Document:

Exhibit

Federal Home Loan Bank of Des Moines
2019 Incentive Plan Document

CONTENTS

		
	I.
	Purpose

		
	II.
	Eligibility

		
	III.
	Plan Design

		
	IV.
	Administration of the Plan

		
	V.
	Miscellaneous Provisions

		
	VI.
	Definitions

Exhibit 1 

Exhibit 2

    
    
    

    

    

    

		
	I.
	Purpose

The Federal Home Loan Bank of Des Moines (“Bank”) strives to attract, retain and motivate employees of the Bank, and to focus its employees’ efforts on fulfilling the Bank’s mission and vision within a safe and sound framework and in a manner consistent with the Bank’s shared values. This 2019 Incentive Plan (“Plan”) is designed to compensate Bank employees in a manner consistent with these goals by: 

		
	•
	Recognizing Bank employees for their individual and/or team contributions to the Bank’s achievement of the Strategic Imperatives listed in the 2019-2023 Strategic Business Plan (“SBP”); and

		
	•
	Providing incentive awards that when combined with base salaries provide competitive total cash compensation to Bank employees. 

The Plan is effective for the calendar year beginning January 1, 2019.  Awards earned during the Performance Period under the Plan (“Plan Awards”) fall into two separate subcategories: “Annual Awards” and “Deferred Awards.” (See Section VI., Definitions, for a description of these terms).  

The Plan shall remain in effect until the Human Resources and Compensation Committee (“HRC”) of the Board of Directors (“Board”) terminates, replaces or amends the Plan. 

		
	II.
	Eligibility

All regular full-time and part-time (working at least 20 hours/week) employees are eligible to participate in the Plan, with the exception of the Internal Audit Department employees who may be eligible to participate in a separate incentive plan as approved by the Board’s Audit Committee. Temporary employees, interns or independent contractors are not eligible to participate in the Plan.  

III.    Plan Design

The Plan includes two components:

•    Bank-wide business performance goals aligned with the Bank’s SBP. These will be quantitative goals tied to the Bank’s business and mission activities, including members , risk management, operations, finance and people initiatives. 

•    Individual and/or team goals for achievement of other objectives tied to the strategic priorities and initiatives in the Bank’s SBP. Every employee will also have an individual goal tied to continuous improvement that will have at least a 10 percent weighting.

The Plan is designed to emphasize overall Bank performance for officers and certain other professionals and more specific operationally-focused goals related to particular areas of responsibility for other employees that provide a “line of sight incentive.”  

Each calendar year the HRC shall establish one or more Bank-wide performance goals, consistent with the SBP in effect during the Performance Period. Each goal will be weighted, and shall have a threshold, target, and maximum level of performance, as appropriate.  

Each calendar year, employees and their managers will develop individual and/or team goals in alignment with the strategic imperatives and strategies included in the SBP.  

Recognizing that circumstances and priorities may change, management may submit to the HRC recommended revisions to Bank-wide performance goals.  The HRC will evaluate the submission and determine whether the Bank-wide performance goals should be amended. Management may authorize changes to individual and/or team goals throughout the Performance Period as priorities and circumstances dictate.

Bank-wide performance goal achievement levels that discretely fall in between threshold, target and maximum performance levels will be interpolated, unless otherwise directed in the design of a particular performance goal.

The total incentive target is a weighted average of the Bank-wide performance goals and individual and/or team goals. 

The following chart provides the threshold, target and maximum Plan Award percentage payout opportunities for each level in the Bank, and associated weights for Bank-wide performance goals and individual and/or team goals. The chart also provides the portion of each Plan Award, if any, that is a Deferred Award. (The classifications are representative titles and may or may not represent the exact titles for each tier.)

	
						
	

Classification
	2019 Threshold/ Target/ Max
Plan Award as a % of Base Salary
	Bank-wide Performance Goal
% of Total Plan Award
	Individual and/or Team Goal
% of Total Plan Award
	% of 2019 Plan Award   Paid Annually
	% of 2019 Plan Award  Deferred

	Tier 1 (President and CEO)

	50.0 / 85.0 / 100.0
	100%
	0%
	50%
	50%

	Tier 2 (Executive Team and Chief Information Security Officer)

	40.0 / 60.0 / 80.0

	100%
	0%
	50%
	50%

	Tier 3 (SVPs)
           
	20.0 / 40.0 / 60.0

	100%
	0%
	50%
	50%

	Tier 4 (Corporate VPs)
           
	17.5 / 35.0 / 52.5
	80%
	20%
	65%
	35%

	Tier 5 (Senior Technical Managers or Associate Directors)
	12.5 / 25 / 37.5

	70%
	30%
	100%
	N/A

	Tier 6 (Technical Managers or Senior Technical Individual Contributors)

	10.0 / 20 / 30.0

	60%
	40%
	100%
	N/A

	Tier 7 (Operational Managers or Senior Individual Contributors)

	7.5 / 15 / 22.5
	50%
	50%
	100%
	N/A

	Tier 8 (Supervisors or Individual Contributors)

	5 / 10 / 15
	40%
	60%
	100%
	N/A

	Tier 9 (Non-Exempt Team Members)

	3 / 6 / 9
	30%
	70%
	100%
	N/A

The actual threshold, target, and maximum achievement levels for the Bank-wide performance goals in the Plan are presented in Exhibit 1 (attached). 

Bank-wide performance goals for the President and CEO, Executive Team and Senior Vice Presidents are weighted at 100% based on the Bank-wide goals in Exhibit 1.

As noted above, for employees classified in Tiers 1-4, a portion of the Plan Award will be paid as an Annual Award in the year following the Performance Period and as a Deferred Award at the end of the Deferral Period. The Deferred Award is designed to ensure that Bank management does not take short-term measures in 2019 to secure incentive compensation that could be detrimental to the long-term value of the Bank. This will ensure that management continues to operate the Bank in a profitable and prudent manner for the long-term value of its members. 
 
For the 2019 Performance Period, the 2019 Deferred Award is to be paid in 2023. The Deferred Award earned during the Performance Period will be impacted by the achievement level of Market Value of Capital Stock (MVCS) in future periods.  See Exhibit 2 (attached) for more information on the final determination of the Deferred Award. 

Bank-wide Performance Goals

As a cooperative, the Bank needs to satisfy the expectations of members as both shareholders and customers. Fulfilling that cooperative mission must be done in a prudent manner so as to preserve the par value of capital stock, which is the rationale for including risk management measures among the Bank’s performance goals.

All employees should have a portion of their incentive potential tied to Bank-wide performance so that everyone in the Bank, regardless of their role or level in the organization, thinks about delivering value to the members, managing the Bank effectively and efficiently, and doing so within an appropriate risk and mission framework.

Given the environment in which the Bank operates, the Board will periodically review achievement on the incentive goals and the HRC may consider changes to the goals as appropriate and subject to the review and non-objection of the FHFA. Structural changes in the financial services sector driven by factors largely outside the Bank’s control (such as legislative changes) may necessitate wholesale changes in how the Bank’s executives and other employees are rewarded.

The threshold, target, and maximum achievements levels for the Bank-wide performance goals listed in the attached Exhibit 1 are calibrated based on results from previous years and projections in the Bank’s 2019-2023 SBP. 

2019 Individual and/or Team Performance Goals
The nature of individual and/or team goals varies depending on the individual’s role and level in the organization. For example, an individual in the Enterprise Risk Management department might have individual and/or team goals focused on improving the Bank’s risk management infrastructure, while an employee in the Member Solutions department might be focused on developing new or enhanced products for the members. However, all employees will have an individual goal tied to continuous improvement.

