Document:

Capital Plan

 EXHIBIT 4.1 
  

CAPITAL PLAN 
 OF THE 
 FEDERAL HOME LOAN BANK
OF SAN FRANCISCO 
  
 As approved by the Board of Directors on 
 May 30, 2003 
  
 

 

 Capital Plan 
 of the 
 Federal Home Loan Bank of San Francisco 
  
 Table of Contents 
  

									
	I.	 	Definitions	  	1
			
	II.	 	Capital Stock	  	5
				
	 	 	A.	  	Characteristics of Capital Stock	  	5
				
	 	 	B.	  	Interest in Retained Earnings	  	5
			
	III.	 	Issuance of Capital Stock	  	6
				
	 	 	A.	  	Exchange Pursuant to Plan of Reorganization	  	6
					
	 	 	 	  	1.	  	Notice and Effective Date	  	6
					
	 	 	 	  	2.	  	Exchange	  	6
					
	 	 	 	  	3.	  	Right to Opt Out of Capital Plan	  	6
					
	 	 	 	  	4.	  	Member in Process of Withdrawing from Membership on Effective Date	  	7
					
	 	 	 	  	5.	  	Disposition of Claims	  	7
				
	 	 	B.	  	Subsequent Issuances	  	7
				
	 	 	C.	  	New Members	  	7
				
	 	 	D.	  	Former Members	  	8
			
	IV.	 	Minimum Stock Requirement	  	8
				
	 	 	A.	  	Calculation of Minimum Stock Requirement	  	8
				
	 	 	B.	  	Adjustments to Stock Requirements	  	10
					
	 	 	 	  	1.	  	Adjustment to Membership Stock Requirement	  	10
					
	 	 	 	  	2.	  	Adjustment to Activity-Based Stock Requirement	  	11
				
	 	 	C.	  	Authorized Ranges	  	11
					
	 	 	 	  	1.	  	Authorized Ranges for Membership Stock Requirement	  	11
					
	 	 	 	  	2.	  	Authorized Ranges for Activity-Based Stock Requirement	  	12
				
	 	 	D.	  	Factors to Consider in Establishing Adjustment Within Authorized Ranges	  	12
			
	V.	 	Ownership and Transfer of Capital Stock	  	12
				
	 	 	A.	  	Ownership Limited to Members	  	12
				
	 	 	B.	  	Transfers at Par Value	  	13

  

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	VI.	 	Voting Rights	  	13
			
	VII.	 	Dividends	  	13
				
	 	 	A.	  	Declaration of Dividends	  	13
				
	 	 	B.	  	No Preference	  	14
				
	 	 	C.	  	Stock Held by Withdrawing or Former Member	  	14
			
	VIII.	 	Liquidation, Merger or Consolidation	  	14
				
	 	 	A.	  	Liquidation	  	14
				
	 	 	B.	  	Merger or Consolidation	  	14
				
	 	 	C.	  	No Limitation on Finance Board’s Authority	  	14
			
	IX.	 	Redemption and Repurchase of Capital Stock (Continuing Membership)	  	14
				
	 	 	A.	  	Redemption Upon Application by the Member	  	14
					
	 	 	 	  	1.	  	Conditions Applicable to Redemption	  	14
					
	 	 	 	  	2.	  	Cancellation of Redemption Notice	  	15
					
	 	 	 	  	3.	  	Redemption	  	16
				
	 	 	B.	  	Repurchase Upon Initiation by the Bank	  	16
				
	 	 	C.	  	Continued Benefits of Ownership Prior to Redemption or Repurchase	  	16
				
	 	 	D.	  	Limitations on Redemption and Repurchase of Capital Stock	  	16
			
	X.	 	Redemption and Repurchase of Capital Stock (Withdrawal or Termination of Membership)	  	17
				
	 	 	A.	  	Voluntary Withdrawal	  	17
					
	 	 	 	  	1.	  	Notice of Intention to Withdraw from Membership	  	17
					
	 	 	 	  	2.	  	Termination of Membership	  	17
					
	 	 	 	  	3.	  	Continued Benefits of Membership Prior to Termination	  	17
					
	 	 	 	  	4.	  	Cancellation of Notice of Withdrawal	  	18
					
	 	 	 	  	5.	  	Circumstances Requiring Finance Board Certification for Withdrawal	  	18
				
	 	 	B.	  	Termination of Membership as a Result of Merger, Consolidation, or Relocation	  	18
					
	 	 	 	  	1.	  	Consolidation of Members	  	18
					
	 	 	 	  	2.	  	Consolidation of Member into Nonmember	  	19
					
	 	 	 	  	3.	  	Relocation of Principal Place of Business	  	19
				
	 	 	C.	  	Other Involuntary Termination of Membership	  	20
				
	 	 	D.	  	Redemption	  	21
				
	 	 	E.	  	Limitations on Redemption and Repurchase of Capital Stock Following Withdrawal or Termination of Membership	  	21

  

 ii 

							
	XI.	 	Priority of Redemption or Repurchase	  	21
				
	 	 	A.	  	Initial Pro Rata Redemption	  	21
				
	 	 	B.	  	Subsequent Pro Rata Redemption	  	22
				
	 	 	C.	  	Pro Rata Repurchase	  	22
				
	 	 	D.	  	No Priority for Notices of Redemption or Repurchase in the Event of Liquidation	  	22
			
	XII.	 	Disposition of Claims	  	23
				
	 	 	A.	  	In General	  	23
				
	 	 	B.	  	Lien on Capital Stock	  	23
				
	 	 	C.	  	Prepayment Fees	  	23
			
	XIII.	 	Amendment to the Capital Plan	  	23
			
	XIV.	 	Appendices	  	23
				
	 	 	A.	  	Membership Asset Factors	  	24
				
	 	 	B.	  	Report from PricewaterhouseCoopers, LLP	  	 
				
	 	 	C.	  	Report from Standard & Poors	  	 

  

 iii 

 May 30, 2003 
  
 Capital Plan 
 of the 

Federal Home Loan Bank of San Francisco 
  

	I.	Definitions 

  
 As used in this Capital Plan, the following capitalized terms shall have the following meanings: 
  

	 	A.	“Act” means the Federal Home Loan Bank Act, as amended from time to time. 

  

	 	B.	“Activity-Based Stock Requirement” means the amount of Capital Stock that a Member must own for as long as a particular transaction between the Bank and the Member
remains outstanding.  

  

	 	C.	“Activity-Based Stock Retention Requirement” means the amount of Capital Stock that a Former Member must own for as long as a particular transaction between the
Bank and the Former Member remains outstanding. The Activity-Based Stock Retention Requirement for a Former Member shall be calculated according to the same formula used to calculate the Activity-Based Stock Requirement for a Member. 

  

	 	D.	“Advance” or “Advances” means the principal balance of all loans from the Bank to a Member or Former Member that are outstanding from time to time and
that are (1) provided pursuant to a written agreement, (2) supported by a note or other written evidence of the borrower’s obligation, and (3) fully secured by collateral in accordance with the Act and the Regulations, including, without
limitation, all such loans that are outstanding on the Effective Date.  

  

	 	E.	“Advances Stock Requirement” means the amount of Capital Stock that a Member must own for as long as Advances made by the Bank to the Member remain outstanding.

  

	 	F.	“Advances Stock Retention Requirement” means the amount of Capital Stock that a Former Member must own for as long as Advances made by the Bank to the Former Member
remain outstanding. The Advances Stock Retention Requirement for a Former Member shall be calculated according to the same formula used to calculate the Advances Stock Requirement for a Member. 

  

	 	G.	“Bank” means the Federal Home Loan Bank of San Francisco. 

  

	 	H.	“Board of Directors” means the board of directors of the Bank. 

  

	 	I.	“Capital Plan” means this capital plan as adopted by the Board of Directors and approved by the Finance Board. 

  

	 	J.	“Capital Stock” means capital stock that has the characteristics of class B stock as described in the Act and the Regulations, and as specified in Section II.A. of
the Capital Plan. 

