Document:

Exhibit 10.1

This EMPLOYMENT AGREEMENT by and between Green Brick Partners, Inc., a Delaware corporation (the “Company”), and Richard A. Costello (“Executive”) (each a “Party” and collectively the “Parties”) is made as of January 15, 2018 (the “Effective Date”).

WHEREAS, the Company desires to employ Executive as its Chief Financial Officer, and Executive desires to accept such employment, on the terms and conditions set forth in this employment agreement (this “Agreement”).

NOW, THEREFORE, in consideration of the premises and of the mutual covenants, understandings, representations, warranties, undertakings and promises hereinafter set forth, intending to be legally bound thereby, the Parties agree as follows:

		1.	
Employment Period.

Subject to earlier termination in accordance with Section 3 of this Agreement, Executive shall be employed by the Company for a period commencing on the Effective Date and ending on the first anniversary of the Effective Date (the “Employment Period”) unless the Parties mutually agree to extend the term at least thirty (30) days prior to the end of the Employment Period. Upon Executive’s termination of employment with the Company for any reason, at the Company’s request, Executive shall immediately resign all positions with the Company and all of its subsidiaries (including any minority-owned subsidiaries) and its affiliates (collectively, the “Company Group”), including any position as a member of the Company’s Board of Directors (the “Board”).

		2.	
Terms of Employment.

a.          Position. During the Employment Period, Executive shall serve as the Chief Financial Officer of the Company and will perform such duties and exercise such supervision with regard to the business of the Company as are associated with such position, including such duties as may be prescribed from time to time by the Chief Executive Officer of the Company (the “CEO”) and the Board. Executive shall report directly to the CEO and, if reasonably requested by the Board, Executive hereby agrees to serve (without additional compensation) as an officer and director of other members of the Company Group.

b.          Duties. During the Employment Period, Executive shall have such responsibilities, duties, and authority that are customary for Executive’s position, subject at all times to the control of the CEO and the Board, and shall perform such services as customarily are provided by an executive of a corporation with Executive’s position and such other services consistent with Executive’s position, as shall be assigned to Executive from time to time by the CEO and the Board. During the Employment Period, and excluding any periods of vacation and sick leave to which Executive is entitled, Executive agrees to devote all of Executive’s business time to the business and affairs of the Company Group and to use Executive’s commercially reasonable efforts to perform faithfully, effectively and efficiently Executive’s responsibilities and obligations hereunder. Executive shall be entitled to engage in charitable and educational activities and to manage Executive’s personal and family investments, to the extent such activities are not competitive with the business of the Company Group, do not interfere with the performance of Executive’s duties for the Company Group and are otherwise consistent with the Company Group’s governance policies.

		c.	
Compensation.

i.          Base Salary. During the Employment Period, Executive shall receive an annual base salary in an amount equal to four hundred thousand dollars ($400,000), which shall be paid in accordance with the customary payroll practices of the Company and prorated for partial calendar years of employment (as in effect from time to time, the “Annual Base Salary”).

ii.          Annual Bonus. During the Employment Period, with respect to each fiscal year of the Company, Executive shall be eligible to receive a bonus (the “Bonus”) under the Company’s 2014 Omnibus Equity Incentive Plan and/or annual bonus plan, as in effect from time to time, with a target amount equal to 100% of the Annual Base Salary based upon and subject to the achievement of qualitative and quantitative performance goals (based on EBITDA targets of the Company) established by the Compensation Committee of the Company’s Board of Directors (the “Committee”) and assessed solely at the discretion of the Committee. The Bonus shall be paid in accordance with the terms of the Company’s 2014 Omnibus Equity Incentive Plan and/or annual bonus plan as in effect from time to time. The Bonus may be paid partially in cash and partially in equity, as determined by the Committee in its sole discretion.

iii.          Benefits. During the Employment Period, Executive shall be eligible to participate in all retirement, compensation and employee benefit plans, practices, policies and programs provided by the Company to the extent applicable generally to senior executives of the Company (except severance plans, policies, practices, or programs) subject to the eligibility criteria set forth therein, as such may be amended or terminated from time to time. During the Employment Period, the Company will provide Executive with indemnification to the fullest extent permitted by applicable law and directors’ and officers’ insurance coverage.

iv.          Expenses. During the Employment Period, Executive shall be entitled to receive reimbursement for all reasonable business expenses incurred by Executive in the performance of Executive’s duties hereunder provided that Executive provides all necessary documentation in accordance with the Company’s policies.

v.          Indemnification. The Company shall maintain an adequate level of directors’ and officers’ liability insurance to protect the Executive from liability related to his employment with the Company on a basis no less favorable than that provided to any director or officer of the Company. To the extent Executive is not indemnified by such insurance, the Company agrees to indemnify Executive for liability related to his employment with the Company, other than any liability related to Executive’s gross negligence, willful misconduct, fraud or material breach of this Agreement or any of the Company’s policies, to the maximum extent permitted by applicable law and to promptly advance to Executive or Executive’s heirs or representatives related expenses upon written request with appropriate documentation of such expense upon receipt of an undertaking by Executive or on Executive’s behalf to repay such amount if it shall ultimately be determined that Executive is not entitled to be indemnified by the Company. The Company further agrees that such indemnification and agreement to advance expenses shall survive Executive’s resignation, termination or expiration of this Agreement, with respect to actions taken by him during his employment with the Company, unless such actions could have been grounds for termination by the Company for Cause.

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vi.          Claw-Back. The Company may claw back from Executive any Bonus and equity-based compensation received in the prior year if the Company is required to restate financial results due to material non-compliance with any financial reporting requirements; provided, however, that, notwithstanding the foregoing, the Company shall be entitled to claw back any Bonus or equity-based compensation received by Executive, irrespective of when received, that is required to be recovered pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act once the rules thereunder have been implemented.

		3.	
Termination of Employment.

a.          Death or Disability. Executive’s employment shall terminate automatically upon Executive’s death. If Executive becomes subject to a “Disability” (as defined below) during the Employment Period, the Company may give Executive written notice in accordance with Sections 3(g) and 9(g) hereof of its intention to terminate Executive’s employment. For purposes of this Agreement, “Disability” means Executive’s inability to perform Executive’s duties hereunder by reason of any medically determinable physical or mental impairment for a period of ninety (90) consecutive days or one hundred eighty (180) days or more in any twelve (12) month period.

b.          Cause. Executive’s employment may be terminated at any time by the Company for “Cause” (as defined below). For purposes of this Agreement, “Cause” shall mean Executive’s (i) commission of a felony or a crime of moral turpitude, (ii) engaging in conduct that constitutes fraud or embezzlement, (iii) engaging in conduct that constitutes gross negligence or willful misconduct that results or could reasonably be expected to result in harm to the Company Group’s business or reputation, (iv) breach of any material terms of Executive’s employment, including this Agreement or (v) continued willful failure to substantially perform Executive’s duties. Executive’s employment shall not be terminated for “Cause” within the meaning of clauses (iv) and (v) above unless Executive has been given written notice by the Company stating the basis for such intended termination and Executive is given fifteen (15) days to cure, to the extent curable, the neglect or conduct that is the basis of any such claim.

c.          Termination Without Cause. The Company may terminate Executive’s employment hereunder without Cause at any time for any reason or no reason upon thirty (30) days’ prior written notice.

d.          Good Reason. Executive’s employment may be terminated by Executive for Good Reason upon the occurrence of any event or condition constituting Good Reason. For purposes of this Agreement, “Good Reason” means any of the following actions taken by the Company without Executive’s written consent: (i) any material failure of the Company to fulfill its obligations under this Agreement, (ii) a material and adverse change to, or a material reduction of, Executive’s duties and responsibilities to the Company, (iii) a material reduction in Executive’s then-current Annual Base Salary (not including any diminution related to a broader compensation reduction that is not limited to Executive specifically and that is not more than 10% in the aggregate), or (iv) the relocation of Executive’s primary office to a location more than fifty (50) miles from the prior location, which materially increases Executive’s commute to work; provided that any such event shall not constitute Good Reason unless and until Executive shall have provided the Company with notice thereof no later than thirty (30) days following the initial occurrence of such event and the Company shall have failed to remedy such event within thirty (30) days following receipt of such notice (such 30-day period, the “Good Reason Cure Period”). If, at the end of the Good Reason Cure Period, the event or condition that constitutes Good Reason has not been remedied, Executive will be entitled to terminate employment for Good Reason during the 30-day period that follows the end of the Good Reason Cure Period. If Executive does not terminate employment during such 30-day period, Executive shall not be permitted to terminate employment for Good Reason as a result of such event or condition.

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e.          Voluntary Termination. Executive’s employment may be terminated at any time by Executive without Good Reason upon thirty (30) days’ prior written notice.

f.          Termination as a Result of Expiration of the Employment Period. Unless otherwise agreed between the Parties pursuant to Section 1 hereof or otherwise, Executive’s employment shall automatically terminate upon the expiration of the Employment Period.

g.          Notice of Termination. Any termination by the Company for Cause or without Cause or by reason of Disability, or by Executive for Good Reason or without Good Reason shall be communicated by Notice of Termination to the other Party hereto given in accordance with Section 9(g). For purposes of this Agreement, a “Notice of Termination” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) if the “Date of Termination” (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company hereunder or preclude Executive or the Company from asserting such fact or circumstance in enforcing Executive’s or the Company’s rights hereunder.

h.          Date of Termination. “Date of Termination” means (i) if Executive’s employment is terminated by the Company for Cause, without Cause or by reason of Disability, or by Executive for Good Reason or without Good Reason, the date specified in the Notice of Termination (in the case of a termination with or without Good Reason, provided such Date of Termination is in accordance with Section 3(d) or Section 3(e) hereof), (ii) if Executive’s employment is terminated by reason of death, the date of death, and (iii) if Executive’s employment is terminated pursuant to Section 1, automatically at the expiration of the Employment Period.

		4.	
Obligations of the Company upon Termination.

a.          For Good Reason; Without Cause. If, during the Employment Period, the Company shall terminate Executive’s employment without Cause or Executive shall terminate Executive’s employment for Good Reason, then the Company will provide Executive with the following payments and/or benefits:

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i.          The Company shall pay to Executive (A) any vested payments or benefits to which Executive or Executive’s estate may be entitled to receive under any of the Company’s benefit plans or applicable law, in accordance with the terms of such plans or applicable law and (B) as soon as reasonably practicable but no later than 60 days following the Date of Termination in a lump sum to the extent not previously paid, (1) the Annual Base Salary through the Date of Termination, (2) the Bonus earned for any fiscal year ended prior to the year in which the Date of Termination occurs, provided that Executive was employed on the last day of such fiscal year, and (3) the amount of any unpaid expense reimbursements to which Executive may be entitled pursuant to Section 2(c)(v) hereof (clauses (A) and (B), the “Accrued Obligations”);

ii.          Subject to Sections 4(e) and 5(i) below, after the Date of Termination, the Company will pay Executive severance in an amount equal to four hundred thousand dollars ($400,000) (the “Severance Payment”). The Severance Payment shall, subject to Section 4(e) below, be paid in a lump sum on a date that is no later than sixty (60) days following the Date of Termination, subject to the terms and conditions in Sections 4(e) and 5(i) below; and

iii.          Subject to Sections 4(e) and 5(i) below, a prorated Bonus in respect of the fiscal year in which such Date of Termination occurs based on the actual performance results for such fiscal year, prorated based on the number of days elapsed in such year (the “Pro-Rated Bonus”), which Pro-Rated Bonus, if any, will be payable in the year immediately following the year in which the Date of Termination occurs when the Bonus would ordinarily be payable in accordance with the terms of the Company’s 2014 Omnibus Equity Incentive Plan and/or annual bonus plan as in effect from time to time.

b.          Death or Disability. If Executive’s employment shall be terminated by reason of Executive’s death or Disability, then the Company will provide Executive with the Accrued Obligations. Thereafter, the Company Group shall have no further obligation to Executive or Executive’s legal representatives.

c.          Cause; Other than for Good Reason. If Executive’s employment shall be terminated by the Company for Cause or by Executive without Good Reason, then the Company will provide Executive with the Accrued Obligations. Thereafter, the Company Group shall have no further obligation to Executive or Executive’s legal representatives.

d.          Expiration of the Employment Period. If Executive’s employment terminates by reason of the expiration of the Employment Period pursuant to Section 1 as result of the Company’s or Executive’s non-extension, then the Company will provide Executive with the Accrued Obligations and, subject to Sections 4(e) and 5(i) below, a Pro-Rated Bonus, which Pro-Rated Bonus, if any, will be payable in the year immediately following the year in which the Date of Termination occurs when the Bonus would ordinarily be payable in accordance with the terms of the Company’s 2014 Omnibus Equity Incentive Plan and/or annual bonus plan as in effect from time to time. Thereafter, the Company Group shall have no further obligation to Executive or Executive’s legal representatives.

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e.          Separation Agreement and General Release. The Company’s obligation to pay the Severance Payment and Pro-Rated Bonus pursuant to Section 4(a) or the Pro-Rated Bonus pursuant to Section 4(d), in each case, is conditioned on Executive or Executive’s legal representative executing a separation agreement and general release of claims related to or arising from Executive’s employment with the Company or the termination of employment, against the Company Group (and their respective officers and directors) in a form reasonably determined by the Company, which shall be provided by the Company to Executive within five (5) days following the Date of Termination; provided, that if such release does not become effective and irrevocable in accordance with its terms within fifty-five (55) days following the Date of Termination, the Company shall not have any obligation to provide the Severance Payment and/or the Pro-Rated Bonus, as applicable.