Payout Determination

Annual and Deferred Awards earned during the Performance Period are payable in 2020 and 2023, respectively, and are subject to HRC approval. Notwithstanding the formulaic computations of the Plan payouts based on incentive goal achievement levels, actual payouts under the Plan are subject to the HRC’s review and approval and are made at the HRC’s discretion subject to prior review and non-objection by the Federal Housing Finance Agency (“FHFA”) for the Bank’s Named Executive Officers (“NEOs”). 

The HRC may consider a variety of objective and subjective factors to decide on the appropriate payouts including but not limited to: (i) operational errors or omissions that result in material revisions to the financial results, information submitted to the FHFA or data used to determine incentive payouts; (ii) untimely submission of information to the Securities and Exchange Commission (“SEC”), Office of Finance (“OF”), or the FHFA, or; (iii) failure to make sufficient progress, as determined by the FHFA, in the timely remediation of examination, monitoring, and other supervisory findings and matters requiring attention.  

The HRC shall consider the relevant facts and circumstances and reduce incentive awards commensurate with the materiality of the exception relative to the Bank’s financial and operational performance and financial reporting responsibilities.

The HRC also may determine a participant is not eligible to receive part or all of any Plan Award payouts.  Events that may justify such HRC action may include, but are not limited to, the following:  

		
	•
	a participant’s failure to achieve a “meets expectations” or higher evaluation of overall job performance during a Performance Period;

		
	•
	a participant becomes subject to disciplinary action or probationary status at the scheduled time of a Plan Award payout; or

		
	•
	a participant’s failure to comply with regulatory requirements or standards, internal control standards, the standards of his or her profession, any internal Bank standard, or failure to perform responsibilities assigned under the Bank’s SBP. 

As soon as feasible after the conclusion of each Performance Period, the HRC shall review the Bank’s performance against its Bank-wide performance goals, and if appropriate, shall approve the payout, if any.  

As soon as feasible after conclusion of each Performance Period, the responsible manager will determine the achievement and performance levels of individual and/or team goals for participants.  The Executive Team (President and CEO, Executive Vice Presidents, the Chief HR and Administrative Officer and the General Counsel) of the Bank will review, approve and submit to Human Resources the Plan Awards for their areas of responsibility. The Executive Team and Human Resources will together calibrate the individual and/or team payouts across the Bank.  Human Resources, after considering each participant’s performance against individual’s goals, shall recommend to the HRC the payout levels for approval. 

Plan Awards are determined based on the participant’s actual earned base salary or wages for hours worked, including overtime and hours paid under the Bank’s paid time off policies, as applicable, but in any case excludes any bonus, incentive compensation, severance payments, or long-term disability insurance payments paid for the current or a prior year.  In the event a participant receives a raise during a calendar year, the participant’s compensation for the year will reflect the actual wages paid to the participant for the year. A participant who has a hire date prior to the beginning of the Performance Period is eligible to receive a full Plan Award.  A participant who has a hire date after the beginning of the Performance Period is eligible to receive a prorated Plan Award based on the employee’s eligible earnings earned during the Plan Year.  A participant hired on or after October 1 of the Performance Period is not eligible to receive a Plan Award for the Performance Period in which they were hired.

Unless otherwise directed by the HRC, Plan Award payouts shall be made in a lump sum through regular payroll distribution, typically within 75 days after the end of the Performance Period (in the case of an Annual Award) or Deferral Period (in the case of the Deferred Award), but in any event by the end of the calendar year following the Performance Period or Deferral Period, as applicable, for which payout approval has been received. Appropriate provisions shall be made for any taxes that the Bank determines are required to be withheld from any payment under applicable laws or other regulations of any governmental authority, whether federal, state or local.  

Employees whose employment ends before any Plan Award payout will not be eligible for award payouts under the Plan unless otherwise provided for herein or in any Executive Employment Agreement. The HRC has the sole discretion to determine whether a payout is made to the participant, and the amount of any such payout.  

Employees whose termination occurs as the result of death or Disability shall be eligible to receive a prorated Plan Award for the Performance Period in which the termination occurs in an amount based upon the employee’s eligible earnings earned during the Plan Year.  The prorated Plan Award for the Performance Period will be determined based upon actual achievement levels for Bank-wide performance goals and Target achievement levels for individual and/or team goals, and will not be subject to an MVCS modifier. Such employees will also be eligible to receive deferred awards earned but not yet approved for payout from periods occurring prior to the Performance Period.  All payouts of deferred awards from prior periods will be based on actual achievement levels attained during such periods, and will not be subject to an MVCS modifier. All awards will be payable in a single lump sum typically within 75 days, but in any event by the end of the calendar year, following the end of the Performance Period that the death or Disability occurred.  

Employees whose termination occurs as the result of a Retirement or Reduction in Force are eligible to receive a prorated Plan Award for the Performance Period in which the termination occurs in an amount based upon the employee’s eligible earnings earned during the Plan Year unless otherwise provided for herein or in any Executive Employment Agreement.  The prorated Plan Award will be determined based upon actual achievement levels for Bank-wide performance goals and Target achievement levels for individual and/or team goals, and will not be subject to an MVCS modifier. Such employees will also be eligible to receive deferred awards earned but not yet approved for payout from periods occurring prior to the Performance Period. The amount of payouts on deferred awards from prior periods, as well as any portion of the prorated Plan Award that constitutes Deferred Awards, will be determined in accordance with the terms of the Plan unless otherwise provided for herein or in any Executive Employment Agreement.  All payments will be made typically within 75 days, but in any event by the end of the calendar year, following the Performance Period or Deferral Period, as applicable.

A participant who is transferred, promoted, or demoted during a Performance Period may receive a prorated Plan Award based on the actual time in each position during the Performance Period. All payments will be made typically within 75 days, but in any event by the end of the calendar year, following the Performance Period or Deferral Period, as applicable.

An employee who receives an Annual Award under the Plan may defer the payment of the Annual Award by executing a timely deferral election under the BEP.  Any election to defer the payment of an Annual Award must be made in compliance with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and Treasury regulations relating thereto (“Section 409A”), and the BEP.  No election to defer the payment of an Annual Award shall become effective until twelve (12) months after the deferral election is made, and the payment of the Annual Award must be deferred for a period of at least five (5) years beyond the date such Annual Award would otherwise have been paid.

In the event an employee is considered a Specified Employee, payment of benefits under this Plan shall not commence until six months following the employee’s separation from service as defined under Section 409A. 
 

IV.    Administration of the Plan
The Bank’s Board of Directors is ultimately responsible for the Plan, including its amendment, replacement or termination. The HRC has the full power and authority of the Board to construe, interpret and administer the Plan. Any decision arising out of or in connection with the construction, interpretation or administration of the Plan lies within the HRC’s absolute discretion and is binding on all parties.  

The HRC shall:

		
	•
	Approve Bank-wide performance goals.

		
	•
	Approve the range of potential payout opportunities for Plan participants.

		
	•
	After the end of a Performance Period, approve any Annual Awards.

		
	•
	After the end of the Deferral Period, approve any Deferred Awards for qualifying eligible officers.

		
	•
	Render any decisions necessary with regard to the interpretation of the Plan.

Day-to-day administration of the Plan is delegated to those in the Bank responsible for Human Resources functions.  

