Document:

EX-10.1

Exhibit 10.1

April 20, 2006

J. Michael Hamilton

2020 Walnut Street, Apt. 17L

Philadelphia, PA 19103

Dear Mike:

On behalf of Avalon Pharmaceuticals, Inc., I am pleased to offer you the position of Chief Medical
Officer. The terms of your employment are as follows:

	 	 	 
	Job Title:

	 	Chief Medical Officer
	 
	 	 
	Reporting to:

	 	Kenneth C. Carter, President & CEO
	 
	 	 
	Starting date:

	 	August 1, 2006
	 
	 	 
	Initial Starting Salary:

	 	$280,000 per annum, subject to

adjustment from time to time in the

Company’s discretion
	 
	 	 
	Sign-on bonus

	 	$15,000, less applicable taxes, which

will be paid at the first pay period

after your employment has begun.
	 
	 	 
	Classification:

	 	Exempt
	 
	 	 
	Equity:

	 	Subject to the approval of the

Compensation Committee of the Company’s

Board of Directors, the Company will

grant you options for 60,000 shares of

Avalon Pharmaceuticals, Inc. Common

Stock on August 1, 2006 under the

Company’s Stock Option Plan. These

options will vest over a five (5) year

period. The options will be available to

you retroactively only upon the

successful completion of the 90-day

Introductory Period. The terms and

conditions for any options will be those

in the Company’s Plan, or as set by the

Board.
	 
	 	 
	Bonus Plan:

	 	Eligibility and distribution of an

annual bonus is based on the achievement

of corporate and individual objectives

in accordance with the approved Avalon

Pharmaceuticals Compensation Plan. You

will be eligible for a bonus up to 35%

of your base pay depending upon the

completion of the approved goals.
	 
	 	 
	Benefits:

	 	The Company provides a comprehensive

benefits program, which includes

standard medical and dental benefits,

long- and short-term disability

coverage, a 401(K) plan, and Employee

Assistance Program, and a flexible

benefits plan. Paid time off is also

available to all employees. These

programs will be provided in accordance

with the terms and conditions set forth

in each plan, and are subject to change

at the Company’s discretion. Provided

that underwriting approves your

application, you will also receive

benefit of Avalon’s salary continuation

plan for executives.
	 
	 	 
	Termination:

	 	Upon termination for any reason, the

Company shall pay you within two weeks

of such termination, your current base

salary earned through the termination

date, plus accrued vacation, if any, and

other benefits or payments, if any, to

which you are entitled as provided in

accordance with the terms and conditions

of such benefit plan. In the event you

are terminated by the Company after the

90-day Introductory Period without

“Cause” (as herein defined), or if you

terminate your employment with the

Company for “Good Reason” (as

hereinafter defined), the Company shall

continue to pay you your bi-weekly rate

in effect at the time of termination for

a period of six (6) months

(“Severance”); provide you with

outplacement services; provide and pay

the Company’s portion of your health

insurance for a period of six months

following such termination. You shall

not be required to mitigate damages by

seeking employment elsewhere. If you are

terminated with cause, the Company shall

pay you only your current base salary

earned through the termination date,

plus accrued vacation, if any, to which

you are entitled as provided in

accordance with the terms and conditions

of such benefit plan.
	 
	 	 
	
 
	 	“Cause” shall include (i) your

conviction of a felony, either in

connection with the performance of your

obligations to the Company or otherwise,

which adversely affects your ability to

perform such obligations or materially

adversely affects the business

activities, reputation, goodwill or

image of the Company, (ii) your willful

disloyalty, deliberate dishonesty,

breach of fiduciary duty to the company

(iii) your breach of the terms of this

Agreement, or your failure or refusal to

use your best efforts to carry out any

material tasks that do not violate any

other term of this agreement, provided

such tasks are assigned to you by the

Company in accordance with the terms

hereof, which breach or failure

continues for a period of more than

thirty (30) days after your receipt of

written notice thereof from the Company,

(iv) the commission by you of any act of

fraud, embezzlement or deliberate

disregard of a rule or policy of the

Company known to you or contained in a

policy and procedure manual provided to

you which results in material loss,

damage or injury to the Company, or (v)

the material breach by you of any of the

material provisions of the

Confidentiality Assignment of Inventions

and Non-Competition Agreement.
	 
