Document:

exv10w98

Exhibit 10.98

ITC HOLDINGS CORP.

EMPLOYEE STOCK PURCHASE PLAN

(Effective May 26, 2011)

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	I. GENERAL PROVISIONS
	 	 	1	 
	 
	1.1 Establishment
	 	 	1	 
	1.2 Purpose
	 	 	1	 
	1.3 Plan Duration
	 	 	1	 
	1.4 Definitions
	 	 	1	 
	1.5 Stock
	 	 	3	 
	1.6 Administration
	 	 	3	 
	1.7 Participants
	 	 	4	 
	 
	II. OFFER TERMS
	 	 	4	 
	 
	2.1 Offer and Purchase Period
	 	 	4	 
	2.2 Option Price
	 	 	4	 
	2.3 Participation
	 	 	5	 
	2.4 Participation Limitations
	 	 	6	 
	2.5 Termination of Employment
	 	 	6	 
	2.6 Restrictions on Transfer
	 	 	6	 
	 
	III. MISCELLANEOUS
	 	 	6	 
	 
	3.1 Non-Assignability
	 	 	6	 
	3.2 Adjustments
	 	 	6	 
	3.3 Change in Control
	 	 	7	 
	3.4 Termination and Amendment
	 	 	8	 
	3.5 Rights Prior to Issuance of
Shares
	 	 	8	 
	3.6 Securities Laws
	 	 	8	 
	3.7 Delivery of Plan
	 	 	8	 
	3.8 Effect on Employment
	 	 	8	 
	3.9 Certificates
	 	 	9	 
	3.10 Use of Proceeds
	 	 	9	 
	3.11 Approval of Plan
	 	 	9	 
	3.12 Governing Law
	 	 	9	 

i

 

ITC HOLDINGS CORP.

EMPLOYEE STOCK PURCHASE PLAN

I. GENERAL PROVISIONS

     1.1 Establishment. On February 8, 2006, the Board of Directors (“Board”) of ITC
Holdings Corp. (“Corporation”) adopted the ITC Holdings Corp. Employee Stock Purchase Plan
(“Plan”), subject to approval by the shareholders of the Corporation on May 17, 2006. The Board
approved the Amended and Restated Plan on April 6, 2011, subject to approval of shareholders at the
Corporation’s annual meeting of shareholders on May 26, 2011.

     1.2 Purpose. The purpose of the Plan is (i) to promote the best interests of the
Corporation and its shareholders by encouraging Employees of the Corporation and any Subsidiaries
to acquire an ownership interest in the Corporation through the purchase of stock in the
Corporation, thus aligning their interests with those of shareholders, and (ii) to enhance the
ability of the Corporation and its Subsidiaries to attract, motivate and retain qualified
Employees. The Plan is intended to constitute an “employee stock purchase plan” under Section 423
of the Code.

     1.3 Plan Duration. Upon receipt of shareholders approval, the Plan shall commence on
May 17, 2006 and subject to earlier termination by the Board in accordance with Section 3.4, no new
Offers may be made under the Plan after February 7, 2016.

     1.4 Definitions. As used in this Plan, the following terms have the meaning described
below:

          (a) “Board” means the Board of Directors of the Corporation.

          (b) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

          (c) “Change in Control” means the occurrence of any of the following events:

     (i) If any one person, or more than one person acting as a group (as defined in
Code Section 409A and IRS guidance issued thereunder), acquires ownership of Common
Stock of the Corporation that, together with stock held by such person or group,
constitutes more than fifty (50) percent of the total fair market value or total
voting power of the Common Stock of the Corporation. However, if any one person or
more than one person acting as a group, is considered to own more than fifty (50)
percent of the total fair market value or total voting power of the Common Stock of
the Corporation, the acquisition of additional stock by the same person or persons
is not considered to cause a Change in Control, or to cause a change in the
effective control of the Corporation (within the meaning of Code Section 409A and
IRS guidance issued thereunder). An increase in the percentage of Common Stock
owned by any one person, or persons acting as a group, as a result of a transaction
in which the

1

 

Corporation acquires its stock in exchange for property shall be treated as an
acquisition of stock for purposes of this Section. This paragraph applies only when
there is a transfer of stock of the Corporation (or issuance of stock of the
Corporation) and stock in such Corporation remains outstanding after the
transaction.

     (ii) If any one person, or more than one person acting as a group (as
determined in accordance with Code Section 409A and IRS guidance thereunder),
acquires (or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) ownership of Common Stock of the
Corporation possessing thirty-five (35) percent or more of the total voting power of
the Common Stock of the Corporation; or

     (iii) If a majority of members on the Corporation’s Board is replaced during
any 12-month period by Directors whose appointment or election is not endorsed by a
majority of the members of the Corporation’s Board prior to the date of the
appointment or election (provided that for purposes of this paragraph, the term
Corporation refers solely to the “relevant” Corporation, as defined in Code Section
409A and IRS guidance issued thereunder), for which no other Corporation is a
majority shareholder.

     (iv) If there is a change in the ownership of a substantial portion of the
Corporation’s assets, which shall occur on the date that any one person, or more
than one person acting as a group (within the meaning of Code Section 409A and IRS
guidance issued thereunder) acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons) assets
from the Corporation that have a total gross fair market value equal to or more than
forty (40) percent of the total gross fair market value of all of the assets of the
Corporation immediately prior to such acquisition or acquisitions. For this
purpose, gross fair market value means the value of the assets of the Corporation,
or the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets.

          (d) “Committee” means the Compensation Committee of the Board.

          (e) “Common Stock” means shares of the Corporation’s Common Stock, as described in Section
1.5, below.

          (f) “Corporation” means ITC Holdings Corp. and, for purposes of this Plan, employment with the
Corporation shall be deemed to include employment with any Subsidiary of the Corporation.

          (g) “Election Period” means the period of time designated by the Committee when an eligible
Employee may elect to participate in one or more Purchase Periods.

          (h) “Employee” means an individual who has an “employment relationship” with the Corporation
or a Subsidiary, as defined in Treasury Regulation 1.421-7(h), and the term “employment” means
employment with the Corporation or a Subsidiary, as applicable.

2

 

          (i) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time and
any successor rule.

          (j) “Fair Market Value” means the value of Common Stock as determined in accordance with
Section 2.2.

          (k) “Offer” means the Committee’s designation of a Purchase Period available to eligible
Employees and the terms on which an option may be exercised during the applicable Purchase Period.