V.     Miscellaneous Provisions

The Plan, in whole or in part, may at any time or from time to time be amended, suspended or reinstated and may at any time be terminated by the HRC.

No amendment, suspension or termination of the Plan shall, without the consent of the participants, affect the rights of the participants to any payout previously approved by the HRC.

No participant has the right to alienate, assign, encumber, or pledge his or her interest in any payout under the Plan, voluntarily or involuntarily, and any attempt to do so is void.

This document is a complete statement of the Plan and supersedes all prior plans, representations and proposals written or oral relating to its subject matter.  The Bank is not bound by or liable to any participant for any representation, promise or inducement made by any person which is not expressed in this document. 

This Plan shall not be considered a contract of employment and nothing in the Plan shall be construed as providing participants any assurance of continued employment for any definite period of time, nor any assurance of current or future compensation.  This Plan shall not, in any manner, limit the Bank’s right to terminate compensation and employment at its will, with or without cause.

Participation in the Plan and the right to receive awards under the Plan shall not give a participant any proprietary interest in the Bank or any of its assets.  Nothing contained in the Plan shall be construed as a guarantee that the assets of the Bank shall be sufficient to pay any benefits to any person.  A participant shall for all purposes be a general creditor of the Bank.  Each payment shall be from the general assets of the Bank.

The Plan shall be construed in accordance with and governed by the State of Iowa except to the extent superseded by federal law.

It is intended that the awarding, vesting and payment of any award will comply with Section 409A, so as not to subject any participant to the payment of any interest or tax penalty, provided, however, that neither the Bank, the HRC, the Board, or any directors, officers, employees, consultants or other agents shall be liable to a participant or otherwise responsible for any such interest and tax penalties.  Neither the Bank nor the employee may accelerate a payment into a calendar year not specified in the Plan nor defer or postpone a payment into a year following the calendar year specified in the Plan, except as may be permitted by Section 409A. 

VI.    Definitions. 

As used in this document, the following definitions apply: 
		
	(a)
	“Annual Award” is the portion of the Plan Award that can be earned during the Performance Period and paid in the calendar year following the Performance Period. 

		
	(b)
	“BEP” shall mean the Federal Home Loan Bank of Des Moines Benefit Equalization Plan, as amended and restated from time to time.

		
	(c)
	 “Deferral Period” is the three calendar year period after which the Deferred Award can be paid.  The Deferral Period begins January 1 immediately following the Performance Period (January 1, 2020 - December 31, 2022).     

		
	(d)
	“Deferred Award” is the portion of the Plan Award that can be earned during the Performance Period and paid in the calendar year following the Deferral Period subject to the applicable MVCS modifier. 

		
	(e)
	“Disability” shall mean that an employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, and which has rendered the employee incapable of performing his or her duties to the Bank, receiving benefits under a disability plan sponsored by the Bank, for a period of not less than three (3) months.

		
	(f)
	“Performance Period” is the one calendar year period during which a Plan Award can be earned (January 1 - December 31, 2019).  

		
	(g)
	“Plan Award” is the award that can be earned during the Performance Period.

		
	(h)
	“Reduction in Force” is a decision by the Bank to reduce the number of Bank employees, which results in the involuntary termination of one or more Bank employees for reasons unrelated or not exclusively related to the performance of such employee or employees. 

		
	(i)
	“Retirement” means an employee’s voluntary termination of his/her employment based on the attainment of at least age 55 and completion of at least 5 years of service with the Bank or as permitted under Section 409A of the Internal Revenue Code of 1986, as amended.  With respect to a Plan participant who is eligible to receive a Deferred Award, the date of such employee’s retirement as well as other terms and conditions that provide for an orderly transition must be mutually agreed to by the employee and the Bank in order for the employee to meet the definition of Retirement as provided herein.

Exhibit 1

Excerpt from the “2019 Incentive Plan Document” (Plan): Notwithstanding the formulaic computations of the Plan payouts based on incentive goal achievement levels, actual payouts under the Plan are subject to the HRC’s review and approval and are made at the HRC’s discretion subject to prior review and non-objection by the Federal Housing Finance Agency (“FHFA”) for the Bank’s Named Executive Officers (“NEOs”). The Board of Directors has the final decision on incentive awards. The Board may consider a variety of objective and subjective factors to decide on the appropriate payouts including but not limited to: (i) operational errors or omissions that result in material revisions to the financial results, information submitted to the FHFA or data used to determine incentive payouts; (ii) untimely submission of information to the Securities and Exchange Commission (“SEC”), Office of Finance (“OF”), or the FHFA, or; (iii) failure to make sufficient progress, as determined by the FHFA, in the timely remediation of examination, monitoring, and other supervisory findings and matters requiring attention. The HRC shall consider the relevant facts and circumstances and reduce incentive awards commensurate with the materiality of the exception relative to the Bank’s financial and operational performance and financial reporting responsibilities.

	
						
	Bank-wide Goals and Weightings
	Business Unit
	Description of Measure
	2019
Threshold
	2019
Target
	2019
Maximum

	Growth of Qualifying Advances, Letters of Credit and Acquired Member Assets (AMA) (10% Weight)

	Members
	Measured by the aggregate dollar amount of the qualifying average daily balance of Advances and LOCs and monthly balance of AMA to a baseline reference. (Excludes Wells Fargo and related subsidiaries and captive insurance companies and other non-members)
The 2019 CMA goal is measured using average daily balances for Advances, LOCs and AMA as of 12/31/2018. This ensures that starting CMA balances are not subject to balance aberrations due to timing. The measure is also based on outstanding unpaid principal balance for Advances and AMA, and notional balance for LOCs.

This differs from the values in the Strategic Business Plan (SBP) as the SBP uses book values for AMA and is based on values as of October month end with projections for November and December to arrive at the 2018 year-end values, whereas the incentive measure uses actual year-end values. Because this ending 2018 CMA value is lower than the SBP value, the ending 2019 value is also lower than the SBP.

	$61.1 billion
	$63.8 billion
	$67.5 billion

	
						
	Bank-wide Goals and Weightings
	Business Unit
	Description of Measure
	2019
Threshold
	2019
Target
	2019
Maximum

	Advance Penetration (15%)

A measure of the average advance to assets ratio of the Bank’s depository members.
	Members
	The Advance Penetration ratio is a simple average of monthly average total advances during 2019 divided by the average of four quarters of member assets starting with Q4 2018 reported on the member regulatory report for all active member banks, thrifts, and credit unions as of 12/31/19. Member mergers are handled retrospectively, and new members during 2019 are not included.
This goal will capture all depository members and treat each equally regardless of size (i.e. not weighted by assets).
Target for this goal is set at the Advance Penetration level achieved for 2018. Threshold is set at 75% of the target, while Maximum is set at 125% of the target. 

	2.12%
	2.83%
	3.54%

	Risk Management (20%)

A measure of the effectiveness of the Bank’s overall management of risk.

	Risk
	One point for each of the following:

•
All market risk exposures at the end of each and during the month are within the Market Value of Equity limits outlined in the Enterprise Risk Management Policy.
•
No repeat FHFA findings that are due on or before 9/30/19*
•
No material weaknesses at 12/31/19
•
A number of high operational risk exceptions is less than or equal to five.
•
The “days of liquidity**” to be 20 days or more, and the quarterly average of “3 months and 12-month maturity gaps” to be within 13% and 28% at each quarter-end. 

