Document:

EXHIBIT 4.1

 

AMENDED AND RESTATED

 

Capital Plan of the Federal Home
Loan Bank of Boston

 

Amended and Restated as
of December 14, 2009

 

 

CONFIDENTIAL

 

	
  §I.

  	
  Definitions

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  §II.

  	
  Leverage and Risk-Based Capital Requirements

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  II.A.

  	
   

  	
  Regulatory Standard

  	
   

  	
  8

  
	
  II.A.1. Leverage Ratio

  	
   

  	
  8

  
	
  II.A.2. Risk-Based Capital Ratio

  	
   

  	
  8

  
	
  II.A.3. Finance Board Designated Capital Levels

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  §III.

  	
  Classes of Stock

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.A.

  	
   

  	
  General

  	
   

  	
  9

  
	
  III.A.1. Redemption

  	
   

  	
  10

  
	
  III.A.2. Repurchase

  	
   

  	
  11

  
	
  III.A.3. Limitations on Redemptions and Repurchases

  	
   

  	
  12

  
	
  III.A.4. Pro Rata Allocation of Redemptions

  	
   

  	
  15

  
	
  III.A.5. Redeemed and Repurchased Stock

  	
   

  	
  15

  
	
  III.A.6. Par Value

  	
   

  	
  15

  
	
  III.A.7. Dividends

  	
   

  	
  15

  
	
  III.A.8. Ownership of Retained Earnings

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.B.

  	
   

  	
  Voting Rights

  	
   

  	
  16

  
	
  III.B.1. Matters Subject to Vote; Eligibility

  	
   

  	
  16

  
	
  III.B.2. Share Voting Determinations; Voting Rights

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.C.

  	
   

  	
  Rights Upon
  Liquidation, Merger, or Consolidation of the Federal Home Loan Bank of Boston

  	
   

  	
  17

  
	
  III.C.1. Liquidation

  	
   

  	
  17

  
	
  III.C.2. Merger or Consolidation

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  §IV.

  	
  Stock Investment Requirements

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  IV.A.

  	
   

  	
  Membership
  Stock Investment Requirement

  	
   

  	
  18

  
	
  IV.A.1. General

  	
   

  	
  18

  
	
  IV.A.2. Frequency of Recalculation

  	
   

  	
  18

  
	
  IV.A.3. Continuing Requirement as Condition of Membership

  	
   

  	
  18

  
	
  IV.A.4. Ranges of Allowable Membership Stock Investment
  Requirements

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.B.

  	
   

  	
  Activity-Based
  Stock Investment Requirement

  	
   

  	
  19

  
	
  IV.B.1. General

  	
   

  	
  19

  
	
  IV.B.2. Range of Allowable Activity-Based Stock Investment
  Requirements

  	
   

  	
  20

  
	
  IV.B.3. Notice of Withdrawal from Membership

  	
   

  	
  22

  
	
  IV.B.4. Requirement upon Termination of Membership

  	
   

  	
  22

  
	
  IV.B.5. Pre-existing Non-Advance Activity-Based Assets

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.C.

  	
   

  	
  Total Stock
  Investment Requirement

  	
   

  	
  23

  
	
  IV.C.1. General

  	
   

  	
  23

  
	
  IV.C.2. Bank Monitoring and Notification

  	
   

  	
  23

  
	
  IV.C.3. Prompt Compliance with Adjustments to Membership
  and Activity-Based Stock Investment Requirements

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.D.

  	
   

  	
  Excess Stock
  Investment

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.E.

  	
   

  	
  Transfers of
  Stock

  	
   

  	
  24

  
	
  IV.E.1. Conditions for Approval of Transfers

  	
   

  	
  24

  
	
  IV.E.2. Relation of Redemption Notices to Transfers of
  Stock

  	
   

  	
  25

  
	
  IV.E.3. Transfers Occurring in Connection with Mergers or
  Consolidations

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.F.

  	
   

  	
  Membership
  Termination

  	
   

  	
  25

  
	
  IV.F.1. Voluntary Withdrawal from Membership

  	
   

  	
  25

  

 

2

 

	
  IV.F.2. Involuntary Termination of Membership

  	
   

  	
  28

  
	
  IV.F.3. Merger or Consolidation of Members

  	
   

  	
  29

  
	
  IV.F.4. Merger or Consolidation of Member into a Member of
  another FHLBank or into a Nonmember

  	
   

  	
  31

  
	
  IV.F.5. Relocation of Principal Place of Business

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  §V.

  	
  Transition, Review, and Amendments

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.A.

  	
   

  	
  Transition

  	
   

  	
  34

  
	
  V.A.1. Effective Date

  	
   

  	
  34

  
	
  V.A.2. Plan of Reorganization

  	
   

  	
  38

  
	
  V.A.3. Good Faith Determination

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.B.

  	
   

  	
  Review and
  Amendments

  	
   

  	
  40

  
	
  V.B.1. Annual Review of the Capital Plan

  	
   

  	
  40

  
	
  V.B.2. Amendments to the Capital Plan

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  §VI.

  	
  Miscellaneous

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI.A.

  	
   

  	
  Interpretation
  of the Capital Plan

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI.B.

  	
   

  	
  Notices

  	
   

  	
  41

  
	
  VI.B.1. Notices by the Bank

  	
   

  	
  41

  
	
  VI.B.2. Notices to the Bank

  	
   

  	
  41

  

 

3

 

§I.                                  Definitions

 

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

 

Acquired Member Assets — Those assets that may be acquired by
the Bank under Part 955 of the Regulations.

 

Act — The Federal Home Loan Bank Act.

 

Activity-Based Assets — Advances, advance commitments, standby
letters of credit, intermediated derivatives, Acquired Member Assets, and
delivery commitments issued to a Member for Acquired Member Assets to be held on
the Bank’s balance sheet, that the Bank obtains from or through its Members.

 

Activity-Based Stock
Investment Requirement — The amount of Class B Stock required to be held by each Member
to support the outstanding Activity-Based Assets for which the Member has
engaged the Bank.

 

Bank — The Federal Home Loan Bank of Boston.

 

Board of Directors  — The board of directors of the Bank.

 

Capital Plan — The capital plan of the Bank as
adopted by the Board of Directors and approved by the Finance Board, as amended
from time to time.

 

Capital Stock - The capital stock of the Bank
outstanding prior to the Effective Date.

 

Class A Stock — Class A Stock as defined by the
Act.

 

Class B Stock — Class B Stock as defined by the
Act.

 

Credit Risk Capital
Requirement — The
amount of Permanent Capital that is required to support the Bank’s credit risk,
as required by 12 C.F.R. §932.4.

 

Effective Date — The date upon which the provisions of
the Capital Plan become effective and existing shares of the Bank’s Capital
Stock are converted to shares of Class B Stock in accordance with the
Capital Plan.

 

FHLBank — A Federal Home Loan Bank.

 

Finance Board — The Federal Housing Finance Board.

 

GAAP — The accounting principles generally
accepted in the United States.

 

4

 

Market Risk Capital
Requirement — The
amount of Permanent Capital that is required to support the Bank’s market risk,
as required by 12 C.F.R. §932.5.

 

Member —  An institution that has been
approved for membership in the Bank and that has purchased the required amount
of Bank Capital Stock or Class B Stock, as applicable.

 

Membership — The rights, privileges, and
obligations of being a member of the Bank.

 

Membership Stock
Investment Requirement — The amount of Class B Stock required to be held by each Member
as a condition of continued Membership in the Bank.

 

Membership Stock
Investment Base — For the purpose of determining the
Membership Stock Investment Requirement, the summation of non-discounted values
of certain Member assets eligible to secure advances under Section 10(a)(3) of
the Act as determined by the Bank from call report data and as defined in the
Products Policy.(1) Members that do not submit financial information to a
regulatory body through a publicly available call reporting process will be
required to submit data directly to the Bank that are similar in substance and
time frame to those data filed in thrift, bank, and credit union call reports.

 

Minimum Regulatory
Capital Requirement
- A minimum regulatory capital requirement for the Bank established by the
Regulations (as referenced in §§II.A.1 and II.A.2 of the Capital Plan) or on a
basis specifically applicable to the Bank by the Finance Board (as referenced
in §II.A.3).

 

NRSRO — A credit rating organization regarded
as a Nationally Recognized Statistical Rating Organization by the Securities
and Exchange Commission.

 

(1) For Members filing an
OTS Thrift Financial Report, the Membership Stock Investment Base would equal
the sum of the following line items: SC250 (Permanent, Closed-end Mortgages and
Junior Liens on 1-4 Family Dwelling Units), SC256 (Permanent Mortgages on 5 or
More Family Dwelling Units), SC130 (U.S. Government and Agency Securities),
SC210 (Mortgage-backed Securities Insured or Guaranteed by an Agency or
Instrument of the United States), SC150 (Mortgage Derivative Securities), and
SC215 (Other Mortgage Pool Securities).

 

For Members filing FFIEC
Reports of Condition and Income, the Membership Stock Investment Base would
equal the sum of the following line items: Schedule RC-C, lines 1.c.(2)(a) and
1.c.(2)(b) (Closed-end First and Junior Liens on 1-4 Family Residential
Properties), Schedule RC-C, line 1.d (Mortgage Loans Secured by Multifamily
Properties), Schedule RC-B, lines 1, 2.a, and 2.b (U.S. Treasury and Agency
Securities, Excluding Mortgage-backed Securities), Schedule RC-B, lines
4.a.(1), 4.a.(2), 4.b.(1), and 4.b.(2) (Mortgage-backed Securities
Guaranteed by Ginnie Mae or Issued by Fannie Mae and Freddie Mac), and Schedule
RC-B, lines 4.a.(3) and 4.b.(3) (Other Mortgage-backed Securities).