          (l) “Option Price” means the price, determined by the Committee, at which Common Stock subject
to an option may be purchased during a Purchase Period.

          (m) “Plan” means the ITC Holdings Corp. Employee Stock Purchase Plan, the terms of which are
set forth herein, and any amendments thereto.

          (n) “Purchase Period” means a period established by the Committee during which an eligible
Employee may exercise options granted hereunder.

          (o) “Stock Exchange” means the principal national securities exchange on which the Common
Stock is listed for trading, or, if the Common Stock is not listed for trading on a national
securities exchange, such other recognized trading market or quotation system upon which the
largest number of shares of Common Stock has been traded in the aggregate during the last 20 days
before the first or last day of a Purchase Period, as applicable.

          (p) “Subsidiary” means any subsidiary of the Corporation, as defined in Code Section 424(f).

     1.5 Stock. The stock subject to option and purchase under the Plan shall be the
Common Stock of the Corporation, and may be either authorized and unissued shares or shares that
have been reacquired by the Corporation. The total amount of Common Stock on which options may be
granted under the Plan shall not exceed one hundred eighty thousand shares (180,000) shares,
subject to adjustment in accordance with Section 3.2. Shares of Common Stock subject to any
unexercised portion of a terminated, canceled or expired option granted under the Plan may again be
used for options under the Plan.

     1.6 Administration. The Plan shall be administered by the Committee. The Committee
may prescribe rules and regulations from time to time for the administration of the Plan and may
decide questions which may arise with respect to its interpretation or application. The decisions
of the Committee in interpreting the Plan shall be final, conclusive and binding on all persons,
including the Corporation, its Subsidiaries, Employees, and optionees. The Committee, from time to
time, shall grant to eligible Employees on a uniform basis, options to purchase Common Stock
pursuant to the terms and conditions of the Plan. In the event of insufficient shares during a
Purchase Period, the Committee shall allocate the right to purchase shares to each participant in
the same proportion that such participant’s total current base salary paid by the Corporation for
the Purchase Period bears to the total of such base salaries paid by the Corporation to all
participants during the same period. All excess funds withheld, as a result of insufficient
shares, shall be returned to the participating Employees.

3

 

     1.7 Participants. Except as provided in Section 2.4 below, any Employee who has (a)
completed six (6) full months of service with the Corporation, and (b) whose customary employment
is more than twenty (20) hours per week and five (5) or more months per calendar year at the time
of an Offer, is eligible to participate in such Offer under the Plan, in accordance with the terms
of the Plan. An Employee who meets the eligibility requirements in this Section 1.7 shall be
entitled to participate in the first Offer commencing after the eligibility requirements have been
satisfied.

II. OFFER TERMS

     2.1 Offer and Purchase Period.

          (a) The Committee shall determine the date or dates upon which one or more Offers shall be
made under the Plan. The Purchase Period pursuant to each Offer shall be three (3) months, or such
other term as the Committee shall determine prior to the commencement of an Offer, but which in no
event shall exceed twenty-seven (27) months.

          (b) To participate in an Offer, an eligible Employee must submit such enrollment forms as
shall be prescribed by the Committee (which shall include a payroll deduction authorization form)
at such time and in such manner as shall be prescribed by the Committee. The payroll deductions
authorized by a participant on a payroll deduction authorization form shall be expressed (i) as a
whole number percentage of the participant’s “base compensation” for each pay period during the
Purchase Period, or (ii) as a specified dollar amount to be withheld from a participant’s base
compensation or bonus on one or more designated payroll dates. For purposes of the Plan, a
participant’s “base compensation” for a pay period shall include the participant’s base
compensation but shall exclude commissions, bonuses, overtime, disability pay, severance pay,
moving expenses, expense reimbursements and allowances and other special payments and supplemental
compensation. A participant may not purchase more than two hundred thirty two (232) shares of
Common Stock in any three (3) month Purchase Period (proportionately adjusted upward for Purchase
Periods of more than three (3) months).

     2.2 Option Price.

          (a) The Option Price at which shares of Common Stock may be purchased under the Plan shall be
determined by the Committee at the time of the Offer but in no event shall such amount be less than
the lesser of:

	 	(i)	 	85% of the Fair Market Value of a share of
Common Stock on the date of grant of the option (first day of a
Purchase Period), or
	 
	 	(ii)	 	85% of the Fair Market Value of a share of
Common Stock on the date the option is deemed exercised pursuant to
Section 2.4(d) (last day of a Purchase Period).

          (b) For purposes of this Plan, the Fair Market Value per share shall be deemed to be the
closing price of Common Stock on the Stock Exchange for the first and last days of the Purchase
Period. In the event that there are no Common Stock transactions on either date, the

4

 

Fair Market Value shall be determined as of the immediately preceding date on which there were
Common Stock transactions.

     2.3 Participation.

          (a) An eligible Employee may elect to participate in an Offer by delivering to the Corporation
an election to participate and a payroll deduction form within the Election Period designated by
the Committee prior to the commencement of a Purchase Period. An eligible Employee’s election to
participate and payroll deduction form from the preceding Election Period automatically shall carry
over to the next Election Period unless affirmatively revoked in writing by the Employee. An
Employee who elects to participate may not authorize payroll deductions which, in the aggregate,
are more than ten percent (10%) of the Employee’s pre-tax base salary (not including overtime and
bonus payments). Only whole shares of Common Stock may be purchased under the Plan.

          (b) All Employees granted options under the Plan shall have the same rights and privileges
under the Plan, except that the number of shares each participant may purchase shall depend upon
his or her base compensation and the designated payroll deduction he or she authorizes.

          (c) Payroll deductions shall commence on the first payroll date in the Purchase Period and
shall continue until the last payroll date in the Purchase Period. An Employee may suspend payroll
deductions during a Purchase Period only at the discretion of the Corporation in the event of an
unforeseen hardship; provided, however, that payroll deductions made prior to approval of the
suspension by the Corporation shall still be used to purchase Common Stock for the Employee at the
end of the Purchase Period.

          (d) A participating Employee’s option shall be deemed to have been exercised on the last
business day of the Purchase Period.

          (e) As soon as practicable after the end of the Purchase Period, the Corporation shall deliver
to each Employee, certificates evidencing the shares of Common Stock that an Employee has purchased
(or a book entry representing such shares shall be made and the shares deposited with the
appropriate registered book-entry custodian). Any amount that has been deducted representing a
fractional share shall be applied toward the purchase of option shares in the next Purchase Period.
An Employee who does not elect to participate in the following Purchase Period shall receive a
check from the Corporation for any amount that has been deducted and represents a fractional share.
Any payroll deductions that exceed the limits set forth in Sections 2.1(b) and 2.4 shall be
returned to the participant in the amount of the excess.