		5.	
Restrictive Covenants.

a.          Non-Solicitation. In consideration of Executive’s employment and receipt of payments hereunder, during the period commencing on the Effective Date and ending twelve (12) months after the Date of Termination (the “Restricted Period”), Executive shall not, directly or indirectly, through another person or entity, (x) induce or attempt to induce any employee, representative, agent or consultant of any member of the Company Group to leave the employ or services of the Company Group, or in any way interfere with the relationship between any member of the Company Group and any employee, representative, agent or consultant thereof, (y) hire any person who was an employee, representative, agent or consultant of any member of the Company Group at any time during the twelve (12)-month period immediately prior to the date on which such hiring would take place or (z) directly or indirectly call on, solicit or service any customer, supplier, licensee, licensor, representative, agent or other business relation of any member of the Company Group in order to induce or attempt to induce such person or entity to cease doing business with, or reduce the amount of business conducted with, any member of the Company Group, or in any way interfere with the relationship between any such customer, supplier, licensee, licensor, representative, agent or business relation of any member of the Company Group. No action by another person or entity shall be deemed to be a breach of this provision unless Executive, directly or indirectly, assisted, encouraged or otherwise counseled such person or entity to engage in such activity.

b.          Non-Competition. Executive acknowledges and agrees that the Company Group would be irreparably damaged if Executive were to provide services to any person or entity competing with any member of the Company Group or engaged in a similar business and that such competition by Executive would result in a significant loss of goodwill by the Company Group. Therefore, in consideration of the payments and benefits provided to Executive and other obligations of the Company to Executive pursuant to this Agreement, including, without limitation, the Company’s promise and obligation to provide Executive with Confidential Information (as defined below), Executive agrees that, during the Restricted Period, Executive shall not (and shall cause each of Executive’s affiliates not to), directly or indirectly, own any interest in, manage, control, participate in (whether as an officer, director, manager, employee, partner, equity holder, member, agent, representative or otherwise), consult with, render services for, or in any other manner engage in any business engaged, directly or indirectly, in the Geographic Area (as defined below), in the business of the Company Group as currently conducted or proposed to be conducted as of the Date of Termination; provided, that nothing herein shall prohibit Executive from being a passive owner of not more than 5% of the outstanding stock of any class of a corporation which is publicly traded so long as Executive does not actively participate in the business of such corporation. For purposes of this Agreement, the “Geographic Area” shall mean the United States of America and any other country or territory in which the Company Group has material business operations.

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c.          Non-Disclosure; Non-Use of Confidential Information. Executive acknowledges that the Company Group has a legitimate and continuing proprietary interest in the protection of its Confidential Information and that it has invested substantial sums and will continue to invest substantial sums to develop, maintain and protect such Confidential Information. Executive shall not disclose or use at any time, either during Executive’s employment with the Company or at any time thereafter, any Confidential Information of which Executive is or becomes aware, whether or not such information is developed by Executive, except to the extent that such disclosure or use is directly related to and required by Executive’s performance in good faith of duties assigned to Executive by the Company. Executive will take all appropriate steps to safeguard Confidential Information in Executive’s possession and to protect it against disclosure, misuse, espionage, loss and theft. Executive shall deliver to the Company at the termination of Executive’s employment with the Company, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information or the “Work Product” (as defined in Section 5(e)(ii)) of the business of the Company Group that Executive may then possess or have under Executive’s control. In accordance with the Defend Trade Secrets Act, 18 U.S.C. § 1833(b), and other applicable law, nothing in this Agreement or any other agreement or policy shall prevent Executive from, or expose Executive to criminal or civil liability under federal or state trade secret law for, (A) directly or indirectly sharing any Company Group trade secrets or other confidential information (except information protected by the Company’s attorney-client or work product privilege) with an attorney or with any federal, state, or local government agencies, regulators, or officials, for the purpose of investigating or reporting a suspected violation of law, whether in response to a subpoena or otherwise, without notice to the Company, or (B) disclosing trade secrets in a complaint or other document filed in connection with a legal claim, provided that the filing is made under seal.

d.          Proprietary Rights. Executive recognizes that the Company Group possesses a legitimate and continuing proprietary interest in all Confidential Information and Work Product and has the exclusive right and privilege to use, protect by copyright, patent or trademark, or otherwise exploit the processes, ideas and concepts described therein to the exclusion of Executive, except as otherwise agreed between the Company Group and Executive in writing. Executive expressly agrees that any Work Product made or developed by Executive or Executive’s agents during the course of Executive’s employment, including any Work Product which is based on or arises out of Work Product, shall be the property of and inure to the exclusive benefit of the Company Group. Executive further agrees that all Work Product developed by Executive (whether or not able to be protected by copyright, patent or trademark) during the course of Executive’s employment with the Company, or involving the use of the time, materials or other resources of the Company Group, shall be promptly disclosed to the Company Group and shall become the exclusive property of the Company Group, and Executive shall execute and deliver any and all documents necessary or appropriate to implement the foregoing.

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e.          Certain Definitions.

i.          As used herein, the term “Confidential Information” means information that is not generally known to the public (but for purposes of clarity, Confidential Information shall never exclude any such information that becomes known to the public because of Executive’s unauthorized disclosure) and that is used, developed or obtained by the Company Group in connection with its business, including, but not limited to, information, observations and data obtained by Executive while employed by the Company Group concerning (A) the business or affairs of the Company Group, (B) products or services, (C) fees, costs and pricing structures, (D) designs, (E) analyses, (F) drawings, photographs and reports, (G) computer software, including operating systems, applications and program listings, (H) flow charts, manuals and documentation, (I) databases, (J) accounting and business methods, (K) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice, (L) customers and clients and customer or client lists, (M) other copyrightable works, (N) all production methods, processes, strategies, plans, technology and trade secrets, (O) personnel information, and (P) all similar and related information in whatever form. Confidential Information will not include any information that has been published in a form generally available to the public (except as a result of Executive’s unauthorized disclosure) prior to the date Executive proposes to disclose or use such information. Confidential Information will not be deemed to have been published or otherwise disclosed merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.

ii.          As used herein, the term “Work Product” means all inventions, innovations, improvements, technical information, systems, software developments, methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, logos and all similar or related information (whether patentable or unpatentable) that relates to the Company Group’s actual or anticipated business, research and development or existing or future products or services and that are conceived, developed or made by Executive (whether or not during usual business hours and whether or not alone or in conjunction with any other person) while employed by the Company together with all patent applications, letters patent, trademark, trade name and service mark applications or registrations, copyrights and reissues thereof that may be granted for or upon any of the foregoing.

f.          Enforcement. If Executive commits a breach of any of the provisions of this Section 5 or Section 6 below, the Company shall have the right and remedy to have the provisions specifically enforced by any court having jurisdiction, it being acknowledged and agreed by Executive that the services being rendered hereunder to the Company Group are of a special, unique and extraordinary character and that any such breach will cause irreparable injury to the Company Group and that money damages will not provide an adequate remedy to the Company Group. Such right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity. Accordingly, Executive consents to the issuance of an injunction, whether preliminary or permanent, consistent with the terms of this Agreement (without posting a bond or other security) if the Company establishes a violation of Section 5 or 6 of this Agreement.

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g.          Blue Pencil. If, at any time, the provisions of this Section 5 shall be determined to be invalid or unenforceable under any applicable law, by reason of being vague or unreasonable as to area, duration or scope of activity, this Agreement shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter and Executive and the Company agree that this Agreement as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

h.          EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS CAREFULLY READ THIS SECTION 5 AND HAS HAD THE OPPORTUNITY TO REVIEW ITS PROVISIONS WITH ANY ADVISORS AS EXECUTIVE CONSIDERED NECESSARY AND THAT EXECUTIVE UNDERSTANDS THIS AGREEMENT’S CONTENTS AND SIGNIFIES SUCH UNDERSTANDING AND AGREEMENT BY SIGNING BELOW.

i.          Severance Payments. In addition to the rights and remedies available to the Company under this Agreement, and not in any way in limitation of any right or remedy otherwise available to the Company Group, in the event that Executive violates any material term of this Agreement or any other agreement between the Company and Executive, (i) the Company’s obligation to pay the Severance Payment and/or the Pro-Rated Bonus and Executive’s right to receive such Severance Payment and/or Pro-Rated Bonus shall terminate and be of no further force or effect and (ii) Executive shall promptly repay to the Company an amount equal to the portion of the Severance Payment and Pro-Rated Bonus previously paid to Executive.

		6.	
Non-Disparagement.

a.          During the Employment Period and at all times thereafter, neither Executive nor Executive’s agents shall, directly or indirectly, whether in public or private, make, publish, encourage, ratify, or authorize; or assist or enable any other person or entity in making, authorizing, ratifying, or publishing any statements that in any way defame, criticize, malign, impugn, reflect negatively on, or disparage any of the Company Parties (as defined below), or cast any of the Company Parties (as defined below) in a negative light in any manner whatsoever. Executive also agrees that Executive will not publicly comment upon or discuss, or assist or permit any other person or entity to publicly comment upon or discuss, any of the Company Parties with any media source or outlet (whether negatively or otherwise), including, but not limited to, or with any reporters, bloggers, weblogs, websites, newspapers, magazines, television stations or productions, radio stations, news organizations, news outlets, or publications, or in any movie, book, or theatrical production. The foregoing shall not be violated by truthful responses to (i) legal process or governmental inquiry or (ii) by private statements to the Company’s officers, directors or employees; provided, that in the case of Executive, with respect to clause (ii), such statements are made in the course of carrying out Executive’s duties pursuant to this Agreement. For purposes of this Agreement, “Company Parties” shall include the Company Group and all of its members; and all of the past, present, and future stockholders, members, partners, principals, investors, directors, officers, managers, benefit plans, fiduciaries, employees, agents, attorneys, heirs, representatives, administrators, successors, and assigns of any of the foregoing entities. Each of the Company Parties shall be a third-party beneficiary of this Agreement and shall be authorized to enforce this Agreement in accordance with its terms.

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b.          During the Employment Period and at all times thereafter, the Company shall take all reasonable steps to ensure that no member of the Board nor any senior executive of the Company (the “Key Persons”) shall, directly or indirectly, whether in public or private, make, publish, encourage, ratify, or authorize; or assist or enable any other person or entity in making, authorizing, ratifying, or publishing, any statements that in any way defame, criticize, malign, impugn, reflect negatively on, or disparage Executive, or cast Executive in a negative light in any manner whatsoever. The foregoing shall not be violated by truthful responses to (i) legal process or governmental inquiry or (ii) by private statements to the Company’s officers, directors or employees by Key Persons; provided, that with respect to clause (ii), such statements are made in the course of carrying out the Key Person’s duties pursuant to the Company.

7.          Confidentiality of Agreement.  The Parties acknowledge and agree that this Agreement shall be filed with the Securities and Exchange Commission. Notwithstanding the foregoing, the Parties agree that the discussions and correspondence that led to this Agreement are private and confidential. Except as may be required by applicable law, regulation, or stock exchange requirement, neither Party may disclose the above information to any other person or entity without the prior written approval of the other Party.

8.          Executive’s Representations, Warranties and Covenants.

		a.	
Executive hereby represents and warrants to the Company that:

i.          Executive has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by Executive;

ii.          the execution, delivery and performance of this Agreement by Executive does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject;

iii.          Executive is not a party to or bound by any employment agreement, consulting agreement, non-compete agreement, fee for services agreement, confidentiality agreement or similar agreement with any other person;

iv.          upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a legal, valid and binding obligation of Executive, enforceable in accordance with its terms;

v.          Executive understands that the Company will rely upon the accuracy and truth of the representations and warranties of Executive set forth herein and Executive consents to such reliance; and

vi.          as of the date of execution of this Agreement, Executive is not in breach of any of its terms, including having committed any acts that would form the basis for a Cause termination if such act had occurred after the Effective Date.

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		b.	
The Company hereby represents and warrants to Executive that:

i.          the Company has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by the Company;

ii.          the execution, delivery and performance of this Agreement by the Company does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Company is a party or any judgment, order or decree to which the Company is subject;

iii.          upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a legal, valid and binding obligation of the Company, enforceable in accordance with its terms; and

iv.          the Company understands that Executive will rely upon the accuracy and truth of the representations and warranties of the Company set forth herein and the Company consents to such reliance.

		9.	
General Provisions.

a.          Severability. It is the desire and intent of the Parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any Party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

b.          Entire Agreement and Effectiveness. Effective as of the Effective Date, this Agreement embodies the complete agreement and understanding among the Parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the Parties, written or oral, which may have related to the subject matter hereof in any way, including, without limitation, the employment agreement by and between the Company and Executive, made as of January 15, 2015.

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c.          Successors and Assigns.

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

ii.          This Agreement shall inure to the benefit of and be binding upon the Company Group and their successors and assigns.

d.          Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

e.          Enforcement.

i.          Arbitration. Except as specifically set forth in Section 5(f) of this Agreement, in consideration of Executive’s employment with the Company and Executive’s receipt of compensation and other benefits under this Agreement, EXECUTIVE AGREES THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES WITH ANYONE (INCLUDING THE COMPANY GROUP AND ANY EMPLOYEE, OFFICER, DIRECTOR, STOCKHOLDER OR BENEFIT PLAN OF THE COMPANY GROUP, IN THEIR CAPACITY AS SUCH OR OTHERWISE) ARISING OUT OF, RELATING TO, OR RESULTING FROM EXECUTIVE’S EMPLOYMENT WITH THE COMPANY OR THE TERMINATION OF EXECUTIVE’S EMPLOYMENT WITH THE COMPANY, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION. Such arbitration shall take place in Dallas, Texas (unless the Parties agree in writing to a different location), before a single arbitrator, who shall be an attorney, in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association then in effect. Executive agrees that the arbitrator shall have the power to decide any motions brought by any party to the arbitration, including motions for summary judgment and/or adjudication and motions to dismiss and demurrers, prior to any arbitration hearing. Executive also agrees that the arbitrator shall have the power to award any remedies, including attorneys’ fees and costs, available under applicable law. The decision and award made by the arbitrator shall be final, binding and conclusive on all Parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof. The Company will bear the totality of the arbitrator’s and administrative fees and costs. Each Party shall otherwise bear its own litigation costs and expenses; provided, however, that the arbitrator shall have the discretion to award the prevailing Party reimbursement of its reasonable attorney’s fees and costs. The arbitration shall be conducted on a strictly confidential basis, and Executive shall not disclose the existence of a claim, the nature of a claim, any documents, exhibits, or information exchanged or presented in connection with such a claim, or the result of any claim (collectively, “Arbitration Materials”) to any third party, with the sole exception of Executive’s legal counsel, who Executive shall ensure also fully complies with the confidentiality provisions of this Agreement. In the event of any court proceeding to challenge or enforce an arbitrator’s award, the Parties hereby consent to the exclusive jurisdiction of the state and federal courts in Dallas, Texas and agree to exclusive venue in Dallas, Texas. The Parties hereby agree to take all steps necessary to protect the confidentiality of the Arbitration Materials in connection with any court proceeding, agree to take all appropriate steps to file all Confidential Information (and documents containing Confidential Information) under seal in any such proceeding where possible, and agree to the entry of an appropriate protective order encompassing the confidentiality provisions of this Agreement.

12

ii.          Remedies. All remedies hereunder are cumulative, are in addition to any other remedies provided for by law and may, to the extent permitted by law, be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed to be an election of such remedy or to preclude the exercise of any other remedy.

iii.          Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

f.          Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

g.          Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when delivered personally, when received if transmitted via telecopier, five (5) days after deposit in the U.S. mail and one day after deposit for overnight delivery with a reputable overnight courier service.