 

For Members filing a
Credit Union 5300 Call Report, the Membership Stock Investment Base would equal
the sum of line items: Balance Sheet Account Code 703 (Total 1st Mortgage Real
Estate Loans), Schedule C Account Code 741C (U.S. Government Obligations), and
Schedule C Account Code 742C (Federal Agency Securities).

 

5

 

Operations Risk Capital
Requirement — The
amount of Permanent Capital that is required to support the Bank’s operations
risk, as required by 12 C.F.R. §932.6.

 

Opt-Out Date — The date sixty (60) days prior to the
Effective Date.

 

Other Institution — A financial institution that is not a
Member and that acquires, receives, or retains Class B Stock under the
Capital Plan.

 

Permanent Capital — The retained earnings of the Bank,
determined in accordance with GAAP, plus the amount paid-in for the Bank’s Class B
Stock.

 

Plan of Merger — The formal agreement governing the
terms of a merger, consolidation, or acquisition between the Bank and any other
FHLBank or group of FHLBanks.

 

Products Policy — The Products Policy of the Bank, as
amended from time to time by the Board of Directors.

 

Redemption Cancellation
Fee — As
applicable, (i) a fee in the amount of two percent (2%) of the par amount
of the shares of Class B Stock that is the subject of a Redemption Notice,
subject to any deductions from the number of shares subject to such Redemption
Notice in accordance with §III.A.1 of the Capital Plan, which may be imposed in
the event that a Member cancels a Redemption Notice, or a Member’s Redemption
Notice is subject to automatic cancellation, or (ii) a fee in the amount
of two percent (2%) of the amount of the par amount of the shares of Class B
Stock held by a Member as of the date that the Bank receives notice from the
Member that the Member is canceling its notification of intent to withdraw from
Membership which may be imposed in the event that a Member cancels its
notification of intent to withdraw from Membership.

 

Redemption Notice — A written notice provided by a Member
to the Bank requesting redemption of a specified number of shares of Class B
Stock, subject to the time limits prescribed in the Act for Class B Stock
and the other restrictions set forth in the Capital Plan, the Regulations and
the Act.

 

Regulations - Regulations promulgated by the Federal
Housing Finance Board.

 

Repurchase Request Notice
Date - The date
sixty (60) days prior to the Effective Date.

 

Required Risk-Based
Capital Ratio —
The amount of Permanent Capital that is required to be outstanding at all times
in order to simultaneously meet the Market Risk Capital Requirement, the Credit
Risk Capital Requirement, and the Operations Risk Capital Requirement.

 

Stock Redemption Period — The five-year period, as applicable,
following: (i) the Bank’s receipt of a Member’s Redemption Notice to
redeem Class B Stock (with such Redemption Notice applicable only to the
number of shares of Class B Stock that are the subject of such Redemption
Notice); (ii) the Bank’s (or as applicable, the Finance 

 

6

 

Board’s) receipt of a
Member’s written notice to the Bank (or as applicable, the Finance Board) of
intent to withdraw from Membership, or the date of acquisition or receipt of
any additional shares of Class B Stock after the Bank’s (or as applicable,
the Finance Board’s) receipt of such notice, (iii) a Member’s termination
of Membership as a result of merger or consolidation into a Member of another
FHLBank or a nonmember, or the date of acquisition or receipt of any additional
shares of Class B Stock after such termination from Membership, (iv) a
Member’s termination from Membership as a result of the relocation of its
principal place of business, or the date of acquisition or receipt of any
additional shares of Class B Stock after such termination of Membership,
or (v) a Member’s involuntary termination from Membership, or the date of
acquisition or receipt of any additional shares of Class B Stock after
such termination of Membership.

 

Total Assets - Total assets of the Bank, as
determined in accordance with GAAP.

 

Total Capital — The sum of Permanent Capital, the
amounts paid-in for Class A Stock, the amount of any general allowance for
losses, and the amount of other instruments identified in the Capital Plan that
the Finance Board has determined to be available to absorb losses incurred by
the Bank.

 

Total Stock Investment
Requirement — The
sum of the Membership Stock Investment Requirement and the Activity-Based Stock
Investment Requirement.

 

Unweighted Leverage Ratio — The ratio of Total Capital to Total
Assets, wherein the portion of Total Capital that is Permanent Capital is
recorded as its book value.

 

Weighted Leverage Ratio - The ratio of Total Capital to Total
Assets, wherein the portion of Total Capital that is Permanent Capital is
weighted 1.5 times.

 

7

 

§II.                            Leverage and Risk-Based Capital
Requirements

 

II.A.                     Regulatory Standard

The Act and the
Regulations require the Bank to maintain the following capital levels at all
times:

 

II.A.1.Leverage Ratio

The Bank must, at all
times, maintain a Weighted Leverage Ratio in the amount of not less than five
percent (5%), wherein Permanent Capital is weighted at 1.5 times its par
value.  The Bank must also, at all times,
maintain an Unweighted Leverage Ratio of not less than four percent (4%),
wherein all capital is weighted at its carrying value.

 

II.A.2.Risk-Based
Capital Ratio

The Bank must, at all
times, maintain an amount of Permanent Capital equal to the sum of its required
Market Risk Capital Requirement, Credit Risk Capital Requirement, and
Operations Risk Capital Requirement.

 

II.A.2(a)                          Market
Risk Capital Requirement

As required by 12 C.F.R.
§932.5(a), the Bank must maintain Permanent Capital in an amount not less than
the sum of:

 

(i) The market value
of the Bank’s portfolio at risk from movements in interest rates, foreign
exchange rates, commodity prices, and equity prices that could occur during
periods of market stress, where the market value of the Bank’s portfolio at
risk is determined using an internal market risk model that fulfills the
requirements of 12 C.F.R. §932.5(b) and that has been approved by the
Finance Board; and

 

(ii) The amount, if
any, by which the Bank’s current market value of Total Capital is less than
eighty-five percent (85%) of the Bank’s book value of Total Capital.

 

II.A.2(b)                          Credit
Risk Capital Requirement

The Bank must maintain
Permanent Capital in an amount sufficient to meet its Credit Risk Capital
Requirement.

 

8

 

II.A.2(c)                           Operations
Risk Capital Requirement

As required by 12 C.F.R.
§932.6, the Bank must maintain Permanent Capital in an amount equal to thirty percent
(30%) of the sum of the Market Risk Capital Requirement and the Credit Risk
Capital Requirement. With the approval of the Finance Board, the Operations
Risk Capital Requirement may be reduced to as low as ten percent (10%) of the
sum of the Market Risk Capital Requirement and the Credit Risk Capital
Requirement if (i) the Bank provides an alternative methodology for
assessing and quantifying an Operations Risk Capital Requirement; or (ii) the
Bank purchases an insurance policy to cover operational risk from an insurer
that is rated in not lower than the second-highest rating category by an
NRSRO.  The Bank reserves the right from
time to time to seek Finance Board approval for either of the foregoing
alternative approaches to satisfy its Operations Risk Capital Requirement.

 

II.A.3.Finance Board
Designated Capital Levels

For reasons of safety and
soundness, the Finance Board in accordance with 12 C.F.R. §§932.2(b) and
932.3(b) may require the Bank to have and maintain a greater amount of
capital than that which is described in §§II.A.1 and II.A.2 of the Capital
Plan.

 

§III.                        Classes
of Stock

 

III.A.                General

The Bank shall issue one
class of stock — Class B Stock — as authorized by the Board of Directors. Class B
Stock shall be redeemable for cash at par value five (5) years following
the Bank’s receipt of a Member’s Redemption Notice to redeem Class B
Stock, or as provided in §IV.F of the Capital Plan, subject to the provisions
of §§ III.A.1, III.A.3 and III.A.4 of the Capital Plan.  The Class B Stock shall be issued to and
owned only by Members or institutions that have been approved for Membership,
with the exception of former Members or successors thereto that acquire,
receive or retain the Class B Stock in accordance with the provisions of
the Capital Plan.  The Bank may not issue
Class B Stock other than in accordance with Section 931.2 of the
Regulations and in accordance with the Capital Plan. Class B Stock may
only be traded between the Bank and its Members in accordance with §IV.E of the
Capital Plan.

 

Subject to the approval
of the Board of Directors and of the Finance Board, the Bank reserves the right
to revise the Capital Plan from time to 

 

9

 

time.  Such amendments might include, but would not
be limited to, the sale of one or more subclasses of Class A Stock (which
would be redeemable on six months’ notice and with other terms and rights as
specified in an amended Capital Plan) and/or one or more subclasses of Class B
Stock, all of which may be issued separate and apart from the Membership Stock
Investment Requirement and Activity-Based Stock Investment Requirement, as
described herein.

 

III.A.1.Redemption

A redemption of Class B
Stock may occur in conjunction with a Membership termination in accordance with
§IV.F of the Capital Plan.  In addition,
a Member may request that shares of Class B Stock be redeemed by
submitting a Redemption Notice to the Bank.

 

III.A.1(a)                      Written
Notice; Specific Share Identification

A Member that provides a
Redemption Notice to the Bank of its intention to redeem Class B Stock
pursuant to this §III.A.1(a) of the Capital Plan shall identify in that
Redemption Notice the particular shares that are subject of that Redemption
Notice by reference to the date acquired, and the manner in which the shares
subject to notice were acquired (i.e., whether by purchase at par value or as a
stock distribution by the Bank).  If a
Member fails to identify the shares to be redeemed, the shares subject to
redemption shall be determined using a first acquired, first redeemed method of
identification.  Class B Stock will
be redeemed upon the expiration of the applicable Stock Redemption Period
subject to the conditions and limitations set forth in §§III.A.3 and III.A.4 of
the Capital Plan.  A Member may not have
more than one Redemption Notice outstanding at any time with respect to the
same shares of Class B Stock.

