Document:

exv10w1

 

Exhibit 10.1

DEFERRED COMPENSATION PLAN

OF THE

FEDERAL HOME LOAN BANK OF DALLAS

The Deferred Compensation Plan (the “Plan”) of the Federal Home Loan Bank of Dallas (the “Bank”) is
hereby amended effective July 24, 2004. All Participants with vested Tier I and Tier II benefits
accrued under the Plan prior to January 1, 1995 will continue to be governed under the provisions
of the original Plan document and the previously adopted Plan Amendments #1 and #2. All Schedule A
and Schedule B vested benefits to Participants accrued after December 31, 1994 shall be governed
exclusively under the provisions of this Plan document.

ARTICLE I

Definitions

     1.01 Administrative Committee shall mean the committee appointed pursuant to Article
VII of the Plan.

     1.02 Adoption Agreement shall mean the initial written agreement between a Participant
and the Bank, whereby a Participant agrees to defer a portion of his or her Compensation pursuant
to the provisions of the Plan, and the Bank agrees to make benefit payments in accordance with the
provisions of the Plan.

     1.03 Beneficiary shall mean any person, persons, or entities designated by a
Participant to receive benefits hereunder upon the death of such Participant.

     1.04 Benefit Account shall mean the account maintained on the books of the Bank for
each Participant pursuant to Section 5.01 hereof.

     1.05 Compensation shall mean (a) the total amount of all base salary payments made by
the Bank to an employee for services rendered by the employee to the Bank; and (b) the total amount
of all Variable Pay Program award payments made by the Bank to an employee. Compensation shall not
include employee expense reimbursements, contributions made by the Bank under the Plan, payments
made by the Bank for group life insurance, long-term disability insurance, medical insurance and
like benefits, or contributions made by the Bank under any employee benefit plan the Bank
maintains. Any deferred compensation payments under this Plan shall not be deemed salary or other
compensation to the Participant eligible for the computation of benefits which he or she may be
entitled to under the defined benefit plan, defined contribution plan, or other arrangement of the
Bank for the benefit of its employees. The deferred compensation payments are compensation for all
other purposes as per the regulations promulgated by the Internal Revenue Service under its
applicable code sections.

     1.06 Deferral Period shall mean the period of time during which Compensation is being
deferred pursuant to the Participant’s Adoption Agreement and Article III of the Plan.

     1.07 Determination Date shall mean the last day of the Plan year.

 

 

     1.08 Highly Compensated Employees shall mean all employees of the Bank who are
designated as Highly Compensated Employees by the Administrative Committee. A person designated as
a Highly Compensated Employee shall remain so until such designation is revoked by the
Administrative Committee, in its sole discretion.

     1.09 Hardship shall mean an unforeseen financial emergency suffered by a Participant.
The financial emergency must be beyond the Participant’s control and must be of sufficient
magnitude to cause the Participant hardship if early withdrawal of the Participant’s benefits were
not allowed, or if a change in the Participant’s stated deferral was not allowed. Any early
withdrawal by reason of Hardship shall be limited to the amount necessary to meet the stated
financial emergency.

     1.10 Interest Yield shall mean the interest rate equivalent to the FUND B interest
rate of the Financial Institutions Thrift Plan. This interest rate shall be determined quarterly
and is to be equal to the average Fund B interest rate calculated by the Financial Institutions
Thrift Plan for the preceding three calendar months. (For example, the Interest Yield for the
first three months of 1995 shall be equal to the average Fund B interest rate for January,
February, and March 1995.)

     1.11 Participant shall mean a Highly Compensated Employee of the Bank who has enrolled
in the Plan by completing an Adoption Agreement.

     1.12 Plan Entry Date shall mean January 1 of each Plan Year.

     1.13 Plan Year shall mean the twelve-month period on which the plan records are kept,
which shall begin on January 1 of one year and end on December 31 of the same year.

     1.14 Qualified Plan shall mean the qualified defined contribution plan (Financial
Institutions Thrift Plan) maintained by the Bank which qualifies under Internal Revenue Code
401(a).

     1.15 Service shall mean the period of time from the date of employment by the Bank to
date of Termination of Employment with the Bank.

     1.16 Stated Deferral shall mean the amount of Compensation the Participant agrees to
defer in the Adoption agreement, and on subsequent annual Plan election forms.

     1.17 Termination of Employment shall mean the Participant’s ceasing to be employed by
the Bank for any reason whatsoever, voluntary or involuntary, including by reason of death, or
disability as defined in Section 1.08 of the original plan document dated November 16, 1986.

ARTICLE II

Eligibility and Participation

     2.01 Participation. From time to time the Administrative Committee, in its sole
discretion, may designate those Highly Compensated Employees to whom the opportunity to participate
in the Plan shall be extended.

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     2.02 Enrollment Requirements. An employee designated as an eligible Participant in
the Plan shall enroll in the Plan by (a) entering into an Adoption Agreement with the Bank, which
shall specify the amount and type of benefit payment under this Plan that will be provided for such
employee, and (b) completing such other forms and furnishing such other documents as the Bank may
require.

     2.03 Enrollment Time Period. A newly hired employee must execute the Adoption
Agreement within the sixty (60) day period immediately following the first date of employment.
Otherwise, the Adoption Agreement must be executed within thirty (30) days before the Plan Entry
Date of the Plan Year in which the Agreement is to be effective.

     2.04 Failure of Eligibility. A Participant shall cease to be a Participant at
Termination of Employment (unless the Participant qualifies for benefits set forth in Article VI),
or upon revocation by the Administrative Committee of the Participant’s status as a Highly
Compensated Employee. A person who ceases to be a Participant during the Deferral Period will have
no further right to defer Compensation. However, the employment of a Participant shall not be
deemed to be terminated by reason of an approved leave of absence granted in accordance with Bank
policy under uniform rules applied in a nondiscriminatory manner.