  

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	 	K.	“Capital Stock Assessment” means the amount of Capital Stock that a Member must own, in addition to the greater of its Membership Stock Requirement or its
Activity-Based Stock Requirement, or that a Former Member must own, in addition to the greater of its Membership Stock Retention Requirement or its Activity-Based Stock Retention Requirement, as applicable, for as long as may be necessary to enable
the Bank to meet its Minimum Regulatory Capital Requirement and to operate within its Target Ratios, as determined by the Board of Directors in its sole discretion (subject to the regulatory oversight of the Finance Board). 

  

	 	L.	“Effective Date” of the Capital Plan means the date of the Exchange as determined by the Board of Directors. 

  

	 	M.	“Excess Stock” of a Member or Former Member means the amount of Capital Stock held by the Member or Former Member that exceeds the amount of Capital Stock that the
Member or Former Member is required to own in accordance with the provisions of the Capital Plan. 

  

	 	N.	“Exchange” means the exchange on the Bank’s books of each share of Bank stock outstanding prior to the exchange on the Effective Date for one share of Capital
Stock, upon which each share of Bank stock shall be retired. 

  

	 	O.	“Finance Board” means the Federal Housing Finance Board or any successor agency. 

  

	 	P.	“Former Member” means an institution, other than a Member, that owns Capital Stock, and includes without limitation (1) a former Member that has withdrawn
voluntarily from Membership, (2) a former Member whose Membership has been terminated as a result of merger or consolidation into a nonmember, (3) a former Member whose Membership has been terminated as a result of relocation of its principal place
of business, (4) a former Member whose Membership has been terminated involuntarily by the Board of Directors, (5) a former Member that has become subject to the appointment of a conservator, receiver, or other legal custodian under federal or state
law, and (6) any other successor in interest to a Member or Former Member.  

  

	 	Q.	“Indebtedness” means all indebtedness of the Member or Former Member to the Bank that is outstanding from time to time, including, without limitation, all Advances
and all other obligations and liabilities of the Member or Former Member to the Bank. 

  

	 	R.	“Issue” or “Issuance” means the issuance of Capital Stock to a Member or Former Member by the Bank in (1) the Exchange, (2) a sale, (3) a transfer, or (4)
a dividend. 

  

	 	S.	“Member” means a member of the Bank. 

  

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 May 30, 2003 
  

	 	T.	“Member Mortgage Asset Program” means a program under which the Bank purchases mortgage loans from a Member. 

  

	 	U.	“Member Mortgage Asset Stock Requirement” means the amount of Capital Stock that a Member must own for as long as the Bank owns any mortgage loan or any portion of
any mortgage loan sold by the Member to the Bank under a Member Mortgage Asset Program. 

  

	 	V.	“Member Mortgage Asset Stock Retention Requirement” means the amount of Capital Stock that a Former Member must own for as long as the Bank owns any mortgage loan
or any portion of any mortgage loan sold by the Former Member to the Bank under a Member Mortgage Asset Program. The Member Mortgage Asset Stock Retention Requirement for a Former Member shall be calculated according to the same formula used to
calculate the Member Mortgage Asset Stock Requirement for a Member. 

  

	 	W.	“Membership” means membership in the Bank. 

  

	 	X.	“Membership Assets” of a Member means all of the assets of the Member (other than Capital Stock) of a type that, at the time of origination of a transaction between
the Member and the Bank, may qualify as collateral security for the Member under the Act or the Regulations. (Assets deemed to be Membership Assets for purposes of calculating a Member’s Membership Stock Requirement may or may not be accepted
by the Bank as collateral security for any particular transaction.) 

  

	 	Y.	“Membership Asset Factor” means the percentage, from zero to one hundred, that the Bank has assigned to a category or type of asset that may constitute a Membership
Asset of any Member. The Membership Asset Factor assigned to each category of Membership Assets is set forth in Appendix A. 

  

	 	Z.	“Membership Asset Value” of a Member means the sum of the amounts of each category of the Member’s Membership Assets, as determined by the Bank from the
Member’s relevant regulatory reports, multiplied in each case by the Membership Asset Factor applicable to each such asset category. 

  

	 	AA.	“Membership Stock Requirement” means the amount of Capital Stock that a Member must own in order to become and remain a Member. 

  

	 	BB.	“Membership Stock Retention Requirement” means the amount of Capital Stock that a Former Member must own until the expiration of the Redemption Period applicable to
the Capital Stock. The Membership Stock Retention Requirement for a Former Member shall be the amount of Capital Stock that comprised its Membership Stock Requirement on the date on which its Membership was terminated, unless adjusted in accordance
with the provisions of Section IV.B.1. of the Capital Plan.  

  

	 	CC.	“Minimum Regulatory Capital Requirement” means each and all of the following: (1) the Regulatory Leverage Capital Requirement, (2) the Regulatory Risk-Based Capital
Requirement, and (3) the Regulatory Total Capital Requirement. 

  

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 May 30, 2003 
  

	 	DD.	“Minimum Stock Requirement” for a Member means (1) the greater of (a) the Member’s Membership Stock Requirement or (b) its Activity-Based Stock Requirement,
plus (2) its Capital Stock Assessment, if any. The Minimum Stock Requirement for a Member shall not include the amount of any Capital Stock Assessment imposed prior to the date of Membership. 

  

	 	EE.	“Minimum Stock Retention Requirement” for a Former Member means (1) the greater of (a) the Former Member’s Membership Stock Retention Requirement or (b) its
Activity-Based Stock Retention Requirement, plus (2) any Capital Stock Assessment imposed prior to the date on which the Former Member’s Membership terminated.  

  

	 	FF.	“Opt-Out Date” means the date that is three calendar months prior to the Effective Date. 

  

	 	GG.	“Permanent Capital” means the sum of (1) the Bank’s retained earnings, determined in accordance with generally accepted accounting principles, and (2)
the paid-in amounts for Issued and outstanding shares of Capital Stock. 

  

	 	HH.	“Record Date” means December 31 of the prior calendar year.  

  

	 	II.	“Redeem” or “Redemption” means the acquisition and retirement by the Bank of Capital Stock and payment at par value to the Member or Former Member
following the expiration of the Redemption Period. 

  

	 	JJ.	“Redemption Period” for Capital Stock means the five-year period following (1) the Bank’s receipt of a Member’s written Redemption notice to the Bank
provided in accordance with the provisions of Section IX.A. of the Capital Plan (which Redemption Period shall apply only to the shares determined in accordance with the provisions of Section IX.A. of the Capital Plan), (2) the Bank’s receipt
of a Member’s written notice to the Bank of the Member’s intention to withdraw from Membership provided in accordance with the provisions of Section X.A. of the Capital Plan, or the date of acquisition or receipt by the Member of any
additional shares of Capital Stock after the Bank’s receipt of such notice (which Redemption Period shall apply only to the shares determined in accordance with the provisions of Section X.A. of the Capital Plan), (3) a Member’s
termination from Membership as a result of merger or consolidation into a nonmember, or the date of acquisition or receipt by the Former Member of any additional shares of Capital Stock after the termination from Membership (which Redemption Period
shall apply only to the shares determined in accordance with the provisions of Section X.B.2. of the Capital Plan), (4) a Member’s termination from Membership as a result of relocation of its principal place of business, or the date of
acquisition or receipt by the Former Member of any additional shares of Capital Stock after the termination of Membership (which Redemption Period shall apply only to the shares determined in accordance with the provisions of Section X.B.3. of the
Capital Plan), or (5) a Member’s involuntary termination from Membership, or the date of acquisition or receipt by the Former Member of any additional shares of Capital Stock after the termination of Membership (which Redemption Period shall
apply only to the shares determined in accordance with the provisions of Section X.C. of the Capital Plan).  

  

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 May 30, 2003 
  

	 	KK.	“Regulations” means the regulations of the Finance Board, as amended from time to time. 