          (f) The Corporation retains the right to designate an exclusive broker to handle the Common
Stock transactions under the Plan. As soon as practicable after the end of the Purchase Period,
the Corporation shall deliver to each Employee or a designated brokerage account, through a
certificate or electronic transfer, the shares of Common Stock that such Employee has purchased.
Unless otherwise determined by the Committee, any amount that has been deducted and withheld in
excess of the option price automatically shall be paid by check to

5

 

the participating Employee promptly following the end of the Purchase Period in which
withheld.

          (g) Unless otherwise determined by the Committee, no interest shall accrue or be paid on any
amounts paid by payroll deduction by any participating Employee.

     2.4 Participation Limitations. Notwithstanding any other provision of the Plan, no
Employee shall be eligible to participate in an Offer under the Plan if:

          (a) the Employee, immediately after such grant, would, in the aggregate, own and/or hold
shares of Common Stock (including all shares which may be purchased under outstanding options,
whether or not such options qualify for the special tax treatment afforded by Section 421(a) of the
Code) equal to or exceeding five percent (5%) or more of the total combined voting power or value
of all classes of capital stock of the Corporation or of its Subsidiaries; for purposes of this
limitation, the rules of section 424(d) of the Code and the regulations promulgated thereunder
(relating to attribution of stock ownership) shall apply; or

          (b) such grant would permit, under the rules set forth in Section 423 of the Code and the
regulations promulgated thereunder, the Employee’s right to purchase stock under this Plan and all
other Code Section 423 employee stock purchase plans maintained by the Corporation and its
Subsidiaries to accrue at a rate in excess of $25,000 in Fair Market Value of such stock
(determined at the time such option is granted) for each calendar year in which such option is
outstanding at any time.

     2.5 Termination of Employment. If a participating Employee ceases to be employed by
the Corporation or a Subsidiary for any reason, including but not limited to, voluntary or forced
resignation, retirement, death, disability or lay-off, the Corporation, within a reasonable time
after notice of the termination, shall issue a check to the former Employee (or executor,
administrator or legal representative, if applicable) in the aggregate amount of the Employee’s
payroll deductions that had not been applied towards the purchase of option shares as of the date
of termination.

     2.6 Restrictions on Transfer. Unless otherwise permitted by the Committee, no shares
of Common Stock purchased under the Plan shall be sold, exchanged, transferred, pledged, assigned
or otherwise disposed of for six (6) months following the close of the Purchase Period in which
acquired.

III. MISCELLANEOUS

     3.1 Non-Assignability. No option shall be transferable by a participating Employee,
and an option may be exercised during a participating Employee’s lifetime only by the Employee.
Upon the death of a participating Employee, his or her executor, administrator or other legal
representative shall receive a check from the Corporation representing the aggregate amount of the
deceased Employee’s payroll deductions that had not been applied towards the purchase of option
shares as of the date of death.

     3.2 Adjustments. In the event of a merger, reorganization, consolidation,
recapitalization, dividend or distribution (whether in cash, shares or other property), stock
split,

6

 

reverse stock split, spin-off or similar transaction or other change in corporate structure
affecting the Common Stock or the value thereof, such adjustments and other substitutions shall be
made to the Plan and Options as the Committee, in its sole discretion, deems equitable or
appropriate, including adjustments in the aggregate number, class and kind of securities that may
be delivered under the Plan and; in the aggregate or to any one Participant, in the number, class,
kind and option price of securities subject to outstanding options under the Plan (including, if
the Committee deems appropriate, the substitution of similar options to purchase the shares of
another company, as the Committee may determine to be appropriate in its sole discretion). Any of
the foregoing adjustments may provide for the elimination of any fractional share which might
otherwise become subject to any option.

     3.3 Change in Control.

          (a) After any merger of one or more corporations into the Corporation in which the Corporation
shall be the surviving corporation or any share exchange in which the Corporation is a constituent
corporation, each participant shall, at no additional cost, be entitled upon the exercise of an
option, to receive (subject to any required action by shareholders), in lieu of the number of
shares of Common Stock for which such option shall then be exercisable, the consideration which
such participant would have been entitled to receive pursuant to the terms of the agreement of
merger or share exchange if at the time of such merger or share exchange such participant had been
a holder of record of a number of shares of Common Stock equal to the number of shares then
underlying the option.

          (b) In addition, in the event of a Change in Control, the Committee shall have the right to
terminate the Purchase Period as of such date, and, if so terminated, each participant shall be
deemed to have exercised, immediately prior to such merger, share exchange, acquisition or sale of
assets, his or her option to the extent payroll deductions were made prior thereto. Comparable
rights shall accrue to each participant in the event of successive Changes in Control.

          (c) Notwithstanding anything contained herein to the contrary, upon the dissolution or
liquidation of the Corporation or upon any merger or share exchange in which the Corporation is not
the surviving corporation (other than a merger with a wholly-owned subsidiary of the Corporation
formed for the purpose of changing the Corporation’s corporate domicile where the Plan is assumed
by the survivor), the Purchase Period for any option granted under this Plan shall terminate as of
the date of the aforementioned event, and each participant shall be deemed to have exercised,
immediately prior to such dissolution, liquidation, merger or share exchange, his or her option to
the extent payroll deductions were made prior thereto.

          (d) The foregoing adjustments and the manner of application of the foregoing provisions shall
be determined by the Committee in its sole discretion. Any such adjustment may provide for the
elimination of any fractional share which might otherwise become subject to an option.

7

 

     3.4 Termination and Amendment.

          (a) The Board may terminate the Plan, or the granting of options under the Plan, at any time.
No option shall be granted under the Plan after the tenth (10th) anniversary of the
adoption of the Plan by the Board.

          (b) The Board may amend or modify the Plan at any time and from time to time, but no amendment
or modification shall disqualify the Plan under Section 423 of the Code or Rule 16b-3 under the
Exchange Act without the approval of the shareholders of the Corporation.

          (c) No amendment, modification, or termination of the Plan shall adversely affect any option
granted under the Plan without the consent of the Employee holding the option.