	 	 
	
 
	 	Termination of your employment by you

shall constitute termination for “Good

Reason” if such termination occurs (a)

within eighteen months of a “Change in

Control” (as hereinafter defined) (b)

within three months of a material

diminution in your responsibilities as

Chief Medical Officer, provided that

such diminution is not in connection

with the termination of your employment

for Cause, (c) within three months of

your principal work location changing to

be more than 50 miles from your then

current residence; or (d) in the event

you should die while an employee of the

Company. The Company shall notify you,

within 10 days of receipt of your notice

of intent to terminate your employment

for Good Reason, if the Company

disagrees with your intent to terminate

pursuant to this paragraph.
	 
	 	 
	
 
	 	A “Change in Control” shall be deemed to

have occurred if either: (i) any

“person” (including, without limitation,

any individual, sole proprietorship,

partnership, trust, corporation,

association, joint venture, or other

entity, whether or not incorporated), or

“group” of persons (as such terms are

used in Sections 13(d) and14(d) of the

Securities Exchange Act of 1934, as

amended (the “Exchange Act”)), becomes,

after the date hereof, the “beneficial

owner” (as defined in Rule 13d-3 under

the Exchange Act), directly or

indirectly, of securities of the Company

representing fifty percent (50%) or more

of the combined voting power of the

Company’s then outstanding securities;

(ii) during any two (2) year period,

individuals who constitute the Board of

Directors at the beginning of such

period, together with any new directors

elected or appointed during the period

whose election or appointment resulted

from a vacancy on the Board of Directors

caused by the retirement, death, or

disability of a director and whose

election or appointment was approved by

a vote of at least a majority of the

directors then still in office who were

directors at the beginning of the

period, cease for any reason to

constitute a majority of the Board of

Directors; (iii) the Company sells,

assigns, conveys, transfers, leases or

otherwise disposes of all or

substantially all of its assets to any

person; (iv) the Company consolidates

with, or merges with or into another

entity, or any entity consolidates with,

or merges with or into, the Company (a

“Merger”), in which the owners of

outstanding voting stock of the Company

immediately prior to such Merger do not

represent at least a majority of the

voting power in the surviving entity

after the Merger; or (v) the

stockholders of the Company approve a

plan of liquidation or dissolution.
	 
	 	 
	Conflict:

	 	You hereby acknowledge that you are not

a party to any agreement that in any way

prohibits or imposes any restrictions on

your employment with the Company, and

your acceptance hereof will not breach

any agreements to which you are a party.
	 
	 	 
	Employment Requirements

and Period:

	 	If you accept this position, you will be

an employee at will, meaning you are not

obligated to remain employed at the

Company for any specific period of time.

Likewise, the Company is not obligated

to employ you for any specific period.
	 
	 	 
	Other Provisions:

	 	Employment will be contingent upon your

signing the Avalon Pharmaceuticals, Inc.

Confidentiality, Assignment of

Inventions and Non-Competition

Agreement. You also agree to be bound by

all personnel policies that may be

adopted from time to time.

I look forward to having you as part of the team and believe you will play an important role in the
growth of the Company.

Sincerely,

	 	 	 
	ON BEHALF OF AVALON PHARMACEUTICALS, INC.:

	 
	 	 
	/s/ Kenneth C. Carter

Kenneth C. Carter

President & CEO

	 	

April 20, 2006

Date
	 
	 	 
	 
	 	 
	 
	 	 
	ACCEPTED:

	 	

	 
	 	 
	/s/ J. Michael Hamilton

J. Michael Hamilton

	 	April 24, 2006

DateEX-10.13

EMPLOYMENT AGREEMENT

THIS AGREEMENT (“Agreement”), by and between the Federal Home Loan Bank of Des Moines, a
federally chartered corporation (“Company”), and Michael L. Wilson (“Executive”) is effective as of
August 21, 2006 (the “Effective Date”). In consideration of the mutual covenants set forth herein,
the Company and the Executive hereby agree as follows:

1. Employment. The Company hereby agrees to employ the Executive, and the Executive agrees to
serve the Company, in the capacities described herein during the Period of Employment (as defined
in Section 2 of this Agreement), in accordance with the terms and conditions of this Agreement.

