Document:

ftd_Ex10_27

		
			Exhibit 10.27
		

		
			EMPLOYMENT AGREEMENT
		

		
			 
		

		
			This Employment Agreement (this "Agreement") is entered into as of November 13, 2014, between Anne Saunders and FTD Companies, Inc., a Delaware corporation (the "Company").
		

		
			 
		

		
			In consideration of the mutual promises and covenants set forth below and in the Confidentiality Agreement and Non-Competition Agreement referenced herein, you and the Company hereby agree as follows:
		

		
			 
		

		
			1.Term; Position. The term of this Agreement will commence on November 13, 2014 (the "Effective Date") and extend for two years from the Effective Date, unless this Agreement is earlier terminated as provided herein (which term shall automatically renew for successive one year terms thereafter unless the Company provides written notice of non-renewal to you at least ninety (90) days prior to the expiration of the then current term) (the "Term").  For the avoidance of doubt, you will not be entitled to the benefits pursuant to Section 4 and the payments pursuant to Section 7 of this Agreement by reason of the Company electing not to renew the Term.  During the Term, you will serve as the Company's President, Consumer Division and will report to the President and Chief Executive Officer of the Company.  You will agree to devote your full-time attention, skill and efforts to the performance of your duties for the Company.
		

		
			 
		

			
	
			
				 2.
			

			
	
			
			Salary and Benefits.

		
			 
		

			
	
			
				 (a)
			You will be paid a salary at an annualized rate of $425,000, payable in bi-weekly or semi-monthly installments in accordance with the Company's standard payroll practices, subject to such increases as may be determined from time to time by the Company.

		
			 
		

			
	
			
				 (b)
			You will be eligible to participate in the employee benefit plans, including its 401(k) plan, that are made generally available to the Company's senior executives. You will be entitled to a minimum of four (4) weeks of paid vacation each year or such greater amount as determined in accordance with the standard vacation policy in effect for the Company.

		
			 
		

			
	
			
				 (c)
			The Company will promptly reimburse you for all reasonable and necessary business expenses you incur in connection with the business of the Company and the performance of your duties hereunder upon your submission of reasonable and timely documentation of the expenses.  Business expenses will be reimbursed no later than the end of the calendar year following the calendar year in which such expense was incurred, and the amounts reimbursed in any one calendar year shall not affect the amounts reimbursable in any other calendar year.  In addition, your right to receive such reimbursements may not be exchanged or liquidated for any other benefit.

		
			 
		

		
			3.Annual Bonus.  For each fiscal year of the Company during your period of employment (starting with the Company’s 2015 fiscal year), you will be eligible to participate in a bonus program with eligibility for up to 75% of your annualized base salary.  The performance criteria for purposes of determining your actual bonus for each fiscal year will be established by the Company.  Except as otherwise determined by the Company or as set forth herein, you will be 

		 

 

entitled to a bonus award only if you are employed by and in good standing with the Company on the date bonus payments are paid for that fiscal year.  Your annual bonus award will be paid no later than the 15th day of the third month following the end of your taxable year or, if later, the end of the Company's taxable year, in which such bonus award is earned.
		

		
			 
		

			
	
			
				 4.
			

			
	
			
			Restricted Stock Unit and Other Equity Awards.

		
			 
		

			
	
			
				 (a)
			Except as set forth in Section 4(b) of this Agreement, if your employment is terminated by the Company "without cause" or by you for "good reason" (as each term is defined below) during the Term, the vesting and (subject to Section 7(e)) payment of any equity awards you hold as of the date of such termination will be accelerated by the additional number of shares in which you would have otherwise been vested at the time of such termination had you completed an additional twelve (12) months of employment with the Company, calculated as if such equity awards vested on a monthly basis.  Such vesting acceleration and (subject to Section 7(e)) payment are subject to your timely execution and delivery to the Company of the Release referred to in Section 7(b), and except as otherwise expressly provided in the agreement evidencing a particular restricted stock unit award, the shares of common stock underlying the restricted stock units that vest on such an accelerated basis will be issued to you on the sixtieth (60th) day following the date of your termination "without cause" or your resignation for "good reason", provided the executed Release required of you pursuant to Section 7(b) is at that time effective, enforceable and irrevocable in accordance with applicable law. In no event will the number of shares which vest on such an accelerated basis with respect to any particular equity grant exceed the number of shares unvested immediately prior to the date of such termination with respect to such grant.