     3.5 Rights Prior to Issuance of Shares. No participating Employee shall have any
rights as a shareholder with respect to shares covered by an option until the issuance of a stock
certificate or electronic transfer to the Employee (or book entry representing such shares has been
made and such shares have been deposited with the appropriate registered book-entry custodian). No
adjustment shall be made for dividends or other rights with respect to such shares for which the
record date is prior to the date when the certificate is issued or the shares electronically
delivered to the Employee’s brokerage account.

     3.6 Securities Laws.

     3.7 (a) Anything to the contrary herein notwithstanding, the Corporation’s obligation to sell
and deliver Common Stock pursuant to the exercise of an option is subject to such compliance with
federal and state laws, rules and regulations applying to the authorization, issuance or sale of
securities as the Corporation deems necessary or advisable. The Corporation shall not be required
to sell and deliver or issue Common Stock unless and until it receives satisfactory assurance that
the issuance or transfer of such shares shall not violate any of the provisions of the Securities
Act of 1933 or the Exchange Act, or the rules and regulations of the Securities Exchange Commission
promulgated thereunder or those of any stock exchange on which the stock may be listed and the
provisions of any state laws governing the sale of securities, or that there has been compliance
with the provisions of such acts, rules, regulations and laws.

          (b) The Board may impose such restrictions on any shares of Common Stock acquired pursuant to
the exercise of an option under the Plan as it may deem advisable, including, without limitation,
restrictions (i) under applicable federal securities laws, (ii) under the requirements of a Stock
Exchange or other recognized trading market upon which such shares of Common Stock are then listed
or traded, and (iii) under any blue sky or state securities laws applicable to such shares. No
shares shall be issued until counsel for the Corporation has determined that the Corporation has
complied with all requirements under appropriate securities laws.

     3.8 Delivery of Plan. Each Employee who is a participant in the Plan shall have
delivered to him or her a copy of the Plan.

8

 

     3.9 Effect on Employment. Neither the adoption of the Plan nor the granting of an
option pursuant to it shall be deemed to create any right in any individual to be retained or
continued in the employment of the Corporation.

     3.10 Certificates. If certificates are issued, the Corporation shall have the right
to retain such certificates representing shares of Common Stock issued pursuant to the Plan until
such time as all conditions and/or restrictions applicable to such shares of Common Stock have been
satisfied.

     3.11 Use of Proceeds. The proceeds received from the sale of Common Stock pursuant to
the Plan shall be used for general corporate purposes of the Corporation.

     3.12 Approval of Plan. The Plan shall be subject to the approval of the holders of at
least a majority of the Common Stock of the Company present and entitled to vote at a meeting of
shareholders of the Company held within twelve (12) months after adoption of the Plan by the Board.
If not approved by shareholders within such 12-month period, the Plan and any options granted
hereunder shall become void and of no effect.

     3.13 Governing Law. This Plan shall be governed by and construed under the laws of
the State of Michigan without regard to its conflict of law provisions.

     This ITC Holdings Corp. Employee Stock Purchase Plan, as amended and restated, has been
executed on behalf of the Corporation on this the 26th day of May, 2011.

	 	 	 	 	 
	 	ITC HOLDINGS CORP.

 	 
	 	By:  	/s/ Linda H. Blair
 	 
	 	 	Its: Executive Vice President 	 
	 	 	and Chief Business Officer 	 
	 

9exv10w1

Exhibit 10.1

 

Federal Home Loan Bank of Dallas

Form of Special Non-Qualified Deferred Compensation Plan

 

(Amended and Restated Effective: December 31, 2010)

 

 

FEDERAL HOME LOAN BANK OF DALLAS

SPECIAL NON-QUALIFIED DEFERRED COMPENSATION PLAN

Table Of Contents

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I NAME AND PURPOSE OF PLAN
	 	 	1	 
	 
	 	 	 	 
	1.1 Name of Plan
	 	 	1	 
	1.2 Purpose
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	2.1 Account
	 	 	1	 
	2.2 Base Salary
	 	 	1	 
	2.3 Bank
	 	 	1	 
	2.4 Beneficiary
	 	 	1	 
	2.5 Benefit
	 	 	1	 
	2.6 Board
	 	 	1	 
	2.7 Code
	 	 	2	 
	2.8 Contributions
	 	 	2	 
	2.9 Disabled or Disability
	 	 	2	 
	2.10 Effective Date
	 	 	2	 
	2.11 Employee
	 	 	2	 
	2.12 Group One Participants
	 	 	2	 
	2.13 Group Two Participants
	 	 	2	 
	2.14 Group Three Participants
	 	 	2	 
	2.15 Group Four Participants
	 	 	2	 
	2.16 Investment Performance
	 	 	2	 
	2.17 Normal Retirement Age
	 	 	2	 
	2.18 Participant
	 	 	2	 
	2.19 Plan
	 	 	2	 
	2.20 Plan Year
	 	 	2	 
	2.21 Rule of 70
	 	 	3	 
	2.22 Separation from Service
	 	 	3	 
	2.23 Thrift Plan
	 	 	3	 
	2.24 Trustees, Trust, Trust Agreement, Trust Assets and Trust Fund
	 	 	3	 
	2.25 Years of Credited Service
	 	 	3	 
	 
	 	 	 	 
	ARTICLE III ELIGIBILITY FOR PARTICIPATION
	 	 	3	 
	 
	 	 	 	 
	3.1 Participation
	 	 	3	 
	3.2 Cessation of Participation
	 	 	4	 
	 
	 	 	 	 
	ARTICLE IV CONTRIBUTIONS
	 	 	4	 
	 
	 	 	 	 
	4.1 Contributions by the Bank
	 	 	4	 
	4.2 Recordkeeping
	 	 	4	 
	4.3 Limitations
	 	 	4	 

- i - 

 

	 	 	 	 	 
	 	 	Page	 
	ARTICLE V INVESTMENT FUNDS
	 	 	4	 
	 
	 	 	 	 
	5.1 Investment Funds
	 	 	4	 
	5.2 Allocation of Investment Performance
	 	 	5	 
	 
	 	 	 	 
	ARTICLE VI VESTING
	 	 	5	 
	 
	 	 	 	 
	6.1 Separation From Service — Vesting of Account
	 	 	5	 
	6.2 Vesting
	 	 	5	 
	6.3 Forfeitures
	 	 	5	 
	6.4 No Forfeitures for Cause
	 	 	6	 
	 
	 	 	 	 
	ARTICLE VII PAYMENT
	 	 	6	 
	 
	 	 	 	 
	7.1 Payment Upon Separation from Service or Disability
	 	 	6	 
	7.2 Payment Upon Death
	 	 	6	 
	7.3 Beneficiary Designations
	 	 	6	 
	 