2. Period of Employment. The term “Period of Employment” shall mean the period which
commences on the Effective Date and, unless earlier terminated pursuant to Section 6, ends on
December 31, 2008; provided, however, that the Period of Employment shall automatically be extended
by one year effective January 1, 2009 and each year thereafter until such date as either the
Company or the Executive shall have terminated such automatic extension provision by giving no less
than 30 days written notice to the other prior to the end of the initial Period of Employment or
any extension thereof.

3. Duties During the Period of Employment.

(a) Executive Representations. Executive represents and warrants to the Company that
Executive is not bound by any restrictive covenants and has no prior or other obligations or
commitments of any kind that would in any way prevent, restrict, hinder or interfere with
Executive’s acceptance of continued employment or the performance of all duties and services
hereunder to the fullest extent of Executive’s ability and knowledge.

(b) Duties. During the Period of Employment, the Executive shall be employed as the Chief
Business Officer of the Company with overall charge and responsibility for leading and coordinating
delivery of products and services to the Company’s members and the communities they serve, as well
as the information services and other systems that support the Company’s business activities. The
Executive shall report directly to the Company’s President and Chief Executive Officer (“CEO”) and
shall serve as a member of its executive leadership team, performing such duties as the Executive
shall reasonably be directed to perform by the CEO. Executive may (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures and fulfill speaking engagements, or (iii)
manage personal investments, so long as such activities under clauses (i), (ii) and (iii) do not in
the view of the Company’s CEO interfere, in any substantive respect, with the Executive’s
responsibilities hereunder or conflict in any material way with the business of the Company or the
Company’s Code of Ethics or any other applicable policies.

(c) Scope. During the Period of Employment, and excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive shall devote substantially all of his
business time and attention to the business and affairs of the Company.

4. Compensation and Other Payments.

(a) Salary. During the Period of Employment, the Company shall pay the Executive an
annualized (as shown below) base salary (“Base Salary”) of not less than the following amounts:

Calendar Year Base Salary

	 	 	 
	2006

2007

2008

	 	$360,000 (prorated)

$375,000

$390,000
	
 
	 	 
	 
	 	 

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The Executive’s Base Salary shall be paid in accordance with the Company’s payroll practices. The
Base Salary shall be reviewed by the Compensation, Diversity and Governance Committee (the
“Committee”) of the Board of Directors (“Board”) as soon as practicable after the end of each
calendar year during the Period of Employment. Based upon such reviews, the Committee may, in its
discretion and upon the recommendation of the CEO, increase the Executive’s Base Salary above the
minimum amount described above, but may not decrease such Base Salary. Any increase in Base Salary
shall not serve to limit or reduce any other obligation to the Executive under this Agreement.

(b) Bonus Programs. The Executive shall participate in the Company’s Gainsharing Plan. The
Executive is guaranteed a prorated portion, based on 2.5 times the number of weeks Executive is
employed at the Company full-time for the calendar year ending December 31, 2006, equal to 30% of
base salary. The multiple of 2.5 times the number of weeks employed is a one-time benefit for
2006 to provide an incentive for Executive to begin employment as soon as possible and to provide
and offset to Executive for the loss of Executive’s annual incentive from Executive’s prior
employer. It is anticipated that the Executive’s target for each year thereafter will be 30% of
base salary, with a range of 20%-40%. Targets and maximums are subject to review and increase by
the Committee based upon market data and/or other studies conducted by the Board, at its
discretion. The Board is committed to ensuring the total compensation package for the Executive
is market competitive and adjustments may be made by the Committee accordingly upon recommendation
of the CEO.

