Document:

exv10w1

Exhibit 10.1

FEDERAL HOME LOAN BANK OF DALLAS

2010 LONG TERM INCENTIVE PLAN

Effective as of January 1, 2010

And for the Period

January 1, 2010 to December 31, 2012

(Approved by the Board of Directors on April 25, 2010)

 

 

FEDERAL HOME LOAN BANK OF DALLAS

2010 LONG TERM INCENTIVE PLAN

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	PAGE	 
	Article I
	 	INTRODUCTION	 	 	1	 
	 
	 	 	 	 	 	 
	Section 1.1
	 	Purpose	 	 	1	 
	Section 1.2
	 	Effective Date	 	 	1	 
	Section 1.3
	 	Administration	 	 	1	 
	Section 1.4
	 	Addendums	 	 	1	 
	Section 1.5
	 	Definitions	 	 	1	 
	 
	 	 	 	 	 	 
	Article II
	 	ELIGIBILITY AND PARTICIPATION	 	 	2	 
	 
	 	 	 	 	 	 
	Section 2.1
	 	Eligibility	 	 	2	 
	Section 2.2
	 	Participation	 	 	2	 
	 
	 	 	 	 	 	 
	Article III
	 	AWARDS	 	 	2	 
	 
	 	 	 	 	 	 
	Section 3.1
	 	Awards	 	 	2	 
	Section 3.2
	 	Performance Goals	 	 	4	 
	Section 3.3
	 	Earning and Vesting of Awards	 	 	4	 
	Section 3.4
	 	Effect of Termination of Service	 	 	5	 
	Section 3.5
	 	Effect of Reorganization	 	 	6	 
	Section 3.6
	 	Payment of Awards	 	 	6	 
	Section 3.7
	 	Forfeiture of Awards	 	 	6	 
	 
	 	 	 	 	 	 
	Article IV
	 	ADMINISTRATION	 	 	7	 
	 
	 	 	 	 	 	 
	Section 4.1
	 	Appointment of the Committee	 	 	7	 
	Section 4.2
	 	Powers and Responsibilities of the Committee	 	 	7	 
	Section 4.3
	 	Income and Employment Tax Withholding	 	 	7	 
	Section 4.4
	 	Plan Expenses	 	 	7	 
	 
	 	 	 	 	 	 
	Article V
	 	BENEFIT CLAIMS	 	 	8	 
	 
	 	 	 	 	 	 
	Article VI
	 	AMENDMENT AND TERMINATION OF THE PLAN	 	 	8	 
	 
	 	 	 	 	 	 
	Section 6.1
	 	Amendment of the Plan	 	 	8	 
	Section 6.2
	 	Termination of the Plan	 	 	8	 
	 
	 	 	 	 	 	 
	Article VII
	 	MISCELLANEOUS	 	 	8	 
	 
	 	 	 	 	 	 
	Section 7.1
	 	Governing Law	 	 	8	 
	Section 7.2
	 	Headings and Gender	 	 	8	 
	Section 7.3
	 	Spendthrift Clause	 	 	8	 
	Section 7.4
	 	Counterparts	 	 	9	 
	Section 7.5
	 	No Enlargement of Employment Rights	 	 	9	 
	Section 7.6
	 	Limitations on Liability	 	 	9	 
	Section 7.7
	 	Incapacity of Participant	 	 	9	 
	Section 7.8
	 	Evidence	 	 	9	 

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	 	 	 	 	PAGE	 
	Section 7.9
	 	Action by Bank	 	 	9	 
	Section 7.10
	 	Severability	 	 	9	 
	Section 7.11
	 	Information to be Furnished by a Participant	 	 	9	 
	Section 7.12
	 	Attorneys’ Fees	 	 	10	 
	Section 7.13
	 	Binding on Successors	 	 	10	 
	Section 7.14
	 	Awards Not Compensation for Other Plans	 	 	10	 

	 	 	 	 	 	 	 