	3/5
	4/5
	5/5

	
						
	Bank-wide Goals and Weightings
	Business Unit
	Description of Measure
	2019
Threshold
	2019
Target
	2019
Maximum

	Operational Excellence Projects
(20%)

	Operations
	Achieve goals for the following projects in 2019 according to scope and timelines approved by the Project Management Committee (one point for each): 
•
User Access Management (1406 and 2233)
•
Mobile Device Containerization (1878)
•
STARS - Investments & Borrowings (2044) 
•
Leverage the HUB (DWH3 Decommission) (2178)
•
HR Automation (1883)

	3/5
	4/5
	5/5

	Spread Between Adjusted Return on Capital Stock and average 3-month LIBOR (25%)

A measure of profitability in which GAAP net income is adjusted for certain volatile and non-recurring items as disclosed in the Bank’s SEC reporting documents on Form 10-K and Form 10-Q.

 

	Finance
	The spread between average 3 month LIBOR and Adjusted Return on Capital Stock (AROCS) for 2019.  GAAP net income is adjusted for the impact of 1) market adjustments relating to derivative and hedging activities and instruments held at fair value; 2) realized gains (losses) on investment securities; and 3) other non-routine and unpredictable items, including asset prepayment fee income, debt extinguishment losses, merger related expenses, and net gains on litigation settlements. This measures, on an adjusted basis, the dividend percentage above average 3 month LIBOR that could be paid to members if 100% of earnings were to be paid as dividends.
The threshold, target and maximum numbers reflect projections in the SBP as approved by the Board in December 2019, excluding the “severely stressed/break the bank scenario”. 

	3.60%
	4.70%
	5.40%

	
						
	Bank-wide Goals and Weightings
	Business Unit
	Description of Measure
	2019
Threshold
	2019
Target
	2019
Maximum

	Diversity and Inclusion (10%)

A measure of achievement on 2019 diversity and inclusion goals outlined in the Diversity and Inclusion Strategic Plan. 

 
	People
	Achieve the following in 2019 (one point for each):
•
Increase female talent (employees) in the Bank >=45.0% (Workforce)
•
Increase diverse talent in the Bank >=19.0% (Workforce)
•
Increase percentage of diverse spend >=10.0% (Vendor)
•
Maintain D&I Discretionary Debt Activity with historical performance of >=3% (Capital Markets)

Targets aligned with the 2019 Diversity and Inclusion Strategic Business plan focus areas of workforce, workplace, vendor and capital markets. 

	2/4
	3/4
	4/4

	*Applies to FHFA exam findings with 2019 remediation due dates. FHFA closure is required for any findings.
** Days of liquidity will be calculated based on the applicable FHFA requirement and calculation methodology. 

Exhibit 2

Deferred Award Payout Determination

The Deferred Award earned in 2019 will be paid in 2023.  The actual amount of the award paid in 2023 will depend principally on the Bank’s average MVCS in 2022. Modifying the amount of award paid using the level of the Bank’s MVCS over the final year ensures that over the interim period, management continues to operate the Bank in a profitable and prudent manner. It also ensures that management does not take short-term measures in 2019 to secure a long-term incentive award in 2023 that would be detrimental to the Bank over the long-term.

The MVCS modifier for the Deferred Award is as follows:

		
	•
	If the average quarterly MVCS for 2022 is less than $100 per share, the modifier would be zero, resulting in no Deferred Award. 

		
	•
	For every three dollars that the average quarterly MVCS for 2022 exceeds $100 per share, one percentage point would be added to the multiplier of 100% up to a maximum multiplier of 110%.

For example, if the Bank were to achieve maximum on the 2019 Bank-wide business performance goals and if MVCS were to average $130 per share or more in 2022, then the absolute maximum Deferred Award payouts under the Plan would be as follows:
 
	
			
	 
	Payout As a % of Base Salary at Excess/Maximum Achievement Level
	Maximum Payout with Multiplier at 110%

	 
	 
	 

	President and CEO
	50.00%
	55.00%

	Executive Team
	40.00%
	44.00%

	SVPs
	30.00%
	33.00%

	VPs
	18.38%
	20.22%

In addition to the modifier described above, the HRC may consider other factors, including:

		
	1.
	Operational errors or omissions that result in material revisions to the financial results, information submitted to the FHFA, or data used to determine incentive payouts;

		
	2.
	Untimely submission of information to the SEC, OF and/or FHFA; or 

		
	3.
	The Bank fails to make sufficient progress, as determined by the FHFA, in the timely remediation of examination, monitoring and other supervisory findings and matters requiring attention.

The HRC shall consider the relevant facts and circumstances and reduce incentive awards commensurate with the materiality of the exception relative to the Bank’s financial and operational performance and financial reporting responsibilities.Exhibit 10.1

 

SEVENTH AMENDMENT TO CREDIT AGREEMENT

 

THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT, dated as of March 13, 2019 (this “Amendment”), is entered into among FTD COMPANIES, INC., a Delaware corporation (the “Company”), INTERFLORA BRITISH UNIT, a company incorporated under the Laws of England & Wales (the “UK Borrower”, and together with the Company, the “Borrowers”), the Guarantors party hereto, the Lenders party hereto, and BANK OF AMERICA, N.A., as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”).  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Credit Agreement (as defined below).

 

RECITALS

 

WHEREAS, the Borrowers, the Guarantors, the Lenders and Bank of America, N.A., in its capacity as the Administrative Agent, Swing Line Lender and L/C Issuer, are parties to that certain Credit Agreement, dated as of July 17, 2013 (as amended or modified prior to the date hereof, the “Existing Credit Agreement”);

 

WHEREAS, the parties hereto have agreed to amend the Existing Credit Agreement as provided herein (the Existing Credit Agreement, as amended hereby, the “Credit Agreement”).

 

NOW, THEREFORE, in consideration of the agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

1.             Consent, Acknowledgement and Reaffirmation. By such Person’s signature below, each of the Loan Parties hereby: (a) acknowledges and consents to this Amendment and the terms and provisions hereof; (b) reaffirms the covenants and agreements contained in each Loan Document to which such Person is party, including, in each case, as such covenants and agreements may be modified by this Amendment and the transactions contemplated hereby; (c) reaffirms that each of the Liens created and granted in or pursuant to the Loan Documents in favor of the Administrative Agent for the benefit of the holders of the Obligations is valid and subsisting, and acknowledges and agrees that this Amendment shall in no manner impair or otherwise adversely affect such Liens, except as explicitly set forth herein; (d) acknowledges that this Amendment is limited to the extent specifically set forth herein and shall not be deemed a waiver of, or a consent to a departure from, any other term, covenant, provision or condition set forth in the Credit Agreement; and (e) confirms that each Loan Document to which such Person is a party is and shall continue to be in full force and effect and the same are hereby ratified and confirmed in all respects, except that upon the effectiveness of this Amendment, all references in such Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import shall mean the Credit Agreement and the other Loan Documents, as the case may be, as in effect and as modified by this Amendment.

 

2.             Amendments.

 

(a)           The following definitions appearing in Section 1.01 of the Existing Credit Agreement are hereby amended to read as follows:

 

“Consolidated Cash Interest Expense” means, for any period, Consolidated Interest Expense for such period (excluding, however, (i) any interest expense not payable in Cash (including amortization of discount, amortization of debt issuance costs

 

1

 

and interest paid-in-kind or added to the existing principal amount) and (ii) original issue discount, financing fees, including those paid in connection with the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment and the Seventh Amendment, redemption premiums and agent fees).