	 	 	 	 
	ARTICLE VIII ADMINISTRATION
	 	 	7	 
	 
	 	 	 	 
	8.1 Plan Administrator
	 	 	7	 
	8.2 Authority of the Bank
	 	 	7	 
	8.3 Action of the Bank
	 	 	7	 
	8.4 Claims Procedure
	 	 	8	 
	 
	 	 	 	 
	ARTICLE IX GENERAL PROVISIONS AND LIMITATIONS REGARDING BENEFITS
	 	 	8	 
	 
	 	 	 	 
	9.1 Non-Alienation of Retirement Rights or Benefits
	 	 	8	 
	9.2 Amendment and Termination
	 	 	8	 
	9.3 Funding
	 	 	9	 
	9.4 Plan Non-Contractual
	 	 	9	 
	9.5 Claims of Other Persons
	 	 	9	 
	9.6 Finality of Determination
	 	 	9	 
	9.7 Merger, Consolidation, or Transfers of Plan Assets
	 	 	9	 
	9.8 Tax Consequences Not Guaranteed
	 	 	10	 
	9.9 Tax Withholding
	 	 	10	 
	9.10 Governing Law
	 	 	10	 
	9.11 Construction
	 	 	10	 
	9.12 Severability
	 	 	10	 

- ii - 

 

FEDERAL HOME LOAN BANK OF DALLAS

SPECIAL NON-QUALIFIED DEFERRED COMPENSATION PLAN

     The Board of Directors of the Federal Home Loan Bank of Dallas adopted the retirement plan
entitled the “FEDERAL HOME LOAN BANK OF DALLAS SPECIAL NON-QUALIFIED DEFERRED COMPENSATION PLAN”
effective January 1, 2003. As a result of the enactment of Code Section 409A and other proposed
changes, the Board has amended and restated the Plan effective January 1, 2009. The Board has
determined that it is in the best interest of the Bank to add an additional category of
participants effective January 1, 2011. As a result, this Plan is amended and restated effective
December 31, 2010 to reflect this additional group of participants.

ARTICLE I

NAME AND PURPOSE OF PLAN

     1.1 Name of Plan. This Plan shall be hereafter known as the FEDERAL HOME LOAN BANK OF
DALLAS SPECIAL NON-QUALIFIED DEFERRED COMPENSATION PLAN.

     1.2 Purpose. The purpose of the Plan is to provide supplemental retirement benefits for
the Participants in accordance with the terms of the Plan.

ARTICLE II

DEFINITIONS

     The words and phrases defined in this Article have the following meanings throughout this plan
document:

     2.1 Account. “Account” means the separate account established for each Participant. The
balance of the Account reflects all Contributions described in Article IV, expense charges, and
Investment Performance allocated to the Account in the manner described in Article V.

     2.2 Base Salary. “Base Salary” means the Participant’s annualized gross rate of salary
paid before any deductions of any kind whatsoever excluding overtime, bonuses, commissions and
other extraordinary compensation.

     2.3 Bank. “Bank” means the Federal Home Loan Bank of Dallas, an instrumentality of the
United States government.

     2.4 Beneficiary. “Beneficiary” means the individual, trustee, or estate designated by the
Participant to receive the Participant’s Benefit in the event of his death.

     2.5 Benefit. “Benefit” means the balance in the Participant’s Account.

     2.6 Board. “Board” means The Board of Directors for the Federal Home Loan Bank of Dallas.

 

 

     2.7 Code. “Code” means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code includes not only the section but any comparable section or sections
of any future legislation that amends, supplements, or supersedes the section.

     2.8 Contributions. “Contributions” mean contributions by the Bank under this Plan to
Participant Accounts, as provided by Article IV.

     2.9 Disabled or Disability. “Disabled or Disability” shall mean the Participant is unable
to engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or last for a continuous period of not
less than 12 months. The Committee shall determine whether the Participant meets this criteria in
accordance with Section 409A of the Code. Provided, a Participant will be deemed to be Disabled if
the Participant becomes eligible to receive disability benefits under the long-term disability
benefit plan sponsored by the Bank.

     2.10 Effective Date. “Effective Date” means December 31, 2010 which is the Effective Date
of the amended and restated Plan.

     2.11 Employee. “Employee” means any employee of the Bank who is performing services for
the Bank and is receiving compensation for such services.

     2.12 Group One Participants. “Group One Participants” means Employees who are so
designated by the Board.

     2.13 Group Two Participants. “Group Two Participants” means Employees who are so designated by the Board.

     2.14 Group Three Participants. “Group Three Participants” means Employees who are so
designated by the Board.

     2.15 Group Four Participants. “Group Four Participants” means Employees who are so
designated by the Board.

     2.16 Investment Performance. “Investment Performance” means the earnings or losses
attributable to the contributions as more specifically described in Article V.

     2.17 Normal Retirement Age. “Normal Retirement Age” shall mean the sixty-second
(62nd) birthday of the Participant and it is the earliest age at which benefit payments
can commence unless preceded by the Participant’s Disability or Death.

     2.18 Participant. “Participant” shall mean those employees of the Bank eligible to
participate in the Plan who are selected by the Board to participate in the Plan.

     2.19 Plan. “Plan” means the Federal Home Loan Bank of Dallas Special Non-Qualified
Deferred Compensation Plan.

     2.20 Plan Year. “Plan Year” means the 12-consecutive-month period beginning on January 1
and ending on December 31 of each calendar year.

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     2.21 Rule of 70. “Rule of 70” means the date on which the sum of the Participant’s age and
years of Bank service is at least 70.

     2.22 Separation from Service. An Employee incurs a “Separation from Service” upon
termination of employment with the Bank. Whether a Separation from Service has occurred shall be
determined by the Board in accordance with Code Section 409A.

     Except in the case of an Employee on a bona fide leave of absence as provided below, an
Employee is deemed to have incurred a Separation from Service if the Bank and the Employee
reasonably anticipated that the level of services to be performed by the Employee after a
certain date would be reduced to 20% or less of the average services rendered by the Employee
during the immediately preceding 36-month period (or the total period of employment, if less than
36 months), disregarding periods during which the Employee was on a bona fide leave of absence.

     An Employee who is absent from work due to military leave, sick leave, or other bona fide
leave of absence shall incur a Separation from Service on the first day immediately following the
later of (i) the six-month anniversary of the commencement of the leave or (ii) the expiration of
the Employee’s right, if any, to reemployment under Bank policy, contract or state/federal statute.