	APPENDIX A
	 	FORM OF AWARD AGREEMENT & PARTICIPANTS	 	 	 	A-1
	 
	 	 	 	 	 	 
	APPENDIX B
	 	FORM NON-SOLICITATION AND NON-DISCLOSURE	 	
	 
	 	AGREEMENT	 	 	 	B-1
	 
	 	 	 	 	 	 
	APPENDIX C
	 	2010 PERFORMANCE PERIOD	 	 	 	C-1

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ARTICLE I

INTRODUCTION

     Section 1.1 Purpose. The purpose of the Federal Home Loan Bank of Dallas 2010
Long Term Incentive Plan (the “Plan”) is to attract, retain and motivate certain key employees of
the Federal Home Loan Bank of Dallas (the “Bank”) and to align their interests to
member/shareholders measured by retained earnings, MVE of equity, capacity to pay dividends,
external audit and FHFA examination findings, and the overall performance of the Bank in achieving
its annual objectives during the plan cycle. The Plan is a cash-based long-term incentive plan that
provides award opportunities based on achievement of performance goals over a three-year period.

     Section 1.2 Effective Date. The “Effective Date” of the Plan is January 1,
2010.

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

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

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

	 	 	 
	Term	 	Plan Section
	Award
	 	3.1(b)
	Award Agreement
	 	3.1(b)
	Bank
	 	1.1
	Board
	 	1.3
	Cause
	 	3.4(b)(iii)
	Committee
	 	1.3
	Disability
	 	3.4(b)(i)
	Discretionary Award
	 	0
	Effective Date
	 	1.2
	Extraordinary Occurrences
	 	3.1(e)
	Final Award
	 	3.1(e)

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	Term	 	Plan Section
	Level I Participant
	 	3.1(c)
	Level II Participant
	 	3.1(c)
	Level III Participant
	 	3.1(c)
	Maximum
	 	3.2(b)(iii)
	Non-Solicitation Agreement
	 	2.1
	Participant
	 	2.1
	Performance Goals
	 	3.2
	Performance Period
	 	3.1(a)
	Plan
	 	1.1
	Reorganization
	 	3.5
	Retirement
	 	3.4(b)(ii)
	Termination of Service
	 	3.4(a)
	Target
	 	3.2(b)(ii)
	Threshold
	 	3.2(b)(i)

ARTICLE II

ELIGIBILITY AND PARTICIPATION

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

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

ARTICLE III

AWARDS

     Section 3.1 Awards. At the beginning of each Performance Period, the Board
will decide on the level of Award opportunities that can be potentially earned by an eligible
Participant. Each Award will be equal to a percentage of the Participant’s annual base salary at
the beginning of the Performance Period as described in the applicable Plan Appendix.

	 	(a)	 	Performance Period. A “Performance Period” is a rolling three-calendar
year period over which an Award can be earned and also referred to plan cycle.
	 
	 	(b)	 	Award Agreement. An “Award” to a Participant will be evidenced by a
written “Award Agreement” issued by the Bank to a Participant that specifies the

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

	 	(c)	 	Award Levels. Participants will receive varying Awards based on their
position and salary grade level with the Bank. The actual award opportunities under
the Plan shall be the same as those provided under the applicable short-term incentive
plan (“STIP”) and are established as a percentage of salary at the start of each 3-year
plan cycle.
	 
	 	 	 	Combined STIP and LTIP AWARD RANGES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Maximum Potential Award Ranges
	Award	 	Employee Salary Grade Levels	 	As a % of Employee’s Base Salary
	Group	 	Assigned To Each Award Group	 	Threshhold	 	Target	 	Stretch
	1

	 	Exec. Level 99
	 	 	36.00	%	 	 	48.00	%	 	 	60.00	%
	1(a)

	 	Exempt Levels 86-92
	 	 	26.25	%	 	 	35.00	%	 	 	43.75	%
	1(b)

	 	Exempt Levels 30-38, and 80-85
	 	 	19.20	%	 	 	25.60	%	 	 	32.00	%

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

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

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	 	 	 	weighted to determine the total incentive award payout. The weighting shall
be 65% for the STIP and 35% for the LTIP.