 

III.A.1(b)                      Cancellation
of Request for Redemption

A Member may cancel its
Redemption Notice by providing the Bank with a written notice of cancellation
that is received by the Bank at any time prior to the expiration of the
applicable Stock Redemption Period. The Bank will assess a Redemption
Cancellation Fee unless the Board of Directors decides it has a bona fide
business purpose for waiving the imposition of the fee, and the waiver is
consistent with Section 7(j) of the Act.

 

10

 

III.A.1(c)                       Bank
Repurchase of Shares under Redemption Notice

To the extent that the
Bank repurchases pursuant to §III.A.2 of the Capital Plan shares of Class B
Stock that are subject to a Redemption Notice or Notices, the respective
repurchased shares shall be deducted from the outstanding Redemption Notice or
Notices.

 

III.A.1(d)                      Transfer
of Shares under Redemption Notice

To the extent that a
Member, or Other Institution, transfers pursuant to §IV.E of the Capital Plan
shares of Class B Stock that are subject to a Redemption Notice or
Notices, the respective transferred shares shall be deducted from the
outstanding Redemption Notice or Notices.

 

III.A.1(e)                       Redemption
Cancellation to Satisfy Total Stock Investment Requirement

A Redemption Notice by a
Member to redeem shares of Class B Stock shall automatically be cancelled
if the Bank is prevented from redeeming the Member’s Class B Stock within
five business days after the expiration of the applicable Stock Redemption
Period because the Member would not be in compliance with its Total Stock
Investment Requirement after such redemption. 
In the event of an automatic cancellation of a Member’s Redemption
Notice as provided in the preceding sentence, the Bank will assess a Redemption
Cancellation Fee unless the Board of Directors decides it has a bona fide
business purpose for waiving the imposition of the fee, and the waiver is
consistent with Section 7(j) of the Act.

 

III.A.2.Repurchase

 

III.A.2(a)                      Bank
Authority to Repurchase

The Bank may repurchase
for cash shares of Class B Stock from a Member, or Other Institution, that
are in excess of the Member’s, or Other Institution’s, Total Stock Investment
Requirement at any time, subject to the Bank transmitting, sending or giving
the Member, or Other Institution, written notice of such repurchase at least 15
days prior to the date of such repurchase, unless a shorter notice period is
agreed to in writing by the affected Member, or Other Institution.

 

11

 

III.A.2(b)                      Identification
of Repurchased Shares

If a Member, or Other
Institution, has one or more Redemption Notices outstanding as of the date that
the Bank is to repurchase shares of Class B Stock pursuant to §III.A.2(a) of
the Capital Plan, the Bank shall repurchase shares of Class B Stock by
first repurchasing shares of a Member, or Other Institution, that are subject
to a Redemption Notice that has been outstanding for the longest period of time
and then, to the extent necessary, by repurchasing shares that are subject to a
Redemption Notice that was outstanding for the next longest period of time and
continuing in that order, to the extent necessary, until there are no remaining
outstanding Redemption Notices by a Member, or Other Institution, in which
instance the shares to be repurchased shall be determined by the Bank using a
first acquired, first repurchased method of identification.  If a Member, or Other Institution, does not
have any Redemption Notices outstanding as of the date that the Bank is to
repurchase shares of Class B Stock, the shares to be repurchased shall be
determined by the Bank using a first acquired, first repurchased method of
identification.

 

III.A.2(c)                       Conduct
of Repurchase Activities

The Bank shall conduct
its repurchase activities fairly and impartially and without discrimination in
favor of or against any Member.

 

III.A.3.Limitations on
Redemptions and Repurchases

 

III.A.3(a)                      Prohibitions
on Redemptions and Repurchases

 

III.A.3(a)(1)                                                                                                                                  Bank Compliance with Minimum Regulatory
Capital Requirements

The Bank shall not
redeem or repurchase any shares of Class B Stock if, following such
redemption or repurchase, the Bank would not be in compliance with each of its
Minimum Regulatory Capital Requirements.

 

III.A.3(a)(2)                                  Member Compliance with Total Stock
Investment Requirements

The Bank shall not
redeem or repurchase any shares of Class B Stock from any Member, or Other
Institution, if, following the redemption or 

 

12

 

repurchase, the
Member, or Other Institution, would not be in compliance with its Total Stock
Investment Requirement.

 

III.A.3(a)(3)                                  Other Limitations on Redemptions and
Repurchases

The Bank shall not
redeem or repurchase any shares of Class B Stock without the prior written
approval of the Finance Board if the Finance Board or the Board of Directors,
has determined that the Bank has incurred or is likely to incur losses that
result in or are likely to result in “charges against the capital of the Bank,”
as that term is defined in the Regulations. 
This prohibition shall apply even if the Bank is in compliance with its
Minimum Regulatory Capital Requirements and shall remain in effect for however
long the Bank continues to incur such charges or until the Finance Board
determines that such charges are not expected to continue.

 

III.A.3(b)                      Bank’s
Discretion to Suspend Redemptions

 

III.A.3(b)(1)                                 Conditions for Suspension of Redemptions

The Board of
Directors, or a committee thereof, may suspend the redemption of Class B
Stock, if the Bank reasonably believes that continued redemption of Class B
Stock would cause the Bank to fail to meet its minimum capital requirements as
set forth in Sections 932.2 and 932.3 of the Regulations, would prevent the
Bank from maintaining adequate capital against a potential risk that may not be
adequately reflected in its Minimum Regulatory Capital Requirements or would
otherwise prevent the Bank from operating in a safe and sound manner.

 

III.A.3(b)(2)                                 Written Notification to the Finance Board
of a Suspension of Redemptions

If a decision is
made to suspend redemption of Class B Stock, the Bank shall notify the
Finance Board in writing within two business days of the decision, informing
the Finance Board of the reasons for the suspension and of the Bank’s strategies
and time frames for addressing the conditions that led to the suspension, as
indicated in Section 931.8(b) of the Regulations.

 

13

 

III.A.3(b)(3)                                 Finance Board May Require
Re-institution of Redemptions

The Finance Board
may require the Bank to re-institute the redemption of Class B Stock.

 

III.A.3(b)(4)                                 Limitation on Repurchases During Period
of Suspension of Redemptions

The Bank may not
repurchase any Class B Stock without the written permission of the Finance
Board during any period in which the Bank has suspended the redemption of Class B
Stock as provided for in §III.A.3(b)(1) of the Capital Plan.

 

III.A.3(c)                       Retention
of Redemption or Repurchase Proceeds as Collateral

The Bank may retain the
proceeds of the redemption or repurchase of Class B Stock as additional
collateral if the Bank reasonably determines that there is an existing or
anticipated collateral deficiency related to any obligations owed by the
Member, or Other Institution, to the Bank and the Member, or Other Institution,
has failed to deliver additional collateral to resolve the existing or
anticipated collateral deficiency to the Bank’s satisfaction, until all such
obligations have been satisfied or the anticipated deficiency is resolved to
the Bank’s satisfaction.

 

III.A.3(d)                      Limitations
on Redemptions and Repurchases Associated with Termination of Membership

The restrictions on
redemptions and repurchases set forth in §§III.A.3(a), III.A.3(b) and
III.A.3(c) of the Capital Plan apply with respect to redemptions pursuant
to a Redemption Notice as well as to redemptions in connection with a
termination of Membership in accordance with §IV.F of the Capital Plan and to
all repurchases of Class B Stock held by Members and by Other Institutions.

 

If a Member whose
Membership is terminated pursuant to §§IV.F.1, IV.F.2, IV.F.4 or IV.F.5 of the
Capital Plan has one or more Redemption Notices outstanding as of the effective
date of its termination from Membership, such Redemption Notice or Notices shall
not be subject to automatic cancellation in accordance with §III.A.1(e) of
the Capital Plan. Such Redemption Notices shall remain pending until they can
be satisfied 

 

14

 

in accordance with
§§III.A.1, III.A.3 and III.A.4 of the Capital Plan.

 

III.A.4.Pro Rata
Allocation of Redemptions

If at any time more than
one Member, or Other Institution, has outstanding a Redemption Notice in
accordance with §III.A.1(a) of the Capital Plan or redemption of Class B
Stock in connection with a termination of Membership in accordance with §IV.F
of the Capital Plan as to which the applicable Stock Redemption Period has
expired, and if the redemption by the Bank of all of the shares of Class B
Stock subject to such Redemption Notice or termination of Membership would
cause the Bank to fail to be in compliance with any of its Minimum Regulatory
Capital Requirements, then the Bank shall fulfill such redemptions as the Bank
is able to do so from time to time, beg inning with such redemptions as to
which the Stock Redemption Period expired on the earliest date and fulfilling
such redemptions relating to that date on a pro rata basis from time to time
until fully satisfied, and then fulfilling such redemptions as to which the Stock
Redemption Period expired on the next earliest date in the same manner, and
continuing in that order until all such redemptions as to which the Stock
Redemption Period has expired have been fulfilled.

 

III.A.5.Redeemed and
Repurchased Stock

All shares of Class B
Stock that are acquired by the Bank pursuant to redemption or repurchase shall
be retired.

 

III.A.6.Par Value

The par value of each
share of Class B Stock shall be one hundred dollars ($100).  All Class B Stock shall be issued,
redeemed, repurchased, and transferred only at par value.

 

III.A.7.Dividends

 

III.A.7(a)                      General

The Board of Directors,
in its discretion, subject to the provisions of §III.A.7 of the Capital Plan,
may declare dividends to be paid on the Class B Stock on a quarterly basis
or as otherwise determined by the Board of Directors.  Each Member or Other Institution is entitled
to receive dividends that are declared on Class B Stock based upon the
Member’s or Other Institution’s average daily balance of Class B Stock
held during the applicable period. 
Dividends are non-cumulative with respect to payment obligation.

 

15

 

III.A.7(b)                      Sources
and Forms of Payment

Dividends may only be
paid from current net earnings or previously retained earnings.  Dividend payments may be in the form of cash,
additional shares of Class B Stock, or a combination thereof as determined
by the Board of Directors.