		
			 
		

			
	
			
				 (b)
			If your employment is terminated by the Company "without cause" or by you for "good reason" (as each term is defined below) in connection with, or within twelve ( 12) months after, a change in control of the Company (as defined in the applicable stock plan, stock option agreement or restricted stock unit agreement), the vesting and (subject to Section 7(e)) payment of any equity awards you hold as of the date of such termination will be accelerated by the additional number of shares in which you would have otherwise been vested at the time of such termination had you completed an additional twelve (12) months of employment with the Company or, if greater, an additional period of service equal in duration to the actual period of service you completed between the Effective Date and the date of such termination, in all cases calculated as if such equity awards vested on a monthly basis. Such vesting acceleration and (subject to Section 7(e)) payment are subject to your timely execution and delivery to the Company of the Release referred to in Section 7(b), and the shares of common stock underlying the restricted stock units that vest on such an accelerated basis will be issued in accordance with the same issuance provisions set forth in Section 4(a) above.  In no event will the number of shares which vest on such an accelerated basis with respect to any particular equity grant exceed the number of shares unvested immediately prior to the date of such termination with respect to such grant.

		
			 
		

			
	
			
				 (c)
			Upon the termination of your employment during the Term as a result of death or upon your Disability (as defined below), the vesting and (subject to Section 7(e)) payment of any equity awards you hold as of the date of such termination or Disability will be accelerated by the additional number of shares in which you would have been vested at such time if you had completed an additional twelve (12) months of service, and such shares shall be issued, subject to 

		 

		

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	the Company's collection of all applicable withholding taxes, within the 60-day period following the date of termination or Disability, calculated as if such equity awards vested on a monthly basis; provided however, that in no event will the number of shares which vest on such an accelerated basis with respect to any particular equity grant exceed the number of shares unvested immediately prior to the date of  such  termination or Disability with respect to such grant.  For purposes of this Agreement, “Disability” means your inability to engage in any substantial gainful activity necessary to perform your duties hereunder by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than twelve (12) months.

		
			 
		

			
	
			
				 (d)
			In the event of any inconsistency between the terms set forth in this Section 4 and the terms set forth in the agreement evidencing any equity awards granted to you, the terms set forth in this Agreement will control. The provisions of this Section 4 and Section 7 will apply to future equity awards, except to the extent specifically stated in the applicable award agreement or in a resolution of the Board of Directors or committee thereof of the Company.

		
			 
		

		
			5.     Policies; Procedures. As an employee of the Company, you agree to abide by all of the policies and procedures in effect for the Company, including (without limitation) the insider trading policy, the code of ethics and the employee handbook, as well as the Confidentiality and Non-Competition Agreement between you and the Company of even effective date herewith (the “Confidentiality Agreement”), a copy of which is attached hereto as Appendix A and incorporated herein by reference).
		

		
			 
		

		
			6.     At Will Employment.  Notwithstanding anything to the contrary contained herein, your employment with the Company will be "at will" and will not be for any specified term, meaning that either you or the Company will be entitled to terminate your employment at any time and for any reason, with or without cause or advance notice. Any contrary representations that may have been made to you are superseded by the terms set forth in this Agreement. This is the full and complete agreement between you and the Company on this subject. Although your job duties, title, compensation and benefits, as well as the personnel policies and procedures applicable to the Company, may change from time to time, the "at will" nature of your employment may only be changed in an express written agreement signed by you and the Chief Executive Officer of the Company.
		

		
			 
		

		
			7.     Separation from Service.
		

		
			 
		

			
	
			
				 (a)
			Termination by You Without Good Reason. If you terminate your employment with the Company for any reason other than as a result of your death or Disability or your resignation for "good reason" (as defined below), then all obligations of the Company as set forth in this Agreement will cease, other than the obligation to pay you, on your termination date, any earned but unpaid compensation for services rendered through that date and any accrued but unused vacation days as of your termination date (collectively, the “Accrued Obligations”).  Notwithstanding your termination pursuant to this Section 7(a), you will continue to be obligated to comply with the terms of the policies, procedures and agreements referenced in Section 5 above.