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

	 	-	 	LTIP goal achievement of 80% for the 3-year
plan cycle will increase the related Final Award payout level as a
percentage of base salary by 5%; and
	 
	 	-	 	LTIP goal achievement of 90% for the 3-year
plan cycle will increase the related Final Award payout level as a
percentage of base salary by 10%.

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

	 	(a)	 	Establishment of Performance Goals. Performance Goals for the
Performance Period commencing on January 1, 2010, will be established as of the date
the Plan is adopted. Performance Goals for Performance Periods commencing on and after
January 1, 2011, will be communicated to Participants in writing after they have been
established by the Board.
	 
	 	(b)	 	Achievement Level. Three achievement levels will be defined for each
Performance Goal.

	 	(i)	 	Threshold. The “Threshold” achievement level is the
minimum achievement level accepted for a Performance Goal.
	 
	 	(ii)	 	Target. The “Target” achievement level is the planned
achievement level for a Performance Goal.
	 
	 	(iii)	 	Maximum. The “Maximum” achievement level is
achievement that substantially exceeds the Target achievement level.

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

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

	 	(a)	 	the applicable Performance Goals for the Performance Period are satisfied; and
	 
	 	(b)	 	the Participant is actively employed on the last day of the Performance Period.

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     The value of Awards will be calculated in accordance with the applicable Appendix to the Plan
and the applicable Award Agreement.

     Section 3.4 Effect of Termination of Service.

	 	(a)	 	In General. If a Participant incurs a Termination of Service for any
reason other than a reason set forth in subsection 3.4(b), then any portion of an Award
which has not otherwise become vested as of the date of Termination of Service will be
forfeited, effective as of the date of such termination. For purposes of the Plan,
“Termination of Service” means the occurrence of any act or event or any failure to
act, that actually or effectively causes or results in a Participant ceasing, for
whatever reason, to be an employee of the Bank, including, but not limited to, death,
Disability, Retirement, termination by the Bank of the Participant’s employment
(whether for Cause or otherwise), termination by the Participant of his or her
employment with the Bank for Good Reason and voluntary resignation or termination by
the Participant of his or her employment.
	 
	 	(b)	 	Termination Due to Death, Disability, Retirement or Other Events.
Notwithstanding the provisions of Section 3.3 and subsection 3.4(a), if a Participant
incurs a Termination of Service (i) due to death, (ii) due to Disability, (iii) due to
Retirement or (iv) special circumstances as solely determined and approved by the Board
any portion of his or her Award eligible to become earned and vested in the Performance
Periods in which the termination occurs will, to the extent the Performance Goals for
such Performance Periods are satisfied, be treated as earned and vested in a pro rata
manner equivalent to the period of time during the Performance Periods the Participant
participated in the Plan. The Award will become vested effective as of the last day of
such Performance Periods in which the Termination of Service occurs.

	 	(i)	 	For purposes of the Plan, “Disability” means, as a result of
the Participant’s incapacity due to physical or mental illness, the Participant
has been absent from his or her duties with the Bank for an aggregate of 12 out
of 15 consecutive months and, within 30 days after a written notice of
termination is thereafter given by the Bank to the Participant, the Participant
does not return to the full-time performance of the Participant’s duties.
	 
	 	(ii)	 	For purposes of the Plan, “Retirement” means the planned and
voluntary termination of the Participant’s employment on or after the
Participant has attained age 55 with ten “Years of Service.” To be credited
with a Year of Service, a Participant must complete 1,000 “hours of service”
for the Bank during such year.
	 
	 	(iii)	 	For purposes of the Plan, “Special Circumstances” may include,
but not limited to a significant change in a participant’s job responsibilities
other than for cause.