ARTICLE III

Participant Compensation Deferral

     3.01 Initial Deferral. Any Highly Compensated Employee not currently participating in
the Plan shall, within thirty (30) days before the Plan Entry Date of the Plan Year in which the
Agreement is to be effective, execute an Adoption Agreement and elect to defer a portion of his or
her Compensation earned and payable commencing with the first pay period in which the election
becomes effective. A newly hired employee must execute the Adoption Agreement within the sixty
(60) day period immediately following the first date of employment and elect to defer a portion of
his or her Compensation earned and payable on or after the date of such election and before the
commencement of the pay period in which the election becomes effective.

     3.02 Subsequent Deferrals. Subsequent to the initial deferral provided for in Section
3.01 above, any election to defer Compensation hereunder shall be made no later than January 1 of
each Plan Year.

     3.03 Procedure for Deferral. The Highly Compensated Employee shall make the election
provided for in Sections 3.01 and 3.02 above by executing the Adoption Agreement in the form
provided by the Bank. The Adoption Agreement shall set forth the Highly Compensated Employee’s
Stated Deferral. After the initial Stated Deferral, the election shall be made on a separate
document provided by the Bank for that purpose. The amount deferred shall be subtracted from the
Compensation otherwise payable to the Participant during the year of the deferral. Unless
otherwise permitted by the Bank under Section 3.06 of the Plan, the deferral specified in the
Adoption Agreement shall be deferred, and the Participant’s Compensation shall be correspondingly
reduced.

     3.04 Schedule A Stated Deferral. Schedule A Stated Deferral shall mean a voluntary
Participant deferral into an equivalent interest bearing account payable upon Retirement, or

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Termination of Employment. The minimum required deferral is $83.33 per pay period if only
deferring to a Schedule A Stated Deferral account, or a minimum of $41.67 to the Schedule A Stated
Deferred if an equal or greater amount is being deferred into a Schedule B Stated Deferral account.

     3.05 Schedule B Stated Deferral. Schedule B Stated Deferral shall mean a voluntary
Participant deferral into an equivalent interest bearing account. Schedule B Stated Deferrals will
be deferred for a specific period of time, with the minimum deferral period being twelve (12)
months from the date of the last deferral, and payable as stated in the Adoption Agreement or the
deferral election form. The minimum required deferral is $83.33 per pay period if only deferring
to a Schedule B Stated Deferral account, or a minimum of $41.67 to the Schedule B Stated Deferred
if an equal or greater amount is being deferred into a Schedule A Stated Deferral account.

     3.06 Election to Defer Irrevocable; Exceptions. Except as otherwise provided herein,
a Participant’s election to defer Compensation shall be irrevocable except for changes allowed at
Plan Entry Date. The Administrative Committee, in its sole discretion, upon demonstration of
substantial Hardship by the Participant, may permit subsequent alteration of a Participant’s
deferral election. A request to alter the amount of Compensation deferred shall be submitted by a
Participant in writing to the Administrative Committee. The application shall set forth in detail
the reasons for the requested reduction.

ARTICLE IV

Bank Contributions

     4.01 Bank Contributions. For each Plan Year, the Bank shall make an addition to each
Participant’s Benefit Account of a monthly matching contribution in an amount based on the
following schedule:

	 	 	 	 	 
	1st year of Bank service

	 	=
	 	no Bank match
	 
	 	 	 	 
	2nd and 3rd years of employment

	 	=
	 	100% match on the first 3% of monthly salary
contributed in any combination to the Deferred Compensation Plan and the Qualified
Plan.
	 
	 	 	 	 
	4th and 5th years of employment

	 	=
	 	150% match on the first 3% of monthly salary
contributed in any combination to the Deferred Compensation Plan and the Qualified
Plan.
	 
	 	 	 	 
	6 or more years of employment

	 	=
	 	200% match on the first 3% of monthly salary
contributed in any combination to the Deferred Compensation Plan and the Qualified
Plan.

	 	 	 
	Note:

	 	      (a) The Participant’s monthly salary amount used to calculate the matching
Bank contribution to the Qualified Plan is reduced by the amount of the

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Participant’s contribution to the Deferred Compensation Plan. The above schedule
ensures that the total matching Bank contribution amount shall be provided to the
Participant, as allowed, in either the Qualified Plan, the Deferred Compensation
Plan, or a combination of the two plans.

               (b) The amount of the matching Bank contribution added to the Participant’s
Benefit Account is solely dependent on the Participant’s length of service and
the amount of the corresponding matching contribution, if any, added to the
Participant’s Qualified Plan account.

               (c) The amount of the matching Bank contribution as determined from the
above schedule will be first applied to the participant’s Qualified Plan. The
difference between the maximum Bank contribution as determined from the above
schedule and the amount applied to the Qualified Plan shall then be applied to
the Deferred Compensation Plan.

               (d) Compensation for the purpose of calculating the matching Bank
contribution to the Participant’s Benefit Account is limited to that portion of
the monthly base salary deferred, or as provided for under (a) above. Under no
circumstances will the Plan provide a Bank matching contribution on the amount of
any VPP award deferred into the Participant’s Benefit Account.

     4.02 Designation of Bank Contributions to Stated Deferral Benefit Account. The Plan
shall require the Bank to first place matching contributions into the Participant’s Schedule A
Benefit Account as calculated in Section 4.01, with the residual, if any, placed in the
Participant’s Schedule B Benefit Account.