If to the Company, to:

Green Brick Partners, Inc.

2805 North Dallas Parkway Suite 400

Plano, TX 75093

 Attention: Chairman of the Board

with a copy (which shall not constitute notice) to:

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, NY 10036

Facsimile: (212) 872-1002

 Attention: Alice Hsu

13

         If to Executive, to:

Executive’s home address most recently on file with the Company.

h.          Withholdings Taxes. The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

i.           Survival of Representations, Warranties and Agreements. All representations, warranties and agreements contained herein shall survive any termination of Executive’s employment under this Agreement.

j.           Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. All references to a “Section” in this Agreement are to a section of this Agreement unless otherwise noted.

k.           Construction. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Party.

l.            Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

m.          Section 409A.

i.          Compliance. Notwithstanding anything herein to the contrary, this Agreement is intended to be interpreted and applied so that the payments and benefits set forth herein either shall either be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), or shall comply with the requirements of Code Section 409A, and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt from or in compliance with Code Section 409A. To the extent that the Company determines that any provision of this Agreement would cause the Executive to incur any additional tax or interest under Code Section 409A, the Company shall be entitled to reform such provision to attempt to comply with or be exempt from Code Section 409A through good faith modifications. To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Executive and the Company without violating the provisions of Code Section 409A. Notwithstanding anything herein to the contrary, in no event does the Company, its affiliates, officers, equityholders, employees, agents, members, directors, or representatives guarantee the exemption from or compliance with Code Section 409A and no such party shall have any liability for failure of this Agreement to be exempt from or comply with such Code section.

ii.          Separate Payments. Notwithstanding anything in this Agreement to the contrary, each payment payable hereunder shall be deemed to be a payment in a series of separate payments for purposes of Code Section 409A.

14

iii.          Specified Employee. Notwithstanding any provision in this Agreement or elsewhere to the contrary, if on the date of Executive’s termination from employment with the Company, Executive is deemed to be a “specified employee” within the meaning of Code Section 409A and the Final Treasury Regulations using the identification methodology selected by the Company from time to time, or if none, the default methodology under Code Section 409A, any payments or benefits that constitute non-exempt deferred compensation under Code Section 409A and that are due upon a termination of Executive’s employment shall be delayed and paid or provided (or commence, in the case of installments) on the first payroll date on or following the earlier of (i) the date which is six (6) months and one (1) day after Executive’s termination of employment for any reason other than death, and (ii) the date of Executive’s death, and any remaining payments and benefits shall be paid or provided in accordance with the normal payment dates specified for such payment or benefit.

iv.          Separation from Service. Notwithstanding anything in this Agreement or elsewhere to the contrary, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits that constitute “non-qualified deferred compensation” within the meaning of Code Section 409A upon or following a termination of Executive’s employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service” and the date of such separation from service shall be the date of termination of Executive’s employment by the Company for purposes of any such payment or benefits.

v.          No Designation. In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement or otherwise which constitutes a “deferral of compensation” within the meaning of Code Section 409A.

vi.          Expense Reimbursement. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense was incurred.

n.          Excess Parachute Payments. Notwithstanding anything in this Agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or any its affiliates to Executive or for Executive’s benefit pursuant to the terms of this Agreement or otherwise (“Covered Payments”) are determined to constitute “excess parachute payments” within the meaning of Section 280G of the Code and would, but for this Section 9(n) be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then the Covered Payments shall be reduced (but not below zero) to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax. All determinations required to be made under this Section 9(n), including whether a payment would result in an “excess parachute payment” and the assumptions utilized in arriving at such determination, shall be made by an accounting firm selected by the Company.

o.          Employee Not to Act. Executive agrees that Executive is not entitled to, and will not, exercise any rights of the Company under this Agreement or act for or on behalf of the Company under this Agreement.

15

[SIGNATURE PAGE FOLLOWS]

16

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above.

	 	
GREEN BRICK PARTNERS, INC.

	 	 
	 	 
	 	
By:

	
/s/ James R. Brickman

	 	
Name: 

	James R. Brickman 
	 	
Title: 

	Chief Executive Officer 
	 	 
	 	 
	 	
EXECUTIVE

	 	 
	 	
By:

	
/s/ Richard A. Costello

	 	
Name: 

	Richard A. Costello 
	 	
Title: 

	Chief Financial Officer

[Signature Page to Costello Employment Agreement]

17EX-4.1

Effective as of: February 9, 2018

AMENDED AND RESTATED

CAPITAL PLAN

of the

Federal Home Loan Bank of New York

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Definitions	 		 	iv
	 	1.	 	 	Overview	 	 	1	 
	 	2.	 	 	The Capital Structure	 	 	2	 
	 	 	 	 	 	2.1	 	 	Authorized Stock 
	 	 	2	 
	 	 	 	 	 	 	 	 	2.1.1Par Value 
	 	 	2	 
	 	 	 	 	 	 	 	 	2.1.2Ownership of Retained Earnings 
	 	 	2	 
	 	 	 	 	 	2.2	 	 	Purchase, Redemption and Repurchase of Stock 
	 	 	2	 
	 	 	 	 	 	 	 	 	2.2.1Purchase of Capital Stock 
	 	 	2	 
	 	 	 	 	 	 	 	 	2.2.2Redemption of Capital Stock by Members 
	 	 	3	 
	 	 	 	 	 	 	 	 	2.2.3Repurchase of Excess Stock by the FHLBNY 
	 	 	4	 
	 	 	 	 	 	 	 	 	2.2.4Limitations on Redemptions and Repurchases 
	 	 	5	 
	 	 	 	 	 	 	 	 	2.2.5Retirement of Redeemed and Repurchased Stock 
	 	 	6	 
	 	 	 	 	 	 	 	 	2.2.6Transfer of Capital Stock 
	 	 	6	 
	 	 	 	 	 	 	 	 	2.2.7Limitation on Converting or Exchanging Excess
Stock as Between Subclasses 
	 	 	6	 
	 	 	 	 	 	2.3	 	 	Dividends 
	 	 	7	 
	 	 	 	 	 	2.4	 	 	Rights Upon Liquidation, Merger or Consolidation of the FHLBNY 
	 	 	7	 
	 	 	 	 	 	 	 	 	2.4.1Liquidation of the FHLBNY 
	 	 	7	 
	 	 	 	 	 	 	 	 	2.4.2FHLBNY Acquired by another Federal Home Loan Bank 
	 	 	7	 
	 	 	 	 	 	 	 	 	2.4.3FHLBNY Acquires Other Federal Home Loan Bank 
	 	 	7	 
	 	3.	 	 	Responsibilities of Directors and Management and Voting of Stock	 	 	8	 
	 	 	 	 	 	3.1	 	 	Responsibilities of Directors and Management 
	 	 	8	 
	 	 	 	 	 	3.2	 	 	Voting Rights 
	 	 	9	 
	 	4.	 	 	Member Stock Purchase Requirements	 	 	10	 
	 	 	 	 	 	4.1	 	 	Membership Stock Purchase Requirement 
	 	 	10	 
	 	 	 	 	 	4.2	 	 	Activity-Based Stock Purchase Requirement 
	 	 	10	 
	 	 	 	 	 	4.3	 	 	Periodic Review of Capital Stock Purchase Requirements 
	 	 	11	 
	 	 	 	 	 	4.4	 	 	Member Compliance with Adjusted Requirements 
	 	 	12	 
	 	5.	 	 	Capital Requirements of the FHLBNY	 	 	13	 
	 	 	 	 	 	5.1	 	 	Statutory Capital Requirements 
	 	 	13	 
	 	 	 	 	 	 	 	 	5.1.1Total Capital Requirement 
	 	 	13	 
	 	 	 	 	 	 	 	 	5.1.2Leverage Capital Requirement 
	 	 	13	 
	 	 	 	 	 	 	 	 	5.1.3Permanent Capital Requirement 
	 	 	13	 
	 	 	 	 	 	 	 	 	5.1.4FHFA Authority to Require More Capital 
	 	 	13	 
	 	 	 	 	 	5.2	 	 	Risk-Based Capital Requirement 
	 	 	13	 
	 	 	 	 	 	 	 	 	5.2.1Credit Risk Capital Requirement 
	 	 	14	 
	 	 	 	 	 	 	 	 	5.2.2Market Risk Capital Requirement 
	 	 	14	 
	 	 	 	 	 	 	 	 	5.2.3Operations Risk Capital Requirement 
	 	 	15	 
	 	6.	 	 	Reporting Requirements to the Finance Agency	 	 	16	 
	 	 	 	 	 	6.1.	 	 	Changes in Membership 
	 	 	16	 
	 	 	 	 	 	6.2	 	 	Leverage and Risk Based Capital 
	 	 	16	 
	 	 	 	 	 	6.3	 	 	Voting Shares 
	 	 	16	 
	 	7.	 	 	Termination of Membership in the FHLBNY	 	 	17	 
	 	 	 	 	 	7.1	 	 	Voluntary Withdrawal from Membership 
	 	 	17	 
	 	 	 	 	 	 	 	 	7.1.1Written Notification 
	 	 	17	 
	 	 	 	 	 	 	 	 	7.1.2Access to Benefits of Membership 
	 	 	17	 
	 	 	 	 	 	 	 	 	7.1.3Finance Agency Notification 
	 	 	17	 
	 	 	 	 	 	 	 	 	7.1.4Disposition of Claims 
	 	 	17	 
	 	 	 	 	 	 	 	 	7.1.5Effective Date of Withdrawal 
	 	 	18	 
	 	 	 	 	 	7.2	 	 	Involuntary Termination of Membership 
	 	 	18	 
	 	 	 	 	 	 	 	 	7.2.1Written Notification 
	 	 	18	 
	 	 	 	 	 	 	 	 	7.2.2Access to Benefits of Membership 
	 	 	18	 
	 	 	 	 	 	 	 	 	7.2.3Disposition of Claims 
	 	 	18	 
	 	 	 	 	 	7.3	 	 	Merger or Consolidation of Members 
	 	 	19	 
	 	 	 	 	 	 	 	 	7.3.1Termination of Charter and Stock Redemption Period 
	 	 	19	 
	 	 	 	 	 	 	 	 	7.3.2Capital Stock Requirement of Surviving Member 
	 	 	19	 
	 	 	 	 	 	7.4	 	 	Merger or Consolidation of Member into a Member of another Federal
Home Loan Bank or into a Nonmember 
	 	 	20	 
	 	 	 	 	 	 	 	 	7.4.1General 
	 	 	20	 
	 	 	 	 	 	 	 	 	7.4.2Disposition of Claims 
	 	 	20	 
	 	 	 	 	 	 	 	 	7.4.3Acquiring Institution Applies for FHLBNY Membership 
	 	 	21	 
	 	 	 	 	 	7.5	 	 	Relocation of Principal Place of Business 
	 	 	21	 
	 	 	 	 	 	 	 	 	7.5.1General 
	 	 	21	 
	 	 	 	 	 	 	 	 	7.5.2Disposition of Claims 
	 	 	21	 
	 	8.	 	 	[Reserved]	 	 	22	 
	 	9.	 	 	[Reserved]	 	 	22	 
	 	10.	 	 	Amendments to the Capital Plan and Notices	 	 	23	 
	 	 	 	 	 	10.1	 	 	Amendments to the Capital Plan 
	 	 	23	 
	 	 	 	 	 	10.2	 	 	Notices Relating to the Capital Plan 
	 	 	23	 
	 	 	 	 	 	 	 	 	10.2.1 Notices by the FHLBNY 
	 	 	23	 
	 	 	 	 	 	 	 	 	10.2.2 Notices to the FHLBNY 
	 	 	23	 

11. Joint Capital Enhancement Agreement 24

11.1 Retained Earnings Enhancement Implementation and Definitions 24

11.1.1 Implementation 24

11.1.2 Definitions applicable to Sections 11.1 through 11.4 of this Capital Plan 24

	 	 	 	 	 	 	 	 	 
	 	 	 	 	11.2 Establishment of Restricted Retained Earnings 
	 	 	27	 
	 	 	 	 	11.2.1 Segregation of Account 
	 	 	27	 
	 	 	 	 	11.2.2 Funding of Account 
	 	 	27	 
	 	 	 	 	11.3 Limitation on Dividends, Stock Purchase and Stock Redemption 
	 	 	29	 
	 	 	 	 	11.3.1 General Rule on Dividends 
	 	 	29	 
	 	 	 	 	11.3.2 Limitations on Repurchase and Redemption 
	 	 	29	 
	 	 	 	 	11.4 Termination of Agreement 
	 	 	29	 
	 	 	 	 	11.4.1 Notice of Automatic Termination Event 
	 	 	29	 
	 	 	 	 	11.4.2 Notice of Voluntary Termination 
	 	 	30	 
	 	 	 	 	11.4.3 Consequences of an Automatic Termination Event or Vote to
Terminate the Agreement 
	 	 	31	 
	Appendix I – Member Stock Purchase Requirements	 	 	32	 
	 	A.	 	 	Membership Stock Purchase Requirement 
	 	 	32	 
	 	B.	 	 	Activity-Based Stock Purchase Requirement 
	 	 	32	 

1

Definitions

For purposes of the Capital Plan, all capitalized terms used but not defined elsewhere have
the meanings set forth below. In the Capital Plan unless the context otherwise requires, words
describing the singular number include the plural and vice versa.

Activity-Based Stock means Capital Stock that is purchased and held by a Member to meet the
Member’s Activity-Based Stock Purchase Requirement.

Activity-Based Stock Purchase Requirement means the requirement under which a Member must acquire
and maintain a specific amount of Activity-Based Stock based on the specified value of certain
transactions of the Member with the FHLBNY as described in Section 4.2 of the Capital Plan.

Acquired Member Assets or AMA means assets acquired by the FHLBNY from a Member through either a
purchase or funding transaction under Part 1268 of the Regulations, and includes assets acquired
through transactions undertaken through the FHLBNY’s “Community Mortgage Asset” program.

Advances Agreement means the Bank’s Advances, Collateral Pledge and Security Agreement, as may be
amended from time to time. For avoidance of doubt, the term “advances” for purposes of the Capital
Plan shall include funding agreements between the FHLBNY and life insurance company Members.

Bank Act means the Federal Home Loan Bank Act, as amended.

Board of Directors means the Board of Directors of the FHLBNY.

Capital Plan means the capital plan of the FHLBNY as adopted by the Board of Directors and approved
by the Finance Agency, as amended from time to time.