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

	 	(a)	 	The Bank is merged or consolidated with or reorganized into or with another
FHLBank or other entity, or another FHLBank or other entity is merged or consolidated
into the Bank;
	 
	 	(b)	 	The Bank sells or transfers all, or substantially all of its business and/or
assets to another FHLBank or other entity; or
	 
	 	(c)	 	The liquidation or dissolution of the Bank.

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

     Section 3.7 Forfeiture of Awards.

	 	(a)	 	Notwithstanding any other provision of the Plan, if a Participant violates a
Non-Solicitation Agreement, all of his unpaid vested and unvested Awards will be
forfeited effective as of the date the Board determines such violation has occurred and
notifies the Participant of such determination. Any future payments for a vested Award
will cease and the Bank will have no further obligation to make such payments.
	 
	 	(b)	 	Notwithstanding any other provision of the Plan, if during the most recent
examination of the Bank by the FHFA, the FHFA identified an unsafe or unsound practice
or condition with regard to the Bank within the Participant’s area(s) of responsibility
and such unsafe or unsound practice or condition is not subsequently resolved in favor
of the Bank, then all of a Participant’s vested and unvested Awards will be forfeited.
Any future payments for a vested Award will cease and the Bank will have no further
obligation to make such payments.
	 
	 	(c)	 	Claw-back Provision. “Final Awards” not yet paid, regardless of
vesting status, are subject to cancellation, if awards are subsequently determined to
be based on fraud or material financial misstatements. The Board in its sole
discretion shall determine the meaning of fraud and/or material financial misstatement.

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ARTICLE IV

ADMINISTRATION

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

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

	 	(a)	 	Records and Reports. The Committee will be responsible for maintaining
sufficient records to determine each Participant’s eligibility to participate in the
Plan.
	 
	 	(b)	 	Rules and Decisions. The Committee may adopt such rules as it deems
necessary, desirable, or appropriate in the administration of the Plan. All rules and
decisions of the Committee will be applied uniformly and consistently to all
Participants in similar circumstances. When making a determination or calculation, the
Committee will be entitled to rely upon information furnished by a Participant, the
Bank or the legal counsel of the Bank.
	 
	 	(c)	 	Application for Benefits. The Committee may require a Participant to
complete and file with it an application for a benefit, and to furnish all pertinent
information requested by it. The Committee may rely upon all such information so
furnished to it, including the Participant’s current mailing address.
	 
	 	(d)	 	Delegation. The Committee may authorize one or more officers of the
Bank to perform administrative responsibilities on its behalf under the Plan. Any such
duly authorized officer will have all powers necessary to carry out the administrative
duties delegated to such officer by the Committee.

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

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

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ARTICLE V

BENEFIT CLAIMS

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

ARTICLE VI

AMENDMENT AND TERMINATION OF THE PLAN

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

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

ARTICLE VII

MISCELLANEOUS

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

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

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

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

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

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

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

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

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

     Section 7.10 Severability. In the event any provisions of the Plan are held to be illegal or invalid
for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and
the Plan will be construed and endorsed as if the illegal or invalid provisions had never been
contained in the Plan.

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

9

 

evidence or other
information to the Committee, and on the prompt execution of any document reasonably related to the
administration of the Plan requested by the Committee.

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

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

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

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APPENDIX A

FORM OF AWARD AGREEMENT

     THIS AWARD AGREEMENT (the “Award Agreement”) is made and entered into this                      day of
                    , 20     , but effective as of January 1, 20     , between Federal Home Loan Bank of Dallas
(the “Bank”), and                      (the “Participant”).

WITNESSETH:

     WHEREAS, the Bank has adopted the Federal Home Loan Bank of Dallas 2010 Long Term Incentive
Plan (the “Plan”) to attract, retain and motivate designated key employees of the Bank and to focus
their efforts on continued improvement in the profitability of the Bank; and

     WHEREAS, the Participant is eligible to receive an Award;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained,
the Bank and the Participant agree as follows:

     1. Awards. The Bank will hereby award to the Participant, upon the completion of the
3-year performance period, the Award specified in Schedule A to this Agreement which is
incorporated herein as if fully set forth, subject to the terms of this Award Agreement and the
provisions of the Plan (the “Award”). All provisions of the Plan, including defined terms, are
incorporated herein and are expressly made a part of this Award Agreement by reference. If any
provision of this Award Agreement conflicts with a provision of the Plan, the provision of the Plan
will control.