		
			 
		

			
	
			
				 (b)
			Termination by the Company; Termination by You for Good Reason.  If 

		 

		

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	your employment is terminated by the Company "without cause" (as defined below) during the Term or you terminate your employment for "good reason" (as defined below) during the Term, and subject to your timely execution (without revoking) and delivery to the Company of a comprehensive agreement releasing the Company and its officers, directors, employees, stockholders, subsidiaries, affiliates, representatives and other parties and containing such other and additional terms as the Company deems satisfactory ( "Release"), which becomes effective after the expiration of any applicable revocation  period, the Company will pay you a separation payment (the “Separation Payment”) equal to twelve (12) months of your then current annual base salary.  If your date of termination occurs after the 90th day of a fiscal year, subject to your satisfaction of the Release requirement, you also will be eligible for any additional separation payment in an amount equal to the pro-rated bonus for the fiscal year in which such termination occurs.  Such pro-rated bonus will be determined by multiplying (A) the actual bonus (if any) you would have earned for that fiscal year, based on the level at which the applicable performance goals for such fiscal year are in fact attained, had you continued in the Company's employ through the date that bonus award becomes due and payable by (B) a fraction the numerator of which is the number of whole months (rounded to the next highest whole month) you remained in the Company's employ during that fiscal year and the denominator of which is twelve (12), with such pro-rated bonus (if any) to be paid at the same time and in same form that the bonus payment for such fiscal year would have been made following the completion of that fiscal year had you remained in the Company's employ through the payment date.  In addition, notwithstanding the second to last sentence of Section 3 hereof, subject to your satisfaction of the Release requirement, if your date of termination occurs following the end of a fiscal year and prior to the date that you would have otherwise been entitled to be paid your annual bonus for such fiscal year, the Company will pay you an amount equal to the annual bonus that you would have received had you remained employed by and in good standing with the Company through the date the annual bonus for such fiscal year is paid, which amount shall be paid at the same time and manner that such payment would have been paid to you had you remained employed through such date.  The Release required to be executed by you in order for you to receive the Separation Payment, the other payments described in this Section 7(b) and the accelerated vesting of your equity awards must be executed and delivered to the Company within 21 days (or 45 days to the extent such longer period is required under applicable law) after the effective date of your termination "without cause" or for "good reason".  Subject to the provisions of Section 7(e) and your continued compliance with the policies, procedures and agreements referenced in Section 5 above, the Separation Payment will be paid in a series of twelve (12) successive equal monthly installments, with the first such installment payment to be paid on the sixtieth (60th) day following the date of your termination, provided your executed Release is at that time effective, enforceable and irrevocable in accordance with applicable law, and each subsequent installment will be paid on a successive monthly basis, on the last regularly-scheduled payday each month for the Company's salaried employees, over the remainder of the installment period.  Each installment payment shall be subject to the Company's collection of all applicable withholding taxes and shall be treated as a series of separate payments for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code").  However, if you are, as of the termination date, a specified employee for purposes of Section 409A of the Code, then the Separation Payment installments of this Section 7(b) will be subject to the delayed payment provisions of Section 7(e) below.

		
			 
		

		
			If your employment is terminated by the Company "without cause" or by you for "good 

		 

		

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reason" during the Term, the Company will have no further obligation to you pursuant to this Agreement other than the Accrued Obligations, the acceleration of vesting provided in Section 4 above and the obligations of the Company pursuant to this Section 7(b).
		

		
			 
		

		
			If your employment is terminated by the Company "with cause" as defined below, the Company will have no further obligation to you under the terms of this Agreement, other than the Accrued Obligations.
		

		
			 
		

		
			Notwithstanding the termination of your employment by the Company "with cause" or "without cause," or by you for "good reason", you will continue to be obligated to comply with the terms of the policies, procedures and agreements referenced in Section 5 above.
		

		
			 
		

		
			If any payment or benefit received or to be received by you (including any payment or benefit received pursuant to this Agreement or otherwise) would be (in whole or part) subject to the excise tax imposed by 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 excise tax (such tax or taxes, together with any such interest and penal ties, are hereafter collectively referred to as the "Excise Tax''), then, the cash payments provided to you under this Agreement shall first be reduced, with each such payment to be reduced pro-rata but without any change in the payment date, and then, if necessary, the accelerated vesting of your equity awards pursuant to the provisions of this Agreement shall be reduced in the same chronological order in which those awards were made, but only to the extent necessary to assure that you receive only the greater of (i) the amount of those payments and benefits which would not constitute a parachute payment under Section 280G of the Code or (ii) the amount which yields you the greatest after-tax amount of benefits after taking into account any Excise Tax imposed on the payments and benefits provided you hereunder (or on any other payments or benefits to which you may become entitled in connection with any change in control or ownership of the Company or the subsequent termination of your employment with the Company).
		