ARTICLE V

Participant Benefit Account and Vesting

     5.01 Benefit Account. The Bank shall establish a Benefit Account on its books for
each Participant, and shall credit to each Participant’s Benefit Account the following amounts at
the times specified:

               (a) The amount of Compensation that the Participant has previously deferred or elects
to defer pursuant to Section 3.04 and Section 3.05 of the Plan, credited as of the date the
Participant would otherwise have received the Compensation. The Bank shall deduct any
amounts it is required to withhold under state, federal or local law for taxes other than
charges from the Participant’s deferred Compensation.

               (b) The amount of the Bank matching contribution for each Participant as set forth in
Section 4.01 of the Plan.

               (c) As of the last day of each calendar quarter, an amount equal to the earnings
attributable to the Participant’s Benefit Account. For the period of August 1, 2004 through
December 31, 2004 the earnings will be an amount equal to the greater of: (1) the
product of the Benefit Account balance as of that date multiplied by the Interest

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Yield for that quarter, with interest credited for the actual days the funds were in
the Benefit Account during the quarter or (2) the earnings attributable to the investment
performance of assets contributed to a grantor trust as defined in Section 671 of the Code
(the “Trust”) established by the Bank on behalf of the Plan with such earnings allocated to
each Benefit Account based upon the ratio each Participant’s Benefit Account balance bears
to the total balances of all Benefit Accounts held by the Trust that is attributable to this
Plan. For the period subsequent to January 1, 2005, Benefit Account earnings will be
determined based upon the investment elections made by the Participant described in more
detail below. The Participant must make a one-time irrevocable election to have earnings on
the portion of his or her Benefit Account attributable to deferrals prior to January 1, 2005
calculated based upon either (i) the Interest Yield or (ii) the investment return
attributable to the deemed investments selected by the Participant based upon the benchmark
funds provided by the Bank. Once an investment election is made by the Participant, the
Participant cannot change his or her election between such investment alternatives. Prior
to the commencement of each year (beginning January 1, 2005) for which deferrals of
Compensation will be made, the Participant will make an election to have the earnings on all
of future deferrals calculated based upon the investment return attributable to the deemed
investments selected by the Participant based upon the benchmark funds provided by the Bank.

               (d) The Bank shall deduct any amounts it is required to withhold under state, federal
or local law or regulations for taxes or other charges from the Participant’s deferred
Compensation, or earnings thereon.

A Participant’s Benefit Account shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to the Participant pursuant to the Plan. A Participant’s
Benefit Account shall not constitute or be treated as a trust fund of any kind. All benefits
payable under this Plan shall be paid as they become due and payable by the Bank out of its general
assets. Provided, the Bank may establish and/or continue a grantor trust as defined in Section 671
of the Code to provide a source of funding for amounts deferred under the Plan.

     5.02 Determination of Account. Each Participant’s Benefit Account as of each
Determination Date shall consist of the balance of the Participant’s Benefit Account as of the
immediately preceding Determination Date, plus the amounts required to be credited to such account
by the Bank pursuant to Section 5.01 less the amount of all distributions, if any, made from such
Benefit Account since the immediately preceding Determination Date. The Administrative Committee
shall determine the accrual of benefit (Participant deferrals and matching Bank Contributions to
the Participant’s Benefit Account(s) on the basis of the Plan Year.

     5.03 Freezing of the Tier I Benefit Amount. All Participants with a vested Tier I
monthly benefit amount payable at retirement, along with the monthly survivor benefit payable to a
Beneficiary in the event of the Participant’s death shall have these benefit amounts frozen at the
accrued benefit level as of the Plan Year ending on December 31, 1994.

     5.04 Non-Forfeitable Value of Tier I and Tier II Account Determination. The amount of
the non-forfeitable value of the Tier I and Tier II benefit amounts and the corresponding account
balances shall be credited with interest as described in Section 5.01 beginning with the Plan Year

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commencing on January 1, 1995. However, the non-forfeitable value of the Tier I account
balance shall only apply in the case of a lump sum distribution of the Tier I Benefit Account upon
termination.

     5.05 Statement of Account. The Administrative Committee shall provide each
Participant, within 120 days after the close of the Plan Year, a
statement in such form as the
Administrative Committee deems desirable setting forth the balance to the credit of such
Participant in his or her Benefit Account(s) as of the last day of the preceding Plan Year.

     5.06 Vesting of Benefit Account. All Compensation deferred by a Participant and the
related matching Bank Contributions to the Benefit Account(s) shall be one hundred percent (100%)
vested at all times.

ARTICLE VI

Payment of Benefits

     6.01 Schedule A Benefits Upon Termination of Employment Prior to Age 45. The Schedule
A Stated Deferral Benefit Account balance shall be payable to the Participant, or his or her
Beneficiary, in a lump sum cash payment within ninety (90) days from the date of Termination of
Employment.

     6.02 Schedule A Benefits Upon Termination of Employment At Age 45 or Older. Based on
the Participant’s most recent annual election form completed prior to Termination of Employment,
whether for involuntary of voluntary reasons, the Schedule A Stated Deferral Benefit Account
balance will be payable to the Participant as follows:

               (a) In the form of annual installments for a period of from two (2) to twenty (20)
years payable on January 31 of each year immediately following Termination of Employment, or
as a deferred vested benefit with payments to begin at a designated later calendar date.

               (b) In a lump sum cash payment within ninety (90) days from the date of Termination of
Employment.

     6.03 Schedule B Benefits. The Participant can elect to receive the Schedule B Stated
Deferral Benefit Account balance(s) as follows:

               (a) The Participant may designate in the Adoption Agreement or on the annual election
form to have each annual deferred Compensation amount, plus interest, paid in a lump sum on
a specific calendar date. The date of this payment must be, at a minimum, twelve (12) months
after the date of the last Schedule B pay period deferral associated with this benefit
payout.

