INDEMNIFICATION
AGREEMENT
THIS
INDEMNIFICATION AGREEMENT made and entered into as of this 28th day
of July 2008 (the “Agreement”), by and between
FEDERAL HOME LOAN BANK OF DALLAS, a federally chartered corporation
(“Bank”), and Terry Smith (the
“Officer”),
WHEREAS, the Board
of Directors of the Bank (the “Board”) believes that it
is reasonable, prudent, and necessary for the Bank contractually to
obligate itself to indemnify the Officer to the fullest extent
permitted by applicable law in order to induce the Officer to serve
or continue to serve the Bank, including the Officer’s
service as an officer, director, trustee, or other official of
organizations with which the Bank may have a contractual or other
relationship, free from undue concern that he will not be so
indemnified; and
WHEREAS,
Article VIII of the Bank’s Bylaws provides that the Bank
will indemnify officers and directors of the Bank in connection
with their service as officers, directors, trustees of
organizations on which they serve as officers, directors, or
trustees on behalf of or for the benefit of the Bank;
and
WHEREAS, the
Officer is willing to serve, continue to serve, and take on
additional service for, or on behalf of, the Bank on the condition
that he be so indemnified as more fully set forth
herein:
NOW, THEREFORE, in
consideration of the promises and the covenants in this Agreement,
and intending to be legally bound, the Bank and the Officer do
hereby covenant and agree as follows:
SECTION 1.
Definitions . For purposes of this Agreement:
(a)
“Agent” shall mean any person who (i) is or was a
director, officer, employee or agent of the Bank; or (ii) is
or was serving at the request of, for the convenience of, or to
represent the interest of the Bank (including, without limitation,
the Financial Institutions Retirement Fund, the Financing
Corporation, the Resolution Funding Corporation, the Office of
Finance, Pentegra Defined Benefit Plan for Financial Institutions
(“Pentegra”), the Council of Federal Home Loan Banks
and any Federal Home Loan Bank System committee, including but not
limited to the Bank Presidents’ Conference, and their
successors) as a director, officer, partner, employee, member,
manager, trustee or agent of another corporation, partnership,
limited liability company, joint venture, trust, agency,
instrumentality or other enterprise (including service with respect
to an employee benefit plan).
(b)
“Disinterested Director” shall mean a director of the
Bank who is not and was not a party to the Proceeding in respect of
which indemnification or advancement of Expenses is being sought by
the Officer or any similar Proceeding then pending.
(c)
“Expenses” shall be broadly construed and shall include
all direct and indirect costs (including, without limitation,
attorneys’ fees and retainers, court costs,
transcription
costs, fees of experts, witness fees, travel expenses, food and
lodging expenses while traveling, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service, and
freight or other transportation fees and expenses) actually and
reasonably incurred, in connection with either the investigation,
defense, settlement, or appeal of a Proceeding or the establishment
or enforcement of a right to indemnification under this Agreement,
applicable law or otherwise; provided, however, that
“Expenses” shall not include any judgments, fines, or
amounts paid in settlement to the extent any amounts paid in
respect of any thereof are prohibited to be indemnified against by
applicable law.
(d)
“Independent Counsel” shall mean a law firm or a member
of a law firm that neither is presently nor in the past three years
has been retained to represent (i) the Bank or the Officer in
any matter material to either party or (ii) any other party to
the Proceeding giving rise to a claim for indemnification under
this Agreement. Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who,
under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing
either the Bank or the Officer in an action to determine the
Officer’s right to indemnification under this
Agreement.
(e)
“Liabilities” shall mean liabilities of any type
whatsoever, including, but not limited to, judgments, fines, excise
taxes and penalties payable pursuant to the Employee Retirement
Income Security Act (“ERISA”), and amounts paid in
settlement (including all interest, assessments or other charges
paid or payable in connection with any of the
foregoing).
(f)
“Proceeding” shall mean any threatened, pending or
completed action, hearing, claim, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative
hearing, or any other proceeding, whether civil, criminal,
arbitrative, administrative or investigative (including, without
limitation, any action, suit, or proceeding by or in the right of
the Bank to procure a judgment in its favor) and whether formal or
informal, arising by reason of the fact that the Officer is or was
an Agent or by reason of anything done or not done by the Officer
in his capacity as an Agent.
SECTION 2.