     2.23 Thrift Plan. The words “Thrift Plan” means the Pentegra Defined Contribution Plan for
Financial Institutions as adopted by the Federal Home Loan Bank of Dallas

     2.24 Trustees, Trust, Trust Agreement, Trust Assets and Trust Fund. “Trustees” shall mean
the Trustees, or their successors, named in that certain trust agreement (the “Trust Agreement”),
dated as of the same date as this Plan, which governs the “Trust” styled: “Federal Home Loan Bank
of Dallas Non-Qualified Deferred Compensation Trust,” being the trust which, in conjunction with
this Plan, shall hold and invest Contributions made by the Bank under the Plan. The words “Trust
Assets” and “Trust Fund” shall mean the assets held in the Trust. The Trust shall be a “grantor
trust” as defined in Section 671 of the Code.

     2.25 Years of Credited Service. “Years of Credited Service” shall have the same definition
and shall be calculated in the same manner as provided in the Thrift Plan.

ARTICLE III

ELIGIBILITY FOR PARTICIPATION

     3.1 Participation. The Group One Participants identified on Exhibit “A” attached hereto
were eligible to participate in the Plan effective January 1, 2003 if they were employed by the
Bank on June 30, 2003. Group Two Participants identified on Exhibit “B” attached hereto were
eligible to participate in the Plan for the Plan Year ending December 31, 2003 provided they were
(i) employed by the Bank on June 30, 2003, and (ii) were not eligible to receive a matching
contribution by the Bank pursuant to the terms of the Thrift Plan as of December 31, 2002. Group
Three Participants identified on Exhibit “C” attached hereto were eligible to participate in the
Plan effective November 1, 2004. Group Four Participants identified on Exhibit “D” attached hereto
are eligible to participate in the Plan effective January 1, 2011. No

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other Employee shall ever
become eligible to participate in this Plan unless the Board specifically selects such Employee for
participation in the Plan.

     3.2 Cessation of Participation. Participants shall not be eligible to participate in the
Plan if they are no longer employed by the Bank. Also, in the event a Participant’s Account is
reduced to zero due to forfeiture of the Participant’s unvested Account balance under Section 6.3,
the Participant will no longer be eligible to participate in the Plan.

ARTICLE IV

CONTRIBUTIONS

     4.1 Contributions by the Bank. The Contributions to a Participant’s Account shall be made
solely by the Bank and Contributions by Participants are not permitted. Contributions to a
Participant’s Account will only be made in the sole discretion of the Board. Participants will be
notified by the Bank of the amount of Contributions made in subsequent Plan Years.

     4.2 Recordkeeping. Records for each Participant under this Plan are maintained on the
basis of the January 1 through December 31 Plan Year. At least once a Plan Year, the Bank will
send the Participant a report summarizing the status of his Account. Similar reports or
illustrations may be obtained by the Participant upon Separation from Service or at any other time
by writing directly to the Bank’s Director of Human Resources.

     4.3 Limitations. Notwithstanding anything to the contrary contained in this Plan, the
obligation of the Bank to make Contributions is subject to the provisions relating to the amendment
and termination of the Plan; provided that no amendment or termination will affect any obligation
of the Bank to make Contributions with respect to any Plan Years before the date of such amendment
or termination.

ARTICLE V

INVESTMENT FUNDS

     5.1 Investment Funds. Amounts contributed to the Trust representing Contributions to Group
One Participant Accounts will be invested at the discretion of the Trustee during the period of
Participant’s employment until Separation from Service. Following Separation from Service, Group
One Participant Accounts will either be disbursed in a lump sum payment, or if installment payments
are elected, be deposited into the Deferred Compensation Plan and invested based upon the
investment election filed by the Group One Participant. During this period, Group One Participants
will be permitted to select among the same investment alternatives offered under the Deferred
Compensation Plan of the Federal Home Loan Bank of Dallas. Amounts contributed to the Trust
representing Contributions to Group Two Participant Accounts will be invested at the discretion of
the Trustee. Amounts contributed to the Trust representing Contributions to Group
Three Participant Accounts will be invested based upon the investment election filed by the Group
Three Participant. Group Three Participants will be permitted to select
among the same investment alternatives offered under the Deferred
Compensation Plan of the Federal Home Loan Bank of Dallas. Amounts contributed to the Trust
representing Contributions to Group Four Participant Accounts will be invested based upon the
election filed by the Group Four Participant. Group Four Participants will be permitted to select

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among the same investment alternatives offered under the Deferred Compensation Plan of the
Federal Home Loan Bank of Dallas.

     5.2 Allocation of Investment Performance. At the end of each calendar quarter, the Investment
Performance of Trust Assets attributable to Group One Participants who are currently employed with
the Bank and Group Two Participant Accounts will be allocated to the Accounts of Participants as
determined by the Trustee each Plan Year based upon the ratio as of the first day of such calendar
quarter that each Participant’s Account balance bears to the total of the Account balances of all
Group One and Group Two Participants held by the Trust that are under the Trustees’ investment
discretion. The Investment Performance of the Trust Assets attributable to the Group Three
Participant Accounts, the Group Four Participant Accounts and the terminated Group One Participant
Accounts will be determined based upon the actual performance of the investment alternatives
selected by the Participant.

ARTICLE VI

VESTING

     6.1 Separation from Service — Vesting of Account. Unless sooner vested, a Participant will
have a 100% vested and nonforfeitable interest in the balance of his Account upon attaining the
Rule of 70 or Separating from Service due to Disability or death.

     6.2 Vesting.

          (a) Earlier Vesting for Group Two Participants. Group Two Participants shall vest and
have nonforfeitable rights in the balance of their Account in accordance with the percentages set
forth in the following table:

	 	 	 
	Years of Credited	 	Amount of
	Service Completed	 	Vested Account
	0
	 	0%
	1
	 	100%

          (b) Group Three Participants. Group Three Participants shall vest and have
nonforfeitable rights in the balance of their Account upon the date specified by the Board.

          (c) Group Four Participants. Group Four Participants shall vest in 100% of their
Account on January 1, 2016 provided they remain continuously employed with the Bank through such
date.

     6.3 Forfeitures. In the event that a Participant terminates employment at any point in time, other than
termination due to death or Disability and if the Participant is less than 100% vested in his
Account, then, the Participant shall forfeit the unvested portion of such Account, if any, and such
unvested portion may be applied to reduce the Bank’s contribution to the Plan. The Board
may elect to reduce or eliminate all or any portion of a Participant’s unvested

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Account balance.
Forfeitures may be applied to reduce the Bank’s future contributions to the Plan.

