retirement Age on a date that is not more than twelve (12) months before the end of a Performance Period, such
Participant shall be vested at the end of the corresponding Performance Period in the Performance Period Award he would have received had his employment with the Bank continued to the end of the Performance Period, multiplied by a fraction, the
numerator of which is the number of full months he was employed by the Bank during the Performance Period (excluding any period of Disability in excess of three months), and the denominator of which is the total number of months in the Performance
Period. For purposes of clarity, if a Participant dies, becomes Disabled, or incurs a Separation from Service on or after attaining his normal Retirement Age on a date that is more than twelve (12) months before the end of a Performance Period,
then such Participant shall not be vested in any benefits or rights under this Plan for such Performance Period. 
 In the event of: (i) a Change of Control; or
(ii) a termination of the Participant’s employment by the Participant for Good Reason, the Participant shall be fully vested in any Performance Period Award to the extent an award is applicable at the end of the corresponding Performance
Period. Pursuant to Article IV, in the event of a Change of Control, the Committee, in its sole discretion and subject to Board approval, may make such adjustments and changes to the Performance Criteria and Performance Period as it may deem
appropriate in the circumstances. 
  

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 Any award allocation hereunder may be reduced pro rata in the event that a Participant (1) commences employment with
the Bank during a Performance Period, or (2) is absent from the Bank (other than regular vacation) during a Performance Period whether through approved leave or otherwise, Disability, leave under the Family and Medical Leave Act, a personal
leave of absence or military leave. Notwithstanding the foregoing, no employee commencing employment with the Bank after December 31, 2008, in the case of the initial Performance Period under this Plan, or more than one-half (1/2) of the
way through any subsequent Performance Period, shall be entitled to participate in this Plan for such Performance Period. 
 VII.    Benefits

  

	 	a.	Benefit Value. The benefits to a Participant under the Plan will be the amount determined by multiplying the Participant’s base salary in effect on the last day of the
Performance Period or the last day of the Participant’s employment, as the case may be, by the multiplier determined in accordance with the Performance Goals based upon the achievement of the Performance Goals as established and determined by
the Committee; provided, however, that notwithstanding that the Committee has made a determination that the Performance Goals for a Performance Period have been achieved, the Committee in its sole discretion shall determine whether an
award shall be made to Plan Participants for such Performance Period. The Committee also may, to the extent it deems appropriate in its sole discretion which shall be conclusive and binding upon all parties concerned, make awards or adjust awards to
compensate for or reflect any significant changes which may have occurred during the Performance Period which alter the basis upon which the Performance Goals were determined or otherwise. Immediately following the completion of the Performance
Period and the determination of the award benefit by the Committee, each eligible Participant will become vested in such benefit in accordance with the vesting rules in Article V. 

  

	 	 b.
	 Time of Payment. Except as otherwise provided for herein, payments due hereunder for vested benefits will be made
within two and one-half (2 1/2) months following the end of the Performance Period in which such benefits vested.

  

	 	c.	Form of Payment. A Participant will receive a distribution from the Plan in the form of a lump sum. The Committee may prescribe such rules as it deems necessary regarding the
payment of benefits. 

 VIII.    Designation of Beneficiary 
 In the event of the death of a Participant, all benefits to which that Participant is entitled but which are unpaid at the time of his death shall be paid to the beneficiary or beneficiaries of that Participant who are
designated in writing by the Participant on a form provided by, filed with and accepted by the Bank, or in the absence of any such designation, to the beneficiary or beneficiaries of that Participant who are entitled to receive the benefits of that
Participant which are payable under the qualified defined benefit pension plan sponsored by the Bank or its successor plan. 
  

 7 

  

 IX.    Amendment or Termination of Plan 
 The Bank may terminate, amend or modify this Plan at any time and from time to time; provided, however, any such termination, amendment or modification may not divest any Participant of any of his benefits under this
Plan which are vested as of the date of such termination, amendment or modification. 
  

	 	a.	General Rule. The Bank reserves the right to terminate or amend this Plan at any time and from time to time; provided, however, that except as otherwise provided in
Section (b) of this Article VII, no termination or amendment of the Plan shall accelerate the payment of benefits under the Plan in violation of Section 409A of the Code. To the extent that the Committee does not accelerate the timing of
distributions on account of the Plan termination, payment of any remaining benefits under the Plan shall be made at the same time and in the same form as such distribution would have been based upon the most recent effective election made by the
Participant as in effect at the time of the Plan termination. 

  

	 	b.	Terminations and Liquidations Subject to Certain Conditions. To the extent otherwise permitted by Section 409A of the Code and the Regulations thereunder, the Bank may
terminate and liquidate the Plan if the following requirements are met: 

  

	 	(1)	the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank; 

  

	 	(2)	the Bank terminates and liquidates all plans, agreements, methods, programs and other arrangements sponsored by the Bank that would be aggregated with any terminated and liquidated plans,
agreements, methods, programs and other arrangements under §1.409A-1(c) of the Regulations if the Participant had deferrals of compensation under such plans, agreements, methods, programs and other arrangements; 

  

	 	(3)	no payments in liquidation of the Plan are made within twelve months (12) of the date the Bank takes all necessary action to irrevocably terminate and liquidate the Plan, other than
payments that would be payable under the terms of the Plan if the action to terminate and liquidate the Plan had not been taken; 

  

	 	(4)	all payments are made within twenty-four (24) months of the date the Bank takes all necessary action to irrevocably terminate and liquidate the Plan; and 

  

	 	(5)	the Bank does not adopt a new plan that would be aggregated with any terminated and liquidated plan under applicable Treasury Regulations if the same Participant was a employee in both plans,
at any time within three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Plan. 