		
			 
		

		
			(c)       Termination by Death or Disability.  If your employment is terminated during the Term as a result of your death or Disability, the Company will be obligated to pay the Accrued Obligations to you, your estate or beneficiaries (as the case may be), and such Accrued Obligations shall be paid within 60 days following the date of such termination, subject to the Company's collection of all applicable withholding taxes. In the event of a termination of your employment due to death or Disability, you or your estate or beneficiaries, as the case may be, will be entitled to the accelerated vesting of your equity awards as set forth in Section 4(c) above.  The provisions of this Section 7(c) will not affect or change the rights or benefits to which you are otherwise entitled under the Company's employee benefit plans or otherwise.
		

		
			 
		

		
			(d)        Definitions.
		

		
			For purposes of this Agreement, the following definitions will be in effect:
		

		
			 
		

		
			"good reason" means:
		

			
	
			
				 (i)
			

			
	
			
			a material reduction in your base salary without your prior written consent;

			
	
			
				 (ii)
			

			
	
			
			a material  reduction in your position, duties or responsibilities without your prior written consent;

		
			

		 

		

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(iii)       a material change in your place of employment which is not within a 50-mile radius of the following address, without your prior written consent:    3113 Woodcreek Drive, Downers Grove, IL 60515; or
		

		
			 
		

		
			(iv)      any material un-waived breach by the Company of the terms of this Agreement; provided however, that with respect to any of the clause (i) - (iv) events above, you will not be deemed to have resigned for good reason unless (A) you provide written notice to the Company of the existence of the good reason event within ninety (90) days after its initial occurrence, (B) the Company is provided with thirty (30) days in which to cure such good reason event, and (C) your termination of employment is effected within one hundred eighty (180) days following the occurrence of the non-cured clause (i) - (iv) event.
		

		
			 
		

		
			"with cause" means your commission of any one or more of the following acts:
		

		
			 
		

			
	
			
				 (i)
			

			
	
			
			willfully damaging of the property, business, business relationships, reputation or goodwill of the Company or its affiliates;

			
	
			
				 (ii)
			

			
	
			
			commission of a felony or a misdemeanor involving moral turpitude;

			
	
			
				 (iii)
			

			
	
			
			theft, dishonesty, fraud or embezzlement;

			
	
			
				 (iv)
			

			
	
			
			willfully violating any rules or regulations of any governmental or regulatory body that is or is reasonably expected to be injurious to the Company or its affiliates;

			
	
			
				 (v)
			

			
	
			
			the use of alcohol, narcotics or other controlled substances to the extent that it prevents you from efficiently performing services for the Company or its affiliates;

			
	
			
				 (vi)
			

			
	
			
			willfully injuring any other employee of the Company or its affiliates;

			
	
			
				 (vii)
			

			
	
			
			willfully injuring any person in the course of performance  of  services for  the Company or its affiliates;

			
	
			
				 (viii)
			

			
	
			
			disclosing to a competitor or other unauthorized persons confidential or proprietary information or secrets of the Company or its affiliates;

			
	
			
				 (ix)
			

			
	
			
			solicitation of business on behalf of a competitor or a potential competitor of the Company or its affiliates;

			
	
			
				 (x)
			

			
	
			
			harassment of any other employee of the Company or its affiliates or the commission of any act which otherwise creates an offensive work environment for other employees of the Company or its affiliates;

			
	
			
				 (xi)
			

			
	
			
			failure for any reason within five (5) days after receipt by you of written notice thereof from the Company, to correct, cease or otherwise alter any insubordination, failure to comply with instructions, inattention to or neglect of the duties to be performed by you or other act or omission to act that in the opinion of the Company does or may adversely affect the business or operations of the Company or its affiliates;

			
	
			
				 (xii)
			

			
	
			
			breach of any material term of this Agreement; or

			
	
			
				 (xiii)
			

			
	
			
			any other act or omission that is determined to constitute "cause" in the good faith discretion of the Board of Directors of the Company.