5. Other Executive Benefits.

(a) Regular Reimbursed Business Expenses. The Company shall promptly reimburse the Executive
for all expenses and disbursements reasonably incurred by the Executive in the performance of his
duties hereunder during the Period of Employment upon proper submission in accordance with Company
policy.

(b) Benefit Plans; Vacation. The Executive and his eligible family members shall be entitled
to participate in any group and/or executive life, hospitalization or disability insurance plan,
health program, vacation policy, pension, 401 (k) and similar benefit plans, including any
applicable benefit equalization plan (qualified and non-qualified ) or other fringe benefits of
the Company on terms generally applicable to the Company’s senior executives, subject to the
terms, conditions and limitations of such plans and programs. The Executive is eligible for four
weeks of vacation annually. The first year shall be prorated based upon the number of full months
employed at the Company.

(c) Perquisites. The Company shall provide the Executive such perquisites of employment as
are commonly provided to other senior executives of the Company. This includes financial planning
not to exceed $2,000.00 annually, use of the Company’s business club memberships and parking.

(d) Relocation Benefits. The company shall provide relocation benefits in accordance with
Company’s Executive Relocation policy.

6. Termination.

(a) Death or Disability. This Agreement and the Period of Employment shall terminate
automatically upon the Executive’s death. If the Company determines in good faith that the
Disability of the Executive has occurred (pursuant to the definition of “Disability” set forth
below), it may give to the Executive written notice of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment with the Company shall terminate effective
on the thirtieth day after receipt by the Executive of such notice given at any time after a
period of ninety (90) consecutive days of Disability or a period of one hundred twenty (120) days
of Disability within any twelve (12) consecutive months, and, in either case, while such
Disability is continuing (“Disability Effective Date”); provided that, within the thirty (30) days
after such receipt, the Executive shall not have returned to full-time performance of the
Executive’s duties. For purposes of this Agreement, “Disability” means the Executive’s inability
to substantially perform his duties hereunder, with reasonable accommodation, as evidenced by a
certificate signed either by a physician mutually acceptable to the Company and the Executive or,
if the Company and the Executive cannot agree upon a physician, by a physician selected by
agreement of a physician designated by the Company and a physician designated by the Executive;
provided, however, that if such physicians cannot agree upon a third physician within thirty (30)
days, such third physician shall be designated by the American Arbitration Association.

(b) By the Company for Cause. During the Period of Employment after the Effective Date, the
Company may terminate the Executive’s employment immediately for “Cause.” For purposes of this
Agreement, “Cause” shall mean that Executive:

(i) shall have been convicted (or pled guilty or nolo contendere) to a felony or other crime
involving moral turpitude;

(ii) shall have committed willful acts of misconduct that materially impair the goodwil1 or
business of the Company or cause material damage to its property, goodwill, or business monetarily
or otherwise;

(iii) shall have breached the representation in Section 3(a) of this Agreement;

(iv) shall have a willful and continued failure to perform his material duties; or

(v) shall have violated the Company’s policies regarding sexual harassment, discrimination,
substance abuse or the Company’s Code of Ethics to the extent such acts would provide grounds for
a termination for Cause with respect to other employees.

No act or failure to act on the part of the Executive shall be considered “willful” unless it is
done, or omitted to be done, by the Executive in bad faith and without reasonable belief that the
Executive’s action or omission was in the best interest of the Company.

(c) By Executive for Good Reason. During the Period of Employment, the Executive’s employment
hereunder may be terminated by the Executive for Good Reason upon written notice. For purposes of
this Agreement, “Good Reason” shall mean (i) diminution in Executive’s titles, (ii) the assignment
of duties to Executive that are materially and adversely inconsistent with Executive’s positions,
(iii) any material diminution in Executive’s authority, responsibility or reporting lines, (iv)
reduction in Executive’s Base Salary or (v) material breach of this Agreement by the Company. If
(I) Executives provides written notice to the Company of the occurrence of Good Reason fifteen
days after Executive has knowledge of the circumstances constituting Good Reason, which notice
shall specifically identify the circumstances which Executive believes constitute Good Reason;
(II) the Company fails to correct the circumstances within thirty days after receiving such
notice; and (III) Executive resigns fifteen days after the Company fails to correct such
circumstances; then Executive shall be considered to have terminated for Good Reason for purposes
of this Agreement.