     6.4 No Forfeitures for Cause. The vested and nonforfeitable Benefit represented by the balance
of a Participant’s Account shall not be forfeited for any reason.

ARTICLE VII

PAYMENT

     7.1
Payment Upon Separation from Service or Disability. For Group
One Participants, the Participant’s vested
Account balance will be paid upon the earlier to occur of Separation from Service and the
attainment of Normal Retirement Age (62), Disability or death. For
Group Two Participants, Group Three Participants, and Group Four
Participants,
the Participant’s vested Account balance will be paid upon the earlier to occur of Separation from
Service, Disability or death. In the event payment is triggered by Separation from Service (and,
in the case of Group One Participants, the Participant’s attainment of Normal Retirement Age) or Disability, the
Participant’s Account will be paid in either a lump sum or installments. New Participants must
file an election as to the method of payment within 30 days of the date that the Board selects them for
participation in the Plan.

          (a) Installment Payments. The Participant is eligible to elect annual installment
payments payable within 30-days of January 1st each year and for a period of 2 to 20
years. The first installment shall commence within 30-days of January 1st of the
calendar year following the Participant’s Separation from Service or date of Disability with each
subsequent annual installment paid within 30-days of the first day of January of each subsequent
calendar year until all installment payments have been paid.

          (b) Lump Sum Payment. If a Participant (i) fails to make an election as to the method
of payment or (ii) elects to receive payment in the form of a single lump sum payment, payment will
be made in the form of a lump sum within 30 days following the last day of the month of the
Participant’s date of Separation from Service or Disability.

          (c) Changes in Method of Payment. The method of payment of a Participant’s Benefit
may be changed by the Participant, but in no event will such change be considered valid if the
change occurs within the twelve-month period prior to the date payment would have otherwise
commenced with the Bank. Any requests to change the method of payment will not take effect for
twelve months following the date it is received by the Board and the first payment with respect to
such election is deferred for a period of five years from the date such payment would otherwise
have been made.

     7.2 Payment Upon Death. If a Participant dies with a balance credited to the Participant’s Account the then current
vested balance of the Participant’s Account shall be paid to the Participant’s Beneficiary in a
lump sum within 90 days of the Participant’s death.

     7.3 Beneficiary Designations. A Participant shall designate on a Beneficiary designation form
provided by the Bank a Beneficiary who, upon the Participant’s death, will receive payments that
otherwise would have been paid to the Participant under the Plan. All Beneficiary designations
must be in writing. Beneficiary designations will be effective only if and when delivered to the
Bank during the lifetime of the Participant. A Participant may change

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a Beneficiary or
Beneficiaries by filing a new Beneficiary designation form. The latest Beneficiary designation
form shall apply to the Accounts of the Participant. If a Beneficiary of a Participant predeceases
the Participant, the designation of such Beneficiary shall be void. If a Beneficiary to whom
benefits under the Plan remain unpaid dies after the Participant and the Participant failed to
specify a contingent Beneficiary on the appropriate Beneficiary designation form, the balance of
the Participant’s Account will be paid to such Beneficiary’s estate. If a Participant fails to
designate a Beneficiary or if such designation is ineffective, in whole or in part, any payment
that otherwise would have been paid to such Participant shall be paid to the Participant’s estate.

ARTICLE VIII

ADMINISTRATION

     8.1 Plan Administrator. Federal Home Loan Bank of Dallas, 8500 Freeport Parkway South, Suite
100, Irving, Texas 75063-2547, is the Administrator of this Plan, to be responsible for performing
duties required for the operation of the Plan.

     8.2 Authority of the Bank. The Bank has all the powers and authority expressly conferred upon
it herein and further shall have discretionary and final authority to manage and control the assets
of the Plan, to determine all questions concerning eligibility and Contributions under the Plan, to
interpret and construe all terms of the Plan, including any uncertain terms in its sole discretion,
and to determine any disputes arising under and all questions concerning administration of the
Plan. Any determination made by the Bank shall be given deference, in the event it is subject to
judicial review, and shall be overturned only if it is arbitrary or capricious. In exercising
these powers and authority, the Bank will at all times exercise good faith, apply standards of
uniform application, and refrain from arbitrary action. The Bank may employ attorneys, agents, and
accountants as it finds necessary or advisable to assist it in carrying out its duties. The Bank,
by action of its Board, may designate a person or persons other than the Bank to carry out any of
its powers, authority, or responsibilities. Any delegation will be set forth in writing.

     8.3 Action of the Bank. Any act authorized, permitted, or required to be taken by the Bank
under the Plan, which has not been delegated in accordance with Section 8.2, may be taken by a
majority of the members
of the Board, either by vote at a meeting, or in writing without a meeting. All notices, advice,
directions, certifications, approvals, and instructions required or authorized to be given by the
Bank under the Plan will be in writing and signed by either (i) a majority of the members of the
Board, or by any member or members as may be designated by an instrument in writing, signed by all
members, as having authority to execute the documents on its behalf, or (ii) as delegated to an
Officer of the Bank or a person who becomes authorized to act for the Bank in accordance with the
provisions of Section 8.2. Any action taken by the Bank which is authorized, permitted, or
required under the Plan and is in accordance with the Bank’s
contractual obligations is final and
binding upon the Bank, and all persons who have or who claim an interest under the Plan, and all
third parties dealing with the Bank.

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     8.4 Claims Procedure.

          (a) The Bank shall make all determinations as to the right of any person to Benefits or
eligibility to participate in the Plan. If any request for Benefits is wholly or partially denied,
the Bank shall notify the person requesting such Benefits, in writing, of such denial, including in
such notification the following information:

               (i) the specific reason or reasons for such denial;

               (ii) the specific references to the pertinent Plan provisions upon which the denial is based;

               (iii) a description of any additional material and information which may be needed to clarify
the request, including an explanation of why such information is required; and

               (iv) an explanation of this Plan’s review procedure with respect to denial of such Benefits.

Any such notice to be delivered to any Participant or Beneficiary shall be personally delivered
within a reasonable time to such Participant by obtaining a signed receipt therefore or shall be
mailed by certified or registered mail with return receipt requested to such Participant or
Beneficiary. Such notice shall be written to the best of the Bank’s ability in a manner that may
be understood without legal counsel.