               (b) The Participant may designate in the Adoption Agreement or on the annual election
form to have the accumulated annual deferred Compensation account balance for several Plan
Years, plus interest, paid in a lump sum on a specific calendar date.

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The date of this payment must be, at a minimum, twelve (12) months after the date of
the last Schedule B pay period deferral associated with this benefit payout.

               (c) The Participant may designate in the Adoption Agreement or on the annual election
form to have the accumulated annual deferred Compensation account balance for several Plan
Years, plus interest, paid in annual installments for a period of from two (2) to four (4)
years. The Participant must designate in the Adoption Agreement and on the annual election
forms the date payment is to be made each year. The date of the first payment must be, at a
minimum, twelve (12) months after the date of the last Schedule B pay period deferral
associated with this benefit payout.

     In addition to the election options (a) through (c), the Participant may also designate a
contingent lump sum distribution option on the annual election form for the Plan. This option is
effective only in the event the Participant’s employment is terminated, for any reason, prior to
the scheduled distribution date(s) selected in options (a), (b), or (c). If so designated on the
Participant’s annual election form most recently completed prior to Termination of Employment, the
total Schedule B Stated Deferral Benefit Account balance will be payable to the Participant in a
lump sum cash payment within ninety (90) days from the date of Termination of Employment.

     6.04 Hardship Distribution. The Administrative Committee may, in its sole discretion,
upon finding that the Participant has suffered or is suffering a Hardship, distribute to such
Participant all or a portion of his or her Compensation deferred under the Plan. In the event the
distribution is based on Tier I Stated Deferrals, if applicable, the amount of monthly benefits
payable under this Plan shall be adjusted accordingly by the Administrative Committee.
Distributions pursuant to Hardship shall include interest based upon the Interest Yield as
described in Section 1.09.

     6.05 Bank Obligations and Source of Payments. All benefits payable under this Plan
shall be paid as they become due and payable by the Bank out of its general assets. Nothing
contained in this Plan shall be deemed to create a trust of any kind for the benefit of the
Participants or create any fiduciary relationship between the Bank and the Participants or their
beneficiaries. To the extent that any person acquires a right to receive benefits under this Plan,
such rights shall be no greater than the right of any unsecured general creditor of the Bank.

     6.06 Recipients of Payments: Designation of Beneficiary. All payments to be made by
the Bank shall be made to the Participant, if living. In the event of a Participant’s death prior
to receipt of all benefit payments, all subsequent payments to be made under the Plan shall be to
the Beneficiary or Beneficiaries of the Participant. Each Participant shall file with the Bank a
designation of Primary Beneficiary and Secondary Beneficiary to whom the Participant’s interest
under the Plan shall be paid in the event of death. The initial designation of Beneficiary shall
be made in the Participant’s Adoption Agreement. Such designation may be changed by the
Participant at any time without the consent of any previously designated Beneficiary. In the
absence of an effective Beneficiary designation as to any portion of a Participant’s interest under
the Plan, such amount shall be paid to the Participant’s personal representative, but if the Bank
believes none has been appointed within six months after the Participant’s death, the Bank may
direct that such amount shall not be paid until a personal representative has been appointed or may
direct that such amount be paid to the Participant’s surviving spouse, or if there is none, to the
Participant’s

8

 

surviving children and issue of deceased children by right of representation, or there be
none, the Participant’s surviving parents and if none, according to the laws of descent and
distribution of the State of Texas. In the event a benefit is payable to a minor or person
declared incompetent or a person incapable of handling the disposition of his property, the
Administrative Committee may pay such benefit to the guardian, legal representative or person
having the care or custody of such minor, incompetent or person. The Administrative Committee may
require proof of incompetency, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Such distribution shall completely discharge the Bank from all
liability with respect to such benefit.

ARTICLE VII

Administration

     7.01 Administrative Committee. The Plan shall be administered by the Administrative
Committee in accordance with its terms and purposes. The Bank’s Board of Directors shall appoint
the Administrative Committee, which shall consist of three (3) or more persons to act on behalf of
the Bank. Interpretation by the Administrative Committee shall be final and binding upon a
Participant. The Administrative Committee shall select the Participating Highly Compensated
Employees eligible to participate in the Plan and shall be responsible for administration of the
Plan in accordance with the terms and provisions herein.

     7.02 Claims Procedure.

               (a) All claims shall be filed in writing by the Participant, his or her beneficiary or
authorized representative of the claimant, by completing such procedures as the
Administrative Committee shall require. Such procedures shall be reasonable and may include
the completion of forms and the submission of documents and additional information.

               (b) If a claim is denied, notice of denial shall be furnished by the Administrative
Committee to the claimant within ninety (90) days after receipt of the claim by the
Administrative Committee, unless special circumstances require an extension of time for
processing the claim, in which event notification of the extension shall be provided to the
Participant or beneficiary and the extension shall not exceed ninety (90) days.

               (c) The Administrative Committee shall provide adequate notice, in writing, to any
claimant whose claim has been denied, setting forth the specific reasons for such denial,
specific reference to pertinent Plan provisions, a description of any additional material or
information necessary for the claimant to perfect his or her claim and any explanation of
why such material or information is necessary, all written in a manner calculated to be
understood by the claimant. Such notice shall include appropriate information as to the
steps to be taken if the claimant wishes to submit his or her claim for review. The
claimant or the claimant’s authorized representative must request such review within the
reasonable period of time prescribed by the Administrative Committee. In no event shall
such period of time be less than sixty (60) days. A decision on review shall be made not
later than sixty (60) days after the Bank’s receipt of the request for review. If special
circumstances require further extension of time for processing, a decision shall be

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rendered not later than one hundred twenty (120) days following the Bank’s receipt of
the request for review. If such an extension of time for review is required, written notice
of the extension shall be furnished to the claimant prior to the commencement of the
extension. The decision on review shall be furnished to the claimant. Such decision shall
be in writing and shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, as well as specific references to the pertinent
Plan provisions on which the decision is based.