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(d) Other than for Cause or Good Reason. The Executive or the Company may terminate this
Agreement for any reason other than for Good Reason or Cause, respectively, upon thirty (30) days’
written notice to the Company or Executive, as the case may be. If the Executive terminates the
Agreement for any reason, he shall have no liability to the Company or its affiliates solely as a
result thereof. If the Company terminates the Agreement, or if the Agreement terminates because of
the death of the Executive, or if, as a result of a merger, consolidation, or other corporate
combination an individual other than Executive is selected to serve as Chief Business Officer (or
similar position) of the resulting entity, the obligations of the Company shall be as set forth in
Section 7 hereof.

(e) Notice of Termination. A termination by the Company or by the Executive sha1l be
communicated by a Notice of Termination to the other party hereto given in accordance with Section
18(b) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written
notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail, if necessary, the basis for termination of the Executive’s
employment under the provision so indicated, and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies the termination date. The
failure by the Executive or Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of the basis for termination shall not waive any right
of such party hereunder or preclude such party from asserting such fact or circumstance in
enforcing his or its rights hereunder.

(f) Date of Termination. “Date of Termination” means the date specified in the Notice of
Termination, provided, however, that if the Executive’s employment is terminated by reason of death
or Disability, the Date of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.

7. Obligations of the Company Upon Termination. The following provisions describe the
obligations of the Company to the Executive under this Agreement upon termination of his
employment. However, except as explicitly provided in this Agreement, nothing in this Agreement
shall limit or otherwise adversely affect any rights which the Executive may have under applicable
law, under any other agreement with the Company, or under any compensation or benefit plan,
program, policy or practice of the Company.

(a) Termination by the Company for Cause, by the Executive without Good Reason, or due to
Death or Disability. If the Executive’s employment is terminated by the Company for Cause or by the
Executive without Good Reason, or due to the Executive’s death or Disability, he shall be entitled
to his Base Salary and accrued vacation through his Date of Termination and all vested benefits
under the terms of the Company’s employee benefit plans, subject to the terms of such plans.

(b) Termination by the Company without Cause or by the Executive for Good Reason. In addition
to the items in Section 7(a), if the Executive’s employment is terminated by the Company without
Cause or by the Executive for Good Reason, he shall be entitled, upon execution of a release of
claims (exclusive of claims for indemnification under Section 9 or under Company benefit plans) in
a form acceptable to the Company without subsequent revocation within the period described in such
release, to severance payments, in lieu of any other severance benefits, equal to the Executive’s
Base Salary for the calendar year in which the Date of Termination occurs plus the minimum total
incentive compensation for the calendar year in which the Date of Termination occurs prorated as of
such date. The Base Salary amount shall be paid in a lump sum within ten (10) days of the date the
release becomes effective. Fifty percent of the minimum total incentive compensation amount shall
be paid on each of the first two anniversaries of the termination date. No severance shall be paid
in connection with the expiration or non-renewal of this Agreement.

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8. Mitigation. In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement. Any severance benefits payable to the Executive shall not be subject
to reduction for any compensation received from other employment.

9. Indemnification. The Company shall maintain, for the benefit of the Executive, director and
officer liability insurance in form at least as comprehensive as, and in an amount that is at least
equal to, that maintained by the Company on the Effective Date. In addition, the Executive shall be
indemnified by the Company against liability as an officer and director of the Company and any
subsidiary or affiliate of the Company to the maximum extent permitted by applicable law provided,
however, that the Company need not indemnify Executive for actions taken in bad faith, fraud or for
breach of Executive’s fiduciary duties to the Company. The Executive’s rights under this Section 9
shall continue so long as he may be subject to such liability, whether or not this Agreement may
have terminated prior thereto.