  

	 	LL.	“Regulatory Leverage Capital Requirement” means the ratio of Total Capital to total assets that the Bank is required to maintain in accordance with the Regulations.

  

	 	MM.	“Regulatory Risk-Based Capital Requirement” means the amount of Permanent Capital that the Bank is required to maintain in accordance with the Regulations.

  

	 	NN.	“Regulatory Total Capital Requirement” means the amount of Total Capital that the Bank is required to maintain in accordance with the Regulations.

  

	 	OO.	“Repurchase” means the acquisition and retirement by the Bank of Excess Stock and payment at par value to the Member or Former Member without regard to the
expiration of any Redemption Period. 

  

	 	PP.	“Target Ratios” means the ranges of ratios of (1) Total Capital to total assets of the Bank and (2) Permanent Capital to total assets of the Bank within which the
Bank intends to operate, as set forth in the Bank’s risk management policy as in effect from time to time.  

  

	 	QQ.	“Total Capital” means the sum of (1) Permanent Capital, (2) the amount of any general allowance for losses reserved on the books of the Bank, and (3) the value of
other instruments identified in the Capital Plan that the Finance Board has determined to be available to absorb losses incurred by the Bank. 

  

	II.	Capital Stock 

  

	 	A.	Characteristics of Capital Stock 

  
 The Board of Directors hereby authorizes the Bank to Issue, Redeem, and Repurchase Capital Stock, and take other actions in accordance with the
provisions of the Capital Plan, at the Exchange and thereafter. Capital Stock shall have a par value of $100 per share and shall be Issued, Redeemed, and Repurchased only at its stated par value. The Bank may Issue Capital Stock only in book-entry
form. 
  

	 	B.	Interest in Retained Earnings 

  
 Each Issued and outstanding share of Capital Stock shall represent an undivided ownership interest (proportionate to the number of shares of Capital
Stock Issued and outstanding from time to time) in the retained earnings, paid-in surplus, undivided profits, and equity reserves of the Bank. No Member or Former Member shall have a right to receive a distribution of its undivided interest in the
retained earnings, paid-in surplus, undivided profits, or equity reserves of the Bank at any time, including but not limited to, upon withdrawal or termination from Membership, except through a dividend or capital distribution approved by the Board
of Directors or as a result of the liquidation of the Bank. 
  

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	III.	Issuance of Capital Stock 

  

	 	A.	Exchange Pursuant to Plan of Reorganization 

  

	 	1.	Notice and Effective Date 

  
 To implement the Capital Plan, the Bank will take the following actions, which constitute the Bank’s Plan of Reorganization, within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder. Within the three-year period following Finance Board approval of the Capital Plan, the Bank shall effect the Exchange on the Effective Date by exchanging
on the Bank’s books each share of Bank stock outstanding prior to the Exchange for one share of Capital Stock, upon which each share of Bank stock shall be retired. The Bank shall provide at least 240 days’ advance written notice of the
Effective Date to Members and Former Members and to any institution with a pending application for Membership. Any institution that requests or submits an application for Membership subsequent to the date of notice to Members and Former Members, but
prior to the Effective Date, shall receive written notice of the Effective Date with its application materials or at the time it submits its application. 
  

	 	2.	Exchange  

  
 Each Member must satisfy its Minimum Stock Requirement on the Effective Date. If, as of the Exchange, a Member holds shares of Capital Stock in an amount
that is less than the amount required to satisfy the Member’s Minimum Stock Requirement, the Bank immediately shall (i) Issue sufficient additional shares of Capital Stock to the Member so that the Member meets its Minimum Stock Requirement;
and (ii) debit the Member’s transaction account with the Bank in the amount of the par value of the additional shares of Capital Stock Issued. In the event that the Member’s transaction account reflects insufficient funds, the Bank may
take any of the actions authorized pursuant to the transaction account terms and conditions then in effect. 
  

	 	3.	Right to Opt Out of Capital Plan 

  
 Any Member may opt out of participation in the Exchange by providing to the Bank and the Finance Board a written notice of intention to withdraw from
Membership, which notice must be received by the Bank and the Finance Board on or before the Opt-Out Date. Unless the Bank has received written notice from the Member prior to the expiration of the three-month withdrawal notice period that the
Member is canceling its notice of intention to withdraw from Membership, on the expiration of the three-month withdrawal notice period, the Bank shall terminate the Membership of that Member and shall, subject to the Act and Regulations and the
other provisions of this Section III., cancel the Former Member’s outstanding stock and pay to the Former Member the par value of such stock. A Member may cancel its notice of intention to withdraw at any time prior to the date on which its

  

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 May 30, 2003 
  
 Membership terminates by providing a written cancellation notice to the Bank. Any Member that submits a notice of intention to withdraw subsequent to the
notice to Members of the Effective Date and cancels its notice of intention to withdraw prior to the Effective Date shall pay a fee to the Bank equal to $0.50 multiplied by the number of shares of outstanding stock held by the Member on the date
that the Bank receives the notice of cancellation. 
  
 If the
expiration of the three-month withdrawal notice period applicable to any withdrawing Member falls on the Effective Date, the Bank shall terminate the Member’s Membership and cancel the Former Member’s outstanding stock prior to effecting
the Exchange. Any Member that has not withdrawn from Membership prior to the Exchange shall be deemed to have consented to the provisions of the Capital Plan, including, but not limited to, the Exchange. 
  
 Notwithstanding the immediately preceding paragraph, any Former Member
that, prior to the Exchange, (i) has not repaid in full all Advances owed by the Former Member to the Bank, (ii) has sold any mortgage loan or any portion of any mortgage loan to the Bank under a Member Mortgage Asset Program, all or any portion of
which mortgage loan continues to be owned by the Bank, or (c) has not extinguished or settled all other obligations to the Bank, shall participate in the Exchange to the extent necessary to comply with its Activity-Based Stock Retention Requirement.
Any such Former Member shall be deemed to have consented to the provisions of the Capital Plan, including, but not limited to, the Exchange. 
  

	 	4.	Member in Process of Withdrawing from Membership on Effective Date 

  
 The Redemption Period for Capital Stock held by a Member that provides a written notice of intention to withdraw from Membership subsequent to the
Opt-Out Date but prior to the Effective Date shall begin on the date the notice is received by the Bank and the Finance Board. 
  

	 	5.	Disposition of Claims 

  
 The provisions of Section XII. of this Capital Plan shall apply to the disposition of claims against Members or Former Members arising in connection with
the Exchange. 
  

	 	B.	Subsequent Issuances 

  
 The terms, rights, and preferences applicable to any Capital Stock Issued after the Exchange shall be identical to those set forth in this Capital Plan.
The Bank may not issue Capital Stock other than in accordance with the Regulations and this Capital Plan. 
  

	 	C.	New Members 

  
 Any institution that becomes a Member on or after the Effective Date must, upon becoming a Member, purchase and hold sufficient shares of Capital Stock
to satisfy its Minimum Stock Requirement. 
  

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	 	D.	Former Members 

  
 Any Former Member must purchase and hold sufficient shares of Capital Stock to satisfy its Minimum Stock Retention Requirement. 
  