Capital Stock means all shares of Class B Stock issued by the FHLBNY, including subclasses, in
accordance with the Bank Act, the Regulations and the Capital Plan.

Class B Stock means the capital stock that has the characteristics of Class B stock as described in
the Bank Act and the Regulations, and as specified in Section 2.1 of the Capital Plan.

Credit Risk Capital Requirement means the amount of Permanent Capital that is required to support
the FHLBNY’s credit risk, as defined by Section 932.4 of the Regulations.

Derivative Contract means a financial contract the value of which is derived from the values of one
or more underlying assets, reference rates, or indices of asset values, or credit-related events.

Excess Stock means the shares of each subclass of Capital Stock held by a Member, or Other
Institution, that exceeds the Member’s, or Other Institution’s, Membership Stock Purchase
Requirement or Activity-Based Stock Purchase Requirement related to the respective subclass.

FHFA or Finance Agency means, as the context requires in this Capital Plan, either (1) the Federal
Housing Finance Agency, (2) any successor agency, or (3) the Federal Housing Finance Board, the
predecessor agency to the Federal Housing Finance Agency.

FHLBNY means the Federal Home Loan Bank of New York.

GAAP means Generally Accepted Accounting Principles in the United States of America.

General Allowance for Losses means an allowance established by the FHLBNY in accordance with GAAP
for expected losses, but does not include any amounts held against specific assets of the FHLBNY.

Market Risk Capital Requirement means the amount of Permanent Capital to support the FHLBNY’s
market risk, as required by Section 932.5 of the Regulations.

Member means an institution that has been approved for membership by the FHLBNY in accordance with
Part 1263 of the Regulations and which has satisfied the Membership Stock Purchase Requirement.

Membership means all the rights, privileges and obligations associated with being a Member.

Membership Stock means Capital Stock that is purchased and held by each Member to meet the
Membership Stock Purchase Requirement.

Membership Stock Purchase Requirement means the level of Membership Stock that must be purchased
and maintained by a Member as a condition of Membership as described in Section 4.1 of the Capital
Plan.

Member Stock Purchase Requirements means, respectively, the Activity-Based Stock Purchase
Requirement and the Membership Stock Purchase Requirement.

Minimum Regulatory Capital Requirement means a minimum regulatory capital requirement for the
FHLBNY established by the Regulations, as referred to in Sections 5.1.1, 5.1.2, 5.1.3 and 5.2 of
the Capital Plan, or on a basis specifically applicable to the FHLBNY by the Finance Agency, as
referred to in Section 5.1.4 of the Capital Plan.

Minimum Stock Investment Requirement means the Capital Stock that a Member or Other Institution is
required, as applicable, to hold to meet its Membership Stock Purchase Requirement and the Capital
Stock that a Member or Other Institution is required, as applicable, to hold to meet its
Activity-Based Stock Purchase Requirement. For avoidance of doubt, in order for a Member or Other
Institution to be deemed to satisfy its Minimum Stock Investment Requirement it must at the
relevant point in time hold both the number of shares of Membership Stock required to meet, to the
extent applicable, the Member’s or Other Institution’s Membership Stock Purchase Requirement and
the number of shares of Activity-Based Stock required to meet, to the extent applicable, the
Member’s or Other Institution’s Activity-Based Stock Purchase Requirement.

Mortgage-related Assets means loans and participations in loans secured by residential real
property and mortgage-backed securities; loans secured by manufactured housing; certain other
mortgage-related securities; and certain loans secured by nonresidential nonfarm real property, all
as listed and described, and as may be modified from time to time, on the FHLBNY’s web site at
www.fhlbny.com/capitalplan.

Operations Risk Capital Requirement means the amount of Permanent Capital that is required to
support the FHLBNY’s operations risk, as required by Section 932.6 of the Regulations.

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

Par Value means $100 per share of Capital Stock.

Permanent Capital means the retained earnings of the FHLBNY, determined in accordance with GAAP,
plus the amount paid-in for the FHLBNY’s Class B stock (whether required or excess).

Record Date means December 31st of the calendar year preceding the election of
directors.

Redemption Cancellation Fee means as applicable (i) a fee of $500, 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 of $500 that may be imposed in the event that a Member
cancels its notification of intent to withdraw from Membership.

Redemption Notice means a written notice provided by a Member to the FHLBNY in accordance with
Section 2.2.2 of the Capital Plan requesting redemption of a specified number of shares of Capital
Stock, subject to the time limits prescribed in the Bank Act, for Class B Stock and the other
restrictions set forth in the Act, the Regulations and the Capital Plan.

Risk-based Capital Requirement means the amount of Permanent Capital that the FHLBNY must maintain
in accordance with Section 932.3 of the Regulations.

Regulations means the regulations promulgated by the Finance Agency, as amended from time to time.

Stock Redemption Period means the five-year period, as applicable, following: (i) the FHLBNY’s
receipt of a Member’s Redemption Notice, (ii) the FHLBNY’s (or as applicable, the Finance Agency’s)
receipt of a Member’s written notice to the FHLBNY (or as applicable, the Finance Agency) of intent
to withdraw from Membership, or the date of acquisition or receipt of any additional shares of
Capital Stock after the FHLBNY’s (or as applicable, the Finance Agency’s) receipt of such notice,
(iii) a Member’s termination from Membership as a result of merger or consolidation into a member
of another Federal Home Loan Bank or a nonmember, or the date of acquisition or receipt of any
additional shares of Capital 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 Capital 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 Capital Stock after such termination of
Membership.

Total Assets means the total assets of the FHLBNY, as determined in accordance with GAAP.

Total Capital of the FHLBNY means the sum of Permanent Capital, the amount of any General Allowance
for Losses, and the amount of other instruments identified in the Capital Plan that the FHFA has
determined to be available to absorb losses incurred by the FHLBNY.

	1.	 	Overview

Pursuant to the Bank Act and the Regulations, the Board hereby establishes this Capital
Plan to:

provide a new statutory capital structure for the FHLBNY that can be implemented as
described herein; and

ensure that the FHLBNY is able to comply with each of its Minimum Regulatory Capital
Requirements at all times after implementation.

In developing this Capital Plan, the Board of Directors has kept in mind the cooperative
nature of the FHLBNY. The Board of Directors hereby reaffirms the FHLBNY’s continuing use
of the cooperative business model.

This document takes into account the Bank Act and the Regulations, and is not intended to
contradict the same. Under Section 26 of the Bank Act, the Finance Agency has the authority
to liquidate or reorganize a Federal Home Loan Bank and the provisions of this Capital Plan
are subject to that authority. In addition, certain discretionary decisions of the Board of
Directors under this plan may be subject to Finance Agency review and/or approval. Nothing
in this plan may be construed as abrogating, nullifying or otherwise interfering with such
Finance Agency authorities.

All references to the Regulations hereunder shall be deemed to include any successor
regulations.

2

2. The Capital Structure

2.1 Authorized Stock

The Board of Directors hereby authorizes one class of Capital Stock, Class B Stock.
Shares of Class B Stock shall be redeemable in cash at Par Value five years following the
FHLBNY’s receipt of a Member’s Redemption Notice, or in accordance with a termination of
Membership as provided in Section 7 of the Capital Plan, or in accordance with Sections
8.1.1.2, 8.1.1.4 and 8.1.1.5 of the Capital Plan. Class B Stock will have two distinct
subclasses:

Membership Stock will be purchased and held by each Member to meet the Membership
Stock Purchase Requirement established by the FHLBNY as a condition of membership.

Activity-Based Stock will be purchased and held by a Member to meet the
Activity-Based Stock Purchase Requirement established by the FHLBNY for certain
transactions with Members.

The Board of Directors may determine in the future that it wishes to authorize the issuance of
additional subclasses of Class B Stock or to authorize the issuance of Class A stock,
including one or more subclasses of Class A stock. In such cases, an amendment to this
Capital Plan will be submitted to the FHFA for approval in accordance with Section 10.1 of the
Capital Plan.

2.1.1 Par Value

All Capital Stock will be issued, redeemed, repurchased or transferred pursuant to
Section 2.2.6 of the Capital Plan at Par Value.

2.1.2 Ownership of Retained Earnings

The retained earnings, surplus, undivided profits and equity reserves, if any, of the
FHLBNY shall be owned by the holders of Class B Stock in an amount proportional to each
holder’s share of the total shares of Class B Stock; however, the holders shall have no right
to receive any portion of those items, except through the declaration of a dividend or capital
distribution approved by the Board of Directors or through the liquidation of the FHLBNY.

2.2 Purchase, Redemption and Repurchase of Stock

All Members are required to purchase and redeem Capital Stock in accordance with the
requirements of the Bank Act, the Regulations and this Capital Plan.

	 	2.2.1	 	Purchase of Capital Stock

Each Member of the FHLBNY will be required to maintain a minimum investment in Membership
Stock as a condition of membership in accordance with the requirements of Section 4 of this
Capital Plan and Appendix I hereto; in addition, each Member engaged in certain transactions
with the FHLBNY will also be required to maintain a minimum investment in Activity-Based Stock
in accordance with the requirements of Section 4 of this Capital Plan and Appendix I hereto.

The FHLBNY will not issue stock other than in accordance with 12 C.F.R. §1277.21 and the
Capital Plan. Capital Stock shall be issued to and owned only by Members, with the exception
of Other Institutions. Capital Stock may be traded only between the FHLBNY and its Members.
All Capital Stock will be issued in book entry form only. The FHLBNY will act as its own
transfer agent.

	 	2.2.2	 	Redemption of Capital Stock by Members

A Member may redeem shares of its Capital Stock by providing a Redemption Notice to the
FHLBNY. A redemption of Capital Stock may also occur in accordance with Sections 7, 8.1.1.2
and 8.1.1.5 of the Capital Plan. The FHLBNY shall (subject to the restrictions contained in
Section 2.2.4 below) redeem Capital Stock in accordance with the two preceding sentences upon
the expiration of the applicable Stock Redemption Period, provided that the FHLBNY shall not
be obligated to redeem Capital Stock unless all applicable conditions contained in the Bank
Act, the Regulations and the Capital Plan are met.

Redemption Notice

A Member that provides a Redemption Notice to the FHLBNY shall identify in that Redemption
Notice the particular shares that are the subject of the Redemption Notice by reference to
the subclass, the date acquired and the manner in which the shares were acquired. If a
Member fails to identify the particular shares within a subclass to be redeemed, the
            shares subject to redemption shall be determined using a last acquired, first redeemed
method of identification within the subclass specified by the Member. Capital Stock will
be redeemed upon the expiration of the applicable Stock Redemption Period subject to the
conditions and limitations set forth in Sections 2.2.4 and 2.2.5 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 Capital Stock.

Cancellation of Redemption Notice

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

Repurchase of Shares Subject to a Redemption Notice

To the extent that the FHLBNY repurchases pursuant to Section 2.2.3 of the Capital Plan
            shares of Capital Stock that are subject to a Redemption Notice or Notices, the respective
repurchased shares of Capital Stock shall be deducted from the outstanding Redemption
Notice or Notices.

Automatic Cancellation of a Redemption Notice

A Redemption Notice will be automatically cancelled if the FHLBNY is prevented from
redeeming the Capital Stock within five business days of the expiration of the applicable
Stock Redemption Period because the Member would not be in compliance with its Minimum
Stock Investment Requirement. In the event of an automatic cancellation of a Member’s
Redemption Notice as provided in the preceding sentence, the FHLBNY will assess a
Redemption Cancellation Fee unless the Board of Directors determines it has a bona fide
business purpose for waiving the Redemption Cancellation Fee, and the waiver is consistent
with Section 7(j) of the Bank Act.

2.2.3 Repurchase of Excess Stock by the FHLBNY

Repurchase of Activity-Based Stock

The FHLBNY will, from time to time but not less than monthly, calculate with respect to
each Member, or Other Institution, the amount, if any, of outstanding Activity-Based Stock
that is Excess Stock. The FHLBNY will then automatically repurchase for cash all such
Excess Stock at its Par Value on the same day as the calculation, subject to the
provisions of Section 2.2.4 of the Capital Plan. The FHLBNY will notify members of
changes to the repurchase methodology, undertaken on its own initiative, no less than
fifteen business days prior to such changes.

Repurchase of Membership Stock

Upon written application by a Member, or Other Institution, to the FHLBNY or on its own
initiative, the FHLBNY may in its discretion repurchase for cash at Par Value some or all
of the outstanding shares of Membership Stock that are determined by the FHLBNY to be in
excess of the Member’s, or Other Institution’s, Membership Stock Purchase Requirement,
subject to Section 2.2.4 of the Capital Plan. If the FHLBNY determines that it will not
repurchase any or all shares of Membership Stock requested to be repurchased under a
written application by a Member, or Other Institution, the FHLBNY will promptly notify the
Member, or Other Institution, that such Membership Stock will not be repurchased. No
prior notice of repurchase of shares of Membership Stock under a written application by a
Member, or Other Institution will be given. The FHLBNY shall transmit, send or give
written notice to the Member, or Other Institution, of repurchases of shares of Membership
Stock undertaken on its own initiative at least 10 business days prior to the date of the
repurchase.

Identification of Repurchased Shares

If a Member, or Other Institution, has one or more Redemption Notices outstanding as of
the date that the FHLBNY is to repurchase shares of Capital Stock pursuant to this Section
2.2.3 of the Capital Plan, the FHLBNY shall repurchase shares of Capital Stock by first
repurchasing shares of a Member, or Other Institution, that are subject to a Redemption
Notice applicable to the subclass that is to be repurchased 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 applicable to the subclass to be repurchased 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 with respect
to the subclass to be repurchased in which instance the shares to be repurchased shall be
determined by the FHLBNY using a last acquired, first repurchased method of
identification. If a Member, or Other Institution, does not have any Redemption Notices
applicable to the subclass to be repurchased outstanding as of the date that the FHLBNY is
to repurchase shares of Capital Stock the shares to be repurchased shall be determined by
the FHLBNY using a last acquired, first repurchased method of identification.

2.2.4 Limitations on Redemptions and Repurchases

Prohibitions on Redemptions and Repurchases

The FHLBNY will not redeem or repurchase any shares of Capital Stock, if following the
redemption or repurchase the FHLBNY would not be in compliance with each of its Minimum
Regulatory Capital Requirements.

The FHLBNY will not redeem or repurchase any shares of Capital Stock if, following such
redemption or repurchase, the Member, or Other Institution, would not be in compliance
with the Member’s, or Other Institution’s, Minimum Stock Investment Requirement.