ARTICLE VIII

Miscellaneous

     8.01 Employment Not Guaranteed by Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving a Participant the right to be retained as a Highly
Compensated Employee or as an employee of the Bank for any period of time.

     8.02 Amendment and Termination. The Board of Directors of the Bank may, at any time,
amend or terminate the Plan, provided that the Board may not reduce or modify any benefit being
paid to a Participant or a Participant’s Beneficiary as a result of the death or retirement of such
Participant prior to such amendment or termination. Furthermore, in the event the Plan is
terminated by the Board of Directors, the Bank shall distribute to the Participant or a
Participant’s Beneficiary, in the form of a lump sum payment within ninety (90) days from the date
of the Board resolution to terminate the Plan, the Participant’s then total Benefit Account
balance. After such payment, any and all obligations of the Bank under the Plan shall be
considered satisfied, and the Bank shall have no further obligations under the Plan to Participants
or their Beneficiaries. Such notice of termination or Plan Amendment shall be provided in writing
to all Participants.

     8.03 Assignment of Benefits. No Participant or Beneficiary shall have the right to
assign, transfer, hypothecate, encumber, or anticipate his or her interest in any benefits under
this Plan, nor shall the benefits under this Plan be subject to any legal process to levy upon or
attach the benefits for payment of any claim against the Participant or his or her Beneficiary. In
the event of an attempted assignment or transfer, the Bank shall have no further liability
hereunder.

     8.04 Disposition of Unclaimed Payments. Each Participant must file with the Bank from
time to time in writing his or her post office address and each change of post office address. The
communication, statement, or notice addressed to a Participant at the last post office address
filed with the Bank, or if no address is filed with the Bank, then at the last post office address
as shown on the Bank’s records, will be binding upon Participant and his or her beneficiaries for
all purposes of the Plan. The Bank shall not be required to search for or locate a Participant or
his or her Beneficiary.

     8.05 Taxes. The Bank shall deduct from all payments made hereunder all applicable
federal and state taxes required by law to be withheld from such payments.

     8.06 Independence of Benefits. The benefits payable under this Plan shall be
independent of, and in addition to, any other benefits of compensation whether by salary or however
characterized.

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     8.07 GOVERNING LAW. THIS PLAN IS INTENDED TO CONSTITUTE AN UNFUNDED PLAN FOR A SELECT
GROUP OF MANAGEMENT OR HIGHLY COMPENSATED EMPLOYEES AND RIGHTS THEREUNDER SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF TEXAS.

     8.08 Form of Communication. Any election, application, claim, notice or other
communication required or permitted to be made by a Participant to the Administrative Committee
shall be made in writing and in such form as the Administrative Committee shall prescribe. Such
communication shall be effective upon mailing, if sent by first class letter, postage pre-paid, and
addressed to the Bank’s offices as follows:

Attention: Deferred Compensation Committee

Federal Home Loan Bank of Dallas

8500 Freeport Parkway South, Suite 600

Irving, Texas 75063-2547

     8.09 Severability. The invalidity of any portion of this Plan shall not invalidate
the remainder thereof, and said remainder shall continue in full force and effect.

     8.10 Binding Agreement. The provisions of this Plan shall be binding upon the
Participants and the Bank and their respective successors, assigns, heirs, executors, and
beneficiaries.

     This Deferred Compensation Plan of Federal Home Loan Bank of Dallas reflects the governing
provisions of the Plan effective July 24, 2004 and incorporates all revisions and amendments for
the period January 1, 1995 through July 24, 2004.

	 	 	 	 	 
	 	 	Bank:
	 
	 	 	 	 
	 	 	FEDERAL HOME LOAN BANK OF DALLAS
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Timothy J. Heup
	 	 	 	 	 
	 

	 	 	 	Corporate Officer

ATTEST:

	 	 	 
	/s/ Karen A. Krug

	 	 
	 	 	 
	Corporate Secretary
	 	 

11exv10w2

 

Exhibit 10.2

NONQUALIFIED DEFERRED COMPENSATION PLAN

FOR THE

BOARD OF DIRECTORS

OF THE

FEDERAL HOME LOAN BANK OF DALLAS

The Nonqualified Deferred Compensation Plan (the “Plan”) for the Board of Directors of the Federal
Home Loan Bank of Dallas (the “Bank”) is hereby amended effective July 24, 2004. This document
shall serve as the revised Plan Document and Adoption Agreement for Plan Years occurring on or
after January 1, 1995.

ARTICLE I

Definitions

     1.01 Administrative Committee shall mean the committee appointed pursuant to Article
VI of the Plan.

     1.02 Adoption Agreement shall mean the initial written agreement between a Participant
and the Bank, whereby a Participant agrees to defer a portion of his or her Director’s Fees
pursuant to the provisions of the Plan, and the Bank agrees to make benefit payments in accordance
with the provisions of the Plan.

     1.03 Beneficiary shall mean any person, persons, or entities designated by a
Participant to receive benefits hereunder upon the death of such Participant.

     1.04 Benefit Account shall mean the account maintained on the books of the Bank for
each Participant pursuant to Article IV hereof.

     1.05 Deferral Period shall mean the period of time during which the Director’s Fees
are being deferred pursuant to the Participant’s Adoption Agreement.