	IV.	Minimum Stock Requirement 

  

	 	A.	Calculation of Minimum Stock Requirement 

  
 From time to time, the Board of Directors shall set the Minimum Stock Requirement for Members so that the aggregate of (i) the Minimum Stock Requirements
of all Members; (ii) the Minimum Stock Retention Requirements of all Former Members; and (iii) other Capital Stock outstanding is sufficient for the Bank to meet its Minimum Regulatory Capital Requirement. The Board of Directors shall have a
continuing obligation to review and adjust the Minimum Stock Requirement to ensure that the Bank remains in compliance with its Minimum Regulatory Capital Requirement. Except as set forth in Section IV.A.2.a., each Member shall comply promptly with
any such requirement. Subject to Paragraphs B. – D. of this Section IV., at the Effective Date, and for as long as its Membership continues or a relevant transaction is outstanding, each Member shall hold Capital Stock in an amount equal
to: 
  

	 	1.	The greater of: 

  

	 	a.	The Member’s Membership Stock Requirement, which shall equal 1.00% of the Member’s Membership Asset Value, with each Member’s Membership Stock Requirement subject to
a cap equal to $25 million; or 

  

	 	b.	The Member’s Activity-Based Stock Requirement, which shall equal the sum of: 

  

	 	i.	The Member’s Advances Stock Requirement, which shall equal 4.70% of the Member’s outstanding Advances; plus 

  

	 	ii.	The Member’s Member Mortgage Asset Stock Requirement, which shall equal 5.00% of any portion of any mortgage loan sold by the Member and owned by the Bank under a Member
Mortgage Asset Program; plus 

  

	 	2.	The Member’s Capital Stock Assessment, if any. 

  
 The Board of Directors may impose a Capital Stock Assessment only if it determines that the aggregate of (i) the Minimum Stock Requirements of all
Members and (ii) the Minimum Stock Retention Requirements of all Former Members will result in, or will be likely to result in, an amount of Capital Stock that is not sufficient for the Bank to meet its Minimum Regulatory Capital Requirement and to
operate within its Target Ratios. The aggregate amount of any Capital Stock Assessment shall not exceed (i) the amount of Capital Stock necessary to enable the Bank to meet its Minimum Regulatory Capital Requirement, plus (ii) the amount of Capital
Stock necessary to enable the Bank to operate within its Target Ratios. 
  

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 The amount of each Member’s Capital Stock Assessment shall be determined by allocating among all Members, in proportion to the number of shares of
Capital Stock that then constitutes each Member’s Minimum Stock Requirement, the amount of additional Capital Stock necessary to enable the Bank to meet its Minimum Regulatory Capital Requirement and to operate within its Target Ratios. The
amount of Excess Stock held by any Member as of the effective date of the Capital Stock Assessment shall be allocated toward satisfaction of that Member’s Capital Stock Assessment. 
  
 The Bank shall notify the Finance Board in writing within two business days following the determination by the Board of
Directors to impose a Capital Stock Assessment. 
  

	 	a.	Member Options in the Event of Capital Stock Assessment 

  
 In the event that the Board of Directors imposes a Capital Stock Assessment, the Bank shall provide written notice to each Member at least 20 business
days prior to the effective date of the Capital Stock Assessment, specifying the amount of additional Capital Stock, if any, that the Member is required to purchase. On the effective date of the Capital Stock Assessment, the Bank shall Issue
sufficient additional shares of Capital Stock so that the Member meets its adjusted Minimum Stock Requirement (including its Capital Stock Assessment), and the Bank shall debit the Member’s transaction account with the Bank in the amount of the
par value of the additional shares of Capital Stock Issued, except as set forth in this Section IV.A.2.a. In the event that the Member’s transaction account reflects insufficient funds, the Bank may take any of the actions authorized pursuant
to the transaction account terms and conditions then in effect. 
  
 The Bank shall not Issue Capital Stock to a Member in accordance with the provisions of this Section IV.A.2. if, at least one business day prior to the date of Issuance: 
  

	 	i.	To the extent permitted under the relevant governing agreements between the Bank and the Member (and subject to the payment of any applicable prepayment or termination fee) the
Member has reduced the amount of any transactions outstanding between the Bank and the Member, and thereby reduced its Activity-Based Stock Requirement and its Minimum Stock Requirement to a level such that the Member then holds Capital Stock in an
amount at least equal to the Member’s adjusted Minimum Stock Requirement (including its Capital Stock Assessment); or 

  

	 	ii.	The Member has provided written notice to the Bank not to Issue such Capital Stock, in which case the Member shall not be required to purchase additional Capital Stock to meets its
Capital Stock Assessment. Such written notice shall constitute grounds for involuntary termination of Membership, and the Board of Directors shall terminate the Member’s Membership. The Bank may liquidate any Indebtedness of the Former Member
in accordance with the relevant governing agreements and applicable Regulations. The Former Member shall have no right to exercise any of the benefits of Membership after the date on which its 

  

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 May 30, 2003 
  
 Membership terminates, other than to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through the date
of Redemption or Repurchase by the Bank. 
  

	 	b.	Reduction of Capital Stock Assessment 

  
 The Board of Directors, in its sole discretion (subject to the regulatory oversight of the Finance Board), shall determine when all or any portion of the
Capital Stock Issued in accordance with the Capital Stock Assessment is no longer necessary to enable the Bank to meet its Minimum Regulatory Capital Requirement and to operate within its Target Ratios. Upon such determination, the Board of
Directors shall declare a pro rata reduction in the number of shares of each Member’s Capital Stock Assessment, based upon the number of shares of Capital Stock that are no longer required to enable the Bank to meet its Minimum Regulatory
Capital Requirement and to operate within its Target Ratios. The number of shares subtracted from each Member’s Capital Stock Assessment shall immediately be deemed to be Excess Stock of that Member to the extent that the Member otherwise holds
sufficient Capital Stock to meet its Minimum Stock Requirement (including any portion of the Capital Stock Assessment continuing in effect). 
  
 The Bank, in its sole discretion (subject to the regulatory oversight of the Finance Board) may limit the amount of Capital Stock that any Member may own
to that amount necessary for the Member to meet its Minimum Stock Requirement. 
  

	 	B.	Adjustments to Stock Requirements 

  

	 	1.	Adjustment to Membership Stock Requirement 

  
 The Bank shall recalculate each Member’s Membership Stock Requirement annually, using financial data from the prior calendar yearend. In its
discretion, the Bank may recalculate any Member’s Membership Stock Requirement more frequently, using the most recently available financial data. The Bank shall also recalculate each Member’s Membership Stock Requirement for any adjustment
to the Membership Stock Requirement within the authorized ranges described in Section IV.C. 
  
 The Bank shall notify each Member promptly of any adjustment to its Membership Stock Requirement. If the adjustment results in an increase in the
Member’s Minimum Stock Requirement, within 15 business days the Bank shall (i) Issue sufficient additional shares of Capital Stock so that the Member meets its Minimum Stock Requirement; and (ii) debit the Member’s transaction account with
the Bank in the amount of the par value of the additional shares of Capital Stock Issued. In the event that the Member’s transaction account reflects insufficient funds, the Bank may take any of the actions authorized pursuant to the
transaction account terms and conditions then in effect. 
  

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 May 30, 2003 
  

	 	2.	Adjustment to Activity-Based Stock Requirement 

  
 The Bank shall recalculate each Member’s Activity-Based Stock Requirement and each Former Member’s Activity-Based Stock Retention Requirement
at the time of any change in the amount of transactions outstanding between the Bank and the Member or Former Member and at the time of any adjustment to the Activity-Based Stock Requirement within the authorized ranges described in Section IV.D.
Any adjustment to the Activity-Based Stock Requirement for Members also shall apply to the Activity-Based Stock Retention Requirement for Former Members. The Bank shall promptly notify each Member of any adjustment to its Activity-Based Stock
Requirement and each Former Member of any adjustment to its Activity-Based Stock Retention Requirement. 
  

	 	a.	Adjustment Caused by Change in Activity 

  
 If the adjustment is caused by a change in the amount of transactions outstanding between the Bank and the Member, and the adjustment results in an
increase in the Member’s Minimum Stock Requirement, the Bank immediately shall (i) Issue sufficient additional shares of Capital Stock so that the Member meets its Minimum Stock Requirement; and (ii) debit the Member’s transaction account
with the Bank in the amount of the par value of the additional shares of Capital Stock Issued. In the event that the Member’s transaction account reflects insufficient funds, the Bank may take any of the actions authorized pursuant to the
transaction account terms and conditions then in effect. 
  

	 	b.	Adjustment Caused by Change Within Authorized Ranges 

  
 If the adjustment is caused by a change to the Activity-Based Stock Requirement within the ranges set forth in Section IV.D., and the adjustment results
in an increase in the Member’s Minimum Stock Requirement or to the Former Member’s Minimum Stock Retention Requirement, within 15 business days the Bank shall (i) Issue sufficient additional shares of Capital Stock so that the Member meets
its Minimum Stock Requirement or the Former Member meets its Minimum Stock Retention Requirement; and (ii) debit the transaction account of the Member or Former Member in the amount of the par value of the additional shares of Capital Stock Issued.
In the event that the transaction account of the Member or Former Member reflects insufficient funds, the Bank may take any of the actions authorized pursuant to the transaction account terms and conditions then in effect.  
  