The FHLBNY will not redeem or repurchase any shares of Capital Stock without the prior
written approval of the FHFA if the FHFA or the Board of Directors has determined that the
FHLBNY 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 phrase is defined in the Regulations.
This prohibition shall apply even if the FHLBNY is in compliance with its Minimum
Regulatory Capital Requirements, and shall remain in effect for however long the FHLBNY
continues to incur such charges, or until the FHFA determines that such charges are not
expected to continue.

FHLBNY’s Discretion to Suspend Redemptions of Capital Stock

The Board of Directors may suspend the redemption of Capital Stock, if the FHLBNY
reasonably believes that continued redemption of Capital Stock would cause the FHLBNY to
fail to meet its Minimum Regulatory Capital Requirements, would prevent the FHLBNY 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 FHLBNY from
operating in a safe and sound manner. If a decision is made to suspend redemption of
Capital Stock, the FHLBNY shall notify the Finance Agency in writing within two business
days of the decision, informing the Finance Agency of the reasons for the suspension and
of the FHLBNY’s strategies and time frames for addressing the conditions that led to the
suspension, as indicated in Section 1277.27(b) of the Regulations. The Finance Agency may
require the FHLBNY to re-institute the redemption of Capital Stock. The FHLBNY may not
repurchase any Capital Stock without the written permission of the Finance Agency during
any period in which the FHLBNY has suspended the redemption of Capital Stock as provided
for in this section of the Capital Plan.

Retention of Redemption or Repurchase Proceeds as Collateral

If the FHLBNY reasonably determines that there is an existing or anticipated collateral
deficiency related to any obligations owed by the Member, or Other Institution, to the
FHLBNY and the Member, or Other Institution, has failed to deliver additional collateral
to resolve the existing or anticipated collateral deficiency to the FHLBNY’s satisfaction

the FHLBNY may retain the proceeds of redemption or repurchase of Capital Stock as
additional collateral until all such obligations have been satisfied or the existing or
anticipated deficiency is resolved to the FHLBNY’s satisfaction.

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Limitations on Redemptions and Repurchases Related to Terminations of Membership

The restrictions on redemptions and repurchases set forth in the preceding provisions of
this Section 2.2.4 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 Section 7 of the Capital Plan and to redemptions in accordance with
Sections 8.1.1.2, 8.1.1.4 and 8.1.1.5 of the Capital Plan and to all repurchases of
Capital Stock held by Members and by Other Institutions.

If a Member whose Membership is terminated pursuant to Sections 7.1, 7.2, 7.4 or 7.5 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 Section 2.2.2 of the Capital Plan. Such
Redemption Notices shall remain pending until they can be satisfied in accordance with
this Section 2.2.4 of the Capital Plan.

Pro Rata Allocation of Redemptions

If at any time more than one Member or Other Institution has outstanding a Redemption
Notice in accordance with Section 2.2.2 of the Capital Plan or redemption of Capital Stock
in connection with a termination of Membership in accordance with Sections 7.1, 7.2, 7.4
and 7.5 of the Capital Plan or redemption of Capital Stock in accordance with Sections
8.1.1.2, 8.1.1.4 and 8.1.1.5 of the Capital Plan as to which the applicable Stock
Redemption Period has expired, and if the redemption by the FHLBNY of all of the shares of
Capital Stock subject to such Redemption Notice or termination of Membership would cause
the FHLBNY to fail to be in compliance with any of its Minimum Regulatory Capital
Requirements, then the FHLBNY shall fulfill such redemptions as the FHLBNY is able to do
so from time to time, beginning 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.

2.2.5 Retirement of Redeemed and Repurchased Stock

All shares of Capital Stock that are acquired by the FHLBNY pursuant to redemption or
repurchase shall be retired.

2.2.6 Transfer of Capital Stock

A Member, or Other Institution, may not transfer any Capital Stock to any other person or
entity, including another Member, except for transfers of Capital Stock occurring pursuant to
Sections 7.3 and 7.4 of the Capital Plan. Such transfers shall be deemed to be approved by
the FHLBNY as of the cancellation of the disappearing Member’s charter.

	 	2.2.7	 	Limitation on Converting or Exchanging Excess Stock as Between Subclasses

A member shall not convert or exchange (i) shares of Membership Stock that are in excess
of its Membership Stock Purchase Requirement into shares of Activity-Based Stock or (ii)
            shares of Activity-Based Stock that are in excess of its Activity-Based Stock Purchase
Requirement into shares of Membership Stock.

2.3 Dividends

The Board of Directors, in its discretion, subject to the provisions of this Section 2.3
of the Capital Plan, may declare dividends to be paid on the Capital Stock on a quarterly
basis or as otherwise determined by the Board of Directors. Each Member, or Other
Institution, that continues to hold Capital Stock is entitled to receive dividends that are
declared on all Capital Stock held during the applicable period for the period of time the
Member, or Other Institution, owns the Capital Stock. Dividends are non-cumulative with
respect to payment obligations.

Dividends may be paid only in accordance with the Bank’s Retained Earnings and Dividend
Policy, as such may be amended by the Bank’s Board of Directors from time to time. Dividend
payments may be in the form of cash, additional shares of Capital Stock, or a combination
thereof as determined by the Board of Directors. The Board of Directors may not declare or
pay a dividend if the FHLBNY 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 FHLBNY would not be in compliance with each of its Minimum Regulatory Capital
Requirements.

2.4 Rights Upon Liquidation, Merger or Consolidation of the FHLBNY

2.4.1 Liquidation of the FHLBNY

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

2.4.2 FHLBNY Acquired by another Federal Home Loan Bank

In the event that the FHLBNY is merged or consolidated into another Federal Home Loan
Bank, the holders of the outstanding Capital Stock of the FHLBNY 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 Agency.

2.4.3 FHLBNY Acquires Other Federal Home Loan Bank

In the event that another Federal Home Loan Bank is merged or consolidated into the
FHLBNY, the holders of the outstanding stock of the other Federal Home Loan 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 Agency.

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	3.	 	Responsibilities of Directors and Management and Voting of Stock

3.1 Responsibilities of Directors and Management

The Board of Directors

The duties and responsibilities of the FHLBNY’s Board of Directors under the Capital Plan
include:

approval of:

authorization to issue Capital Stock;

“operating ratios” for leverage and risk based capital to be specified in the FHLBNY’s
risk management policy in accordance with 12 C.F.R. § 1239.11;

initial minimum Member Stock Purchase Requirements;

policy limits for market and credit risk;

involuntary terminations of membership; and

dividend distributions.

periodic review and approval of:

amendments to the Capital Plan to be submitted for Finance Agency approval;

adjustments to the minimum Member Stock Purchase Requirements; and

independent annual validations of the FHLBNY’s internal risk measurement model.

monitoring of compliance with the terms and conditions of the Capital Plan, including a
continuing obligation to review and adjust the Member Stock Purchase Requirements, as
necessary to ensure that the FHLBNY remains in compliance with its Minimum Regulatory
Capital Requirements.

FHLBNY Management

The duties and responsibilities of FHLBNY management under the Capital Plan delegated by the
Board of Directors include:

maintenance of the internal risk measurement model in accordance with the
Regulations;

maintenance of procedures and systems to support the purchase and redemption of
stock under the capital structure; and

maintenance of reporting systems and procedures for Member Stock Purchase
Requirements and stock ownership.

In addition, management is also responsible for the maintenance of an effective internal
control system to provide:

Member compliance with Member Stock Purchase Requirements;

the FHLBNY’s compliance with its Minimum Regulatory Capital Requirements at all
times; and

timely reporting to the Finance Agency and the Board of Directors.

3.2 Voting Rights

Holders of Capital Stock that are Members as of the Record Date shall be entitled to vote
for the election of directors to the Board of Directors in accordance with Part 1261 of the
Regulations. For purposes of applying Part 1261 of the Regulations, the Capital Stock that a
Member is “required to hold” shall be the Member’s Minimum Stock Investment Requirement as of
the Record Date. The number of shares of Capital Stock that a particular Member, or Other
Institution (to the extent such institution is permitted to vote under Part 1261 of the
Regulations), may vote in connection with an election of directors shall be subject to the
limitations set forth in the Bank Act and Part 1261 of the Regulations.

In addition, holders of Capital Stock that are Members as of a date to be determined by the
Board of Directors shall be entitled to vote on the ratification of a merger agreement as to
which the FHLBNY is a constituent in accordance with Part 1278 of the Regulations. For
purposes of applying Part 1278 of the Regulations, the Capital Stock that a Member is
“required to own” shall be the Member’s Minimum Stock Investment Requirement as of the
aforementioned date that is to be determined by the Board of Directors. The number of shares
of Capital Stock that a particular Member, or Other Institution (to the extent such
institution is permitted to vote under Part 1278 of the Regulations), may vote in connection
with the ratification of a merger agreement shall be subject to the limitations set forth in
the Bank Act and Part 1278 of the Regulations.

5

4. Member Stock Purchase Requirements

The FHLBNY requires all Members to purchase Capital Stock of the FHLBNY. The FHLBNY’s
Member Stock Purchase Requirements are based on the potential and actual volume of, and risks
inherent in, the financial products and services provided by the FHLBNY to its Members.
Therefore:

a Member will be required to maintain a minimum Capital Stock investment of Membership
Stock for as long as the institution remains a Member of the FHLBNY, irrespective of the
volume of activity with the FHLBNY; and

a Member will also be required to purchase Activity-Based Stock in proportion to that
Member’s transactions with the FHLBNY.

4.1 Membership Stock Purchase Requirement

As a condition of Membership, each Member is required to purchase and maintain a minimum
investment in Membership Stock. The Membership Stock Purchase Requirement will be equal to a
specified percentage of the Mortgage-related Assets held by the Member, in all events rounded
up to the next even $100 increment. The FHLBNY will perform calculations of the Membership
Stock Purchase Requirement for each Member on at least an annual basis and may recalculate
such Requirement for any one or more Members more frequently as the Board of Directors may
determine from time to time. The Board of Directors may increase or decrease the Membership
Stock Purchase Requirement from time to time. Except as provided in Sections 7.2.3 and 7.4.2
of this Capital Plan, in no event will the requirement be less than the greater of (i) $1,000
or (ii) an amount to be determined by the Board of Directors that will be no less than 0.10%
or more than 0.25% of the Mortgage-related Assets held by the Member. In addition,
notwithstanding the requirements in this section, the Board of Directors in its discretion may
implement a limit on Membership Stock purchases otherwise required under this section of no
less than $25 million and no more than $100 million.

The currently approved Membership Stock Purchase Requirement is specified in Appendix I
attached hereto. Notice of changes to the Membership Stock Purchase Requirement will be
transmitted, sent or given to Members and Other Institutions at least 10 days prior to the
effective date of such changes.

4.2 Activity-Based Stock Purchase Requirement

From time to time, the FHLBNY will adopt one or more percentages or amounts for the
calculation of the Activity-Based Stock Purchase Requirement, which will require a Member or
Other Institution to purchase and maintain Activity-Based Stock in an amount equal to:

a specified percentage (but in no event less than 4.0% or more than 5.0%) of the
outstanding principal balance of advances under the Advances Agreement between the FHLBNY
and the Member; and

a specified percentage (but in no event less than 4.0% or more than 5.0%) of the
outstanding principal balance of Acquired Member Assets originated for or sold to the
FHLBNY by a Member that remain on the FHLBNY’s balance sheet plus the principal amount of
delivery commitments issued to the Member by FHLBNY for Acquired Member Assets to be held
on the FHLBNY’s balance sheet, provided that the outstanding principal balance of Acquired
Member Assets originated for or sold to the FHLBNY by a Member that were on the FHLBNY’s
balance sheet as of November 30, 2005 will not be subject to this requirement; and

a specified dollar amount ranging between (a) zero and (b) the FHLBNY’s Credit Risk
Capital Requirement for any off-balance sheet items (excluding the principal amount of
delivery commitments issued to the Member by the FHLBNY for Acquired Member Assets) listed
in Section 932.4(f), Table 2, of the Regulations which the FHLBNY has transacted on a
Member’s behalf and which are continuing, with such Credit Risk Capital Requirement being
calculated in accordance with Section 932.4(c) of the Regulations; and

a specified percentage (but in no event less than 0% or more than 5.0%) of the carrying
value on the Bank’s balance sheet of Derivative Contracts between the Member and the
FHLBNY, as determined by the FHLBNY under GAAP,

in all events rounded up to the next even $100 increment.

The Board of Directors may increase or decrease one or more of the percentages or amounts for
the calculation of the Activity-Based Stock Purchase Requirement from time to time within the
foregoing ranges. 

The currently approved percentages and amounts for the calculation of the Activity-Based Stock
Purchase Requirement are specified in Appendix I attached hereto. Notice of changes to any of
the components of the Activity-Based Stock Purchase Requirement will be transmitted, sent or
given to Members and Other Institutions at least 10 days prior to the effective date of such
changes.

4.3 Periodic Review of Capital Stock Purchase Requirements

The Board of Directors will review the FHLBNY’s Capital Plan on a continuing basis to
ascertain whether changes to the Member Stock Purchase Requirements are required in order to
ensure that the FHLBNY is in compliance with its Minimum Regulatory Capital Requirements, and
shall make adjustments as necessary.

The Board of Directors may at any time modify:

the Membership Stock Purchase Requirement within the limits defined in Section 4.1 above;
and/or

the applicable percentage or amount for any of the components of the Activity-Based Stock
Purchase Requirement, so long as such requirement is within the limits defined in Section
4.2 above.

With regard to any changes made to the Membership Stock Purchase Requirement, such changes
shall be applied to all Members without preference.

With regard to any changes made to any components of the Activity-Based Stock Purchase
Requirement, such changes shall be applied to all outstanding activity at the time that such
changes become effective, provided that such changes shall not apply to the outstanding
principal balance of Acquired Member Assets originated for or sold to the FHLBNY by a Member
that were on the FHLBNY’s balance sheet as of November 30, 2005.

4.4 Member Compliance with Adjusted Requirements

Each Member must comply promptly with any adjusted Membership Stock Purchase Requirement
or Activity-Based Stock Purchase Requirement established by the Board of Directors as
described above; however, Members will be allowed a reasonable time (as determined by the
Board of Directors from time to time, but in no event longer than three months), which period
of time shall be specified in any notice provided in accordance with Sections 4.1 or 4.2 of
the Capital Plan, to come into compliance. Each Other Institution must comply promptly with
any adjusted Activity-Based Stock Purchase Requirement established by the Board of Directors
as described above; however, Other Institutions will be allowed a reasonable time (as
determined by the Board of Directors from time to time, but in no event longer than three
months) which period of time shall be specified in any notice provided in accordance with
Section 4.2 of the Capital Plan to come into compliance. Members and Other Institutions may
reduce their outstanding activity with the FHLBNY as an alternative to purchasing additional
Activity-Based Stock.