     1.06 Determination Date shall mean the last day of the Plan Year.

     1.07 Director shall mean the person elected or appointed as a Director of the Bank
pursuant to the Federal Home Loan Bank Act, as amended, although the oath of office has not been
administered.

     1.08 Director’s Fee shall mean the total amount of all compensation payments made by
the Bank to a Director for services rendered by a Director in fulfilling his or her
responsibilities associated with serving as a member of the Bank’s Board of Directors. Director’s
Fees shall not include expense reimbursements, or any deferred compensation payments under this
Plan. The deferred compensation payments are compensation for all other purposes as per the
regulations promulgated by the Internal Revenue Service under its applicable code sections.

     1.09 Hardship shall mean an unforeseen financial emergency suffered by a Participant.
The financial emergency must be beyond the Participant’s control and must be of sufficient

 

 

magnitude to cause the Participant hardship if early withdrawal of the Participant’s benefits
were not allowed, or if a change in the Participant’s stated deferral was not allowed. Any early
withdrawal by reason of Hardship shall be limited to the amount necessary to meet the stated
financial emergency.

     1.10 Interest Yield shall mean the interest rate equivalent to the FUND B interest
rate of the Financial Institutions Thrift Plan. This interest rate shall be determined quarterly
and is to be equal to the average Fund B interest rate calculated by the Financial Institutions
Thrift Plan for the three preceding calendar months. (For example, the Interest Yield for the
first quarter of a given year shall be equal to the average Fund B interest rate for January,
February, and March of that year.)

     1.11 Participant shall mean a duly elected or appointed Director of the Bank who has
enrolled in the Plan by completing an Adoption Agreement.

     1.12 Plan Entry Date shall mean January 1 of each Plan Year.

     1.13 Plan Year shall mean the twelve-month period on which the plan records are kept,
which shall begin on January 1 of one year and end on December 31 of the same year.

     1.14 Stated Deferral shall mean the amount of the Director’s Fee the Participant
agrees to defer in the Adoption Agreement, and on subsequent annual Plan election forms.

ARTICLE II

Eligibility and Participation

     2.01 Participation. Participation in this Plan is limited to those Directors elected
or appointed as a Director of the Bank pursuant to the Federal Home Loan Bank Act, as amended,
although the oath of office has not been administered.

     2.02 Enrollment Requirements. A Director shall enroll as a Participant in the Plan by
(a) entering into an Adoption Agreement with the Bank, which shall specify the distribution of
benefits under this Plan for such Director, and (b) by completing such other forms and furnishing
such other documents as the Bank may require.

     2.03 Enrollment Time Period. The Adoption Agreement must be executed within thirty
(30) days before the Plan Entry Date of the Plan Year in which the Agreement is to be effective.

     2.04 Failure of Eligibility. A Participant shall cease to be a Participant at such
time as his or her term of office on the Board of Directors has expired.

ARTICLE III

Participant Compensation Deferral

     3.01 Initial Deferral. Any Director not currently participating in the Plan shall,
within thirty (30) days before the Plan Entry Date of the Plan Year in which the Agreement is to be

2

 

effective, execute an Adoption Agreement and elect to defer all or a portion of his or her
Director’s Fees earned and payable commencing with the first month in which the election becomes
effective.

     3.02 Subsequent Deferrals. Subsequent to the initial deferral provided for in Section
3.01 above, any election to continue to defer, revise, or terminate the deferral of Director’s
Fees hereunder shall be made no later than January 1 of each Plan Year. Should the Participant
terminate the deferral, the Benefit Account cannot be distributed until such time as requested and
stated in the Adoption Agreement, or on the most recent annual deferral election form.

     3.03 Procedure for Deferral. The Director shall make the election provided for in
Section 3.01 and Section 3.02 above by executing the Adoption Agreement in the form provided by the
Bank. The Adoption Agreement shall set forth the Director’s Stated Deferral. After the initial
Stated Deferral, the election to continue, revise, or terminate the deferral shall be made on a
separate document provided by the Bank for that purpose. The amount deferred shall be subtracted
from the compensation otherwise payable to the Participant during the year of the deferral, less
any applicable state or federal taxes required to be withheld.

     3.04 Stated Deferral. The Stated Deferral shall mean a voluntary Participant
deferral, less any applicable state or federal taxes required to be withheld, into an interest
bearing account established on the books of the Bank.

     3.05 Election to Defer Irrevocable; Exceptions. Except as otherwise provided herein,
a Participant’s election to defer Director’s Fees shall be irrevocable except for changes allowed
at Plan Entry Date. The Administrative Committee, in its sole discretion, upon demonstration of
substantial Hardship by the Participant, may permit subsequent alteration of a Participant’s
deferral election. A request to alter the amount of Compensation deferred shall be submitted by a
Participant in writing to the Administrative Committee and shall set forth in detail the reasons
for the requested reduction.

ARTICLE IV

Participant Benefit Account and Vesting

     4.01 Benefit Account. The Bank shall establish a Benefit Account on its books for
each Participant, and shall credit to each Participant’s Benefit Account the following amounts at
the times specified:

(a) The amount of Director’s Fees that the Participant has
previously deferred or elects to defer pursuant to Section 3.01 of the
Plan, credited as of the date the Participant would otherwise have received
the fee compensation. The Bank shall deduct any amounts it is required to
withhold under state, federal or local law for taxes or other charges
from the Participant’s Director’s Fees.