 

III.A.7(c)                       Limitations
on Dividends

The Board of Directors
may not declare or pay a dividend if the Bank is not at the time in compliance
with each of its Minimum Regulatory Capital Requirements or if following such
declaration or payment of such a dividend the Bank would not be in compliance
with each of its Minimum Regulatory Capital Requirements.

 

III.A.8.Ownership of
Retained Earnings

Class B Stock
shareholders are the owners of the retained earnings, surplus, undivided
profits, and equity reserves, if any, of the Bank.  Ownership of each of these items is
apportioned in accordance with each Class B Stock shareholder’s
proportional ownership of the total shares of Class B Stock.  Holders of Class B Stock shall have no
right to receive any portion of these items, except through the declaration of
a dividend or capital distribution approved by the Board of Directors or
through the liquidation of the Bank as provided for in §III.C.1 of the Capital
Plan.

 

III.B.                Voting
Rights

 

III.B.1.Matters
Subject to Vote; Eligibility

Holders of Class B
Stock that are Members of the Bank as of the record date shall be entitled to
vote for the election of directors to the Board of Directors in accordance with
Part 915 of the Regulations.

 

III.B.2.Share Voting
Determinations; Voting Rights

For purposes of applying Part 915
of the Regulations, the Class B Stock that a Member was “ required to hold”
shall be the Member’s Total Stock Investment Requirement as of the record date
provided for in Part 915, provided that if the Capital Plan was not in
effect as of the record date, the number of shares of Capital Stock that a Member
was required to hold as of the record date shall be as determined in accordance
with Sections 925.20 and 925.22 of the Regulations.  The number of shares of Class B Stock
that a particular Member, or Other Institution (to the extent such institution
is permitted to vote under Part 915 of the Regulations), 

 

16

 

may vote in connection
with an election of directors shall be subject to the limitations set forth in
the Act and Part 915 of the Regulations.

 

III.C.                Rights
Upon Liquidation, Merger, or Consolidation of the Federal Home Loan Bank of
Boston

 

III.C.1.Liquidation

Upon the liquidation of
the Bank, following the retirement of all outstanding liabilities of the Bank
to its creditors, all shares of Class B Stock are to be redeemed at par
value, provided that if sufficient funds are not available to accomplish the
redemption in full of the Class B Stock, then such redemption shall occur
on a pro rata basis among all holders of Class B Stock.  Following the redemption in full of all Class B
Stock any remaining assets will be distributed on a pro rata basis to the
holders of Class B Stock immediately prior to such liquidation.  This provision does not limit the authority
granted the Finance Board under 12 U.S.C. §1446 to prescribe rules, regulations
or orders governing the liquidation of a FHLBank which may modify, restrict or
eliminate any of the rights set forth above.

 

III.C.2.Merger or
Consolidation

 

III.C.2(a)                     Bank
Acquired

In the event that the
Bank is merged or consolidated into another FHLBank, the holders of the
outstanding Class B Stock of the Bank will be entitled to the rights and
benefits set forth in any applicable Plan of Merger and/or terms established or
approved by the Finance Board.

 

III.C.2(b)                     Bank
Acquires Other FHLBank

In the event that another
FHLBank is merged or consolidated into the Bank, the holders of the outstanding
stock of the other FHLBank will be entitled to the rights and benefits set
forth in any applicable Plan of Merger and/or terms established or approved by
the Finance Board.

 

17

 

§IV.                       Stock
Investment Requirements

 

IV.A.                 Membership
Stock Investment Requirement

 

IV.A.1.General

The initial minimum
Membership Stock Investment Requirement is as follows:

 

Class B Stock:  0.35 percent (0.35%) of the Member’s
Membership Stock Investment Base, subject to a minimum investment of $10,000
and a maximum investment of $25,000,000.

 

IV.A.2.Frequency of
Recalculation

The Membership Stock
Investment Requirement on the Effective Date shall be determined based on a
Member’s Membership Stock Investment Base as of the most recently available
call report data.  Thereafter, the
Membership Stock Investment Requirement will be recalculated annually by April 30
of each year based on the Member’s most recent calendar year-end call report
data.  Provided however, that the Bank
may, for a bona fide business purpose, recalculate a Member’s Membership Stock
Investment Requirement between annual calculations.

 

IV.A.3.Continuing
Requirement as Condition of Membership

As a condition of
Membership, each Member is required to purchase and maintain the amounts of Class B
Stock indicated above while its Membership is continuing.  In order to become a Member, an approved
applicant must purchase shares of Class B Stock equal to its Membership
Stock Investment Requirement within sixty (60) days of membership approval by
the Bank.

 

IV.A.4.Ranges of
Allowable Membership Stock Investment Requirements

The Board of Directors may
change each or any of the applicable percentage, the minimum investment and
maximum investment under the Membership Stock Investment Requirement, but any
such revision must fall within the following ranges:

 

Base
requirement:  not less than 0.05 percent
(0.05%) nor more than 0.50 percent (0.50%) of a member’s Membership Stock
Investment Base, subject to the following minimum and maximum investments.

 

Minimum
investment:  not less than $5,000 nor
more than $50,000.

 

18

 

Maximum
investment:  not less than $5,000,000 nor
more than $100,000,000.

 

In the event that a
Member provides the Bank with written notice of its intent to withdraw from
Membership, the Membership Stock Investment Requirement for said Member shall
not be increased during the pendency of said notice.

 

IV.B.                 Activity-Based
Stock Investment Requirement

 

IV.B.1.General

The initial minimum
Activity-Based Stock Investment Requirement is as follows:

 

IV.B.1(a)                      Advances

A Member is required to hold Class B Stock in an amount equal to
4.50 percent (4.50%) of the Member’s outstanding principal balances of advances
from the Bank.

 

IV.B.1(b)                      Advance
Commitments

A Member is required to hold Class B Stock in an amount equal to
0.00 percent (0.00%) of the amount of the Member’s advance commitments with the
Bank adjusted by the appropriate conversion factor found in Table 2 of 12
C.F.R. §932.4(f).

 

IV.B.1(c)                       Standby
Letters of Credit

A Member is
required to hold Class B Stock in an amount equal to 4.50 percent (4.50%)
of the amount of standby letters of credit issued by the Bank on behalf of the
Member adjusted by the appropriate conversion factor in Table 2 of 12 C.F.R. §932.4(f).

 

IV.B.1(d)                      Intermediated
Derivative Contracts

A Member is required to
hold Class B Stock in an amount equal to 4.50 percent (4.50%) of the value
of intermediated derivative contracts between the Member and the Bank which
shall be equal to the sum of (1) the Bank’s current credit exposure for
all intermediated derivative contracts between the Bank and the Member, as
calculated in accordance with 12 C.F.R. §932.4(h)(1), and (2) the Bank’s
potential future 

 

19

 

exposure for all
intermediated derivative contracts between the Bank and the Member, as
calculated in accordance with 12 C.F.R. §932.4(h)(2).

 

IV.B.1(e)                       Acquired
Member Assets

A Member is
required to hold Class B Stock in an amount equal to 4.50 percent (4.50%)
of the principal balance of Acquired Member Assets acquired by the Bank from
the Member that remain on the Bank’s balance sheet.

 

IV.B.1(f)                          Delivery
Commitments for Acquired Member Assets

A member is
required to hold Class B Stock in an amount equal to 0.00 percent (0.00%) of the amount of the delivery commitments
issued to a Member for Acquired Member Assets to be held on the Bank’s balance
sheet adjusted by the appropriate conversion factor found in Table 2 of 12
C.F.R. §932.4(f).

 

Each Member will be
required to purchase and maintain, as a component of its Total Stock Investment
Requirement, the amounts of Class B Stock indicated above while the
Activity-Based Assets to which such requirement applies remain
outstanding.  Each Member’s
Activity-Based Stock Investment Requirement will change from time to time (as
often as daily) as the Member’s activity with the Bank changes.  On and after the Effective Date a Member that
engages the Bank with respect to an Activity-Based Asset must comply with any
associated requirement to purchase additional Class B Stock at the time
the Activity-Based Asset transaction occurs.

 

IV.B.2.Range of
Allowable Activity-Based Stock Investment Requirements

The Board of Directors
may amend the Activity-Based Stock Investment Requirement, but any such change
must fall within the following ranges:

 

IV.B.2(a)                      Advances

A Member may be
required to hold Class B Stock in an amount ranging between 3.00 percent
(3.00%) and 6.00 percent (6.00%) of the Member’s outstanding principal balances
of advances from the Bank.

 

20

 

IV.B.2(b)                      Advance
Commitments

A Member may be required to hold Class B Stock in an amount
ranging between 0.00 percent (0.00%) and 6.00 percent (6.00%) of the amount of
the Member’s advance commitments with the Bank adjusted by the appropriate
conversion factor found in Table 2 of 12 C.F.R. §932.4(f).

 

IV.B.2(c)                       Standby
Letters of Credit

A Member may be
required to hold Class B Stock in an amount ranging between 3.00 percent
(3.00%) and 6.00 percent (6.00%) of the amount of standby letters of credit
issued by the Bank on behalf of the Member adjusted by the appropriate
conversion factor in Table 2 of 12
C.F.R. §932.4(f).

 

IV.B.2(d)                      Intermediated
Derivative Contracts

A Member may be
required to hold Class B Stock in an amount ranging between 3.00 percent
(3.00%) and 6.00 percent (6.00%) of the value of intermediated derivative
contracts between the Member and the Bank which shall be equal to the sum of (1) the
Bank’s current credit exposure for all intermediated derivative contracts
between the Bank and the Member, as calculated in accordance with 12 C.F.R.
§932.4(h)(1), and (2) the Bank’s potential future exposure for all
intermediated derivative contracts between the Bank and the Member, as
calculated in accordance with 12 C.F.R. §932.4(h)(2).