	 	C.	Authorized Ranges  

  

	 	1.	Authorized Ranges for Membership Stock Requirement 

  
 From time to time, the Board of Directors may adjust the Membership Stock Requirement to an amount not less than 0.50% nor greater than 1.50% of
the Member’s Membership Asset Value, with each Member’s Membership Stock Requirement subject to a cap not less than $10 million nor greater than $50 million. 
  

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 May 30, 2003 
  

	 	2.	Authorized Ranges for Activity-Based Stock Requirement 

  
 From time to time, the Board of Directors may adjust the Activity-Based Stock Requirement to equal the sum of: 
  

	 	a.	The Advances Stock Requirement, which shall equal an amount not less than 4.40% nor greater than 5.00% of the Member’s outstanding Advances; plus 

  

	 	b.	The Member Mortgage Asset Stock Requirement, which shall equal an amount not less than 5.00% nor greater than 5.70% of any portion of any mortgage loan sold by the Member and owned
by the Bank under a Member Mortgage Asset Program. 

  

	 	D.	Factors to Consider in Establishing Adjustment Within Authorized Ranges 

  
 In establishing any adjustment to the Membership Stock Requirement or to the Activity-Based Stock Requirement, the Board of
Directors, in its sole discretion (subject to the regulatory oversight of the Finance Board), shall take into consideration the following factors: 
  

	 	1.	The amount of Capital Stock required for the Bank to meet its Minimum Regulatory Capital Requirement; 

  

	 	2.	The amount of Capital Stock required for the Bank to meet its Target Ratios; 

  

	 	3.	The amount of Capital Stock required for the Bank to capitalize the assets available to provide the necessary liquidity, if any, associated with any capitalized activity, as
determined by the Board of Directors from time to time; 

  

	 	4.	The amount of Capital Stock required for the Bank to meet the Regulatory Risk-Based Capital Requirement applicable to particular Bank assets comprising any capitalized activity;

  

	 	5.	The amount of Capital Stock required for the Bank to maintain assets other than assets for which Capital Stock is provided by the Activity-Based Stock Requirement;

  

	 	6.	The amount of Capital Stock required because of losses that have resulted in, or are expected to result in, charges against the Total Capital of the Bank; and

  

	 	7.	Any other relevant factors as determined from time to time by the Board of Directors in its sole discretion (subject to the regulatory oversight of the Finance Board).

  

	V.	Ownership and Transfer of Capital Stock 

  

	 	A.	Ownership Limited to Members 

  
 Except for any Former Member subject to a Minimum Stock Retention Requirement, Capital Stock may only be Issued to or held by Members of the Bank.
Capital Stock shall be tradable only between a Bank and its Members or Former Members, and only as set forth in this Section V. 
  

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 May 30, 2003 
  
 Upon the written request of a Member or Former Member identifying the particular shares to be transferred, the Bank, in its sole discretion (subject to
the regulatory oversight of the Finance Board), may transfer Excess Stock held by the Member or Former Member to another Member or Former Member, or to an institution that has been approved for Membership and that has satisfied all conditions for
becoming a Member (other than the purchase of Capital Stock), to assist the transferee to meet its Minimum Stock Requirement or its Minimum Stock Retention Requirement. Following any such transfer, the transferor Member or Former Member shall
continue to maintain Capital Stock sufficient to meet its Minimum Stock Requirement or its Minimum Stock Retention Requirement, as applicable, in accordance with the provisions of the Capital Plan. A Member or Former Member may not otherwise
transfer Capital Stock.  
  

	 	B.	Transfers at Par Value 

  
 Any transfer of Capital Stock shall be made at par value. The Bank shall act as the transfer agent for any such transfer, and it shall record promptly
the transaction on the books of the Bank. 
  

	VI.	Voting Rights 

  
 The Members shall be entitled to vote in connection with the election of directors in accordance with the provisions of the Act and the Regulations. A
Member may cast for each open directorship in any such election a number of votes equal to the number of shares of Capital Stock that it was required to hold pursuant to Section IV. of the Capital Plan as of the Record Date; provided, however, that
the number of votes that any Member may cast for each open directorship in any such election shall not exceed the average of the number of shares of Capital Stock that all Members located in that Member’s state were required to hold pursuant to
Section IV. of the Capital Plan as of the Record Date. For purposes of this Section VI., “Member” includes any Former Member that was a Member as of the Record Date. 
  

	VII.	Dividends 

  

	 	A.	Declaration of Dividends  

  
 From time to time, the Board of Directors, in its sole discretion (subject to the regulatory oversight of the Finance Board), may declare and the Bank
may pay dividends on Capital Stock. Any such dividend may be paid in the form of cash or Capital Stock, shall be paid to the Members and Former Members holding Capital Stock during the time period for which the dividend is declared, and shall be
computed on the amount of time during the relevant time period that the Capital Stock was outstanding. The Bank may not pay any dividends if it is not in compliance with its Minimum Regulatory Capital Requirement or if, after paying such dividends,
it would fail to comply with its Minimum Regulatory Capital Requirement. 
  

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 May 30, 2003 
  

	 	B.	No Preference 

  
 All Capital Stock shall share in any dividends without preference. Any dividends shall be payable only from the net earnings or retained earnings of the
Bank, determined in accordance with generally accepted accounting principles. 
  

	 	C.	Stock Held by Withdrawing or Former Member 

  
 A Member or Former Member shall be entitled to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through
the date of Redemption or Repurchase by the Bank. 
  

	VIII.	Liquidation, Merger or Consolidation 

  

	 	A.	Liquidation 

  
 In the event of the liquidation of the Bank, after making provision for the payment of the Bank’s liabilities, the Bank shall pay to each Member and
Former Member the par value of its Capital Stock; provided, however, that if sufficient funds are not available to make payment in full to all Members and Former Members, payment shall occur on a pro rata basis. In addition, any undistributed
retained earnings, paid-in surplus, undivided profits, equity reserves, and other assets not otherwise identified shall be allocated among the Members and Former Members, in proportion to the number of shares of Capital Stock owned by each.

  

	 	B.	Merger or Consolidation 

  
 In the event that the Bank merges with or consolidates into another Federal Home Loan Bank, the Members and Former Members shall be entitled to the
rights and benefits set forth in the agreement of merger or consolidation approved by the Board of Directors and the Finance Board. 
  

	 	C.	No Limitation on Finance Board’s Authority 

  
 Notwithstanding the provisions of Section VIII.A. and B., no provision of this Capital Plan shall limit the authority of the Finance Board to prescribe
rules, regulations or orders governing the liquidation or reorganization of the Bank. 
  

	IX.	Redemption and Repurchase of Capital Stock (Continuing Membership)  

  

	 	A.	Redemption Upon Application by the Member 

  

	 	1.	Conditions Applicable to Redemption 

  
 A Member may obtain Redemption of its Capital Stock by providing a written Redemption notice to the Bank, in a form acceptable to the Bank. The
Redemption notice must identify the particular shares to be Redeemed, and the identified shares may not be the subject of an outstanding Redemption notice. If the Redemption notice fails to identify the particular shares to be Redeemed, the Member
shall be 
  

 Page 14 

 May 30, 2003 
  
 deemed to have requested Redemption of the most recently-purchased shares that are not subject to a pending Redemption notice, followed by the shares
most recently acquired in a manner other than by purchase that are not subject to a pending Redemption notice. If the shares identified in the Redemption notice are subject to a pending Redemption notice, the Redemption notice shall be deemed
invalid. 
  