In the event that a Member or Other Institution does not comply with any adjusted
Activity-Based Stock Purchase Requirement by the expiration of the time period specified in a
notice provided in accordance with Section 4.2 of the Capital Plan, the FHLBNY is hereby
authorized, in its discretion, to issue a notice of noncompliance to the Member or Other
Institution and, ten business days after transmitting, sending or giving such notice of
noncompliance to the Member or Other Institution, to accelerate the maturity of an amount of
advances sufficient to reduce the Member’s or Other Institution’s Activity-Based Stock
Purchase Requirement to an amount not more than the Activity-Based Stock then held by the
Member or Other Institution. Without regard to the discretion conferred on the Board of
Directors under the foregoing sentence, and without in any respect limiting the Board of
Directors’ authority under Section 7.2.1 of the Capital Plan, the Board of Directors in its
discretion may determine that a Member’s failure to comply with any adjusted Membership Stock
Purchase Requirement or Activity-Based Stock Purchase Requirement by the expiration of the
period of time specified in any notice provided in accordance with Sections 4.1 or 4.2 of the
Capital Plan constitutes the basis for a determination to terminate the Membership of a Member
for a failure to comply with a requirement of the Capital Plan.

6

5. Capital Requirements of the FHLBNY

The FHLBNY is required to maintain Permanent Capital and Total Capital to:

provide for the safe and sound operation of the FHLBNY;

protect the FHLBNY’s creditors against potential loss;

generate earnings sufficient to meet the FHLBNY’s community support and public purpose
obligations; and

comply with regulatory requirements as established by the Finance Agency.

5.1 Statutory Capital Requirements

5.1.1 Total Capital Requirement

Total Capital must be equal to at least 4.0% of the FHLBNY’s Total Assets.

5.1.2 Leverage Capital Requirement

The FHLBNY must maintain a leverage ratio of Total Capital to Total Assets of at least
5.0% of the FHLBNY’s Total Assets. For purposes of determining the leverage ratio, Total
Capital shall be computed by multiplying by 1.5 the FHLBNY’s Permanent Capital, and adding to
the product all other components of Total Capital.

5.1.3 Permanent Capital Requirement

Permanent Capital must at all times be equal to or exceed the value of the FHLBNY’s
Risk-based Capital Requirement, calculated in accordance with Section 5.2 below.

5.1.4 FHFA Authority to Require More Capital

The FHFA may, in its discretion, require the FHLBNY to hold more Total Capital or
Permanent Capital than is indicated in Sections 5.1.1 or 5.1.3 of the Capital Plan.

5.2 Risk-Based Capital Requirement

The FHLBNY’s Risk-based Capital Requirement shall be equal to the sum of:

the FHLBNY’s Credit Risk Capital Requirement,

the FHLBNY’s Market Risk Capital Requirement, and

the FHLBNY’s Operations Risk Capital Requirement as defined by the FHFA.

Unless otherwise directed by the FHFA, the FHLBNY will measure its Credit, Market and Operations
Risk Capital Requirements as of the close of business of the last business day of the month for
which the credit risk capital charge is being calculated.

5.2.1 Credit Risk Capital Requirement

The Credit Risk Capital Requirement shall be equal to the sum of the credit risk capital
charges for all assets, off-balance sheet items and derivative contracts. Credit risk percentage
requirements are established by the FHFA from time to time.

Assets

The credit risk capital charge for an asset on the FHLBNY’s balance sheet is equal to the book
value of the asset multiplied by the credit risk percentage requirement assigned to that asset
class in the Regulations.

Off-balance sheet items

The credit risk capital charge for an off-balance sheet item is equal to the credit equivalent
amount of the item (based on conversion factors provided by the FHFA) multiplied by the credit risk
percentage requirement assigned to that item in the Regulations.

Off balance sheet items include:

Asset sales with recourse where the credit risk remains with the FHLBNY

Commitments to make advances

Commitments to make or purchase other loans

Standby letters of credit

Other commitments with original maturity of over 1 year

Other commitments with original maturity of 1 year or less

Derivative Contracts

The credit risk capital charge for Derivative Contracts is equal to:

the current credit exposure for the Derivative Contract multiplied by the credit risk
percentage requirement assigned to that derivative contract, as determined in accordance
with Section 932.4 of the Regulations, plus

the potential future credit exposure for the Derivative Contract multiplied by the credit
risk percentage requirement assigned to that Derivative Contract, as determined in
accordance with Section 932.4 of the Regulations.

Guidelines for calculating capital charges on Derivative Contracts are defined by the FHFA from
time to time.

5.2.2 Market Risk Capital Requirement

The Market Risk Capital Requirement shall equal the sum of:

the market value of the FHLBNY’s portfolio at risk from movements in market rates and prices
that could occur during periods of market stress. The market value of the FHLBNY’s
portfolio at risk is determined using an internal market risk model (VaR model) that that
has been approved by the FHFA; and

the amount, if any, by which the FHLBNY’s current market value of Total Capital is less than
85% of the FHLBNY’s book value of Total Capital, where:

the current market value of the FHLBNY’s Total Capital is calculated using the
internal market risk model approved by the FHFA; and

the book value of Total Capital is the same as the amount of Total Capital reported
by the FHLBNY to the FHFA on a monthly basis.

The internal market risk model will:

estimate the market value of the FHLBNY’s assets and liabilities, off-balance sheet items,
and Derivative Contracts, including any related options, and

measure the market value of the FHLBNY’s portfolio at risk, including all assets,
liabilities, off-balance sheet items, and Derivative Contracts that represent a source of
material market risk.

5.2.3 Operations Risk Capital Requirement

The FHLBNY is required to meet its Operations Risk Capital Requirement to cover unexpected
losses associated with:

human error

fraud

unenforceability of legal contracts

deficiencies in internal controls

deficiencies in information controls

The FHLBNY will meet its Operations Risk Capital Requirement through maintenance of an amount of
Permanent Capital equal to 30% of the sum of its Credit Risk and Market Risk Capital Requirements
subject to modification as set forth below.

With FHFA approval, the FHLBNY may have an Operations Risk Capital Requirement equal to less than
30% but no less than 10% of the sum of the FHLBNY’s Credit Risk and Market Risk Capital
Requirements if (i) the FHLBNY provides an alternative methodology for assessing and quantifying an
Operations Risk Capital Requirement or (ii) if the FHLBNY obtains insurance to cover operations
risk from an insurer rated at least the second highest investment grade credit rating by an NRSRO.

6. Reporting Requirements to the Finance Agency

The following are the FHLBNY’s specific reporting requirements to the Finance Agency
pertaining to the Capital Plan.

6.1 Changes in Membership

The FHLBNY shall notify the FHFA within 10 calendar days of receipt of any notice of
withdrawal or notice of cancellation of withdrawal from Membership.

6.2 Leverage and Risk Based Capital

The FHLBNY shall report to the FHFA by the 15th business day of each month:

Risk-based Capital Requirement by component amounts, and

actual Total Capital and Permanent Capital outstanding.

Both measures are calculated as of the close of business on the last business day of the
preceding month, or more frequently, as may be required by the FHFA.

6.3 Voting Shares

On or before April 10 of each year, the FHLBNY shall submit to the FHFA a Capital Stock
report that indicates, as of the Record Date:

the number of Members located in each voting state in the FHLBNY’s district,

the number of shares of Capital Stock that each Member (identified by its docket number)
was required to hold, and

the number of shares of Capital Stock that all Members located in each voting state were
required to hold. Excess Stock will not be included in the calculation of outstanding
Capital Stock for purposes of voting.

The FHLBNY shall certify to the FHFA that, to the best of its knowledge, the information
provided in the Capital Stock report is accurate and complete, and that it has notified each
Member of its minimum Capital Stock holdings pursuant to this Capital Plan.

7

7. Termination of Membership in the FHLBNY

7.1 Voluntary Withdrawal from Membership

7.1.1 Written Notification

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

7.1.2 Access to Benefits of Membership

Until the effective date of a Member’s withdrawal from the FHLBNY, such Member will
continue to have access to the benefits of Membership. On and after the effective date of
the Member’s withdrawal, regardless of whether the Other Institution is required to maintain
an investment in the Capital Stock, the Other Institution will no longer have the benefits
of Membership including access to the FHLBNY’s products and services and will no longer have
any voting rights other than as provided in the Regulations, but the Other Institution will
still be entitled to any and all dividends declared on its Capital Stock until the Capital
Stock is redeemed or repurchased by the FHLBNY.

7.1.3 Finance Agency Notification

The FHLBNY shall notify the Finance Agency within ten calendar days of the receipt of
any notice of intent to withdraw from Membership or cancellation of a notice of withdrawal
from Membership.

7.1.4 Disposition of Claims

The FHLBNY shall determine an orderly manner for the disposition of transactions
outstanding with a Member that withdraws from Membership. The Stock Redemption Period for
the Capital Stock held by a Member as of the date of the FHLBNY’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
Capital Stock acquired or received by such a withdrawing Member after the date that its
notice of intent to withdraw is received by the FHLBNY will commence on the date such shares
are acquired or received. If transactions remain outstanding beyond the effective date of
the termination of Membership, the FHLBNY will not redeem any Activity-Based Stock that the
Other Institution is required to hold to comply with the Activity-Based Stock Purchase
Requirement corresponding to such outstanding transactions.

Upon the effective date of a Member’s withdrawal from Membership, it shall become an Other
Institution under this Capital Plan. Such Other Institution shall not be deemed to be
subject to the Membership Stock Purchase Requirement and the FHLBNY may repurchase
Membership Stock held by the Other Institution, that has not otherwise been redeemed by the
FHLBNY upon the expiration of an applicable Stock Redemption Period. The FHLBNY may
repurchase the Other Institution’s Activity-Based Stock, that has not otherwise been
redeemed by the FHLBNY upon the expiration of an applicable Stock Redemption Period, if the
stock is not needed to comply with the Activity-Based Stock Purchase Requirement
corresponding to such outstanding transactions, and not subject to any of the limitations on
redemption or repurchase in Section 2.2.4.

7.1.5 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 Capital Stock that the Member is required to hold under the
Membership Stock Purchase Requirement as of the date that the Member’s written notification
of its intent to withdraw from Membership was received by the FHLBNY.

7.2 Involuntary Termination of Membership

7.2.1 Written Notification

The Board of Directors may terminate the Membership of any Member that: (i) fails to
comply with any requirement of the Bank Act, any Regulation, 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 FHLBNY if it were to remain a Member.

7.2.2 Access to Benefits of Membership

A Member whose Membership is terminated involuntarily shall cease being a Member of the
FHLBNY as of the date on which the Board of Directors acts to terminate the Membership.
After that date, such terminated Member shall become an Other Institution under this Capital
Plan. Such Other Institution shall have no right to obtain any of the benefits of
Membership including access to the FHLBNY’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 Capital Stock until the Capital Stock is redeemed or
repurchased by the FHLBNY.

7.2.3 Disposition of Claims

The FHLBNY shall determine an orderly manner for the disposition of transactions
outstanding with the Other Institution. The Stock Redemption Period for the Capital 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 Capital Stock acquired or received by the Other Institution after the
date of the termination of its Membership shall commence on the date of such acquisition or
receipt. If transactions remain outstanding beyond the effective date of the termination of
Membership, the FHLBNY will not redeem any Activity-Based Stock to the extent that the Other
Institution is required to hold such stock to comply with the Activity-Based Stock Purchase
Requirement corresponding to such outstanding transactions.

Capital Stock held by the Member as of the effective date of its termination shall not be
deemed automatically to be Excess Stock solely by virtue of the termination of the Member’s
Membership; provided however, that on and after the effective date of termination, any
Membership Stock that is not required to meet the Other Institution’s Membership Stock
Purchase Requirement on the date on which the Member’s Membership was terminated that has
not otherwise been redeemed by the FHLBNY upon the expiration of an applicable Stock
Redemption Period, or any Activity-Based Stock not required to meet the Other Institution’s
Activity-Based Stock Purchase Requirement that has not otherwise been redeemed by the FHLBNY
upon the expiration of an applicable Stock Redemption Period, shall be Excess Stock that
shall be subject to repurchase by the FHLBNY; 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 Purchase Requirement
shall be deemed to be zero. However, notwithstanding any other provision of this Capital
Plan, in the event that (a) a receiver or conservator has been appointed for the Member, or
the Member has acted to voluntarily dissolve or liquidate itself and is no longer eligible
for membership, and (b) the Bank has terminated the Member’s Membership, then the terminated
Member’s Membership Stock Purchase Requirement shall be deemed to be zero. In addition, in
the event that any Member otherwise fails to satisfy any statutory or regulatory eligibility
requirements for membership in the FHLBNY, the Board of Directors shall involuntarily
terminate that institution’s membership in accordance with Section 7.2.1, and the Membership
Stock Purchase Requirement for that Other Institution shall be deemed to be zero as of the
date on which the Bank next conducts its calculation of membership stock purchase
requirements for all members, and all Membership Stock then held by that Other Institution
shall be Excess Stock that shall be subject to repurchase by the FHLBNY. Further,
notwithstanding any of the foregoing, any repurchases and redemptions of stock permitted
hereunder shall remain subject to the limitations in Section 2.2.4 of the Capital Plan.

7.3 Merger or Consolidation of Members

7.3.1 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 Capital Stock held by the disappearing
Member will be transferred on the books of the FHLBNY into the name of the surviving Member.
The Stock Redemption Period for the Capital Stock previously 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 FHLBNY’s receipt of a
Redemption Notice from the surviving Member, (ii) the FHLBNY’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 Federal Home Loan Bank or into a nonmember, (iv) the surviving Member’s termination
of 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 FHLBNY 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 FHLBNY, subject to the provisions of Section 2.2.2 of the Capital
Plan.

7.3.2 Capital 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 Purchase Requirement shall be immediately increased by
the amount of the disappearing Member’s Membership Stock Purchase Requirement immediately
prior to the cancellation of its charter. Future calculations of the surviving Member’s
Membership Stock Purchase Requirement shall be as determined in accordance with Section 4.1
of the Capital Plan, provided that if the mostly recently available data from the regulatory
reports for the surviving Member does not include the assets of the disappearing Member,
then, in that event, the Membership Stock Purchase Requirement for the surviving Member will
be calculated by adding together the most recently available regulatory report data for the
disappearing Member and for the surviving Member. As of the effective date of the
cancellation of the disappearing Member’s charter, the surviving Member’s Activity-Based
Stock Purchase Requirement will be calculated based on its current outstanding transactions
with the FHLBNY including those acquired from the disappearing Member.