 

IV.B.2(e)                       Acquired
Member Assets

A Member may be
required to hold Class B Stock in an amount ranging from 0.00 percent
(0.00%) to 6.00 percent (6.00%) of the principal balance of Acquired Member
Assets acquired by the Bank from the Member that remain on the Bank’s balance
sheet.

 

IV.B.2(f)                          Delivery
Commitments for Acquired Member Assets

A Member may be
required to hold Class B Stock in an amount ranging from 0.00 percent 

 

21

 

(0.00%) to 6.00
percent (6.00%) of the amount of the delivery commitments issued to a Member
for Acquired Member Assets to be held on the Bank’s balance sheet adjusted by
the appropriate conversion factor found in Table 2 of 12 C.F.R. §932.4(f).

 

IV.B.3.Notice of
Withdrawal from Membership

In the event that a
Member provides the Bank with written notice of its intent to withdraw from
Membership, the Activity-Based Stock Investment Requirement applicable to the
Member’s Activity-Based Assets in existence on the date of the Member’s notice
of intent to withdraw from Membership is received by the Bank shall not be
increased during the pendency of said notice. 
After the date the Bank has received written notice from a Member of its
intent to withdraw from Membership, if the Member is required to purchase
additional Class B Stock to meet its Total Stock Investment Requirement as
a result of a new Activity-Based Asset that the Member engages in with the
Bank, the Activity-Based Stock Investment Requirement applicable to such
Activity-Based Asset on the date of the transaction shall apply but shall not
be increased subsequently during the pendency of said notice.  If such a withdrawing institution is no
longer a Member it shall nevertheless be required to maintain sufficient Class B
Stock to meet the Activity-Based Stock Investment Requirement applicable to all
outstanding Activity-Based Assets in accordance with this §IV.B.3 of the
Capital Plan for as long as any such Activity-Based Assets remain outstanding.

 

IV.B.4.Requirement
upon Termination of Membership

In the event that a
Member’s Membership terminates in accordance with §§IV.F.2, IV.F.4 or IV.F.5 of
the Capital Plan, the terminated Member or its successor shall nevertheless be
required to maintain sufficient Class B Stock to meet the Activity-Based Stock
Investment Requirement applicable to all outstanding Activity-Based Assets.
However, such Activity-Based Stock Investment Requirement shall not be
increased on and after the date of the termination of the Member’s Membership.

 

IV.B.5.Pre-existing
Non-Advance Activity-Based Assets

Acquired Member Assets or
binding commitments by the Bank to provide or purchase Acquired Member Assets
that are in existence prior to the Effective Date shall be subject exclusively
to contractual requirements to hold Capital Stock, if any, that were in
existence immediately prior to the Effective Date until they are no 

 

22

 

longer held by the Bank,
and shall not be subject to requirements set forth from time to time in §IV.B
of the Capital Plan.

 

IV.C.                 Total
Stock Investment Requirement

 

IV.C.1.General

The Total Stock
Investment Requirement for a Member is the amount of Class B Stock that
equals the sum of the Member’s Membership Stock Investment Requirement and the
Member’s Activity-Based Stock Investment Requirement, in all events rounded up
to the next even $100 increment.  These
amounts must be maintained at all times by each Member and adjusted, as
necessary, to reflect adjustments in the bases upon which they are calculated.  The Board of Directors has a continuing
obligation to review and adjust the Total Stock Investment Requirement, as
necessary to ensure that the Bank remains in compliance with each of its
Minimum Regulatory Capital Requirements, provided that the Board of Directors
in conducting such review may take into account all components of the Bank’s
Permanent Capital and Total Capital, including, without limitation, shares of Class B
Stock held by Members and Other Institutions in excess of their Total Stock
Investment Requirements.

 

IV.C.2.Bank Monitoring
and Notification

The Bank will, on a
continuing basis, monitor each Member’s Total Stock Investment Requirement and
the Member’s actual Class B Stock ownership and will transmit, send or
give the Member written notice of the need to purchase additional Class B
Stock within seven (7) days of the date that the Bank determines that a
deficiency exists.  Such a Member will be
required to purchase an amount of Class B shares (rounded to the next
higher $100 increment) needed to satisfy its deficiency within seven (7) days
of the date that the Bank sends, transmits, or gives notice to the Member of
such a deficiency.

Prompt Compliance with
Adjustments to Membership and Activity-Based Stock Investment Requirements At
least thirty (30) days but no more that forty-five (45) days prior to
implementing any adjustment to the Membership Stock Investment Requirement or
the Activity-Based Stock Investment Requirement the Bank will transmit, send or
give Members written notice of its intent to do so and the effective date of
such adjustment.  A Member must purchase
any additional Class B Stock required to comply with such adjustment on or
before the date specified by the Bank for such adjustment.  Alternatively, a Member may achieve
compliance with such adjustment by sufficiently reducing its volume of
Activity-Based Assets on or 

 

23

 

before the date specified
by the Bank for such adjustment.  The
Bank reserves the right to determine whether to apply any adjustment to the
Activity-Based Stock Investment Requirement to Activity-Based Assets that are
in existence prior to the effective date of the adjustment and/or to
Activity-Based Assets in which the Member engages the Bank on or after the
effective date of adjustment to the Activity-Based Stock Investment
Requirement.

 

IV.D.                 Excess
Stock Investment

 

IV.D.1.Member Purchase
and Retention of Excess Stock

A Member may hold Class B
Stock in excess of its Membership Stock Investment Requirement, its
Activity-Based Stock Investment Requirement, or its Total Stock Investment
Requirement, subject to the limitations of 12 C.F.R. § 925.23.  The Bank from time to time may, in its
discretion and subject to conditions established by the Bank, offer to issue
excess shares of Class B Stock to Members, subject to the limitations of
12 C.F.R. § 925.23.  In the event the
Bank determines to issue such excess shares of Class B Stock, Members will
be provided access to a disclosure, either in electronic or written form, prior
to the Member’s purchase of excess shares of Class B Stock, regarding the
nature of the Member’s investment in such excess shares of Class B
Stock.  The Bank reserves the right to
impose a limit on Member holdings of excess shares of Class B Stock at any
time.  Subject to the provisions of
§§III.A.2 and III.A.3 of the Capital Plan, the Bank may, at any time,
repurchase excess shares of Class B Stock.

 

IV.D.2.Capital
Treatment of Excess Stock

All issued and
outstanding shares of Class B Stock shall be included in any calculation
of the Bank’s compliance with the capital requirements under the Capital Plan,
the Regulations and the Act.

 

IV.E.                 Transfers
of Stock

 

IV.E.1.Conditions for
Approval of Transfers

Subject to compliance
with 12 C.F.R. §931.6, and with the prior written approval of the Bank, and in
compliance with procedures specified by the Bank from time to time, a Member,
or Other Institution, may transfer, at par value, any Class B Stock that
it holds in excess of its Total Stock Investment Requirement to any other
Member or institution that has satisfied all conditions for 

 

24

 

becoming a Member other
than the purchase of the Class B Stock required to satisfy its Total Stock
Investment Requirement.  A Member, or
Other Institution, that wishes to transfer Class B Stock shall identify in
a written notice to the Bank the particular shares that are to be transferred
by reference to the date acquired, and the manner in which the shares subject
to notice were acquired (i.e., whether by purchase at par value or as a stock
distribution by the Bank).  If a Member,
or Other Institution, fails to identify the shares to be transferred, the
shares subject to transfer shall be determined using a first acquired, first
transferred method of identification. 
All Class B Stock transfers will be effective upon being recorded
on the appropriate books and records of the Bank.  Approval for all transfers is subject to a
requirement, that following the transfer, the transferring Member, or Other
Institution, would continue to hold sufficient Class B Stock to meet the
Member’s, or Other Institution’s, Total Stock Investment Requirement.

 

IV.E.2.Relation of
Redemption Notices to Transfers of Stock

In the event that the
Bank approves the transfer of any shares of Class B Stock on which a
Member, or Other Institution, has filed a Redemption Notice, such Redemption
Notice will not apply to the transferred shares of Class B Stock, provided
that this provision shall not apply in the case of transfers occurring pursuant
to §§IV.F.3 and IV.F.4 of the Capital Plan.

 

IV.E.3.Transfers
Occurring in Connection with Mergers or Consolidations

Transfers of Class B
Stock occurring pursuant to §§IV.F.3 and IV.F.4 of the Capital Plan shall be
deemed to be approved by the Bank as of the cancellation of the disappearing
Member’s charter for purposes of this §IV.E of the Capital Plan.

 

IV.F.                 Membership
Termination

 

IV.F.1.Voluntary
Withdrawal from Membership

 

IV.F.1(a)                      Written
Notification

A Member may withdraw
from Membership at any time by providing written notice of its intent to
withdraw from Membership to the Bank.  A
Member may cancel a notice of withdrawal prior to its effective date by
providing the Bank with written notice of such cancellation and any such
cancellation will result in the imposition of the Redemption Cancellation Fee
with respect to the Member’s Class B Stock unless the Board 

 

25

 

of Directors decides it
has a bona fide business purpose for waiving the imposition of the fee, and the
waiver is consistent with Section 7(j) of the Act.

 

IV.F.1(b)                      Access
to Benefits of Membership

Until the effective date
of a Member’s withdrawal from the Bank, such Member will continue to have
access to the benefits of Membership, provided that the Bank need not commit to
providing any further services, including advances, to a withdrawing Member
that would mature or otherwise terminate subsequent to the effective date of
the Member’s withdrawal.  On and after
the effective date of the Member’s withdrawal, regardless of whether the former
Member is required to maintain an investment in the Class B Stock, the
former Member will no longer have the benefits of Membership including access
to the Bank’s products and services and will no longer have any voting rights
other than as provided in the Regulations, but the former Member will still be
entitled to any and all dividends declared on its Class B Stock until the Class B
Stock is redeemed or repurchased by the Bank.