 

“Consolidated Adjusted EBITDA” means, for any period, the sum, without duplication, of the amounts for such period of:  (a) Consolidated Net Income, plus (b) to the extent included in calculating such Consolidated Net Income:  (i) Consolidated Interest Expense and any amounts paid in respect of or pursuant to Hedge Agreements entered into in connection with Indebtedness of the Company and its Restricted Subsidiaries for protection against fluctuations in interest rates, whether consisting of periodic payments, upfront payments, termination payments or otherwise (other than amounts paid as a result of a breach or default under a Hedge Agreement), (ii) provisions for Taxes based on income, (iii) total depreciation expense, (iv) total amortization expense, (v) any foreign currency translation or transaction losses (including losses related to currency remeasurements of indebtedness), (vi) extraordinary, unusual or non-recurring cash losses, charges or expenses (including, without limitation, expenses resulting from actual or potential transactions such as business combinations, mergers, acquisitions, and financing transactions (including compensation expense and expense for advisors and representatives such as investment bankers, consultants, attorneys and accounting firms), severance expenses, facility closure expenses, relocation costs and other restructuring charges (but excluding any of the foregoing incurred in connection with the Bloom Acquisition), and charges (including fees, expenses, damages and settlement costs) related to litigation, arbitration, investigations, disputes or similar matters) (it being understood and agreed that Item 10(e) of Regulation S-K under the Securities Act of 1933 shall not constitute a limitation on any such determination and unusual or non-recurring losses, charges, expenses or gains shall be determined by Company in good faith)), (vii) losses, charges or expenses with respect to litigation, investigations and other legal matters disclosed under the section “Business — Legal Proceedings” in the Registration Statement (or legal matters arising out of the same or similar facts, circumstances or allegations that such litigation, investigations, and other legal matters relate to), not to exceed $10,000,000 in aggregate over the term of this Agreement), (viii) [reserved], (ix) all other non-Cash expenses or losses including, without limitation, non-Cash stock compensation expenses for officers, directors, employees and consultants (other than (A) any such non-Cash expense or charge to the extent it represents an accrual of or reserve for Cash expenditures or charge in any future period and (B) write-downs or reserves of account receivables or inventory), (x) all Equity Related Compensation Payments, (xi) corporate reorganization costs, other than restructuring and other exit costs otherwise described in this definition, associated with the Company’s corporate restructuring and cost savings plan such as financial consulting fees, retention bonuses for key employees, travel expenses related to transition of responsibilities between locations and other similar costs, (xii) (A) any impairment charge or asset write-off or write-down, in each case relating to a long-lived asset or an intangible asset, pursuant to FASB ASC 360 and FASB ASC 350, respectively, or successor or related provisions, (B) the amortization of intangible assets arising pursuant to FASB ASC 805 or successor or related provision, (C) the amortization or write-off deferred financing fees and (D) the amortization of other intangible assets, (xiii) all expenses incurred in connection with the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment and the Sixth Amendment, in an aggregate amount not to exceed the sum of (A) $6,000,000 plus (B) the full amount of any fees paid or payable to the Lenders in connection with the Sixth Amendment, (xiv) transaction,

 

2

 

integration and restructuring fees and expenses incurred in connection with the Bloom Acquisition incurred prior to December 31, 2017 and not exceeding $33,000,000 in the aggregate during the term of this Agreement and (xv) value added taxes in an amount not to exceed $2,000,000 for the four quarter period ended December 31, 2018, minus (c) the following to the extent included in Consolidated Net Income:  (i) extraordinary, unusual or nonrecurring cash gains or income for such period (excluding any proceeds of business interruption insurance), (ii) non-cash gains and income for such period (other than (A) any such gain or income representing a reversal of an accrual or a reserve for any cash charge in any future period to the extent a corresponding cash payment was not made and (B) accruals or other items expected to result in a cash payment in a future period) and (C) any foreign currency translation or transaction gains (including gains related to currency remeasurements of indebtedness).  Consolidated Adjusted EBITDA shall be calculated on a Pro Forma Basis.

 

“Guarantors” means, collectively, (a) with respect to all Obligations, (i) each Restricted Subsidiary of the Company identified as a “Guarantor” on the signature pages hereto, (ii) to the extent a Joinder Agreement is executed by the UK Borrower in accordance with Section 7.08(a) and Section 7.15, the UK Borrower, and (iii) each Person that joins as a Guarantor pursuant to Section 7.08 or otherwise, (b) with respect to (i) Obligations of the UK Borrower, (ii) Obligations under any Secured Hedge Agreement, (iii) Obligations under any Secured Cash Management Agreement and (iv) any Swap Obligation of a Specified Loan Party (determined before giving effect to Sections 4.01 and 4.08) under the Guaranty, the Company, and (c) the successors and permitted assigns of the foregoing (in each case, except to the extent that such Guarantor has been released pursuant to Section 11.11)

 

(b)           Clause (ii) in the definition of “Excluded Assets” in Section 1.01 of the Existing Credit Agreement is hereby amended and restated to read as follows: “(ii) [reserved],”

 

(c)           The following new definitions are hereby added to Section 1.01 of the Existing Credit Agreement in the appropriate alphabetical order to read as follows:

 

“Seventh Amendment” means that certain Seventh Amendment to Credit Agreement, dated as of the Seventh Amendment Effective Date, by and among the Borrowers, the Guarantors party thereto, the Lenders party thereto, and the Administrative Agent.

 

“Seventh Amendment Effective Date” means March 13, 2019.

 

“Target Date” has the meaning specified in Section 7.14.

 

(c)           Section 2.05(b)(viii) of the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(viii)        Limited Availability Period.  Each Borrower shall immediately prepay Revolving A Loans, Revolving B Loans and/or Swing Line Loans made to it, and/or the Company shall Cash Collateralize the L/C Obligations, in an aggregate amount as is necessary to cause the sum of the Total Revolving A Outstandings plus the Outstanding Amount of all Revolving B Loans to not exceed the following amounts for the periods set forth therein:

 

3

 

	
Period
    	
 
    	
Amount
    	
 
    
	
March 11,   2019 – March 17, 2019
    	
 
    	
$
    	
135,000,000
    	
 
    
	
March 18,   2019 – March 24, 2019
    	
 
    	
$
    	
145,000,000
    	
 
    
	
March 25,   2019 – March 31, 2019
    	
 
    	
$
    	
160,000,000
    	
 
    
	
April 1,   2019 – April 14, 2019
    	
 
    	
$
    	
160,000,000
    	
 
    
	
April 15,   2019 – May 14, 2019
    	
 
    	
$
    	
165,000,000
    	
 
    
	
May 15,   2019 – May 16, 2019
    	
 
    	
$
    	
80,000,000
    	
 
    
	
May 17,   2019 – May 20, 2019
    	
 
    	
$
    	
70,000,000
    	
 
    
	
May 21,   2019 – May 24, 2019
    	
 
    	
$
    	
60,000,000
    	
 
    
	
May 25,   2019 – June 1, 2019
    	
 
    	
$
    	
85,000,000
    	
 
    
	
June 2,   2019 – June 7, 2019
    	
 
    	
$
    	
130,000,000
    	
 
    
	
June 8,   2019 – June 14, 2019
    	
 
    	
$
    	
135,000,000
    	
 
    
	
June 15,   2019 – June 28, 2019
    	
 
    	
$
    	
150,000,000
    	
 
    
	
June 29,   2019 – July 5, 2019
    	
 
    	
$
    	
155,000,000
    	
 
    
	
July 6,   2019 – Maturity Date
    	
 
    	
$
    	
167,500,000
    	
 
    

 

; it being understood that availability in excess of $150,000,000 from and after July 6, 2019 will be subject to the Company’s 13-week cash forecast supporting any borrowing above such level.