  

 8 

  

	 	c.	Compliance with Code Section 409A. This Plan shall be construed in a manner consistent with the applicable requirements of Section 409A of the Code, and the Committee,
in its sole discretion and without the consent of any Participant or beneficiary may amend the provisions of the Plan if and to the extent that the Committee determines that such amendment is necessary or appropriate to comply with the applicable
requirements of Section 409A of the Code. 

 X.    Limited Restrictions on Setting Aside or Reserving Assets 

Notwithstanding the foregoing provisions in this Plan to the contrary, if the Participant is an “applicable covered employee” (defined below), then no amounts or
benefits due a Participant shall be transferred to a trust or otherwise set aside or reserved pursuant to any other arrangement during any “restricted period” (defined below) with respect to the qualified defined benefit plan sponsored by
the Bank or its successor plan. For these purposes: 
  

	 	a.	Restricted Period. The term “restricted period” means (1) any period during which the qualified defined benefit plan sponsored by the Bank or its successor plan
is in “at-risk status” (as defined in Section 430(i) of the Code), (2) any period in which the sponsor of the qualified defined benefit plan is a debtor in a case under Title 11, United States Code, or similar Federal or State
law, and (3) the twelve (12) month period beginning on the date which is six (6) months before the termination date of the qualified defined benefit plan if, as of the termination date, the assets of the qualified defined benefit plan
are not sufficient for pay all benefit liabilities (within the meaning of Section 4041 of ERISA) under the qualified defined benefit plan; 

  

	 	b.	Applicable Covered Participant. The term “applicable covered participant” means any (1) covered participant of the sponsor of the qualified defined benefit plan,
(2) covered participant of any member of a controlled group that includes the sponsor of the qualified defined benefit plan, and (3) former employee who was a covered employee at the time of termination of employment with the sponsor of
the qualified defined benefit plan or any member of a controlled group that includes the plan sponsor; and 

  

	 	c.	Covered Participant. The term “covered participant” means an individual described in Section 162(m)(3) of the Code or an individual subject to the requirements of
Section 16(a) of the Securities Exchange Act of 1934. 

 XI.    General Provisions 
  

	 	a.	No Right of Continued Employment. Nothing contained in the Plan shall give any Participant the right to be retained in the employment of the Bank or affect the right of the Bank
to dismiss any Participant. 

  

	 	b.	No Right to Continued Participation or Payments. The participation in this Plan by a Participant for a particular Performance Period shall not guarantee a Participant the right
to participate in the Plan in any subsequent Performance Periods. The payment of any Plan benefits for any Performance Period shall not guarantee a Participant the right to receive any such award or benefits for any subsequent Performance Period.

  

 9 

  

	 	c.	No Right of Transfer. The interests of persons entitled to benefits under the Plan are not subject to their debts or other obligations and, except for tax withholding
requirements or as otherwise specifically provided herein, may not be voluntarily or involuntarily sold, transferred, alienated, assigned or encumbered. 

  

	 	d.	Withholding for Taxes. The Bank shall have the right to deduct from all amounts paid under this Plan any taxes required by federal, state or local law to be withheld with
respect to such payments. 

  

	 	e.	Special Compensation. Except as otherwise provided by law, benefits received under the Plan shall not be included or taken into account in determining benefits under pension,
retirement, profit sharing, group insurance, or any other benefit plan maintained by the Bank, unless so provided in such plan. Neither the Bank nor the Committee guarantee in any way the deferral of tax liability if a Participant defers the payment
of Plan benefits. 

  

	 	f.	Law to Govern. All questions pertaining to the construction, regulation, validity and effect of the provisions of the Plan shall be determined in accordance with applicable
Federal law. 

  

	 	g.	Funding of Benefits. Benefits payable hereunder to or on account of any Participant shall be paid directly by the Bank from its general assets. The Bank shall not be required to
segregate on its books or otherwise set aside any amount to be used for the payment of benefits under this Plan. 

  

	 	h.	Interpretation. The Committee shall have the sole and complete authority to interpret the provisions of and decide all disputes arising under the Plan, which interpretations and
decisions shall be final and binding on all parties having any interests arising under or by virtue of the Plan. 

  

	 	i.	Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the
singular shall include the plural. 

  

	 	j.	Litigation. If any Participant, former Participant or beneficiary shall bring a suit or proceeding against the Committee or the Bank, or if any dispute shall arise as to the
person or persons to whom payment or delivery of any funds shall be made by the Bank, the costs (including attorneys’ fees) to the Bank of defending the action, where the result is adverse to the complainant, or pursuant to the authorization of
the court or other forum in which the suit or proceeding is brought, shall be charged against the Plan benefits of the applicable Participant, former Participant or beneficiary, and only the excess of such Plan benefits, if any, over the amount of
such costs shall be payable by the Bank. 

  

	 	k.	Effective Date. The Plan shall be effective beginning January 1, 2008 until modified or revoked by the Bank. 

  

 10 

  

	 	l.	Federal Housing Finance Board. This Plan shall be maintained in accordance with and is subject to Federal Housing Finance Board regulations and policies.

  
  

			
	 APPROVED THIS 22ND DAY OF
 JULY, 2008 BY THE BOARD OF

DIRECTORS OF THE FEDERAL
 HOME LOAN BANK OF CHICAGO
	 	
	 	 /s/    Peter E. Gutzmer

	 	Its Corporate Secretary

  

 11

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