 

IV.F.1(c)                       Finance
Board Notification

The Bank shall notify the
Finance Board within ten (10) calendar days of the receipt of any notice
of intent to withdraw from Membership or cancellation of a notice of withdrawal
from Membership.

 

IV.F.1(d)                      Finance
Board Certification

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

 

IV.F.1(e)                       Disposition
of Claims

The Bank shall determine
an orderly manner for the disposition of Activity-Based Assets outstanding to a
Member that withdraws from Membership. 
The Bank may allow the withdrawing Member to leave its obligations to
the Bank outstanding for any length of time up to and including maturity.  The Bank may, in 

 

26

 

its discretion, require
immediate settlement of all obligations of the withdrawing Member on the
effective date of the Member’s withdrawal, in which case the Member shall be
subject to any applicable prepayment fees. 
The Stock Redemption Period for the Class B Stock held by a Member
as of the date of the Bank’s receipt of the written notification of the Member’s
intent to withdraw from Membership and not already subject to a Redemption
Notice shall commence as of that date. 
The Stock Redemption Period for shares of Class B Stock acquired or
received by such a withdrawing Member after the date that its notice of intent
to withdraw is received by the Bank will commence on the date such shares are
acquired or received.  If Activity-Based
Assets remain outstanding beyond the effective date of the termination of
Membership, the Bank will not redeem Class B Stock to the extent that the
former Member’s outstanding Class B Stock investment would fall below the
minimum Activity-Based Stock Investment Requirement corresponding to such
outstanding Activity-Based Assets.

 

Class B Stock held
by the Member as of the effective date of its withdrawal from Membership shall
not be deemed automatically to be excess Class B Stock solely by virtue of
the termination of the Member’s Membership. 
Upon the effective date of a Member’s withdrawal from Membership, such a
terminated Member shall not be deemed to be subject to the Membership Stock
Investment Requirement.  The Bank may
repurchase Class B Stock held by the terminated Member in excess of the
minimum Total Stock Investment Requirement as Activity-Based Assets are
extinguished or repurchased by the terminated Member.

 

IV.F.1(f)                          Effective
Date of Withdrawal

The Membership of a
Member that has submitted a notice of intent to withdraw, and that has not
cancelled such notice, shall terminate as of the date on which the last
applicable Stock Redemption Period ends for Class B Stock that the Member
is required to hold under the Membership Stock Investment Requirement as of the
date that the Member’s written notification of its intent to withdraw from
Membership was received by the Bank.

 

27

 

IV.F.2.Involuntary
Termination of Membership

 

IV.F.2(a)                      Written
Notification

The Board of Directors
may terminate the Membership of any Member that: (i) fails to comply with
any requirement of the Act, any regulation adopted by the Finance Board, or any
requirement of the Capital Plan, (ii) becomes insolvent or otherwise
subject to the appointment of a conservator, receiver, or other legal custodian
under federal or state law, or (iii) would jeopardize the safety and
soundness of the Bank if it were to remain a Member.

 

IV.F.2(b)                      Access
to Benefits of Membership

A Member whose Membership
is terminated involuntarily shall cease being a Member of the Bank as of the
date on which the Board of Directors acts to terminate the Membership.  After that date the institution whose Membership
has been terminated shall have no right to obtain any of the benefits of
Membership including access to the Bank’s products and services and will no
longer have any voting rights, other than as provided in the Regulations, but
shall be entitled to receive any dividends declared on its Class B Stock
until the Class B Stock is redeemed or repurchased by the Bank.

 

IV.F.2(c)                       Disposition
of Claims

The Bank shall determine
an orderly manner for the disposition of Activity-Based Assets outstanding to a
Member whose Membership has been terminated. 
The Bank may allow the Member whose Membership has been terminated to
leave its obligations to the Bank outstanding for any length of time up to and
including maturity.  The Bank may, in its
discretion, require immediate settlement of all obligations of the Member on
the date on which the Member’s Membership is terminated, in which case the
Member shall be subject to any applicable prepayment fees.  The Stock Redemption Period for the Class B
Stock owned by a Member as of the date of its termination and not already
subject to a Redemption Notice shall commence on the date that the Member’s
Membership is terminated.  The Stock
Redemption Period for Class B Stock acquired or received by a Member after
the date of the termination of its Membership shall commence on the date of
such 

 

28

 

acquisition or
receipt.  If Activity-Based Assets remain
outstanding beyond the effective date of the termination of Membership, the
Bank will not redeem Class B Stock to the extent that the former Member’s
outstanding Class B Stock investment would fall below the minimum
Activity-Based Stock Investment Requirement corresponding to such outstanding
Activity-Based Assets.

 

Class B Stock held
by the Member as of the effective date of its termination shall not be deemed
automatically to be excess Class B Stock solely by virtue of the
termination of the Member’s Membership; provided however, that on and after the
effective date of termination, any Class B Stock that is not required to
meet the terminated Member’s Membership Stock Investment Requirement on the
date on which the Member’s Membership was terminated, or its Activity-Based
Stock Investment Requirement shall be excess Class B Stock that shall be
subject to repurchase by the Bank; and provided further that effective upon the
expiration of the Stock Redemption Period that commences on the date that the
Member’s Membership is terminated, the terminated Member’s Membership Stock
Investment Requirement shall be deemed to be zero.  However, notwithstanding any other provision
of this Capital Plan, in the event that (a) a receiver, conservator, or
other legal custodian has been appointed for the Member, and (b) the Bank
has terminated Member’s Membership, the terminated Member’s Membership Stock
Investment Requirement shall be deemed to be zero.

 

IV.F.3.Merger or
Consolidation of Members

 

IV.F.3(a)                      Termination
of Charter and Stock Redemption Period

If a Member’s Membership
is terminated as a result of a Member’s merger or other consolidation into
another Member, the Membership shall terminate upon cancellation of the
disappearing Member’s charter.  On that
date, the Class B Stock held by the disappearing Member will be
transferred on the books of the Bank into the name of the surviving
Member.  The Stock Redemption Period for
the Class B Stock previously 

 

29

 

held by the disappearing
Member shall not be deemed to commence on the date on which the disappearing
Member’s charter is cancelled, but shall commence only upon:  (i) the Bank’s receipt of a Redemption
Notice, (ii) the Bank’s receipt of the surviving Member’s written notice
of its intent to withdraw from Membership, (iii) the surviving Member’s
termination of Membership as a result of merger or consolidation into a member
of another FHLBank or into a nonmember, (iv) the surviving Member’s
termination from Membership as a result of the relocation of its principal
place of business, or (v) the involuntary termination of the surviving
Member’s Membership.  Stock Redemption
Periods applicable to a Redemption Notice or Notices received by the Bank from
the disappearing Member prior to the effective date of the cancellation of the
disappearing Member’s charter shall continue to run with respect to the
surviving Member from the date such Redemption Notice was received by the Bank,
subject to the provisions of §III.A.1 of the Capital Plan.

 

IV.F.3(b)                      Stock
Requirement of Surviving Member

As of the effective date
of the cancellation of the disappearing Member’s charter, the surviving Member’s
Membership Stock Investment Requirement shall be immediately increased by the
amount of the disappearing Member’s Membership Stock Investment Requirement
immediately prior to the cancellation of its charter.  Future calculations of the surviving Member’s
Membership Stock Investment Requirement shall be as determined in accordance
with §IV.A of the Capital Plan, provided that if the most recently available
call report data for the surviving Member does not include the assets of the
disappearing Member, then, in that event, the Membership Stock Investment
Requirement for the surviving Member will be calculated by adding together the
most recently available call report data of the disappearing Member and of the
surviving Member.  As of the effective
date of the cancellation of the disappearing Member’s charter, the surviving
Member’s Activity-Based Stock Investment Requirement will be calculated based
on its current Activity-Based Assets including those acquired from the
disappearing Member.

 

30

 

IV.F.4.Merger or
Consolidation of Member into a Member of another FHLBank or into a Nonmember

 

IV.F.4(a)                      General

If a Member’s Membership
is terminated as a result of the Member’s merger or consolidation into a member
of another FHLBank or a nonmember, the Membership shall terminate as of the
date on which the Member’s charter is cancelled.  On that date, the Class B Stock held by
the disappearing Member will be transferred on the books of the Bank into the
name of the surviving institution.  After
that date the terminated Member (or its successor) shall have no right to
obtain any of the benefits of Membership including access to the Bank’s
products and services and will no longer have any voting rights other than as
provided in the Regulations, but shall be entitled to receive any dividends
declared on its Class B Stock until the Class B Stock is redeemed or
repurchased by the Bank.

 

IV.F.4(b)                      Disposition
of Claims

The Bank shall
determine an orderly manner for the disposition of Activity-Based Assets outstanding
to a Member whose Membership has been terminated.  The Bank may allow the Member whose
Membership has been terminated (or its successor) to leave its obligations to
the Bank outstanding for any length of time up to and including maturity.  The Bank may, in its discretion, require
immediate settlement of all obligations of the Member on the date on which the
Member’s Membership is terminated, in which case the Member shall be subject to
any applicable prepayment fees.  The
Stock Redemption Period for the Class B Stock then held by the former
Member (or its successor) and not already subject to a Redemption Notice shall
be deemed to commence on the date on which the Member’s charter is
cancelled.  The Stock Redemption Period
for any Class B Stock acquired or received by the terminated Member (or
its successor) after the date of the termination of its Membership shall
commence on the date of acquisition or receipt.

 

If Activity-Based
Assets remain outstanding beyond the effective date of the termination of
Membership, the Bank will not redeem Class B Stock to the extent that the
terminated Member’s outstanding Class B 

 

31

 

Stock investment
would fall below the minimum Activity-Based Stock Investment Requirement
corresponding to such outstanding Activity-Based Assets.