10. Executive Covenants.

(a) General. The Executive and the Company understand and agree that the purpose of the
provisions of this Section 10 is to protect legitimate business interests of the Company, as more
fully described below, and is not intended to impair or infringe upon the Executive’s right to
work, earn a living, or acquire and possess property from the fruits of his labor. The Executive
hereby acknowledges that the post-employment restrictions set forth in this Section 10 are
reasonable and that they do not, and will not, unduly impair his ability to earn a living after the
termination of his employment with the Company. Therefore, subject to the limitations of
reasonableness imposed by law upon restrictions set forth herein, the Executive shall be subject to
the restrictions set forth in this Section 10.

(b) Definitions. The following capitalized terms used in this Section 10 shall have the
meanings assigned to them below, which definitions shall apply to both the singular and the plural
forms of such terms.

“Confidential Information” means any confidential or proprietary information possessed by the
Company without limitation, any confidential “know-how”, customer lists, details of client or
consultant contracts, current and anticipated customer requirements, pricing policies, price lists,
market studies, business plans, operational methods, marketing plans or strategies, product
development techniques or plans, computer software programs (including object code and source
code), data and documentation, data base technologies, systems, structures and architectures,
inventions and ideas, past, current and planned research and development, compilations, devices,
methods, techniques, processes, financial information and data, business acquisition plans, new
personnel acquisition plans and any other information that would constitute a trade secret under
the common law or statutory law of the State of Iowa.

“Determination Date” means the date of termination of the Executive’s employment with the Company
for any reason whatsoever or any earlier date (during the Restricted Period) of an alleged breach
of the Restrictive Covenants by the Executive.

“Person” means any individual or any corporation, partnership, joint venture, association or other
entity or enterprise.

“Principal or Representative” means a principal, owner, partner, shareholder, joint venturer,
member, trustee, director, officer, manager, employee, agent, representative or consultant.

“Protected Employees” means employees of the Company or its affiliated companies who were employed
by the Company or its affiliated companies at any time within six (6) months prior to the
Determination Date.

4

“Restricted Period” means the period of the Executive’s employment by the Company plus a period
extending two (2) years from the date of termination of employment.

“Restrictive Covenants” means the restrictive covenants contained in Section 10(c) and (d) hereof.

(c) Restriction on Disclosure and Use of Confidential Information. The Executive understands
and agrees that the Confidential Information constitutes a valuable asset of the Company and its
affiliated entities, and may not be converted to the Executive’s own use. Accordingly, the
Executive hereby agrees that the Executive shall not, directly or indirectly, at any time during
the Restricted Period reveal, divulge or disclose to any Person not expressly authorized by the
Company any Confidential Information, and the Executive shall not, directly or indirectly, at any
time during the Restricted Period use or make use of any Confidential Information in connection
with any business activity other than that of the Company. The parties acknowledge and agree that
this Agreement is not intended to, and does not, alter either the Company’s rights or the
Executive’s obligations under any state or federal statutory or common law regarding trade secrets
and unfair trade practices.

(d) Nonsolicitation of Protected Employees. The Executive understands and agrees that the
relationship between the Company and each of its Protected Employees constitutes a valuable asset
of the Company and may not be converted to the Executive’s own use. Accordingly, the Executive
hereby agrees that during the Restricted Period the Executive shall not directly or indirectly on
the Executive’s own behalf or as a Principal or Representative of any Person solicit any Protected
Employee to terminate his or her employment with the Company.