          (b) Any Participant or Beneficiary whose claim has been denied in accordance with the
foregoing Subsection (a) herein may appeal to the Bank for review of such denial by making a
written request therefore within 60 days of receipt of the notification of such denial. Such
Participant or Beneficiary may examine documents pertinent to the review and may submit to the Bank
written issues and comments. Within 60 days (45 days in the case of a claim involving a disability
determination) after receipt of the request for review, the Bank shall communicate to the claimant,
in writing, its decision, and the communication shall set forth the reason or reasons for the
decision and specific reference to those Plan provisions upon which the decision is based.

ARTICLE IX

GENERAL PROVISIONS AND LIMITATIONS REGARDING BENEFITS

     9.1 Non-Alienation of Retirement Rights or Benefits. No right or benefit under this Plan shall
be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any
attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge the same shall be void.
No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts,
liabilities, or torts of the person entitled to such benefit. If any Participant or the
Participant’s Beneficiary under this Plan should become bankrupt or attempt to anticipate,
alienate, sell, assign, pledge, encumber, or charge any right to a benefit hereunder, then, such
right or benefit shall cease and terminate.

     9.2 Amendment and Termination. Subject to the last sentence of this Section 9.2, the Bank
reserves the right at any time to amend, otherwise modify, or terminate the Plan, or to discontinue
any further Contributions to Participants’ Accounts or payments under the Plan, by

- 8 -

 

resolution of
its Board. In the event of a termination of the Plan or complete discontinuance of Contributions,
the Bank will notify the Participants of the termination. No amendment, modification or
termination may reduce the then vested Account balance of any Participant or the obligation of the
Bank and Plan to make payments of such vested Participant’s Account in accordance with the
provisions of the Plan in effect immediately prior to such amendment, modification or termination
and as allowed under the Code. Provided further, no amendment or proposed termination will be
effective to the extent it provides for the payment of Benefits under this Plan in violation of
Code Section 409A. The Bank may, at its sole discretion, amend or modify the Plan to bring it in
compliance with the Code.

     9.3 Funding. The Benefits described in this Plan are obligations of the Bank to pay
compensation for services, and shall constitute a liability to the Participants and/or their
Beneficiaries in accordance with the terms hereof. All amounts paid under this Plan shall be paid
in cash from the general assets of the Bank and shall be subject to the general creditors of the
Bank. Benefits shall be reflected on the accounting records of the Bank but shall not be construed
to create, or require the creation of, a trust, custodial or escrow account. No Participant shall
have any right, title or interest whatever in or to any investment reserves, accounts, funds or
assets that the Bank may purchase, establish or accumulate to aid in providing the benefits
described in this Plan. Nothing contained in this Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust or a fiduciary relationship of any kind
between the Bank and a Participant or any other person; provided, however, the Bank may establish
and/or continue the Trust. Neither a Participant nor the Beneficiary of a Participant shall
acquire any interest hereunder greater than that of an unsecured creditor of the Bank.

     9.4 Plan Non-Contractual. Nothing contained in this Plan will be construed as a commitment or
agreement on the part of any person to continue his or her employment with the Bank, and nothing
contained in this Plan will be construed as a commitment on the part of the Bank to continue the employment or the rate of
compensation of any person for any period, and all employees of the Bank will remain subject to
discharge to the same extent as if the Plan had never been put into effect.

     9.5 Claims of Other Persons. The provisions of the Plan will in no event be construed as
giving the Participant or any other person, firm, or corporation, any legal or equitable right
against the Bank, its officers, employees, or directors, except the rights that are specifically
provided for in this Plan or created in accordance with the terms and provisions of this Plan.

     9.6 Finality of Determination. All determinations with respect to the crediting of Years of
Credited Service under the Plan are made on the basis of the records of the Bank, and all
determinations made are final and conclusive upon employees, former employees, and all other
persons claiming a benefit interest under the Plan. There will be no duplication of Years of
Credited Service credited to an employee for any one period of his employment.

     9.7 Merger, Consolidation, or Transfers of Plan Assets. The Plan will not be merged or
consolidated with any other Plan, nor will any of its assets or liabilities be transferred to
another Plan, unless, immediately after a merger, consolidation, or transfer of assets or
liabilities, each Participant would receive a benefit under the Plan which is at least equal to the
benefit he or

- 9 -

 

she would have received immediately prior to a merger, consolidation, or transfer of
assets or liabilities (assuming in each instance that the Plan had then terminated).

     9.8 Tax Consequences Not Guaranteed. The Bank does not warrant that this Plan will have any
particular tax consequences for Participants or Beneficiaries and shall not be liable to them if
tax consequences they anticipate do not actually occur. The Bank shall have no obligation to
indemnify a Participant or Beneficiary for lost tax benefits (or other damage or loss) in the event
the Plan is amended or terminated as permitted under Section 9.2, payment of Benefits are
accelerated, or because of change in Plan design or funding; e.g., establishment of a “secular
trust.”

     9.9 Tax Withholding. The Bank will withhold from a payment or accrued benefit or from the
Participant’s other compensation any federal, state, or local taxes required by law to be withheld
with respect to such payment or accrued benefit and such sums as the Bank may reasonably estimate
as necessary to cover any taxes for which the Bank may be liable and which may be assessed with
regard to Plan Contributions or payments under this Plan.

     9.10 Governing Law. Except as provided under federal law, the provisions of the Plan are governed by and construed
in accordance with the laws of the State of Texas.

     9.11 Construction. Except when otherwise indicated by the context, any masculine terminology
when used in the Plan shall also include the feminine gender, and the definition of any term in the
singular shall also include the plural.

     9.12 Severability. If any provision of the Plan is held invalid or illegal for any reason, any
illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall
be construed and enforced as if the illegal or invalid provision had never been contained therein.
The Bank shall have the privilege and opportunity to correct and remedy such questions of
illegality or invalidity by amendment.

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     IN WITNESS WHEREOF, this amended and restated Plan has been executed on behalf of Federal Home
Loan Bank of Dallas this 29th day of December, 2010 to be effective December 31,
2010.

	 	 	 	 	 
	 	THE FEDERAL HOME LOAN BANK OF DALLAS

 	 
	 	By:  	/s/ Timothy J. Heup
 	 
	 	 	Timothy J. Heup, Senior Vice President 	 
	 	 	 	 

	 	 	 	 
	ATTEST:

 	 
	/s/ Brehan Chapman
 	 
	Brehan Chapman, Vice President and Corporate Secretary 	 

- 11 -

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