 

(d)           Section 2.07(c) of the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(c)           UK Borrower.  Notwithstanding anything to the contrary herein, the UK Borrower shall be obligated to repay Loans made to the Company, any Letters of Credit issued for the account of the company, and any other Obligations exclusively in its capacity as a Guarantor under Article IV hereof to the extent a Joinder Agreement is executed by the UK Borrower in accordance with Section 7.08(a) and Section 7.15.

 

(e)           Section 2.09(b)(iv) of the Existing Credit Agreement is hereby amended and restated to read as follows:

 

(iv)          Unless otherwise waived by the Required Lenders, the Company shall pay to the Administrative Agent, for the ratable account of each Revolving A Lender and Revolving B Lender, in accordance with its Applicable Percentage of the Revolving A Commitments and the Revolving B Commitments, a fee in Dollars equal to (A) the actual

 

4

 

daily funded amount of loans under the Revolving A Commitment plus the actual daily funded amount of loans under the Revolving B Commitments minus $100,000,0000 multiplied by (B)  2.50% per annum.  Such fee shall be due and payable quarterly in arrears on the last Business Day of each Fiscal Quarter, commencing with the first such date to occur after the Seventh Amendment Effective Date, and ending on the Maturity Date.

 

(f)            Section 2.16 of the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

2.16        [Reserved].

 

(g)           Section 4.08 of the Existing Credit Agreement is hereby amended by deleting the phrase “(other than the UK Borrower)” in the first sentence thereof.

 

(h)           Section 7.01(c) of the Existing Credit Agreement is hereby amended and restated to read as follows:

 

(c)           Year-End Financials:  as soon as available and in any event within 90 days after the end of each Fiscal Year, (i) the consolidated balance sheets of the Company and its Subsidiaries and the related consolidated statements of income and cash flows of the Company and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year, all in reasonable detail and certified by a Financial Officer of the Company that they fairly present, in all material respects, the financial condition of the Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated and (ii) in the case of such consolidated financial statements, a report thereon of Deloitte LLP or other independent certified public accountants of recognized national standing selected by the Company, which report shall be unqualified and specifically may not contain a “going concern” explanatory statement, except as provided below, and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of the Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; provided, however, in addition to the foregoing, with respect to the Fiscal Year ending December 31, 2018, the Company shall provide preliminary drafts of the required year-end financial statements (together with a draft Compliance Certificate calculated using the information therefrom) no later than February 28, 2019; provided, further, that the report of Deloitte LLP with respect to the financial statements of the Company and its Subsidiaries for the Fiscal Year ended December 31, 2018 may contain a “going concern” explanatory statement.

 

(i)            Section 7.08(b) of the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(b)           [Reserved.]

 

(j)            A new Section 7.14 is hereby added to the Existing Credit Agreement to read as follows:

 

5

 

7.14        Consummation of Transactions.

 

On or before June 1, 2019 (the “Target Date”), the Company shall consummate (i) one or more transactions that would permit the Company and its Subsidiaries to continue as a going concern, which must provide for the repayment in full of the Obligations by no later than the Target Date, or (ii) one or more Asset Sales of the Company consented to by the Required Lenders, with all or substantially all of the Net Cash Proceeds to the Company from such Asset Sale or Asset Sales used to repay the Obligations and permanently reduce the Commitments.

 

(k)           A new Section 7.15 is hereby added to the Existing Credit Agreement to read as follows:

 

7.15        Guarantee by UK Borrower.

 

The Company shall use its best efforts cause the UK Borrower to execute and deliver to the Administrative Agent a Joinder Agreement in accordance with Section 7.08(a) of this Agreement and to take all such further actions and execute such further documents and instruments as may be necessary to cause the UK Borrower to guarantee all Obligations of the Company under the Loan Documents.

 

(l)            Section 8.06(a) of the Existing Credit Agreement is hereby amended by (i) deleting the ratio “3.90 to 1.0” opposite the March 31, 2019 testing period, (ii) deleting the ratio “3.60 to 1.0” opposite the June 30, 2019 testing period, and (iii) deleting the ratio “4.00 to 1.0” opposite the September 30, 2019 testing period, and inserting “Not tested” in place of each such ratio.

 

(m)          Section 8.06(b) of the Existing Credit Agreement is hereby amended by (i) deleting the ratio “1.00 to 1.0” opposite the March 31, 2019 testing period, (ii) deleting the ratio “1.15 to 1.0” opposite the June 30, 2019 testing period, and (iii) deleting the ratio “1.20 to 1.0” opposite the September 30, 2019, and inserting “Not tested” in place of each such ratio.

 

(n)           Section 8.06 of the Existing Credit Agreement is hereby amended by adding a new clause (c) to read as follows:

 

(c)           Minimum Consolidated Adjusted EBITDA.  The Company shall maintain, as of the end of each period set forth below, Consolidated Adjusted EBITDA of not less than the below amounts for the corresponding periods:

 

	
Period
    	
 
    	
Minimum Consolidated
   Adjusted EBITDA
    	
 
    
	
February 1,   2019 – March 31, 2019
    	
 
    	
$
    	
10,553,000
    	
 
    
	
February 1,   2019 – April 30, 2019
    	
 
    	
$
    	
9,167,000
    	
 
    
	
March 1,   2019 – May 31, 2019
    	
 
    	
$
    	
21,754,633
    	
 
    
	
April 1,   2019 – June 30, 2019
    	
 
    	
$
    	
19,055,520
    	
 
    
	
May 1, 2019   – July 31, 2019
    	
 
    	
$
    	
17,627,692
    	
 
    
	
June 1,   2019 – August 31, 2019
    	
 
    	
$
    	
(4,549,792
    	
)
    
	
July 1,   2019 – September 30, 2019
    	
 
    	
$
    	
(4,521,506
    	
)
    

 

(o)           Section 8.14 of the Existing Credit Agreement is amended and restated in its entirety to read as follows:

 

6

 

8.14        Capital Expenditures.

 

The Company shall not, and shall not permit any of its Restricted Subsidiaries to, permit the aggregate amount of Consolidated Capital Expenditures to be greater than the below amounts for the corresponding periods:

 

	
Period
    	
 
    	
Amount
    	
 
    
	
February 1,   2019 – March 31, 2019
    	
 
    	
$
    	
3,363,067
    	
 
    
	
February 1,   2019 – April 30, 2019
    	
 
    	
$
    	
5,093,817
    	
 
    
	
March 1,   2019 – May 31, 2019
    	
 
    	
$
    	
4,697,750
    	
 
    
	
April 1,   2019 – June 30, 2019
    	
 
    	
$
    	
4,595,625
    	
 
    
	
May 1, 2019   – July 31, 2019
    	
 
    	
$
    	
6,539,156
    	
 
    
	
June 1,   2019 – August 31, 2019
    	
 
    	
$
    	
7,984,551
    	
 
    
	
July 1,   2019 – September 30, 2019
    	
 
    	
$
    	
9,180,303
    	
 
    

 

(p)           Section 9.03 of the Existing Credit Agreement is hereby amended by amending and restating the last sentence of the seventh full paragraph thereof to read as follows: “Amounts received from the UK Borrower shall be applied solely to the Obligations of the UK Borrower; provided, that any amounts received from the UK Borrower on account of any guarantee of the Obligations under Article IV shall be applied to the Obligations.