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

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

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

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

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

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

A-1

 

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

     IN WITNESS WHEREOF, the Bank, by its officer thereunder duly authorized, and the Participant,
have executed this Award Agreement on the day and year first above written, but effective as of
January 1, 20___.

	 	 	 

	FEDERAL
HOME LOAN BANK OF DALLAS

	 	PARTICIPANT
	 
	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

A-2

 

SCHEDULE A

FINAL AWARD AGREEMENT UNDER

FEDERAL HOME LOAN BANK OF DALLAS

2010 LONG TERM INCENTIVE PLAN

Name of Participant:                                                             

I. STIP Determination

	 	(a)	 	STIP Goal Achievement percentage for                      Plan Year:                     %
	 
	 	(b)	 	STIP Award based on Group Level as a percentage of base salary:                     %
	 
	 	(c)	 	STIP Plan Salary ($           ) times STIP Award %: $                    
	 
	 	(d)	 	STIP Weighting Factor: 65%
	 
	 	(e)	 	STIP Final Award Amount (c x d): $                    

II. LTIP determination for the Performance Period January 1, 20__and ended December 31, 20__.

	 	(a)	 	LTIP Goal Achievement percentage for                      Plan Year:                     %
	 
	 	(b)	 	LTIP Award based on Group Level as a percentage of base salary:                     %
	 
	 	(c)	 	LTIP Plan Salary ($            ) times LTIP Award %: $                    
	 
	 	(d)	 	LTIP Weighting Factor: 35%
	 
	 	(e)	 	LTIP Initial Award Amount (c x d): $                    
	 
	 
	 	(f)	 	Additional LTIP bonus percentage for goal achievement above Threshold:                     %
	 
	 	(g)	 	LTIP Plan Salary ($            ) times LTIP bonus percentage _$                    
	 
	 	(h)	 	LTIP Award Amount (e + g): $                    

III. LTIP Discretionary Award: $                    

IV. Total Incentive Compensation Award: $                    

A-3exv10w1

Exhibit 10.1

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (the “ Agreement”), is made as of May 1, 2010 (the
“ Effective Date”) by and between Anthera Pharmaceuticals, Inc. (the “ Company”) and
James Pennington (the “ Executive”).

     WHEREAS, the Company and the Executive entered into that certain letter re: Severance Benefits
Agreement, dated as of July 19, 2007 (the “ Original Agreement”);

     WHEREAS, the Company and the Executive subsequently entered into that certain Amended and
Restated Severance Benefits Agreement as of October 15, 2009 (the “Amended Agreement”), which
replaced the Original Agreement; and

     WHEREAS, the Company and the Executive desire to replace, in their entirety, the Original
Agreement and the Amended Agreement, effective as of the Effective Date and in accordance with the
terms hereof;

     NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Executive agree as follows:

     1. Termination of Prior Agreements; Term.

          (a) As of the Effective Date, the Original Agreement and the Amended Agreement shall terminate
and be of no further force and effect.

          (b) The term of this Agreement shall extend from the Effective Date until the first
anniversary of the Effective Date. This Agreement may be extended for an additional term in an
agreement executed in writing by the parties prior to this Agreement’s expiration date. The term
of this Agreement shall be subject to termination as provided in Section 3 and may be referred to
herein as the “Term.”

     2. Employment, Compensation and Related Matters.

          (a) Commencing on the Effective Date, Executive shall serve as Senior Clinical Fellow on
behalf of the Company, and shall have such duties as may from time to time be prescribed by the
Company. The Executive shall devote his full working time and efforts to the business and affairs
of the Company.