	 	2.	Cancellation of Redemption Notice 

  

	 	a.	Cancellation by Member 

  
 A Member may cancel its Redemption notice at any time prior to the expiration of the Redemption Period by providing a written cancellation notice to the
Bank. Any Member that cancels its Redemption notice shall pay a fee to the Bank determined as follows: 
  

	 	i.	If the Bank receives the notice of cancellation within 30 months following the Redemption notice, the fee shall be equal to $0.50 multiplied by the number of shares of Capital Stock
to which the cancellation notice applies. 

  

	 	ii.	If the Bank receives the notice of cancellation more than 30 months following the Redemption notice, the fee shall be equal to $1.00 multiplied by the number of shares of Capital
Stock to which the cancellation notice applies.  

  

	 	b.	Automatic Cancellation of Redemption Notice 

  
 The Bank shall not Redeem a Member’s Capital Stock if, following the Redemption, the Member would fail to meet its Minimum Stock Requirement. If,
upon expiration of the Redemption Period, the Bank is prevented from Redeeming a Member’s Capital Stock for such reason, the Bank shall attempt the Redemption on each of the five business days following the expiration of the Redemption Period.
If at the end of such time the Bank is prevented from Redeeming the Member’s Capital Stock because, following the Redemption, the Member would fail to meet its Minimum Stock Requirement, the Bank shall automatically cancel the Member’s
Redemption notice. Such automatic cancellation shall have the same effect as a notice of cancellation provided by the Member to the Bank, and the Member shall pay a fee to the Bank equal to $1.00 multiplied by the number of shares of Capital Stock
to which the automatic cancellation applies.  
  

	 	c.	Waiver of Cancellation Fee 

  
 The Board of Directors may waive a cancellation fee only for bona fide business purposes and only if consistent with the provisions of Section 7(j) of
the Act. 
  

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 May 30, 2003 
  

	 	3.	Redemption 

  
 Except as set forth in Sections IX.A.2, IX.D., and XI., and if the Member has complied with the conditions set forth in Section IX.A.1., the Bank shall Redeem the Member’s Capital Stock upon expiration of the
Redemption Period. 
  

	 	B.	Repurchase Upon Initiation by the Bank 

  
 Upon 15 days’ advance written notice to a Member, the Bank, in its discretion, may Repurchase from a Member any Excess Stock then held by the
Member. A Member, in its discretion, may waive this 15-day notice period. If the Bank intends to Repurchase Excess Stock from a Member that has submitted a Redemption notice pursuant to Section IX.A.1., before Repurchasing any other Excess Stock of
the Member, the Bank shall first Repurchase from that Member the shares of Excess Stock that are subject to a Redemption notice, followed by the most recently-purchased shares of Excess Stock that are not subject to a Redemption notice, followed by
the shares of Excess Stock most recently acquired in a manner other than by purchase that are not subject to a Redemption notice. 
  

	 	C.	Continued Benefits of Ownership Prior to Redemption or Repurchase 

  
 The Member shall be entitled to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through the date of
Redemption or Repurchase by the Bank. The Member also shall be entitled to exercise the other benefits associated with ownership of such Capital Stock prior to the date of Redemption or Repurchase. 
  

	 	D.	Limitations on Redemption and Repurchase of Capital Stock 

  
 Notwithstanding any other provision of this Section IX., if the Finance Board or the Board of Directors determines that the Bank has incurred or is
likely to incur losses that result in, or are likely to result in, charges against Capital Stock that create an other than temporary decline in the Bank’s Total Capital such that the value of Total Capital falls below the Bank’s aggregate
amount of Capital Stock, the Bank shall not Redeem or Repurchase any Capital Stock without the prior written approval of the Finance Board for however long the Bank continues to incur such charges or until the Finance Board determines that such
charges are not expected to continue. The Bank shall not Redeem or Repurchase any Capital Stock if, following the Redemption or Repurchase, the Bank would fail to satisfy its Minimum Regulatory Capital Requirement or the Member would fail to
maintain its Minimum Stock Requirement. Further, the Bank shall not Redeem or Repurchase any Capital Stock if prohibited from doing so by any Regulation or Finance Board order. 
  
 If, upon expiration of the Redemption Period applicable to any Capital Stock, the Bank is unable to Redeem the Capital
Stock because (i) following the Redemption, the Bank would fail to satisfy its Minimum Regulatory Capital Requirement or (ii) the Bank is otherwise prohibited from doing so by Regulation or Finance Board order, Redemption shall occur in accordance
with the provisions of Section XI. of the Capital Plan. 
  

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 May 30, 2003 
  

	X.	Redemption and Repurchase of Capital Stock (Withdrawal or Termination of Membership) 

  

	 	A.	Voluntary Withdrawal 

  

	 	1.	Notice of Intention to Withdraw from Membership 

  
 A Member may voluntarily withdraw and terminate its Membership by providing to the Bank written notice of its intention to withdraw from Membership. The
Redemption Period for all Capital Stock then held by that Member that is not subject to a pending Redemption notice shall begin on the date the notice is received by the Bank. 
  
 The Redemption Period for any Capital Stock acquired or received by the Member subsequent to the Bank’s receipt of the
Member’s notice of intention to withdraw shall begin on the date of acquisition or receipt of the Capital Stock by the Member; provided, however, that any Capital Stock that is not required to meet the Member’s Minimum Stock Requirement
shall be Excess Stock and shall be subject to Repurchase by the Bank.  
  

	 	2.	Termination of Membership 

  
 The Membership of a Member that has submitted a notice of intention to withdraw shall terminate on the date on which the Redemption Period ends with
respect to the Capital Stock that comprised the Member’s Membership Stock Requirement on the date on which the Bank received the Member’s notice of intention to withdraw, unless the Bank has received written notice from the Member prior to
the date on which its Membership terminates that the Member is canceling its notice of intention to withdraw. Until the date on which its Membership terminates, a Member shall continue to maintain Capital Stock sufficient to meet its Minimum Stock
Requirement in accordance with the provisions of the Capital Plan.  
  

	 	3.	Continued Benefits of Membership Prior to Termination 

  
 A Member that has submitted a notice of intention to withdraw shall be entitled to receive any dividends attributable to its Capital Stock (subject to
the Bank’s lien thereon) through the date of Redemption or Repurchase by the Bank. The Member also shall be entitled to exercise the other benefits associated with Membership until the date on which its Membership terminates, but the Bank in
its sole discretion (subject to the regulatory oversight of the Finance Board) may limit a Member’s ability to enter into transactions with the Bank, including but not limited to Advances, that would mature or otherwise terminate subsequent to
the date on which its Membership terminates. 
  

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 May 30, 2003 
  

	 	4.	Cancellation of Notice of Withdrawal 

  

	 	a.	Conditions Applicable to Cancellation 

  
 A Member may cancel its notice of intention to withdraw at any time prior to the date on which its Membership terminates by providing a written
cancellation notice to the Bank. Any Member that cancels its notice of intention to withdraw shall pay a fee to the Bank determined as follows: 
  

	 	i.	If the Bank receives the notice of cancellation within 30 months following the notice of intention to withdraw, the fee shall be equal to $0.50 multiplied by the number of shares of
Capital Stock held by the Member on the date that the Bank receives the notice of cancellation. 

  

	 	ii.	If the Bank receives the notice of cancellation more than 30 months following the notice of intention to withdraw, the fee shall be equal to $1.00 multiplied by the number of shares
of Capital Stock held by the Member on the date that the Bank receives the notice of cancellation. 