		
			 
		

		
			"without cause" means any reason not within the scope of the definition of the term "with cause."
		

		
			 
		

			
	
			
				 (e)
			

			
	
			
			Code Section 409A. Notwithstanding any provision in this Agreement to the

		
			contrary (other than Section 7(f) below), no payment or distribution under this Agreement which 

		 

		

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constitutes an item of deferred compensation under Section 409A of the Code and becomes payable by reason of your termination of employment with the Company will be made to you until you incur a "separation from service" (as such term is defined in Treasury Regulations issued under Section 409A of the Code) in connection with such termination of employment. For purposes of this Agreement, each amount to be paid or benefit to be provided you shall be treated as a separate identified payment or benefit for purposes of Section 409A of the Code.  In addition, no payment or benefit which constitutes an item of deferred compensation under Section 409A of the Code and becomes payable by reason of your separation from service will be made to you prior to the earlier of (i) the first day of the seventh (7th) month measured from the date of such separation from service or (ii) the date of your death, if you are deemed at the time of such separation from service to be a specified employee (as determined pursuant to Code Section 409A and the Treasury Regulations thereunder) and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Section 409A(a)(2) of the Code.  Upon the expiration of the applicable deferral period, all payments and benefits deferred pursuant to this Section 7(e) (whether they would have otherwise been payable in a single sum or in installments in the absence of such deferral) shall be paid or provided to you in a lump sum on the first day of the seventh (7th) month after the date of your separation from service or, if earlier, the date of your death. Any remaining payments or benefits due under this Agreement will be paid in accordance with the normal payment dates specified herein.
		

		
			 
		

			
	
			
				 (f)
			Notwithstanding Section 7(e) above, the following provisions shall also be applicable to you if you are a specified employee for purposes of Section 409A of the Code at the time of your separation of service:

		
			 
		

			
	
			
				 (i)
			Any payments or benefits which become due and payable to you during the period beginning with the date of your separation from service and ending on March 15 of the following calendar year and otherwise qualify for the short-term deferral exception to Section 409A of the Code shall not be subject to the holdback provisions of Section 7(e) and shall accordingly be paid as and when they become due and payable under this Agreement in accordance with the short-term deferral exception to Section 409A of the Code.

		
			 
		

			
	
			
				 (ii)
			The remaining portion of the payments and benefits to which you  become entitled under this Agreement, to the extent they do not in the aggregate exceed the dollar limit described below and are otherwise scheduled to be paid no later than the last day of the second calendar year following the calendar year in which your separation from service occurs, shall not be subject to any deferred commencement date under Section 7(e) and shall be paid to you as they become due and payable under this Agreement.  For purposes of this subparagraph (ii), the applicable dollar limitation will be equal to two times the lesser of (i) your annualized compensation (based on your annual rate of pay for the calendar year preceding the calendar year of your separation from service, adjusted to reflect any increase during that calendar year which was expected to continue indefinitely had such separation from service not occurred) or (ii) the compensation limit under Section 401(a)(17) of the Code as in effect in the year of such separation from service.  To the extent the portion of the severance payments and benefits to which you would otherwise be entitled under this Agreement during the deferral period under Section 7(e) exceeds the foregoing dollar limitation, such excess shall  be paid in a lump sum upon the expiration of that deferral period, in accordance with the deferred payment provisions of Section 7(e), and the 

		 

		

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	remaining  severance payments and benefits (if any) shall be paid in accordance with the normal payment dates specified for them herein.

		
			 
		

			
	
			
				 (g)
			To the extent there is any ambiguity as to whether any provision of this Agreement would otherwise contravene one or more requirements or limitations of Section 409A of the Code and the Treasury Regulations thereunder, such provision shall be interpreted and applied in a manner that complies with the applicable requirements of Section 409A of the Code and the Treasury Regulations thereunder.

		
			 
		

		
			8.           Withholding Taxes. All forms of compensation payable pursuant to the terms of this Agreement, whether payable in cash, shares of the Company's common stock or other property, are subject to reduction to reflect the applicable withholding and payroll taxes.
		