          (b) During the term of this Agreement, the Executive’s salary shall be $24,166.67 per month,
less customary withholdings. The salary shall be payable in a manner that is consistent with the
Company’s usual payroll practices for senior executives.

 

 

          (c) The Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him in performing services hereunder, in accordance with the policies and
procedures then in effect and established by the Company.

          (d) The Executive shall also be entitled to employee benefits, including health insurance,
vacation and paid holidays, in accordance with the policies and procedures then in effect and
established by the Company.

          (e) As of the Effective Date, the unvested portions of all Option Grants shall be modified in
that it they shall vest (and the repurchase option with respect to any early exercised Option
Grants shall lapse) over twelve months from the Effective Date in equal monthly installments on the
first day of each of such twelve months such that on the one year anniversary of the Effective Date
all Option Grants shall be fully vested (and the repurchase option with respect to any early
exercised Option Grants shall be fully lapsed), so long as this Agreement remains in effect and the
Executive maintains a service relationship with the Company on each such date. The provisions of
the Option Grants which are not amended hereby shall remain in effect unchanged. For purposes of
this Agreement, the term “ Option Grants” shall mean the following grants of stock options
to purchase common stock of the Company, par value $.001 per share (“ Common Stock”), which
are subject to time-based vesting as set forth in the applicable option agreements:

	 	(i)	 	Grant dated March 9, 2007 with respect to 105,140 shares;
	 
	 	(ii)	 	Grant dated October 24, 2007 with respect to 37,967 shares; and
	 
	 	(iii)	 	Grant dated February 18, 2009 with respect to 29,205 shares.

     3. Termination.

          (a) If, prior to the end of the Term, the Executive’s employment with the Company is
terminated by the Company for any reason other than for Cause or by the Executive due to a
Constructive Termination, and if the Executive provides the Company with a signed general release
of all claims against the Company and its affiliates in a form reasonably acceptable to the Company
(the “ Release”) within the 21-day period following the date of termination of employment
and the seven-day revocation period for the Release has expired, then the Company shall pay,
through the end of the Term (1) the Executive’s salary, on the Company’s regular payroll dates, and
(2) the COBRA premium for health benefits covering the Executive and his eligible dependents, to
the same extent as if the Executive had remained employed through the end of the Term, provided the
Executive makes a timely COBRA election and the Executive and his dependents are and remain
eligible for such benefits under COBRA. In addition, with regard to the Executive’s outstanding
options, all unvested shares to purchase the Company’s common stock shall become vested and any
vesting restrictions on any
Company restricted stock awards that the Executive holds as of the date of such termination of
employment shall lapse (the acceleration of vesting of stock options and restricted stock described
in this section shall be effective as of the date of the Executive’s termination of employment).

          (b) For purposes of this Agreement, “ Cause” shall mean (i) gross negligence or willful
misconduct by the Executive in the performance of the Executive’s duties to the

2

 

Company that is not
cured within thirty (30) days of written notice thereof, where such gross negligence or willful
misconduct has resulted or is likely to result in substantial and material damage to the Company or
its subsidiaries; (ii) the Executive’s repeated unexplained or unjustified absence from the
Company; (iii) a material and willful violation by the Executive of any federal or state law; (iv)
commission by the Executive of any act of fraud with respect to the Company; or (v) the Executive’s
commission of an act of moral turpitude or conviction of or entry of a plea of nolo
contendere to a felony.

          (c) For purposes of this Agreement, “ Constructive Termination” shall mean the
Executive’s resignation within 180 days of the occurrence of any one or more of the following
events without the Executive’s prior written consent, provided that the Executive has provided
written notice to the Company within ninety (90) days of the first occurrence of the event and such
event remains uncured by the Company thirty (30) days after the Executive’s delivery to the Company
of written notice thereof:

          (i) a material diminution of the Executive’s base compensation (other than in
connection with a general decrease in base salaries for most similarly situated employees
of the Company or a successor corporation); or

          (ii) a material change in the geographic location at which the Executive provides
services to the Company.