 

Class B Stock
held by the Member as of the effective date of its termination shall not be
deemed automatically to be excess Class B Stock solely by virtue of the
termination of the Member’s Membership; provided however, that on and after the
effective date of termination any Class B Stock that is not required to
meet the terminated Member’s Membership Stock Investment Requirement on the
date on which the Member’s Membership was terminated, or its Activity-Based
Stock Investment Requirement, shall be excess Class B Stock that shall be
subject to repurchase by the Bank, provided that the terminated Member’s
Membership Stock Investment Requirement shall be deemed to be zero as of the
next recalculation by the Bank of the Membership Stock Investment Requirement
in accordance with §IV.A of the Capital Plan.

 

IV.F.4(c)                       Acquiring
Institution Applies for Bank Membership

If the institution
into which the Member merges or is consolidated is eligible for Membership and
intends to become a Member of the Bank, it must provide written notification to
the Bank of its intention to apply for Membership within sixty (60) calendar
days of the cancellation of the charter of the former Member.

 

Following the
submission of this notification, the application for Membership must be
submitted within sixty (60) calendar days. 
If the institution is approved for Membership, then it must purchase the
appropriate amounts, if any, of Class B Stock to comply with its minimum Total
Stock Investment Requirement.  Such
purchase must be made within the timeframe specified in §IV.A.3 of the Capital
Plan for its Membership Stock Investment Requirement and, with respect to any
Activity-Based Stock Investment Requirement, prior to engaging in such
Activity-Based Assets.

 

32

 

If the institution
does not provide required notification and application for Membership within
the respective required time periods, or is disapproved for Membership, the
provisions of §IV.F.4(b) of the Capital Plan will apply with respect to
the disposition of Activity-Based Assets and redemption and repurchase of Class B
Stock.

 

IV.F.5.Relocation of
Principal Place of Business

 

IV.F.5(a)                      General

If a Member’s Membership
is terminated as a result of the relocation of the Member’s principal place of
business, as defined in the Regulations, the Membership shall terminate on the
date on which the transfer of membership under the Regulations becomes
effective.  After that date the
terminated Member shall have no right to obtain any of the benefits of
Membership including access to the Bank’s products and services and will no
longer have any voting rights other than as provided in the Regulations, but
shall be entitled to receive any dividends declared on its Class B Stock
until the Class B Stock is redeemed or repurchased by the Bank.

 

IV.F.5(b)                      Disposition
of Claims

The Bank shall determine
an orderly manner for the disposition of Activity-Based Assets outstanding to a
Member whose Membership has been terminated. 
The Bank may allow the Member whose Membership has been terminated to
leave its obligations to the Bank outstanding for any length of time up to and
including maturity.  The Bank may, in its
discretion, require immediate settlement of all obligations of the Member on
the date on which the Member’s Membership is terminated, in which case the
Member shall be subject to any applicable prepayment fees.  The Stock Redemption Period for the Class B
Stock then held by the Member and not already subject to a Redemption Notice
shall be deemed to commence on the date on which the Member’s relocation
becomes effective.  The Stock Redemption
Period for any Class B Stock acquired or received by the terminated Member
after the date of the termination of its Membership shall commence on the date
of acquisition or receipt.

 

33

 

If Activity-Based Assets
remain outstanding beyond the effective date of the termination of Membership,
the Bank will not redeem Class B Stock to the extent that the terminated
Member’s outstanding Class B Stock investment would fall below the
Activity-Based Stock Investment Requirement corresponding to such outstanding
Activity-Based Assets.

 

Class B Stock held by
the Member as of the effective date of its termination shall not be deemed
automatically to be excess Class B Stock solely by virtue of the
termination of the Member’s Membership, provided however, that on and after the
effective date of termination any Class B Stock that is not required to
meet the terminated Member’s Membership Stock Investment Requirement on the
date on which the Member’s Membership was terminated, or its Activity-Based
Stock Investment Requirement shall be excess Class B Stock that shall be
subject to repurchase by the Bank; and provided further that effective upon the
expiration of the Stock Redemption Period that commences on the date that the
Member’s Membership is terminated, the terminated Member’s Membership Stock
Investment Requirement shall be deemed to be zero.

 

§V.                           Transition,
Review, and Amendments

 

V.A.                      Transition

 

V.A.1.Effective Date

On a date determined by
the Board of Directors, which shall not occur more than thirty-six (36) months
after final written approval by the Finance Board for the Bank to implement the
Capital Plan, which date shall be subject to adjustment by the Finance Board,
the Capital Plan shall be implemented by the conversion of the Capital Stock of
the Bank as described in §V.A.2 of the Capital Plan.

 

V.A.1(a)                          Bank
Notification to Members

The Opt-Out Date is sixty
(60) days prior to the Effective Date. 
Not less than forty-five (45) nor more than sixty (60) days prior to the
Opt-Out Date, a copy of the Capital Plan as approved by the Finance Board, an
estimate of each Member’s individual Total Stock Investment Requirement, the
disclosures required by Section 933.5 of the Regulations, including a 

 

34

 

description of a Member’s
option to withdraw from Membership prior to the implementation of the Capital
Plan, and a notification of a Member’s opportunity to request that the Bank
repurchase shares of Class B Stock in excess of the Member’s Total Stock
Investment Requirement on the Effective Date will be transmitted, sent or given
to each Member.

 

V.A.1(b)                          Member
Notification of Intent to Withdraw on or before Opt-Out Date

 

V.A.1(b)(1)                                                                                                                                                             General

Members will be informed
that written notice of the Member’s intent to withdraw from Membership must be
received by the Finance Board and the Bank no later than the Opt-Out Date.  The Membership of a Member whose written
notice of intent to withdraw from Membership is received by the Finance Board
and the Bank on or before the Opt-Out Date shall terminate on the Effective Date,
and such Member’s Capital Stock shall be redeemed and retired and shall not be
converted into Class B Stock.

 

V.A.1(b)(2)                                                                                                                                     Disposition of Claims; Collateral
Deficiency Upon Withdrawal

The Bank shall determine
an orderly manner for the disposition of Activity-Based Assets outstanding to
the withdrawing Member.  The Bank may
allow the withdrawing Member to leave its obligations to the Bank outstanding
for any length of time up to and including maturity.  The Bank may, in its discretion, require
immediate settlement of all obligations of the Member on the date on which the
Member’s Membership is terminated, in which case the Member shall be subject to
any applicable prepayment fees.  In the
case of such a withdrawing Member, if on the Effective Date the Bank reasonably
determines that there is an existing or anticipated collateral deficiency
related to any obligations owed by the Member to the Bank, and the Member has
failed to deliver additional collateral to resolve the existing or anticipated
collateral deficiency to the Bank’s satisfaction, the Bank shall redeem all of
the Member’s Capital Stock and remit the 

 

35

 

proceeds to a deposit
account as collateral security for such obligations until all such obligations
have been satisfied or the existing or anticipated deficiency is resolved to
the Bank’s satisfaction.

 

V.A.1(c)                           Affirmative Election to Convert Shares

Any
Member whose written notice of intent to withdraw from Membership is not
received by the Finance Board and the Bank on or prior to the Opt-Out Date
shall be deemed to have affirmatively elected to convert its existing Capital
Stock to Class B Stock on the Effective Date pursuant to the Capital Plan.

 

V.A.1(c)(1)                                                                                                                                      Notice of Intent to Withdraw after
Opt-Out Date

In the event a Member
that is deemed to have affirmatively elected to convert its existing Capital
Stock to Class B Stock files written notice of its intent to withdraw from
Membership that is received by the Finance Board and the Bank after the Opt-Out
Date, the Stock Redemption Period for the Class B Stock issued to the
Member upon the conversion of the shares of Capital Stock that the Member held
as of the date its notice of intent to withdraw is received will be deemed to
commence on the date that the notice of intent to withdraw is received by the
Finance Board and the Bank.

 

V.A.1(c)(2)                                                                                                                                      Additional Shares Received Prior to
Effective Date

If a Member described in
the preceding paragraph acquires or receives any additional shares of the Bank’s
Capital Stock after the date its notice of withdrawal is received by the
Finance Board and the Bank and before the Effective Date, the Stock Redemption
Period for the Class B Stock issued to the Member upon the conversion of
such Capital Stock will be deemed to commence on the date that such shares of
Capital Stock were acquired or received. 
If a Member described in the preceding paragraph acquires or receives
any shares of Class B Stock on or after the Effective Date other than
through the conversion occurring on the Effective Date, the Stock Redemption
Period for such shares shall 

 

36

 

commence on the date such
shares of Class B Stock were acquired or received.

 

V.A.1(d)                          Treatment
of Former Members

With respect to any
institution the Membership of which has terminated on or prior to the Effective
Date other than by virtue of §V.A.1(b) of the Capital Plan that continues
to hold Capital Stock, such Capital Stock shall be redeemed for cash and
retired on or before the Effective Date and shall not be converted into Class B
Stock.  The Bank shall determine an
orderly manner for the disposition of Activity-Based Assets outstanding to such
an institution.  The Bank may allow such
an institution to leave its obligations to the Bank outstanding for any length
of time up to and including maturity. 
The Bank may, in its discretion, require immediate settlement of all
obligations of such an institution on or before the Effective Date, in which
case the institution shall be subject to any applicable prepayment fees.  In the event that the Bank reasonably
determines that there is an existing or anticipated collateral deficiency
related to any obligations owed by such an institution to the Bank and the
institution has failed to deliver additional collateral to resolve the existing
or anticipated collateral deficiency to the Bank’s satisfaction, upon redeeming
the institution’s Capital Stock the Bank shall remit the proceeds to a deposit
account as collateral security for such obligations until all such obligations
have been satisfied or the anticipated deficiency is resolved to the Bank’s
satisfaction.