	7.4	 	Merger or Consolidation of Member into a Member of another Federal Home Loan Bank or into
a Nonmember

7.4.1 General

If a Member’s Membership is terminated as a result of the Member’s merger or
consolidation into a member of another Federal Home Loan Bank or a nonmember, the Membership
shall terminate as of the date on which the Member’s charter is cancelled. On that date,
the Capital Stock held by the disappearing Member will be transferred on the books of the
FHLBNY into the name of the surviving institution. After that date the Other Institution
shall have no right to obtain any of the benefits of Membership including access to the
FHLBNY’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
Capital Stock until the Capital Stock is redeemed or repurchased by the FHLBNY.

7.4.2 Disposition of Claims

The FHLBNY shall determine an orderly manner for the disposition of transactions
outstanding with the Other Institution. The Stock Redemption Period for the Capital Stock
then held by the Other Institution 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 Capital Stock acquired or received by the Other Institution after
the date of the termination of the Member’s Membership shall commence on the date of
acquisition or receipt. If transactions remain outstanding beyond the effective date of the
termination of Membership, the FHLBNY will not redeem any Activity-Based Stock that the
Other Institution is required to hold to comply with the Activity-Based Stock Purchase
Requirement corresponding to such outstanding transactions.

Capital Stock held by the Member as of the effective date of its termination shall not be
deemed automatically to be Excess Stock solely by virtue of the termination of the Member’s
Membership; provided however, that on and after the effective date of termination any
Membership Stock that is not required to meet the Other Institution’s Membership Stock
Purchase Requirement on the date on which the Other Institution’s Membership was terminated
that has not otherwise been redeemed by the FHLBNY upon the expiration of an applicable
Stock Redemption Period, or any Activity-Based Stock not required to meet the Other
Institution’s Activity-Based Stock Purchase Requirement that has not otherwise been redeemed
by the FHLBNY upon the expiration of an applicable Stock Redemption Period, shall be Excess
Stock that shall be subject to repurchase by the FHLBNY. In lieu of the formula specified in
Section 4.1 and section A of Appendix I of this Capital Plan, if the corporate existence of
a Member is terminated as a result of its merger into a nonmember, the FHLBNY in its
discretion may, at any time after thirty days subsequent to the merger, recalculate the
Membership Stock Purchase Requirement based solely on Mortgage-related Assets, and in doing
so may use zero dollars ($0.00) as the amount of the Mortgage-related Assets held by the
former Member, and may thereafter repurchase any resulting Excess Stock. Notwithstanding
the foregoing, any repurchases and redemptions of stock permitted hereunder shall remain
subject to the limitations in Section 2.2.4 of the Capital Plan and the provisions, if
applicable, of Section 7.4.3 of this Capital Plan.

7.4.3 Acquiring Institution Applies for FHLBNY Membership

If the institution into which the Member merges or is consolidated is eligible for
Membership and intends to become a Member of the FHLBNY, it must provide written
notification to the FHLBNY of its intention to apply for Membership within sixty 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 calendar days. If the institution is approved for Membership, then
it must purchase the appropriate amounts, if any, of Capital Stock to comply with its
Minimum Stock Investment Requirement. Such purchase of Membership Stock must be made within
sixty days of approval for Membership and with respect to any Activity-Based Stock Purchase
Requirement, prior to engage in such transactions.

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 Section 7.4.2 of the Capital Plan will apply with respect to the disposition
of outstanding transactions and redemption and repurchase of Capital Stock.

7.5 Relocation of Principal Place of Business

7.5.1 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 such Regulations becomes effective.
After that date the Other Institution shall have no right to obtain any of the benefits of
Membership including access to the FHLBNY’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 Capital Stock until the Capital Stock is redeemed or
repurchased by the FHLBNY.

7.5.2 Disposition of Claims

The FHLBNY shall determine an orderly manner for the disposition of transactions
outstanding with the Other Institution. If transactions remain outstanding beyond the
effective date of the termination of Membership, the FHLBNY will not redeem any
Activity-Based Stock that the Other Institution is required to hold to comply with the
Activity-Based Stock Purchase Requirement corresponding to such outstanding transactions.
Any Activity-Based Stock not required to meet the Other Institution’s Activity-Based
Stock Purchase Requirement that has not otherwise been redeemed by the FHLBNY upon the
expiration of an applicable Stock Redemption Period shall be Excess Stock that shall be
subject to repurchase by the FHLBNY.

If a Member relocates its principal place of business to another Bank district and transfers
its membership to the Bank in that district, its Membership Stock Purchase Requirement at
the FHLBNY shall be deemed to be zero as of the date that the Other Institution becomes a
member of the other Bank, and all Membership Stock then held at the FHLBNY by that Other
Institution shall be Excess Stock that shall be immediately subject to repurchase by the
FHLBNY. However, if a Member relocates its principal place of business to another Bank
district but does not become a member of the Bank in that district, then the Board of
Directors shall involuntarily terminate that Other Institution’s membership in accordance
with Section 7.2.1, and the Membership Stock Purchase Requirement for the Other Institution
shall be deemed to be zero as of the date on which the Bank next conducts its calculation of
membership stock purchase requirements for all members, and all Membership Stock then held
at the FHLBNY by that Other Institution shall be Excess Stock that shall be subject to
repurchase by the FHLBNY. Notwithstanding the foregoing, any repurchases and redemptions of
stock hereunder shall remain subject to the limitations in Section 2.2.4 of the Capital
Plan.

8. [Reserved]

9. [Reserved]

8

10. Amendments to the Capital Plan and Notices

10.1 Amendments to the Capital Plan

Any amendment to the Capital Plan must be approved by the Board of Directors and
submitted to the Finance Agency. The effective date for any proposed amendment shall be
contained in any request for approval that is submitted to the Finance Agency. In order to
become effective, any amendment to the Capital Plan must be approved by the Finance Agency.
The FHLNBY will transmit, send or give its Members notice in writing at least thirty days
prior to the effective date of any amendment to the Capital Plan.

10.2 Notices Relating to the Capital Plan

10.2.1 Notices by the FHLBNY

Written notices transmitted, sent or given by the FHLBNY 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. Such written notices shall be
directed to the postal address, physical address or fax number appearing in the FHLBNY’s
records from time to time.

10.2.2 Notices to the FHLBNY

Written notices given to the FHLBNY in accordance with the provisions of the Capital
Plan shall be addressed to the President of the FHLBNY and delivered to 101 Park Avenue, New
York, NY, 10178 or sent via email to fhlbny@fhlbny.com, and shall be deemed to have been
received by the FHLBNY in each case upon actual receipt by the FHLBNY. The FHLBNY may from
time to time change the address or email address at which it will receive such written
notices by transmitting, sending or giving written notice to the Member, or Other
Institution.

9

11. Joint Capital Enhancement Agreement

	11.1	 	Retained Earnings Enhancement Implementation and Definitions

11.1.1 Implementation

The provisions of sections 11.1 through 11.4 shall become effective upon, and only
upon, the occurrence of the Interim Capital Plan Amendment Implementation Date. Until the
Restriction Termination Date, in the event of any conflict between sections 11.1 through
11.4 and the remainder of this Capital Plan, the applicable terms of sections 11.1 through
11.4 shall govern, and shall be interpreted in a manner such that the restrictions set forth
therein are supplementary to, and not in lieu of, the requirements of the remainder of this
Capital Plan.

11.1.2 Definitions applicable to Sections 11.1 through 11.4 of this Capital Plan

As used in these sections 11.1 through 11.4, the following capitalized terms shall have
the following meanings.  Other capitalized terms used but not defined in these sections 11.1
through 11.4 shall have the meanings set forth in the Definitions section before Section 1
of this Capital Plan.

‘Act’ means the Federal Home Loan Bank Act, as amended as of the Effective Date.

‘Adjustment to Prior Net Income’ means either an increase, or a decrease, to a prior
calendar quarter’s Quarterly Net Income subsequent to the date on which any allocation to
Restricted Retained Earnings for such calendar quarter was made.

‘Agreement’ means the Joint Capital Enhancement Agreement adopted by the FHLBanks on the
Effective Date and amended on the date on which the FHFA has approved the Retained Earnings
Capital Plan Amendments for all of the FHLBanks that have issued capital stock pursuant to a
capital plan as of the Effective Date.

‘Allocation Termination Date’ means the date the Bank’s obligation to make allocations to
the Restricted Retained Earnings account is terminated permanently. That date is determined
pursuant to section 11.4 of this Capital Plan.

‘Automatic Termination Event’ means (i) a change in the Act, or another applicable statute,
occurring subsequent to the Effective Date, that will have the effect of creating a new, or
higher, assessment or taxation on net income or capital of the FHLBanks, or (ii) a change in
the Act, another applicable statute, or the Regulations, occurring subsequent to the
Effective Date, that will result in a higher mandatory allocation of an FHLBank’s Quarterly
Net Income to any Retained Earnings account than the annual amount, or total amount,
specified in an FHLBank’s capital plan as in effect immediately prior to the Automatic
Termination Event.

‘Automatic Termination Event Declaration Date’ means the date specified in section 11.4.1.1
or 11.4.1.2 of this Capital Plan.

‘Bank’s Total Consolidated Obligations’ means the daily average carrying value for the
calendar quarter, excluding the impact of fair value adjustments (i.e., fair value option
and hedging adjustments), of the Bank’s portion of outstanding System Consolidated
Obligations for which it is the primary obligor.

‘Declaration of Automatic Termination’ means a signed statement, executed by officers
authorized to sign on behalf of each FHLBank that is a signatory to the statement, in which
at least 2/3 of the then existing FHLBanks declare their concurrence that a specific
statutory or regulatory change meets the definition of an Automatic Termination Event.

‘Dividend’ means a distribution of cash, other property, or stock to a Stockholder with
respect to its holdings of Capital Stock.

‘Dividend Restriction Period’ means any calendar quarter: (i) that includes the REFCORP
Termination Date, or occurs subsequent to the REFCORP Termination Date; (ii) that occurs
prior to an Allocation Termination Date; and (iii) during which the amount of the Bank’s
Restricted Retained Earnings is less than the amount of the Bank’s RREM. If the amount of
the Bank’s Restricted Retained Earnings is at least equal to the amount of the Bank’s RREM,
and subsequently the Bank’s Restricted Retained Earnings becomes less than its RREM, the
Bank shall be deemed to be in a Dividend Restriction Period (unless an Allocation
Termination Date has occurred).

‘Effective Date’ means February 28, 2011.

‘GAAP’ means accounting principles generally accepted in the United States as in effect from
time to time.

‘FHFA’ means the Federal Housing Finance Agency, or any successor thereto.

‘FHLBank’ means a Federal Home Loan Bank chartered under the Act.

‘Interim Capital Plan Amendment Implementation Date’ means 31 days after the date by which
the FHFA has approved a capital plan amendment substantially the same as the Retained
Earnings Capital Plan Amendment for all of the FHLBanks that have issued capital stock
pursuant to a capital plan as of the Effective Date.

‘Net Loss’ means that the Quarterly Net Income of the Bank is negative, or that the annual
net income of the Bank calculated on the same basis is negative.

‘Quarterly Net Income’ means the amount of net income of an FHLBank for a calendar quarter
calculated in accordance with GAAP, after deducting the FHLBank’s required contributions for
that quarter to the Affordable Housing Program under section 10(j) of the Act, as reported
in the FHLBank’s quarterly and annual financial statements filed with the Securities and
Exchange Commission.

‘REFCORP Termination Date’ means the last day of the calendar quarter in which the FHLBanks’
final regular payments are made on obligations to REFCORP in accordance with Section 997.5
of the Regulations and Section 21B(f) of the Act.

‘Regular Contribution Amount’ means the result of (i) 20 percent of Quarterly Net Income;
plus (ii) 20 percent of a positive Adjustment to Prior Net Income for any prior calendar
quarter that includes the REFCORP Termination Date, or occurred subsequent to the REFCORP
Termination Date, to the extent such adjustment has not yet been made in the current
calendar quarter; minus (iii) 20 percent of the absolute value of a negative Adjustment to
Prior Net Income for any prior calendar quarter that includes the REFCORP Termination Date,
or occurred subsequent to the REFCORP Termination Date, to the extent such adjustment has
not yet been made in the current calendar quarter.

‘Regulations’ mean: (i) the rules and regulations of the Federal Housing Finance Board
(except to the extent that they may be modified, terminated, set aside or superseded by the
Director of the FHFA) in effect on the Effective Date; (ii) the rules and regulations of the
FHFA, as amended from time to time.

‘Restricted Retained Earnings’ means the cumulative amount of Quarterly Net Income and
Adjustments to Prior Net Income allocated to the Bank’s Retained Earnings account

restricted pursuant to the Retained Earnings Capital Plan Amendment, and does not include
amounts retained in: (i) any accounts in existence at the Bank on the Effective Date; or
(ii) any other Retained Earnings accounts subject to restrictions that are not part of the
terms of the Retained Earnings Capital Plan Amendment.

‘Restricted Retained Earnings Minimum’ (‘RREM’) means a level of Restricted Retained
Earnings calculated as of the last day of each calendar quarter equal to one percent of the
Bank’s Total Consolidated Obligations.

‘Restriction Termination Date’ means the date the restriction on the Bank paying Dividends
out of the Restricted Retained Earnings account, or otherwise reallocating funds from the
Restricted Retained Earnings account, is terminated permanently. That date is determined
pursuant to section 11.4 of this Capital Plan.

‘Retained Earnings’ means the retained earnings of an FHLBank calculated pursuant to GAAP.

‘Retained Earnings Capital Plan Amendment’ means the amendment to this Capital Plan, made a
part thereof, adopted effective on the Interim Capital Plan Amendment Implementation Date
adding sections 11.1 through 11.4 to this Capital Plan.

‘Special Contribution Amount’ means the result of: (i) 50 percent of Quarterly Net Income;
plus (ii) 50 percent of a positive Adjustment to Prior Net Income for any prior calendar
quarter that includes the REFCORP Termination Date, or occurred subsequent to the REFCORP
Termination Date, to the extent such adjustment has not yet been made in the current
calendar quarter; minus (iii) 50 percent of the absolute value of a negative Adjustment to
Prior Net Income for any prior calendar quarter that includes the REFCORP Termination Date,
or occurred subsequent to the REFCORP Termination Date, to the extent such adjustment has
not yet been made by the current calendar quarter.