  

	 	b.	Waiver of Cancellation Fee 

  
 The Board of Directors may waive a cancellation fee only for bona fide business purposes and only if consistent with the provisions of Section 7(j) of
the Act. 
  

	 	5.	Circumstances Requiring Finance Board Certification for Withdrawal 

  
 No Member may withdraw from Membership unless, on the date that the Membership is to terminate, there is in effect a certification from the Finance Board
that the withdrawal will not cause the Federal Home Loan Bank System to fail to satisfy its obligations under 12 U.S.C. 1441b(f)(2)(C) to contribute toward the interest payments owed on obligations issued by the Resolution Funding
Corporation. 
  

	 	B.	Termination of Membership as a Result of Merger, Consolidation, or Relocation 

  

	 	1.	Consolidation of Members 

  
 If Membership is terminated as a result of a Member’s merger or other consolidation into another Member, the Membership of the disappearing Member
shall terminate upon the cancellation of its charter. At such time, the Capital Stock of the disappearing Member shall be transferred on the Bank’s books to the account of the surviving Member. The Redemption Period for the Capital Stock
previously held by the disappearing Member that is not subject to a pending Redemption notice shall not be deemed to begin solely by virtue of the termination of Membership, but shall begin only upon (i) the Bank’s receipt of the surviving
Member’s written notice to the Bank requesting Redemption of Capital Stock, (ii) the Bank’s receipt of the surviving Member’s written notice to the Bank of intention to withdraw from Membership, (iii) the surviving Member’s
termination from Membership as a result 
  

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 May 30, 2003 
  
 of merger or consolidation into a nonmember, (iv) the surviving Member’s termination from Membership as a result of relocation of its principal
place of business, or (v) the surviving Member’s involuntary termination from Membership.  
  

	 	2.	Consolidation of Member into Nonmember 

  
 If Membership is terminated as a result of a Member’s merger or other consolidation into an institution that is not a Member, the Membership shall
terminate, and the Redemption Period for the Capital Stock then held by the Member that is not subject to a pending Redemption notice shall be deemed to begin, on the date on which the Member’s charter is cancelled. At such time, the Capital
Stock of the disappearing Member shall be transferred on the Bank’s books to the account of the surviving institution. 
  
 Capital Stock held by such a Former Member shall not be deemed automatically to be Excess Stock solely by virtue of the Member’s termination of
Membership; provided, however, that any Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention Requirement shall be Excess Stock and shall be subject to Repurchase by the Bank. 
  
 The Redemption Period for any Capital Stock acquired or received by a
Former Member subsequent to the termination of Membership shall begin on the date of acquisition or receipt of the Capital Stock by the Former Member; provided, however, that any Capital Stock that is not required to meet the Former Member’s
Minimum Stock Retention Requirement shall be Excess Stock and shall be subject to Repurchase by the Bank. 
  
 The Former Member shall be entitled to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through the date
of Redemption or Repurchase by the Bank, but the Former Member shall have no right to exercise any of the other benefits of Membership after the termination of Membership.  
  

	 	3.	Relocation of Principal Place of Business 

  
 If Membership is terminated as a result of a Member’s relocation of its principal place of business (as defined in the Regulations), the Membership
shall terminate, and the Redemption Period for the Capital Stock then held by the Member that is not subject to a pending Redemption notice shall be deemed to begin, in accordance with applicable Regulations. 
  
 Capital Stock held by such a Former Member shall not be deemed
automatically to be Excess Stock solely by virtue of the Member’s termination of Membership; provided, however, that any Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention Requirement shall be Excess
Stock and shall be subject to Repurchase by the Bank. 
  
 The
Redemption Period for any Capital Stock acquired or received by the Former Member subsequent to the termination of Membership shall begin on the date of acquisition or receipt of the Capital Stock by the Former Member; provided, 
  

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 May 30, 2003 
  
 however, that any Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention Requirement shall be Excess Stock and shall
be subject to Repurchase by the Bank. 
  
 The Former Member
shall be entitled to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through the date of Redemption or Repurchase by the Bank, but the Former Member shall have no right to exercise any of the other
benefits of Membership after the termination of Membership.  
  

	 	C.	Other Involuntary Termination of Membership 

  
 The Board of Directors may immediately terminate the Membership of any Member that: 
  

	 	1.	Fails to comply with any requirement of the Act, the Regulations, or the Capital Plan; 

  

	 	2.	Becomes insolvent or otherwise subject to the appointment of a conservator, receiver, or other legal custodian under federal or state law; or 

  

	 	3.	Would jeopardize the safety or soundness of the Bank if it were to remain a Member. 

  
 If the Board of Directors terminates the Membership of any Member, the Membership shall terminate, and the Redemption
Period for all Capital Stock then held by the terminated Member that is not subject to a pending Redemption notice shall begin, on the effective date of the Board of Directors’ action. 
  
 Capital Stock held by a Former Member whose Membership has been terminated
by the Board of Directors shall not be deemed automatically to be Excess Stock solely by virtue of the termination of Membership; provided, however, that any Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention
Requirement shall be Excess Stock and shall be subject to Repurchase by the Bank. 
  
 The Redemption Period for any Capital Stock acquired or received by the Former Member subsequent to the termination of Membership shall begin on the date of acquisition or receipt of the Capital Stock by the Former
Member; provided, however, that any Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention Requirement shall be Excess Stock and shall be subject to Repurchase by the Bank. 
  
 The Former Member shall be entitled to receive any dividends attributable
to its Capital Stock (subject to the Bank’s lien thereon) through the date of Redemption or Repurchase by the Bank, but it shall have no right to exercise any of the other benefits of Membership after the termination of Membership. 

 

 Page 20 

 May 30, 2003 
  

	 	D.	Redemption  

  
 Except as set forth in Sections X.E. and XI., and unless the Former Member must continue to comply with an Activity-Based Stock Retention Requirement,
the Bank shall Redeem the Former Member’s Capital Stock upon expiration of the Redemption Period. 
  

	 	E.	Limitations on Redemption and Repurchase of Capital Stock Following Withdrawal or Termination of Membership 

  
 Notwithstanding any other provision of this Section X., if the Finance
Board or the Board of Directors determines that the Bank has incurred or is likely to incur losses that result in, or are likely to result in, charges against Capital Stock that create an other than temporary decline in the Bank’s Total Capital
such that the value of Total Capital falls below the Bank’s aggregate amount of Capital Stock, the Bank shall not Redeem or Repurchase any Capital Stock without the prior written approval of the Finance Board for however long the Bank continues
to incur such charges or until the Finance Board determines that such charges are not expected to continue. The Bank shall not Redeem or Repurchase any Capital Stock if, following the Redemption or Repurchase, the Bank would fail to satisfy its
Minimum Regulatory Capital Requirement or the Former Member would fail to maintain its Minimum Stock Retention Requirement. Further, the Bank shall not Redeem or Repurchase any Capital Stock if prohibited from doing so by any Regulation or Finance
Board order. 
  
 If, upon expiration of the Redemption Period
applicable to any Capital Stock, the Bank is unable to Redeem the Capital Stock because (i) following the Redemption, the Bank would fail to satisfy its Minimum Regulatory Capital Requirement or (ii) the Bank is otherwise prohibited from doing so by
Regulation or Finance Board order, Redemption shall occur in accordance with the provisions of Section XI. of the Capital Plan. 
  

	XI.	Priority of Redemption or Repurchase 

  

	 	A.	Initial Pro Rata Redemption 

  
 In the event that the Board of Directors determines for a given calendar quarter that the Bank may not be able to Redeem all Capital Stock with respect
to which the Redemption Period has expired or will expire during that quarter because (i) following such Redemption, the Bank would fail to meet or would be likely to fail to meet its Minimum Regulatory Capital Requirement, or (ii) Redemption would
otherwise prevent the Bank from operating in a safe and sound manner, including, without limitation, a reasonable belief that the Redemption would prevent the Bank from maintaining sufficient Permanent Capital or Total Capital against a potential
risk that may not be reflected adequately in the Bank’s Minimum Regulatory Capital Requirement, then the Board of Directors, in its sole discretion (subject to the regulatory oversight of the Finance Board), may temporarily suspend Redemptions
during that calendar quarter. 
  