 

(q)           Section 11.09(b) of the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(b)           [Reserved].

 

3.             Post-Closing Covenant.  On or before April 1, 2019, the Loan Parties shall open such accounts with the Administrative Agent, establish such lockboxes and take such other actions as the Administrative Agent may request to assure that certain cash Collateral and all other collections and proceeds of Collateral, as designated by the Administrative Agent, received by the Company or any other Loan Party are immediately deposited in a collateral account in which the Administrative Agent has a security interest, perfected by control, and when collected are (unless otherwise agreed by the Required Lenders) applied directly to repay the Obligations, and to otherwise permit the Administrative Agent to implement dominion over all such cash Collateral and other collections and proceeds received by the Company or any other Loan Party.

 

4.             Effectiveness; Conditions Precedent.  This Amendment shall be and become effective as of date hereof when all of the conditions set forth in this Section 4 shall have been satisfied.

 

(a)           Execution of Counterparts of Amendment.  The Administrative Agent shall have received counterparts of this Amendment, which collectively shall have been duly executed on behalf of each of each Borrower, each Guarantor, the Administrative Agent and the Required Lenders.

 

(b)           Opinions of Counsel. The Administrative Agent shall have received favorable opinions of legal counsel to the Borrowers and the Guarantors, addressed to the Administrative Agent and each Lender, dated as of the date hereof, and in form and substance reasonably satisfactory to the Administrative Agent.

 

(c)           Pledge of Foreign Stock and UK Guaranty.  The Administrative Agent shall have received documents, in form and substance satisfactory to the Administrative Agent, providing

 

7

 

for a pledge of one hundred percent (100%) of the equity interests of all first-tier Foreign Subsidiaries other than FTD India Private Limited.

 

(d)           Organization Documents, Resolutions, Etc.  The Administrative Agent shall have received the following, in form and substance satisfactory to the Administrative Agent:

 

(i)            copies of the Organization Documents of each U.S. Loan Party certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its incorporation or organization, where applicable, and certified by a secretary or assistant secretary of such U.S. Loan Party to be true and correct as of the date hereof (or a certification that such Organization Documents have not been amended since the Second Amendment Effective Date);

 

(ii)           such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each U.S. Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Amendment and the other Loan Documents to which such U.S. Loan Party is a party (or, with respect to incumbency certificates, a certification that the Responsible Officers listed on the incumbency certificates delivered on the Second Amendment Effective Date have not changed);

 

(iii)          such documents and certifications as the Administrative Agent may reasonably require to evidence that each U.S. Loan Party is duly organized or formed, and is validly existing, in good standing and qualified to engage in business in its state of organization or formation; and

 

(iv)          in relation to the UK Borrower, (A) a copy of a resolution of the board of directors of the UK Borrower (1) approving the terms of, and the transactions contemplated by, this Amendment and resolving that it execute this Amendment, (2) authorizing a specified person or persons to execute this Amendment on its behalf, and (3) authorizing a specified person or persons, on its behalf, to sign and/or dispatch all documents and notices to be signed and/or dispatched by it under or in connection with this Amendment; (B) a certificate of the UK Borrower (signed by a director) confirming that the constitutional documents and resolution of the board of directors of the UK Borrower are correct, complete and in full force and effect as at a date no earlier than the date of this Amendment; and (C) copies of the Organization Documents of the UK Borrower (or a certification that such Organization Documents have not been amended since the Second Amendment Effective Date).

 

(e)           KYC; Beneficial Ownership Certification.  Upon the reasonable request of any Lender made at least five days prior to the Closing Date, the Company shall have provided to such Lender, and such Lender shall be reasonably satisfied with, the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act. If any Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, such Borrower shall deliver to the Administrative Agent and the Lenders, a Beneficial Ownership Certification in relation to such Borrower

 

8

 

(f)            Fees.  The Company shall have paid to the Administrative Agent, for its own account and for the account of the Lenders executing this Amendment, as applicable, all fees required to be paid in connection with this Amendment.

 

5.             Post-Closing Covenants.  Within fourteen days of the effective date of this Amendment, the Administrative Agent shall have received documents, in form and substance satisfactory to the Administrative Agent, providing for a pledge of one hundred percent (100%) of the equity interests of FTD India Private Limited.

 

6.             Expenses.  The Loan Parties agree to reimburse the Administrative Agent for all reasonable documented out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including without limitation the (a) reasonable documented fees and expenses of Moore & Van Allen PLLC, and (b) the reasonable and documented fees and expenses of FTI Consulting, Inc.

 

7.             Ratification; Acknowledgment.  Each Loan Party acknowledges and consents to the terms set forth herein and agrees that this Amendment does not impair, reduce or limit any of its obligations under the Loan Documents, as amended hereby.  This Amendment is a Loan Document.

 

8.             Representations.  Each Loan Party represents and warrants as follows:

 

(a)           It has taken all necessary action to authorize the execution, delivery and performance of this Amendment.

 

(b)           This Amendment has been duly executed and delivered by such Loan Party and constitutes its legal, valid and binding obligations, enforceable in accordance with its terms, except as such enforceability may be subject to (i) applicable Debtor Relief Laws and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

 

(c)           The execution and delivery of this Amendment does not violate, contravene or conflict with any provision of its Organization Documents.

 

(d)           The Obligations are not subject to any offsets, defenses or counterclaims.

 

(e)           No Default exists on and as of the date of this Amendment.

 

(f)            After giving effect to this Amendment, the representations and warranties set forth in Article VI of the Credit Agreement are true and correct in all material respects (or if such representation and warranty is qualified by materiality or Material Adverse Effect, it shall be true and correct) as of the date hereof unless they specifically refer to an earlier date, in which case they shall be true and correct in all material respects (or if such representation and warranty is qualified by materiality or Material Adverse Effect, it shall be true and correct) as of such earlier date.

 

(g)           As of the Seventh Amendment Effective Date, the information included in the Beneficial Ownership Certification is true and correct in all respects.

 

9.             Lender Representations, Warranties and Covenant.  Each Lender party hereto represents and warrants that, after giving effect to this Amendment, the representations and warranties of such Lender set forth in Section 10.12 of the Credit Agreement are true and correct as of the date of this

 

9

 

Amendment.  Each Lender party hereto hereby agrees to comply with the covenants applicable to such Lender set forth in Section 10.12 of the Credit Agreement.

 

10.          Successors and Assigns; No Third Party Beneficiaries.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  No other Person shall have or be entitled to assert rights or benefits under this Amendment.

 

11.          Headings.  The headings of the sections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Amendment.

 

12.          Severability.  If any provision of this Amendment is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Amendment shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

13.          Acknowledgment of Guarantors.  The Guarantors acknowledge and consent to all of the terms and conditions of this Amendment and agree that this Amendment and any documents executed in connection herewith do not operate to reduce or discharge the Guarantors’ obligations under the Credit Amendment or the other Loan Documents.

 

14.          Release.  In consideration of the agreements of the Administrative Agent and the Required Lenders set forth in this Amendment, the Loan Parties hereby release and forever discharge the Administrative Agent, each L/C Issuer, the Swing Line Lender, the Lenders and the Administrative Agent’s, each L/C Issuer’s, the Swing Line Lender’s and each Lender’s respective predecessors, successors, assigns, officers, managers, directors, employees, agents, attorneys, representatives and affiliates (collectively, the “Lender Group”) from any and all claims, counterclaims, demands, damages, debts, suits, liabilities, actions and causes of action of any nature whatsoever, in each case to the extent arising in connection with any of the Loan Documents through and including the Seventh Amendment Effective Date, whether arising at law or in equity, whether known or unknown, whether liability be direct or indirect, liquidated or unliquidated, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted, which any of the Loan Parties may have or claim to have against any member of the Lender Group.