‘Stockholder’ means (i) a Member, or (ii) an Other Institution.

‘System Consolidated Obligation’ means any bond, debenture, or note authorized under the
Regulations to be issued jointly by the FHLBanks pursuant to Section 11(a) of the Act, as
amended, or any bond or note previously issued by the Federal Housing Finance Board on
behalf of all FHLBanks pursuant to Section 11(c) of the Act, on which the FHLBanks are
jointly and severally liable, or any other instrument issued through the Office of Finance,
or any successor thereto, under the Act, that is a joint and several liability of all the
FHLBanks.

‘Total Capital’ means Retained Earnings, the amount paid-in for Capital Stock, the amount of
any general allowance for losses, and the amount of other instruments that the FHFA has
determined to be available to absorb losses incurred by the Bank.

11.2 Establishment of Restricted Retained Earnings

11.2.1 Segregation of Account

No later than the REFCORP Termination Date, the Bank shall establish an account in its
official books and records in which to allocate its Restricted Retained Earnings, with such
account being segregated on its books and records from the Bank’s Retained Earnings that are
not Restricted Retained Earnings for purposes of tracking the accumulation of Restricted
Retained Earnings and enforcing the restrictions on the use of the Restricted Retained
Earnings imposed in the Retained Earnings Capital Plan Amendment.

11.2.2 Funding of Account

11.2.2.1 Date on which Allocation Begins

The Bank shall allocate to its Restricted Retained Earnings account an amount at least
equal to the Regular Contribution Amount beginning on the REFCORP Termination Date. The
Bank shall allocate amounts to the Restricted Retained Earnings account only through
contributions from its Quarterly Net Income or Adjustments to Prior Net Income occurring on
or after the REFCORP Termination Date, but nothing in the Retained Earnings Capital Plan
Amendment shall prevent the Bank from allocating a greater percentage of its Quarterly Net
Income or positive Adjustment to Prior Net Income to its Restricted Retained Earnings
account than the percentages set forth in the Retained Earning Capital Plan Amendment.

11.2.2.2 Ongoing Allocation

During any Dividend Restriction Period that occurs before the Allocation Termination Date,
the Bank shall continue to allocate its Regular Contribution Amount (or when and if required
under subsection 11.2.2.4 below, its Special Contribution Amount) to its Restricted Retained
Earnings account.

11.2.2.3 Treatment of Quarterly Net Losses and Annual Net Losses

In the event the Bank sustains a Net Loss for a calendar quarter, the following shall apply:
(i) to the extent that its cumulative calendar year-to-date net income is positive at the
end of such quarter, the Bank may decrease the amount of its Restricted Retained Earnings
such that the cumulative addition to the Restricted Retained Earnings account calendar
year-to-date at the end of such quarter is equal to 20 percent of the amount of such
cumulative calendar year-to-date net income; (ii) to the extent that its cumulative calendar
year-to-date net income is negative at the end of such quarter (a) the Bank may decrease the
amount of its Restricted Retained Earnings account such that the cumulative addition
calendar year-to-date to the Restricted Retained Earnings at the end of such quarter is
zero, and (b) the Bank shall apply any remaining portion of the Net Loss for the calendar
quarter first to reduce Retained Earnings that are not Restricted Retained Earnings until
such Retained Earnings are reduced to zero, and thereafter may apply any remaining portion
of the Net Loss for the calendar quarter to reduce Restricted Retained Earnings; and (iii)
for any subsequent calendar quarter in the same calendar year, the Bank may decrease the
amount of its quarterly allocation to its Restricted Retained Earnings account in that
subsequent calendar quarter such that the cumulative addition to the Restricted Retained
Earnings account calendar year-to-date is equal to 20 percent of the amount of such
cumulative calendar year-to-date net income. In the event the Bank sustains a Net Loss for a
calendar year, any such Net Loss first shall be applied to reduce Retained Earnings that are
not Restricted Retained Earnings until such Retained Earnings are reduced to zero, and
thereafter any remaining portion of the Net Loss for the calendar year may be applied to
reduce Restricted Retained Earnings.

11.2.2.4 Funding at the Special Contribution Amount

If during a Dividend Restriction Period, the amount of the Bank’s Restricted Retained
Earnings decreases in any calendar quarter, except as provided in subsections 11.2.2.3(i)
and (ii)(a) above, the Bank shall allocate the Special Contribution Amount to its Restricted
Retained Earnings account beginning at the following calendar quarter-end (except as
provided in the last sentence of this subsection). Thereafter, the Bank shall continue to
allocate the Special Contribution Amount to its Restricted Retained Earnings account until
the cumulative difference between: (i) the allocations made using the Special Contribution
Amount; and (ii) the allocations that would have been made if the Regular Contribution
Amount applied, is equal to the amount of the prior decrease in the amount of its Restricted
Retained Earnings account arising from the application of subsection 11.2.2.3(ii)(b). If at
any calendar quarter-end the allocation of the Special Contribution Amount would result in a
cumulative allocation in excess of such prior decrease in the amount of Restricted Retained
Earnings: (i) the Bank may allocate such percentage of Quarterly Net Income to the
Restricted Retained Earnings account that shall exactly restore the amount of the prior
decrease, plus the amount of the Regular Contribution Amount for that quarter; and (ii) the
Bank in subsequent quarters shall revert to paying at least the Regular Contribution Amount.

11.2.2.5 Release of Restricted Retained Earnings

If the Bank’s RREM decreases from time to time due to fluctuations in the Bank’s Total
Consolidated Obligations, amounts in the Restricted Retained Earnings account in excess of
150 percent of the RREM may be released by the Bank from the restrictions otherwise imposed
on such amounts pursuant to the provisions of the Retained Earnings Capital Plan Amendment,
and reallocated to its Retained Earnings that are not Restricted Retained Earnings. Until
the Restriction Termination Date, the Bank may not otherwise reallocate amounts in its
Restricted Retained Earnings account (provided that a reduction in the Restricted Retained
Earnings account following a Net Loss pursuant to subsection 11.2.2.3 is not a
reallocation).

11.2.2.6 No Effect on Rights of Shareholders as Owners of Retained Earnings

In the event of the liquidation of the Bank, or a taking of the Bank’s Retained
Earnings by any future federal action, nothing in the Retained Earnings Capital Plan
Amendment shall change the rights of the holders of the Bank’s Class B stock that confer
ownership of Retained Earnings, including Restricted Retained Earnings, as granted under
Section 6(h) of the Act.

11.3 Limitation on Dividends, Stock Purchase and Stock Redemption

11.3.1 General Rule on Dividends

From the REFCORP Termination Date through the Restriction Termination Date, the Bank
may not pay Dividends, or otherwise reallocate funds (except as expressly provided in
subsection 11.2.2.5, and further provided that a reduction in the Restricted Retained
Earnings account following a Net Loss pursuant to subsection 11.2.2.3 is not a
reallocation), out of Restricted Retained Earnings. During a Dividend Restriction Period,
the Bank may not pay Dividends out of the amount of Quarterly Net Income required to be
allocated to Restricted Retained Earnings.

11.3.2 Limitations on Repurchase and Redemption

From the REFCORP Termination Date through the Restriction Termination Date, the Bank
shall not engage in a repurchase or redemption transaction if following such transaction the
Bank’s Total Capital as reported to the FHFA falls below the Bank’s aggregate paid-in amount
of Capital Stock.

11.4 Termination of Retained Earnings Capital Plan Amendment Obligations

11.4.1 Notice of Automatic Termination Event

11.4.1.1 Action by FHLBanks

If the Bank desires to assert that an Automatic Termination Event has occurred (or will
occur on the effective date of a change in a statute or the Regulations), the Bank shall
provide prompt written notice to all of the other FHLBanks (and provide a copy to the FHFA)
identifying the specific statutory or regulatory change that is the basis for the assertion.
For the purposes of this section, ‘prompt written notice’ means notice delivered no later
than 90 calendar days subsequent to: (1) the date the specific statutory change takes
effect; or (2) the date an interim final rule or final rule effecting the specific
regulatory change is published in the Federal Register.

If within 60 calendar days of transmission of such written notice to all of the other
FHLBanks, at least 2/3 of the then existing FHLBanks (including the Bank) execute a
Declaration of Automatic Termination concurring that the specific statutory or regulatory
change identified in the written notice constitutes an Automatic Termination Event, then the
Declaration of Automatic Termination shall be delivered by the Bank to the FHFA within 10
calendar days of the date that the Declaration of Automatic Termination is executed. After
the expiration of a 60 calendar day period that begins when the Declaration of Automatic
Termination is delivered to the FHFA, or is delivered to the FHFA by another FHLBank
pursuant to the terms of its capital plan, an Automatic Termination Event Declaration Date
shall be deemed to occur (except as provided in subsection 11.4.1.3).

If a Declaration of Automatic Termination concurring that the specific statutory or
regulatory change identified in the written notice constitutes an Automatic Termination
Event has not been executed by at least the required 2/3 of the then existing FHLBanks
within 60 calendar days of transmission of such notice to all of the other FHLBanks, the

Bank may request a determination from the FHFA that the specific statutory or regulatory
change constitutes an Automatic Termination Event. Such request must be filed with the FHFA
within 10 calendar days after the expiration of the 60 calendar day period that begins upon
transmission of the written notice of the basis of the assertion to all of the other
FHLBanks.

11.4.1.2 Action by FHFA

The Bank may request a determination from the FHFA that a specific statutory or
regulatory change constitutes an Automatic Termination Event, and may claim that an
Automatic Termination Event has occurred, or will occur, with respect to a specific
statutory or regulatory change only if the Bank has complied with the time limitations and
procedures of subsection 11.4.1.1.

If within 60 calendar days after the Bank delivers such a request to the FHFA, or another
FHLBank delivers such a request pursuant to its capital plan, the FHFA provides the
requesting FHLBank with a written determination that a specific statutory or regulatory
change is an Automatic Termination Event, then an Automatic Termination Event Declaration
Date shall be deemed to occur as of the expiration of such 60 calendar day period (except as
provided in subsection 11.4.1.3). The date of the Automatic Termination Event Declaration
Date shall be as of the expiration of such 60 calendar day period (except as provided in
subsection 11.4.1.3) no matter on which day prior to the expiration of the 60 calendar day
period the FHFA has provided its written determination.

If the FHFA fails to make a determination within 60 calendar days after an FHLBank delivers
such a request to the FHFA, then an Automatic Termination Event Declaration Date shall be
deemed to occur as of the date of the expiration of such 60 calendar day period (except as
provided in subsection 11.4.1.3); provided, however, that the FHFA may make a written
request for information from the requesting FHLBank, and toll such 60 calendar day period
from the date that the FHFA transmits its request until that FHLBank delivers to the FHFA
information responsive to its request.

If within 60 calendar days after an FHLBank delivers to the FHFA a request for determination
that a specific statutory or regulatory change constitutes an Automatic Termination Event
(or such longer period if the 60 calendar day period is tolled pursuant to the preceding
sentence), the FHFA provides that FHLBank with a written determination that a specific
statutory or regulatory change is not an Automatic Termination Event, then an Automatic
Termination Event shall not have occurred with respect to such change.

	 	11.4.1.3	 	Proviso as to Occurrence of Automatic Termination Event Declaration Date

In no case under this subsection 11.4.1 may an Automatic Termination Event Declaration
Date be deemed to occur prior to: (1) the date the specific statutory change takes effect;
or (2) the date an interim final rule or final rule effecting the specific regulatory change
is published in the Federal Register.

11.4.2 Notice of Voluntary Termination

If the FHLBanks terminate the Agreement, then the FHLBanks shall provide written notice
to the FHFA that the FHLBanks have voted to terminate the Agreement.

11.4.3  Consequences of an Automatic Termination Event or Vote to Terminate
the Agreement

11.4.3.1 Consequences of Voluntary Termination

In the event the FHLBanks deliver written notice to the FHFA that the FHLBanks have
voted to terminate the Agreement, then without any further action by the Bank or the FHFA:
(i) the date of delivery of such notice shall be an Allocation Termination Date; and (ii)
one year from the date of delivery of such notice shall be a Restriction Termination Date.

11.4.3.2 Consequences of an Automatic Termination Event Declaration Date

If an Automatic Termination Event Declaration Date has occurred, then without further
action by the Bank or the FHFA: (i) the date of the Automatic Termination Event Declaration
Date shall be an Allocation Termination Date; and (ii) one year from the date of the
Automatic Termination Event Declaration Date shall be a Restriction Termination Date.

	 	11.4.3.3	 	Deletion of Operative Provisions of Retained Earnings Capital Plan Amendment

Without any further action by the Bank or the FHFA, on the Restriction Termination
Date, sections 11.1 through 11.4 of this Capital Plan shall be deleted.

10

 Appendix I — Member Stock Purchase Requirements

(Note: This Appendix I to the Capital Plan is effective as of August 1, 2017 and supersedes
the Appendix dated August 1, 2014.)

A. Membership Stock Purchase Requirement

Each Member is required to purchase Membership Stock equal to the greater of (i) $1,000
or (ii) 0.125% of the Mortgage-related Assets held by the Member.

B. Activity-Based Stock Purchase Requirement

Each Member is required to purchase Activity-Based Stock in the following amounts:

1. Advances

Members are required to purchase Activity-Based Stock equal to 4.50% of the dollar amount of
any outstanding advances under the Advances Agreement.

2. Acquired Member Assets

Members are required to purchase Activity-Based Stock equal to 4.50% of the outstanding
principal balance of the Acquired Member Assets originated for or sold to the FHLBNY by a
Member that remain on the FHLBNY’s balance sheet plus the principal amount of delivery
commitments issued to the Member by FHLBNY for Acquired Member Assets to be held on the
FHLBNY’s balance sheet, provided that the outstanding principal balance of Acquired Member
Assets originated for or sold to the FHLBNY by a Member that were on the FHLBNY’s balance
sheet as of November 30, 2005 will not be subject to this requirement.

	3.	 	Off-Balance Sheet Items

Members are required to purchase Activity-Based Stock equal to the credit equivalent amount of
any off-balance sheet items listed in Section 932.4(f), Table 2 of the Regulations which the
FHLBNY has transacted on a Member’s behalf and which are continuing, excluding the principal
amount of delivery commitments issued to the Member by FHLBNY for Acquired Member Assets,
multiplied by zero.

4. Derivative Contracts

Members are required to purchase Activity-Based Stock equal to 0% of the carrying value on the
FHLBNY’s balance sheet of Derivative Contracts between the Member and FHLBNY, as determined by
FHLBNY under GAAP.

11

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