 

V.A.1(e)                           Member
Opportunity to Request Repurchase of Excess Stock

Members will be informed
that they may submit a written notice to the Bank requesting, that to the
extent that the Member upon the conversion of its Capital Stock to Class B
Stock on the Effective Date holds shares of Class B Stock in excess of the
Member’s Total Stock Investment Requirement, that the Bank exercise its
discretion and repurchase a Member- specified percentage of the Member’s shares
of Class B Stock in excess of the Member’s Total Stock Investment
Requirement on the Effective Date.  In
order to be considered under this provision a Member’s written notice must be
received by the Bank by the

 

37

 

Repurchase Request Notice
Date, which is sixty (60) days prior to the Effective Date.  The Bank will treat all written notices
received by the Bank by the Repurchase Request Notice Date equally.

 

The Bank shall have the
sole discretion to determine the extent, if any, to which it will repurchase Class B
Stock in response to written notices from Members and any such repurchases
shall be subject to the limitations set forth in §III.A.3 of the Capital Plan,
and shall be rounded down to the next even $100 increment.  To the extent that the Bank determines not to
repurchase all shares of Class B Stock that are subject to such written
notices, the Bank shall allocate such repurchases among Members that have
submitted such notices on a pro rata basis. 
This provision shall be deemed to satisfy the notice period set forth in
§ of the Capital Plan.

 

Any request by a Member
for the Bank to repurchase shares of Class B Stock that is received by the
Bank after the Repurchase Request Notice Date or prior to the Effective Date
shall not be considered by the Bank.

 

V.A.2.Plan of
Reorganization

The following actions,
which constitute the Bank’s Plan of Reorganization within the meaning of Section 368
of the Internal Revenue Code of 1986, as amended, and the regulations
thereunder, are to be taken in order to implement the Capital Plan.

 

V.A.2(a)                          Calculation
of Total Stock Investment Requirements

On the Effective Date,
each Member’s Total Stock Investment Requirement will be calculated by applying
the Membership Stock Investment Requirement in accordance with the calculation
method set forth in §IV.A of the Capital Plan and by applying the
Activity-Based Stock Investment Requirement determined as of the Effective
Date.

 

V.A.2(b)                          Identification
of Member Stock Positions

With respect to each
Member, the Bank will determine whether upon the conversion of the Member’s
current holdings of Capital Stock for Class B Stock, the Member would exceed
its Total Stock Investment Requirement, exactly meet its Total Stock Investment

 

38

 

Requirement, or not meet
its Total Stock Investment Requirement.

 

V.A.2(c)                           Conversion
of Existing Capital Stock into Class B Stock

On the Effective Date,
prior to the commencement of the Bank’s business day the outstanding shares of
Capital Stock shall automatically be deemed converted into shares of an equal
amount of par value of Class B Stock without any action on the part of the
Members.  The Bank will reflect that
conversion by appropriate book entries. 
All such shares of Capital Stock shall become null and void and shall
cease to represent any ownership interest in the Bank.

 

V.A.2(d)                          Members
that do not meet their Total Stock Investment Requirement

If after all of a Member’s
holdings of Capital Stock as of the Effective Date have been converted into Class B
Stock the Member does not meet its Total Stock Investment Requirement, the Bank
shall notify the Member of the extent of the deficiency.  If the Member was a Member as of November 12,
1999, the Member shall have sixty (60) calendar days in which to purchase
sufficient additional shares of Class B Stock to cause the Member to meet
its Total Stock Investment Requirement. 
Without regard to the foregoing, such a Member must immediately purchase
any additional Class B Stock necessary to satisfy the Activity-Based Stock
Investment Requirements that arise from that Member’s new Activity-Based Asset
transactions occurring on or after the Effective Date.  If the Member became a Member after November 12,
1999, the Member must purchase sufficient additional shares of Class B
Stock on the Effective Date to cause the Member to meet its Total Stock
Investment Requirement as of the Effective Date.

 

V.A.2(e)                            Repurchase of Class B
Stock on Effective Date

Following the conversion
of Capital Stock to Class B Stock on the Effective Date, the Bank to the
extent that it has determined to repurchase excess shares of Class B Stock
held by Members that submitted written notices to the Bank in accordance with
§V.A.1(e) of the 

 

39

 

Capital Plan will
repurchase such shares of Class B Stock.

 

V.A.3.Good Faith
Determination

Management of the Bank
has made a good faith determination that the Bank will be able to implement the
Capital Plan and that the Bank will be in compliance with its Minimum
Regulatory Capital Requirements immediately after the Capital Plan is
implemented.  An analysis of the Bank’s
projected capital position after implementation of the Capital Plan has been
provided to the Finance Board.

 

V.B.                      Review
and Amendments

 

V.B.1.Annual Review of
the Capital Plan

At least annually, the
Board of Directors shall review the Capital Plan and the Board of Directors may
from time to time consider potential amendments to the Capital Plan.

 

V.B.2.Amendments to
the Capital Plan

Any amendments adopted by
the Board of Directors will require submission of the amended Capital Plan to
the Finance Board for approval prior to the implementation of the amended
Capital Plan.  Adjustments listed in
§§IV.A.4 and IV.B.2 of the Capital Plan related to changes to a Member’s
Membership Stock Investment Requirement or Activity-Based Stock Investment
Requirement within the ranges permitted by the Capital Plan are not amendments
to the Capital Plan.  The Bank will
transmit, send or give its Members notice in writing at least thirty (30)
calendar days prior to the effective date of any amendment to the Capital Plan
to be implemented pursuant to Finance Board approval in accordance with this
§V.B.2 of the Capital Plan.

 

§VI.                       Miscellaneous

 

VI.A.                 Interpretation
of the Capital Plan

The Capital Plan takes
into account the applicable provisions of the Act and the Regulations and it is
not intended to contradict such provisions. If any restatement of the Act or a
Regulation contained in the Capital Plan conflicts with the actual provisions
of the Act or the Regulation, the actual provisions of the Act or the
Regulation shall govern.  In this Capital
Plan unless the context otherwise requires, words describing the singular
number shall include the plural and vice versa.

 

40

 

VI.B.                 Notices

 

VI.B.1.Notices by the
Bank

Written notices
transmitted, sent or given by the Bank under this Capital Plan shall be
addressed to the chief executive officer of the Member, or Other Institution,
or such other person, designated by the Member, or Other Institution, in a
written notice in accordance with §VI.B.2 of the Capital Plan received by the
Bank.  Such written notices shall be
directed to the postal address, physical address or fax number appearing in the
Bank’s records from time to time.

 

VI.B.2.Notices to the
Bank

Written notices given to
the Bank in accordance with the provisions of the Capital Plan shall be
addressed to the President of the Bank at the Bank’s postal address, physical
address, or by fax to (617) 292-9645 and shall be deemed to have been received
by the Bank in each case upon actual receipt by the Bank.  The Bank may from time to time change the
postal address, physical address, fax number at which it will receives such
written notices by transmitting, sending or giving written notice to the
Member, or Other Institution, in accordance with §VI.B.1 of the Capital Plan.

 

41EXHIBIT 10.2

 

FIRST AMENDMENT TO THE

THE FEDERAL HOME LOAN
BANK OF BOSTON

PENSION BENEFIT EQUALIZATION PLAN

(Effective January 1, 2009, as amended April 15, 2009)

 

WHEREAS,  the Federal
Home Loan Bank of Boston (the “Bank”) has adopted and currently maintains the
Federal Home Loan Bank of Boston Pension Benefit Equalization Plan (the “Pension
BEP”), effective January 1, 2009, as amended April 15, 2009; and

 

WHEREAS, Section 6.1 of the Pension BEP reserves to
the Board of Directors of the Bank the right to amend the Pension BEP from time
to time, in whole or in part; and

 

WHEREAS, the Bank desires to amend the Pension
BEP to (i) specify the qualifications of any entity who may serve as the
trustee of any rabbi trust established to fund and pay benefits under the
Pension BEP, (ii) require periodic funding of such rabbi trust, and (iii) provide
that a Member or Beneficiary may recover legal fees if he or she is required to
bring a lawsuit to recover benefits from the Pension BEP.

 

NOW, THEREFORE,  the Pension
BEP is amended as set forth below, effective September 1, 2009:

 

1.                                     The following sentence is added to the
end of Section 5.4:

 

If a Member or
Beneficiary prevails in a lawsuit to recover benefits under the Plan, the Bank
shall pay to the Member or Beneficiary the reasonable attorneys’ fees and costs
incurred by such Member or Beneficiary in prosecuting such lawsuit.  However, a Member or Beneficiary shall not be
liable for attorney fees or costs incurred by the Bank, the Plan or the
Committee in successfully defending a lawsuit brought by such Member or
Beneficiary to recover benefits under the Plan, unless a court has finally
determined that the Member or Beneficiary acted in bad faith or that the
lawsuit was frivolous.

 

2.            The following new paragraph is added
to the end of Section 7 of the Plan:

 

7.13         Trust Provisions.  The trustee of any trust established for the
funding and payment of benefits under the Plan shall be a national bank or
trust company, be duly authorized to conduct trust business, be organized under
the 

 

 

laws of the United States
or any of the 50 states thereof, and be independent of and not subject to
control of the Bank or any Member of the Plan.

 

The Bank shall
contribute at least annually to such trust or fund an amount not less than the
sum of (a) the amount by which the present value of accrued benefits, as
calculated by the Plan’s actuary and determined as if each Member voluntarily
terminated service with the Bank as of the December 31 preceding the
calculation, exceeds the fair market value of the assets in the trust or fund,
and (b) the anticipated administrative, trust, and investment advisory
expenses that may be paid by the trust for the next 12 months.  This provision will survive any amendment or
termination of the Plan until all accrued benefits have been paid.

 

IN WITNESS WHEREOF, the undersigned hereby certifies that the foregoing
amendment was duly adopted at a meeting of the Board of Directors of the Bank
on September 18, 2009.

 

Executed
this 30th day of October, 2009.

 

	
   

  	
  FEDERAL
  HOME LOAN BANK OF BOSTON

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ellen McLaughlin

  
	
   

  	
   

  	
  Senior Vice President and General Counsel

  

 

2

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