(e) Exceptions from Disclosure Restrictions. Anything herein to the contrary notwithstanding,
the Executive shall not be restricted from disclosing or using Confidential Information that: (i)
is or becomes generally available to the public other than as a result of an unauthorized
disclosure by the Executive or his agent; (ii) becomes available to the Executive in a manner that
is not in contravention of applicable law from a source (other than the Company or its affiliated
entities or one of its or their officers, employees, agents or representative) that is not known by
the Executive to be bound by a confidential relationship with the Company or its affiliated
entities or by a confidentiality or other similar agreement; (iii) was known to the Executive on a
non-confidential basis and not in contravention of applicable law or a confidentiality or other
similar agreement before its disclosure to the Executive by the Company or its affiliated entities
or one of its or their officers, employees, agents or representatives; or (iv) is required to be
disclosed by law, court order or other legal process; provided, however, that in the event
disclosure is required by law, court order or legal process, the Executive shall provide the
Company with prompt notice of such requirement so that the Company may seek an appropriate
protective order prior to any such required disclosure by the Executive.

11. Enforcement of the Restrictive Covenants.

(a) Rights and Remedies upon Breach. In the event the Executive breaches, or threatens to
commit a breach of, any of the provisions of the Restrictive Covenants, the Company shall have the
right and remedy to enjoin, preliminarily and permanently, the Executive from violating or
threatening to violate the Restrictive Covenants and to have the Restrictive Covenants specifically
enforced by any court of competent jurisdiction, it being agreed that any breach or threatened
breach of the Restrictive Covenants would cause irreparable injury to the Company and that money
damages would not provide an adequate remedy to the Company. The rights referred to in the
preceding sentence shall be independent of any others and severally enforceable, and shall be in
addition to, and not in lieu of, any other rights and remedies available to the Company at law or
in equity.

(b) Severability of Covenants. The Executive acknowledges and agrees that the Restrictive
Covenants are reasonable and valid in time and space and in all other respects. If any court
determines that any Restrictive Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and shall be given full
effect, without regard to the invalid portions.

12. Cooperation in Future Matters. The Executive hereby agrees that, for a period of three (3)
years following his Date of Termination, he shall cooperate with the Company’s reasonable requests
relating to matters that pertain to the Executive’s employment by the Company, including, without
limitation, providing information or limited consultation as to such matters, participating in
legal proceedings, investigations or audits on behalf of the Company, or otherwise making himself
reasonably available to the Company for other related purposes. Any such cooperation shall be
performed at times scheduled taking into consideration the Executive’s other commitments, and the
Executive shall be compensated at a reasonable hourly or per diem rate to be agreed by the parties
to the extent such cooperation is required on more than an occasional and limited basis. The
Executive shall also be reimbursed for all reasonable out of pocket expenses. The Executive shall
not be required to perform such cooperation to the extent it conflicts with any requirements of
exclusivity of service for another employer or otherwise, nor in any manner that in the good faith
belief of the Executive would conflict with his rights under or ability to enforce this Agreement.

13. Assistance with Claims. Executive agrees that, for the period beginning on the Effective
Date, and continuing for a reasonable period after Executive’s termination date, Executive will
assist the Company in defense of any claims that may be made against the Company, and will assist
the Company in the prosecution of any claims that may be made by the Company, to the extent that
such claims may relate to services performed by Executive for the Company. Executive agrees to
promptly inform the Company if he becomes aware of any lawsuits involving such claims that may be
filed against the Company. The Company agrees to provide legal counsel to Executive in connection
with such assistance (to the extent legally permitted), and to reimburse Executive for all of
Executive’s reasonable out-of-pocket expenses associated with such assistance, including travel
expenses. For periods after Executive’s employment with the Company terminates, the Company agrees
to provide reasonable compensation to Executive for such assistance. Executive also agrees to
promptly inform the Company if he is asked to assist in any investigation of the Company (or its
actions) that may relate to services performed by Executive for the Company, regardless of whether
a lawsuit has then been filed against the Company with respect to such investigation.

14. Publicity. Neither party shall issue, without consent of the other party, which shall not
be unreasonably withheld, any press release or make any public announcement with respect to this
Agreement or the employment relationship between them except as may be required by applicable law
or the rules and regulations of the Securities Exchange Commission if the Company were a registrant
under either the Securities Act of 1933 or the Securities Exchange Act of 1934. Following the date
of this Agreement and regardless of any dispute that may arise in the future, Executive and the
Company jointly and mutually agree that they will not disparage, criticize or make statements which
are negative, detrimental or injurious to the other to any individual, company or client, including
within the Company.