 The Bank shall notify the
Finance Board in writing within two business days following the determination by the Board of Directors to suspend Redemption of Capital Stock, informing the Finance Board of the reasons for the suspension and of the Bank’s strategies and time
frames for addressing the conditions that led to the suspension. 
  

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 May 30, 2003 
  
 Unless the Finance Board directs otherwise, within 20 business days following the end of the calendar quarter, the Board of Directors, in its sole
discretion (subject to the regulatory oversight of the Finance Board), shall determine the total amount of funds, if any, to be made available for Redemption for that calendar quarter. Within 10 business days following the determination by the Board
of Directors, the Bank shall Redeem at par value a pro rata number of shares, based upon the number of shares of Capital Stock with respect to which the Redemption Period has expired, of the total amount available for Redemption. 
  
 All Redemption payments for a given calendar quarter made pursuant to this
Section XI.A. shall be made on the same business day. 
  
 The
Bank shall not Repurchase any Excess Stock without the prior written approval of the Finance Board during any period in which the Board of Directors has suspended Redemption of Capital Stock. 
  

	 	B.	Subsequent Pro Rata Redemption 

  
 The Board of Directors, in its sole discretion (subject to the regulatory oversight of the Finance Board), may follow the procedure for pro rata
Redemption described in Section XI.A. for any calendar quarter in which the conditions described therein occur. 
  

	 	C.	Pro Rata Repurchase 

  
 The Board of Directors, in its sole discretion (subject to the regulatory oversight of the Finance Board), may implement the pro rata procedure described
in this Section XI. to Repurchase Excess Stock for any calendar quarter in which (i) no Redemption Period has expired or (ii) the Bank will Redeem all Capital Stock for which the Redemption Period has expired and will Repurchase additional Capital
Stock. All Repurchase payments for a given calendar quarter made pursuant to this Section XI.C. shall be made on the same business day. 
  

	 	D.	No Priority for Notices of Redemption or Repurchase in the Event of Liquidation 

  
 In the event that the Finance Board determines to liquidate the Bank, from and after the date of any such determination,
all of the Capital Stock held by the Members, whether or not subject to a notice of Redemption or Repurchase, shall thereafter be treated exactly the same, and no further Redemptions or Repurchases shall occur except in connection with the
liquidation of the Bank in accordance with the provisions of the Act, the Regulations and this Capital Plan. 
  

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 May 30, 2003 
  

	XII.	Disposition of Claims 

  

	 	A.	In General 

  
 If a Member withdraws from Membership or its Membership is otherwise terminated, the Bank, in its sole discretion (subject to the regulatory oversight of
the Finance Board), shall determine an orderly manner for liquidating all Indebtedness owed by the Former Member to the Bank and for settling all other claims against the Former Member. After the obligations and claims have been extinguished or
settled, the Bank shall return to the Former Member the collateral pledged by the Former Member to the Bank to secure its obligations to the Bank.  
  

	 	B.	Lien on Capital Stock 

  
 The Bank shall have a lien on all of the Capital Stock of a Member or Former Member, and all dividends and other proceeds of such Capital Stock, to
secure the performance by the Member or Former Member of its obligations pursuant to the Capital Plan and to secure its performance with respect to any Indebtedness to the Bank or any transaction with the Bank. The Bank shall not Redeem or
Repurchase any Capital Stock that is required to meet the Member’s Activity-Based Stock Requirement or the Former Member’s Activity-Based Stock Retention Requirement until after the relevant Indebtedness or transactions have been
extinguished or settled. The Bank shall have the right to collect any dividends and other proceeds of Capital Stock otherwise payable to a Member or Former Member in default to satisfy any monetary obligations of the Member or Former Member to the
Bank or, in the sole discretion of the Bank (subject to the regulatory oversight of the Finance Board), to pay any dividends to the Member or Former Member in Capital Stock.  
  

	 	C.	Prepayment Fees 

  
 Any liquidation of Indebtedness that results in payment of the Indebtedness before its stated maturity shall be deemed a prepayment of the Indebtedness,
and shall be subject to any fees applicable to the prepayment. 
  

	XIII.	Amendment to the Capital Plan 

  
 Any amendment to the Capital Plan must be approved by the Board of Directors and by the Finance Board. The Bank shall provide written notice to each
Member and Former Member at least five business days prior to the effective date of any amendment. 
  

	XIV.	Appendices 

  

	 	A.	Membership Asset Factors 

  

	 	B.	Report from PricewaterhouseCoopers, LLP 

  

	 	C.	Report from Standard & Poor’s 

  

 Page 23 

 May 30, 2003 
  
 Appendix A 
  
 Membership Asset Factors 
  

				
	 	  	Initial
Value

	 
	 Residential 1-4 Family First Mortgage Loans
	  	85	%
	 Residential 1-4 Family Second Mortgage Loans
	  	55	%
	 Home Equity Lines of Credit
	  	55	%
	 Multifamily First Mortgage Loans
	  	70	%
	 MBS Pass-Throughs
	  	95	%
	 CMO’s
	  	95	%
	 Other Investment Securities
	  	75	%
	 U.S. Agency and Government Securities
	  	97	%
	 Commercial Real Estate and Non-Residential First Mortgage Loans
	  	55	%
	 Investments in Mutual Funds and Other Investment Securities
	  	75	%
	 Small Business Loans
	  	30	%
	 Small Farm Loans
	  	30	%
	 Small Agribusiness Loans
	  	30	%

  

 Page 24Summary Sheet:  Terms of Employment for Named Executive Officers

 EXHIBIT 10.1 
  
 FHLBank San Francisco (the “Bank”) 
  
 Conditions of Employment for Named Executives 
  
 Employment Status 
  
 Pursuant to the Federal Home Loan Bank Act, the Bank’s employees, including the Bank’s Chief Executive Officer and other four most highly compensated executive
officers as of December 31, 2004 (Dean Schultz, Ross J. Kari, Steven T. Honda, Lisa B. MacMillen, and Lawrence H. Parks) (the “named executive officers”) are “at will” employees. Each is free to resign his or her employment at
any time and the Bank is free to terminate his or her employment at any time for any reason or no reason, with or without cause and with or without notice. 
  
 Each of the named executive officers receives a base salary and is eligible to participate in the Bank’s executive incentive compensation plans and comprehensive
benefit programs, including both qualified and nonqualified retirement benefit plans. Base salaries for 2005 for the named executive officers are: Dean Schultz—$600,000, Ross J. Kari—$465,000, Lawrence H. Parks—$330,000, and Steven T.
Honda—$273,700. The 2005 base salary for Lisa B. MacMillen, Senior Vice President and Corporate Secretary, who was a named executive officer as of December 31, 2004, is not provided since Ms. MacMillen resigned as the Bank’s general
counsel effective April 1, 2005. The named executive officers are also eligible to receive reimbursement for financial planning, health club membership, and building parking expenses incurred each year up to a maximum amount of $12,000 annually and
does not vary per executive. 
  
 An employee of the Bank, including the named
executive officers, may receive severance benefits under the Bank’s current severance policy in the event that the employee’s employment is terminated because of the elimination of the employee’s job or position or because a
substantial job modification results in the employee being unqualified or unable to perform the revised job. Severance pay under the severance policy is equal to the greater of 12 weeks of the employee’s base salary, or the sum of two weeks of
the employee’s base salary (three weeks for vice presidents and more senior officers) plus two weeks of the employee’s base salary (three weeks for vice presidents and more senior officers) for each full year of service at the Bank
(prorated for partial years of service). Employees eligible for benefits under the Bank’s severance policy will also receive one month of continued health and life insurance benefits and, in the Bank’s discretion, outplacement assistance.

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