 

15.          No Actions, Claims. Each Loan Party represents, warrants, acknowledges and confirms that, as of the date hereof, it has no knowledge of any action, cause of action, claim, demand, damage or liability of whatever kind or nature, in law or in equity, against any member of the Lender Group arising from any action by such Persons, or failure of such Persons to act, under or in connection with any of the Loan Documents.

 

16.          Counterparts/Telecopy.  This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.  Delivery of executed counterparts of this Amendment by telecopy or other secure electronic format (.pdf) shall be effective as an original.

 

17.          GOVERNING LAW.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

10

 

[remainder of page intentionally left blank]

 

11

 

Each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.

 

	
COMPANY:
    	
FTD   COMPANIES, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven Barnhart
    
	
 
    	
Name: Steven Barnhart
    
	
 
    	
Title: Executive Vice   President and Chief Financial Officer
    
	
 
    	
 
    
	
UK BORROWER:
    	
INTERFLORA BRITISH   UNIT,
    
	
 
    	
a company incorporated   under the Laws
    
	
 
    	
of England &   Wales
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Rhys J. Hughes
    
	
 
    	
Name: Rhys J. Hughes
    
	
 
    	
Title: Director
    
	
 
    	
 
    
	
GUARANTORS:
    	
FLORISTS’ TRANSWORLD   DELIVERY, INC.,
    
	
 
    	
a Michigan corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven Barnhart
    
	
 
    	
Name: Steven Barnhart
    
	
 
    	
Title: Executive Vice   President, Chief Financial Officer and Treasurer
    
	
 
    	
 
    
	
 
    	
FTD GROUP, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven Barnhart
    
	
 
    	
Name: Steven Barnhart
    
	
 
    	
Title: Executive Vice   President, Chief Financial Officer and Treasurer
    
	
 
    	
 
    
	
 
    	
FTD, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven Barnhart
    
	
 
    	
Name: Steven Barnhart
    
	
 
    	
Title: Executive Vice   President, Chief Financial Officer and Treasurer
    
	
 
    	
 
    
	
 
    	
FTD.CA, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven Barnhart
    
	
 
    	
Name: Steven Barnhart
    
	
 
    	
Title: Executive Vice   President, Chief Financial Officer and Treasurer
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
 
    	
FTD.COM INC.,
    
	
 
    	
a Florida corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven Barnhart
    
	
 
    	
Name: Steven Barnhart
    
	
 
    	
Title: Executive Vice   President, Chief Financial Officer and Treasurer
    
	
 
    	
 
    
	
 
    	
PROVIDE   COMMERCE, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven Barnhart
    
	
 
    	
Name: Steven Barnhart
    
	
 
    	
Title: Executive Vice   President, Chief Financial Officer and Treasurer
    
	
 
    	
 
    
	
 
    	
PROVIDE   CARDS, INC.,
    
	
 
    	
a California   corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven Barnhart
    
	
 
    	
Name: Steven Barnhart
    
	
 
    	
Title: Executive Vice   President, Chief Financial Officer and Treasurer
    
	
 
    	
 
    
	
 
    	
PROVIDE   CREATIONS, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven Barnhart
    
	
 
    	
Name: Steven Barnhart
    
	
 
    	
Title: Executive Vice   President, Chief Financial Officer and Treasurer
    
	
 
    	
 
    
	
 
    	
GIFTCO, LLC,
    
	
 
    	
a Delaware limited   liability company
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Steven Barnhart
    
	
 
    	
Name: Steven Barnhart
    
	
 
    	
Title: Executive Vice   President, Chief Financial Officer and Treasurer
    
	
 
    	
 
    
	
 
    	
FTD MOBILE, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven Barnhart
    
	
 
    	
Name: Steven Barnhart
    
	
 
    	
Title: Executive Vice   President, Chief Financial Officer and Treasurer
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
ADMINISTRATIVE
    	
 
    
	
AGENT:
    	
BANK OF AMERICA, N.A.,
    
	
 
    	
as Administrative Agent
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mary Lawrence
    
	
 
    	
Name: Mary Lawrence
    
	
 
    	
Title: AVP; Agency   Management Officer
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
LENDERS:
    	
BANK OF AMERICA, N.A.,
    
	
 
    	
as a Lender, L/C Issuer   and Swing Line Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ John Schuessler
    
	
 
    	
Name: John Schuessler
    
	
 
    	
Title: Senior Vice   President
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
 
    	
WELLS FARGO BANK,   NATIONAL ASSOCIATION,
    
	
 
    	
as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Tracie Plummer
    
	
 
    	
Name: Tracie Plummer
    
	
 
    	
Title: Director /   Relationship Manager
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
 
    	
BMO HARRIS BANK N.A.,
    
	
 
    	
as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Megan Tripodi
    
	
 
    	
Name: Megan Tripodi
    
	
 
    	
Title: Vice President
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
 
    	
BANK OF MONTREAL,
    
	
 
    	
as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Megan Tripodi
    
	
 
    	
Name: Megan Tripodi
    
	
 
    	
Title: Vice President
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

 

	
 
    	
COMPASS BANK,
    
	
 
    	
as a Lender
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Jon McCurdy
    
	
 
    	
Name: Jon McCurdy
    
	
 
    	
Title: SVP
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
 
    	
PNC BANK, NATIONAL   ASSOCIATION,
    
	
 
    	
as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Terry A. Graffis
    
	
 
    	
Name: Terry A. Graffis
    
	
 
    	
Title: Senior Vice   President
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
 
    	
HSBC BANK USA, NATIONAL   ASSOCIATION,
    
	
 
    	
as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Fred Schimel
    
	
 
    	
Name: Fred Schimel
    
	
 
    	
Title: Vice President
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
 
    	
MUFG UNION BANK, N.A.,
    
	
 
    	
as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Malcolm D. McDuffie
    
	
 
    	
Name: Malcolm D.   McDuffie
    
	
 
    	
Title: Director
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
 
    	
REGIONS BANK,
    
	
 
    	
as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Arthur E. Cutler
    
	
 
    	
Name: Arthur E. Cutler
    
	
 
    	
Title: Senior Vice   President
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
 
    	
FIRST BANK OF HIGHLAND   PARK,
    
	
 
    	
as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Lynn M. Rosinsky
    
	
 
    	
Name: Lynn M. Rosinsky
    
	
 
    	
Title: Senior Vice   President
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
 
    	
AGCOUNTRY FARM CREDIT   SERVICES, PCA (f/k/a FCS COMMERCIAL FINANCE GROUP, FOR AGCOUNTRY FARM CREDIT   SERVICES, PCA), as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Eric Born
    
	
 
    	
Name: Eric Born
    
	
 
    	
Title: Vice President
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

 

 

	
 
    	
COMPEER FINANCIAL, PCA   successor to 1st FARM CREDIT SERVICES, PCA, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kevin Buente
    
	
 
    	
Name: Kevin Buente
    
	
 
    	
Title: Principal Credit   Officer
    

 

SEVENTH AMENDMENT

FTD COMPANIES, INC.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00293-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00293-of-00352.parquet"}]]