15. Withholding. Anything in this Agreement to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive shall be subject to withholding, at
the time payments are actually made to the Executive and received by him, of such amounts relating
to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law
or regulation. In lieu of withholding such amounts, in whole or in part, the Company may, in its
sole discretion, accept other provision for payment of taxes as required by law, provided that it
is satisfied that all requirements of law as to its responsibilities to withhold such taxes have
been satisfied.

16. Arbitration. Any dispute or controversy between the Company and the Executive, whether
arising out of or relating to this Agreement, the breach of this Agreement, or otherwise, shall be
settled by arbitration administered by the American Arbitration Association (“AAA”) in accordance
with its Commercial Arbitration Rules then in effect, and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Any arbitration shall be held
before a single arbitrator who shall be selected by the mutual agreement of the Company and the
Executive, unless the parties are unable to agree to an arbitrator, in which case, the arbitrator
will be selected under the procedures of the AAA. The arbitrator shall have the authority to award
any remedy or relief that a court of competent jurisdiction could order or grant, including,
without limitation, the issuance of an injunction. However, either party may, without inconsistency
with this arbitration provision, apply to any court having jurisdiction over such dispute or
controversy and seek interim provisional, injunctive or other equitable relief until the
arbitration award is rendered or the controversy is otherwise resolved. Except as necessary in
court proceedings to enforce this arbitration provision or an award rendered hereunder, or to
obtain interim relief, neither a party nor an arbitrator may disclose the existence, content or
results of any arbitration hereunder without the prior written consent of the Company and the
Executive. The Company and the Executive acknowledge that this Agreement evidences a transaction
involving interstate commerce. Notwithstanding any choice of law provision included in this
Agreement, the United States Federal Arbitration Act shall govern the interpretation and
enforcement of this arbitration provision. The arbitration proceeding shall be conducted in Des
Moines, Iowa or such other location to which the parties may agree. The Company shall be
responsible for the costs of any arbitrator appointed hereunder.

17. Successors.

(a) This Agreement is personal to the Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s
heirs and legal representatives.

(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

(c) The Company shall require any successor (whether direct or indirect, by purchase, merger,
reorganization, consolidation, acquisition of property or stock, liquidation, or otherwise) to all
or a substantial portion of its assets, by agreement in form and substance reasonably satisfactory
to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform this Agreement if no such succession
had taken place. Regardless of whether such an agreement is executed, this Agreement shall be
binding upon any successor of the Company in accordance with the operation of law, and such
successor shall be deemed the “Company” for purposes of this Agreement.

(d) As used in this Agreement, the term “Company” shall include any successor to the Company’s
business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation
of law, or otherwise.

18. Miscellaneous.

(a) This Agreement shall be governed by and construed in accordance with the laws of Iowa,
without reference to principles of conflicts of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

5

(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party, by overnight courier, or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

If to the Executive:

At the most recent address on file with the Company

If to the Company:

Federal Home Loan Bank of Des Moines

907 Walnut Street

Des Moines, IA 50309

Attn: General Counsel

Or to such other address as either of the parties shall have furnished to the other in writing in
accordance herewith. Notice and communications shall be effective when actually received by the
addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.

(d) Any party’s failure to insist upon strict compliance with any provision hereof shall not
be deemed to be a waiver of such provision or any other provision hereof.

(e) This Agreement supersedes any prior employment agreement or understandings, written or
oral between the Company and the Executive and contains the entire understanding of the Company and
the Executive with respect to the subject matter hereof.

(f) This Agreement may be executed simultaneously in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the dates written
below.

FEDERAL HOME LOAN BANK OF DES MOINES

By: _/s/ Richard S. Swanson     

Richard S. Swanson, President and Chief Executive Officer

Date:      August 2, 2006     

MICHAEL L. WILSON

By:      /s/ Michael L. Wilson      

Michael L. Wilson

Date:      August 2, 2006     

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