(b) As of the last day of each calendar quarter, an amount
equal to the earnings attributable to the Participant’s Benefit Account.
For the period of August 1, 2004 through December 31, 2004 the earnings
will be an amount equal to the greater of: (1) the product of the
Benefit Account balance as of that date multiplied by the Interest Yield
for that quarter, with interest credited for the

3

 

actual days the funds were in the Benefit Account during the quarter or (2) the
earnings attributable to the investment performance of assets contributed to a
grantor trust as defined in Section 671 of the Code (the “Trust”) established by
the Bank on behalf of the Plan with such earnings allocated to each Benefit
Account based upon the ratio each Participant’s Benefit Account balance bears to
the total balances of all Benefit Accounts held by the Trust that is
attributable to this Plan. For the period subsequent to January 1, 2005,
Benefit Account earnings will be determined based upon the investment elections
made by the Participant described in more detail below. The Participant must
make a one-time irrevocable election to have earnings on the portion of his or
her Benefit Account attributable to deferrals prior to January 1, 2005
calculated based upon either (i) the Interest Yield or (ii) the investment
return attributable to the deemed investments selected by the Participant based
upon the benchmark funds provided by the Bank. Once an investment election is
made by the Participant, the Participant cannot change his or her election
between such investment alternatives. Prior to the commencement of each year
(beginning January 1, 2005) for which deferrals of Director’s Fees will be made,
the Participant will make an election to have the earnings on all future
deferrals calculated based upon the investment return attributable to the deemed
investments selected by the Participant based upon the benchmark funds provided
by the Bank.

(c) The Bank shall deduct any amounts it is required to
withhold under state, federal or local law or regulations for taxes or
other charges from the Participant’s deferred Director’s Fees, or earnings
thereon.

A Participant’s Benefit Account shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to the Participant pursuant to the Plan. A
Participant’s Benefit Account shall not constitute or be treated as a trust fund of any
kind. All benefits payable under this Plan shall be paid as they become due and payable by
the Bank out of its general assets. Provided, the Bank may establish and/or continue a
grantor trust as defined in Section 671 of the Code to provide a source of funding for
amounts deferred under the Plan.

       4.02 Determination of Account. Each Participant’s Benefit Account as of each
Determination Date shall consist of the balance of the Participant’s Benefit Account as of the
immediately preceding Determination Date, plus the amounts required to be credited to such account
by the Bank pursuant to Section 4.01.

       4.03 Statement of Account. The Bank shall provide each Participant, within 120 days
after the close of the Plan Year, a statement in such form as the Bank deems appropriate setting
forth the balance to the credit of such Participant in his or her Benefit Account as of the last
day of the preceding Plan Year.

       4.04 Vesting of Benefit Account. All Director’s Fees deferred by a Participant and
the interest credited to the Benefit Account shall be one hundred percent (100%) vested at all
times.

4

 

ARTICLE V

Payment of Benefits

     5.01 Distribution of Benefit Account to Participant. At the end of the deferral
period, the distribution of deferred amounts and accrued interest in the Benefit Account shall be
made payable to the Participant in either a lump sum cash payment, or in the form of annual
installments for a period of from two (2) to twenty (20) years commencing on the date so designated
in the Adoption Agreement, or the most recent annual election form.

     5.02 Recipients of Payments: Designation of Beneficiary. All payments to be made
under this Plan by the Bank shall be made to the Participant, if living. In the event of a
Participant’s death prior to receipt of all benefit payments, all subsequent payments to be made
under the Plan shall be to the Beneficiary or Beneficiaries of the Participant. Each Participant
shall file with the Bank a designation of Primary Beneficiary and Secondary Beneficiary to whom the
Participant’s interest under the Plan shall be paid in the event of death. The initial designation
of Beneficiary shall be made in the Participant’s Adoption Agreement. Such designation may be
changed by the Participant at any time without the consent of any previously designated
Beneficiary. In the absence of an effective Beneficiary designation as to any portion of a
Participant’s interest under the Plan, such amount shall be paid to the Participant’s personal
representative, but if the Bank believes none has been appointed within six months after the
Participant’s death, the Bank may direct that such amount shall not be paid until a personal
representative has been appointed or may direct that such amount be paid to the Participant’s
surviving spouse, or if there is none, to the Participant’s surviving children and issue of
deceased children by right of representation, or there be none, the Participant’s surviving parents
and if none, according to the laws of descent and distribution of the State of Texas. In the event
a benefit is payable to a minor or person declared incompetent or a person incapable of handling
the disposition of his property, the Administrative Committee may pay such benefit to the guardian,
legal representative or person having the care or custody of such minor, incompetent or person.
The Administrative Committee may require proof of incompetency, minority or guardianship as it may
deem appropriate prior to distribution of the benefit. Such distribution shall completely
discharge the Bank from all liability with respect to such benefit.

     5.03 Hardship Distribution. The Administrative Committee may, in its sole discretion,
upon finding that the Participant has suffered or is suffering a Hardship, distribute to such
Participant all or a portion of his or her compensation deferred under the Plan. Distributions
pursuant to Hardship shall include interest based upon the Interest Yield as described in Section
1.10.

     5.04 Bank Obligations and Source of Payments. All benefits payable under this Plan
shall be paid as they become due and payable by the Bank out of its general assets. Nothing
contained in this Plan shall be deemed to create a trust of any kind for the benefit of the
Participants or create any fiduciary relationship between the Bank and the Participants or their
Beneficiaries. To the extent that any person acquires a right to receive benefits under this Plan,
such rights shall be no greater than the right of any unsecured general creditor of the Bank.

5

 

ARTICLE VI

Administration

     6.01 Administrative Committee. The Plan shall be administered by the same
Administrative Committee appointed by the Board of Directors to administer the Bank’s Employee
Deferred Compensation Plan. This administration shall be in accordance with this Plan’s terms and
purposes. Interpretation by the Administrative Committee shall be final and binding upon a
Participant. The Administrative Committee shall be responsible for administration of the Plan in
accordance with the terms and provisions herein.