     4. Section 409A.

          (a) Anything in this Agreement to the contrary notwithstanding, if at the time of the
Executive’s separation from service within the meaning of Section 409A of the Code, the Company
determines that the Executive is a “specified employee” within the meaning of Section
409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes
entitled to under this Agreement on account of the Executive’s separation from service would be
considered deferred compensation subject to the 20 percent additional tax imposed pursuant to
Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code,
such payment shall not be payable and such benefit shall not be provided until the date that is the
earlier of (A) six months and one day after the Executive’s separation from service, or (B) the
Executive’s death. If any such delayed cash payment is otherwise payable on an installment basis,
the first payment shall include a catch-up payment covering amounts that would otherwise have been
paid during the six-month period but for the application of this provision, and the balance of the
installments shall be payable in accordance with their original schedule.

          (b) To the extent that any payment or benefit described in this Agreement constitutes
“non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such
payment or benefit is payable upon the Executive’s termination of employment, then such payments or
benefits shall be payable only upon the Executive’s “separation from service.” The determination
of whether and when a separation from service has occurred shall be made in accordance with the
presumptions set forth in Treasury Regulation Section 1.409A-1(h).

3

 

          (c) The parties intend that this Agreement will be administered in accordance with Section
409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its
compliance with Section 409A of the Code, the provision shall be read in such a manner so that all
payments hereunder comply with Section 409A of the Code. The parties agree that this Agreement may
be amended, as reasonably requested by either party, and as may be necessary to fully comply with
Section 409A of the Code and all related rules and regulations in order to preserve the payments
and benefits provided hereunder without additional cost to either party.

     5. Binding Agreement. This Agreement shall inure to the benefit of and be enforceable
by the Executive and the Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should die while any
amount would still be payable to the Executive hereunder had the Executive continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive’s devisee, legatee or other designee or, if there is no such designee,
to the Executive’s estate.

     6. Entire Agreement. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all prior agreements,
arrangements and understandings of the parties hereto with respect to the subject matter contained
herein, including, without limitation, any prior change in control agreements.

     7. At-Will Employment. Nothing contained in this Agreement shall (a) confer upon the
Executive any right to continue in the employ of the Company, (b) constitute any contract or
agreement of employment, or (c) interfere in any way with the at-will nature of the Executive’s
employment with the Company.

     8. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by the
Executive and such officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of or compliance with, any
condition or provision of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent
time. The validity, interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of California without regard to its conflicts of law principles.
The section headings contained in this Agreement are for convenience only, and shall not affect the
interpretation of this Agreement. This Agreement may be executed in several counterparts, each of
which
shall be deemed to be an original but all of which together shall constitute one and the same
instrument. The invalidity or unenforceability of any provision of this Agreement shall not affect
the validity or enforceability of any other provision of this Agreement, which shall remain in full
force and effect.

     9. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the Executive and the Executive’s heirs, executors, personal representatives, assigns,
administrators and legal representatives. Because of the unique and personal nature of the
Executive’s duties under this Agreement, neither this Agreement nor any rights or obligations under
this Agreement shall be assignable by the Executive. This Agreement shall be binding

4

 

upon and
inure to the benefit of the Company and its successors, assigns and legal representatives. As a
condition precedent to the consummation of any merger, sale of all or substantially all of the
assets of the Company or other similar transaction the Company shall obtain the consent of the
acquirer or successor entity to its assumption of the rights and obligations of the Company under
this Agreement.

     IN WITNESS WHEREOF, this Agreement has been executed by a duly authorized representative of
the Company and by the Executive, as of the Effective Date.

	 	 	 	 	 
	 	Anthera Pharmaceuticals Inc.

 	 
	 	By:  	/s/ Paul Truex
 	 
	 	 	Name:  	Paul Truex 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	Executive

 	 
	 	/s/ James Pennington
 	 
	 	James Pennington 	 
	 	 	 
	 

5

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