Service as an Officer . The Officer agrees to serve as
an officer of the Bank so long as he is duly appointed and
qualified in accordance with the applicable provisions of the
charter and bylaws of the Bank and the Federal Home Loan Bank Act
and the rules and regulations promulgated thereunder and until such
time as he resigns or is removed from his position or is
disqualified to continue in his position (subject to any other
contractual obligation or other obligation imposed by operation of
law). The Bank shall have no obligation under this Agreement to
continue the Officer in any position.
SECTION 3.
Indemnification . The Bank shall, to the fullest extent
permitted by applicable law and regulations and the charter and
bylaws of the Bank in effect on the date hereof or as such laws,
regulations, or charter and bylaws may from time to time be amended
(but, in the case of any such amendment, only to the extent such
amendment permits the Bank to provide broader indemnification
rights than applicable laws and regulations or the charter or
bylaws of the Bank permitted the Bank to provide immediately prior
to such amendment), indemnify the Officer whenever he is or becomes
a party, whether as a plaintiff acting with the approval of the
Board, or as a defendant, or is threatened to be made a party to or
is involved (including, without limitation, as a witness) in any
Proceeding, including without limitation any Proceeding brought by
or in the right of the Bank, against all Liabilities, loss, and
Expenses actually and reasonably incurred or suffered by him in
connection with any Proceeding if, as determined in accordance with
Section 5, he acted in good faith and in a manner he
reasonably
believed to be
in or not opposed to the best interests of the Bank, and, with
respect to any Proceeding, had no reasonable cause to believe his
conduct was unlawful, except such Liabilities and Expenses as
(a) a court of competent jurisdiction holds may not be
indemnified against and (b) are incurred because of (i) the
Officer’s breach of his duty of loyalty to the Bank or its
stockholders, (ii) any act or omission by the Officer which
involves willful misconduct or knowing violation of the criminal
law, or (iii) any transaction from which the Officer derived
any improper personal benefit. The right to indemnification
conferred in the charter and bylaws of the Bank shall be presumed
to have been relied upon by the Officer in serving or continuing to
serve the Bank as its Agent and shall be enforceable hereunder by
the Officer as a contract right. No initial finding by the Board or
its counsel, Independent Counsel, arbitrators, or the stockholders
of the Bank shall be effective to deprive the Officer of the
protection of this indemnity, nor shall a court to which the
Officer may apply for enforcement of this indemnity give any weight
to any such adverse finding in deciding any issue before it, as it
is intended that the Officer shall be paid promptly by the Bank all
amounts necessary to effectuate the foregoing indemnity in full.
The rights of indemnification of the Officer provided under this
Agreement shall include, without limitation, those rights set forth
in Sections 4, 7, and 8 below.
SECTION 4.
Advancement of Expenses . All reasonable Expenses to
which the Officer may be entitled to indemnification under
Section 3 hereof incurred by or on behalf of the Officer in
defending a Proceeding, whether prior to or after final disposition
of a Proceeding (including without limitation any Proceeding
brought by or in the right of the Bank), shall be advanced by the
Bank to the Officer within 20 days after the receipt by the
Secretary of the Bank of (a) a written affirmation by the
Officer of his good faith belief that he has met the standard of
conduct set forth in Section 3 and (b) a written
undertaking by or on behalf of the Officer to repay all amounts
paid or reimbursed only if it shall ultimately be determined that
he is not entitled to be indemnified by the Bank. The
Officer’s entitlement to advancement of Expenses shall
include Expenses incurred in connection with any Proceeding that
seeks a determination, adjudication, or award in arbitration
pursuant to this Agreement. The requests under this Section 4
shall reasonably evidence the Expenses incurred by the Officer in
connection therewith. The undertaking required by clause
(b) of this Section 4 (i) shall be an unlimited
general obligation of such person, (ii) need not be secured,
and (iii) shall be accepted without reference to financial
ability of the Officer to make repayment. Notwithstanding any other
provision in this Agreement, to the extent that the Officer has
been successful on the merits or otherwise in defense of any
Proceeding, the Officer shall be indemnified against, and entitled
to reimbursement of, all Expenses actually and reasonably incurred
by the Officer in connection therewith.
SECTION 5.
Procedure for Determination of Entitlement to
Indemnification .
(a) Whenever
the Officer believes that he is entitled to indemnification
pursuant to this Agreement, the Officer shall submit a written
request for indemnification to the Secretary of the Bank. The
request shall include all documentatio
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