     6.02 Claims Procedure.

          (a) All claims shall be filed in writing by the Participant, his or her
beneficiary or authorized representative of the claimant, by completing such
procedures as the Administrative Committee shall require. Such procedures shall be
reasonable and may include the completion of forms and the submission of documents
and additional information.

          (b) If a claim is denied, notice of denial shall be furnished by the
Administrative Committee to the claimant within ninety (90) days after receipt of the
claim by the Administrative Committee, unless special circumstances require an
extension of time for processing the claim, in which event notification of the
extension shall be provided to the Participant or Beneficiary and the extension shall
not exceed ninety (90) days.

          (c) The Administrative Committee shall provide adequate notice, in writing, to
any claimant whose claim has been denied, setting forth the specific reasons for such
denial, specific reference to pertinent Plan provisions, a description of any
additional material or information necessary for the claimant to perfect his or her
claim and any explanation of why such material or information is necessary, all
written in a manner calculated to be understood by the claimant. Such notice shall
include appropriate information as to the steps to be taken if the claimant wishes to
submit his or her claim for review. The claimant or the claimant’s authorized
representative must request such review within the reasonable period of time
prescribed by the Administrative Committee. In no event shall such period of time be
less than sixty (60) days. A decision on review shall be made not later than sixty
(60) days after the Bank’s receipt of the request for review. If special
circumstances require further extension of time for processing, a decision shall be
rendered not later than one hundred twenty (120) days following the Bank’s receipt of
the request for review. If such an extension of time for review is required, written
notice of the extension shall be furnished to the claimant prior to the commencement
of the extension. The decision on review shall be furnished to the claimant. Such
decision shall be in writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by the claimant, as well as specific
references to the pertinent Plan provisions on which the decision is based.

6

 

ARTICLE VII

Miscellaneous

     7.01 Amendment and Termination. The Board of Directors of the Bank may, at any time,
amend or terminate the Plan, provided that the Board may not reduce or modify any benefit being
paid to a Participant or a Participant’s Beneficiary as a result of the death of such Participant
prior to such amendment or termination. Furthermore, in the event the Plan is terminated by the
Board of Directors, the Bank shall distribute to the Participant or a Participant’s Beneficiary, in
the form of a lump sum payment within ninety (90) days from the date of the Board resolution to
terminate the Plan, the Participant’s then total account balance from all sources, interest on such
amounts calculated at the Interest Yield and accrued through the calendar day immediately preceding
the date of the lump sum distribution. After such payment, any and all obligations of the Bank
under the Plan shall be considered satisfied, and the Bank shall have no further obligations under
the Plan to Participants or their Beneficiaries. Such notice of termination or Plan amendment
shall be provided in writing to all Directors participating in the Plan.

     7.02 Assignment of Benefits. The Board of Directors of the Bank may, at any time,
amend or terminate the Plan, provided that the Board may not reduce or modify any benefit being
paid to a Participant or a Participant’s Beneficiary as a result of the death of such Participant
prior to such amendment or termination. Furthermore, in the event the Plan is terminated by the
Board of Directors, the Bank shall distribute to the Participant or a Participant’s Beneficiary, in
the form of a lump sum payment within ninety (90) days from the date of the Board resolution to
terminate the Plan, the Participant’s then total Benefit Account balance. After such payment, any
and all obligations of the Bank under the Plan shall be considered satisfied, and the Bank shall
have no further obligations under the Plan to Participants or their Beneficiaries. Such notice of
termination or Plan amendment shall be provided in writing to all Participants.

     7.03 Disposition of Unclaimed Payments. Each Participant must file with the Bank from
time to time in writing his or her post office address and each change of post office address. The
communication, statement, or notice addressed to a Participant at the last post office address
filed with the Bank, or if no address is filed with the Bank, then at the last post office address
as shown on the Bank’s records, will be binding upon Participant and his or her Beneficiaries for
all purposes of the Plan.

     7.04 Taxes. The Bank shall deduct from all payments made hereunder all applicable
federal and state taxes required by law to be withheld from such payments.

     7.05 GOVERNING LAW. THIS PLAN IS INTENDED TO CONSTITUTE AN UNFUNDED PLAN FOR THE
BOARD OF DIRECTORS AND RIGHTS THEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS.

     7.06 Form of Communication. Any election, application, claim, notice or other
communication required or permitted to be made by a Participant to the Bank regarding this Plan
shall be made in writing and in such form as the Bank or Board of Directors shall prescribe. Such

7

 

communication shall be effective upon mailing, if sent by first class letter, postage
pre-paid, and addressed to the Bank’s offices as follows:

Attention: Directors Nonqualified Deferred Compensation Plan

Federal Home Loan Bank of Dallas

8500 Freeport Parkway South, Suite 600

Irving, Texas 75063-2547

     7.07 Severability. The invalidity of any portion of this Plan shall not invalidate
the remainder thereof, and said remainder shall continue in full force and effect.

     7.08 Binding Agreement. The provisions of this Plan shall be binding upon the
Participants and the Bank and their respective successors, assigns, heirs, executors, and
beneficiaries.

     This Nonqualified Deferred Compensation Plan for the Board of Directors reflects the governing
provisions of the Plan effective July 24, 2004 and incorporates all revisions and amendments for
the period January 1, 1995 through July 24, 2004.

	 	 	 	 	 
	 	 	Bank:
	 
	 	 	 	 
	 	 	FEDERAL HOME LOAN BANK OF DALLAS
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Timothy J. Heup
	 	 	 	 	 
	 

	 	 	 	Corporate Officer

ATTEST:

	 	 	 
	    /s/ Karen A. Krug

	 	 
	 	 	 
	Corporate Secretary
	 	 

8

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