		
			 
		

		
			9.           Entire Agreement. This Agreement, together with the Confidentiality Agreement, the Employee Proprietary Information and Inventions Agreement previously executed by you, any handbooks, policies and procedures in effect from time to time and the applicable stock plans and any stock option agreements, restricted stock unit agreements or other agreement evidencing the equity awards made to you from time to time during your period of employment, contains all of the terms of your employment with the Company and supersede any prior understandings or agreements relating to the subject matter hereof, whether oral or written, between you and the Company.  If any provision of this Agreement is held by an arbitrator or a court of competent jurisdiction to conflict with any federal, state or local law, or to be otherwise invalid or unenforceable, such provision shall be construed in a manner so as to maximize its enforceability while giving the greatest effect as possible to the intent of the parties.  To the extent any provision cannot be construed to be enforceable, such provision will be deemed to be eliminated from this Agreement and of no force or effect, and the remainder of this Agreement will otherwise remain in full force and effect and be construed as if such portion had not been included in this Agreement.  This Agreement is not assignable by you.  This Agreement may be assigned by the Company to its affiliates or to successors in interest to the Company or its lines of business.
		

		
			 
		

		
			10.         Amendment and Governing Law.  This Agreement may not be amended or modified except by an express written agreement signed by you and the Chief Executive Officer of the Company.  The validity, interpretation, enforceability, and performance of this Agreement and the resolution of any disputes will be governed by and construed and enforced in accordance with the internal laws of the State of Illinois, without giving effect to the conflicts of laws principles thereof. You and the Company consent to jurisdiction and venue in any federal or state court of competent jurisdiction located in the City of Chicago.
		

		
			 
		

		
			11.         Surviving Provisions.  Following any termination of this Agreement, Sections 5, 6, 7(e), and (g), 8, 9, 10 and 11 will survive, and, if your employment with the Company continues thereafter, your employment with the Company will continue to be "at will".
		

		
			 
		

		
			 
		

		
			[Signature Page Follows]
		

		
			
		

		
			

		 

		

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date stated in the opening paragraph.
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						 

					
					
						/s/ Anne Saunders

				
	
					
						 

					
					
						Anne Saunders

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						FTD COMPANIES, INC.

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/ Robert S. Apatoff

				
	
					
						 

					
					
						 

					
					
						Robert S. Apatoff

				
	
					
						 

					
					
						 

					
					
						President and Chief Executive Officer

				

		
			 
		

		
			
		

		
			

		 

		

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Appendix A
		

		
			 
		

		
			 
		

		
			CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
		

		
			 
		

		
			 
		

		
			This CONFIDENTIALITY AND NON-COMPETITION AGREEMENT (the "Agreement") is entered into as of November 13, 2014 between FTD Companies, Inc. (the "Company") and Anne Saunders (the "Employee").
		

		
			 
		

		
			RECITALS:
		

		
			 
		

			
	
			
				 A.
			The Company and the Employee have entered into that certain Employment Agreement as of the date of this Agreement pursuant to which the Employee will serve as President, Consumer Division of the Company; and

		
			 
		

			
	
			
				 B.
			In connection therewith, the Company and the Employee desire to provide for certain additional obligations.

		
			 
		

		
			NOW, THEREFORE, in consideration of the offer to and acceptance by the Employee of employment as President, Consumer Division of the Company and of other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto additionally agree as follows:
		

		
			 
		

		
			Section 1.Secrecy, Non-Competition, No Interference and Non-Solicitation.
		

		
			 
		

			
	
			
				 (a)
			No Competing Employment.  The Employee acknowledges that: (i) the agreements and covenants contained in this Section l are essential to protect the value of the Company's business and assets and (ii) by virtue of her employment with the Company, the Employee will obtain such knowledge, know-how, training and experience of such a character that there is a substantial probability that such knowledge, know-how, training and experience could be used to the substantial advantage of a competitor of the Company and to the Company's substantial detriment.  Therefore, the Employee agrees that, for the period (the "Restricted Period”) commencing on the date of this Agreement and ending on the date that is twelve (12) months after the date on which the Employee is no longer employed by the Company for any reason, the Employee shall not participate, operate, manage, consult, join, control or engage, directly or indirectly, for the benefit of the Employee or on behalf of or in conjunction with any person, partnership, corporation or other entity, whether as an employee, consultant, agent, officer, stockholder, member, investor, agent or otherwise, in any business activity if such activity constitutes the sale or provision of floral products or services, gourmet foods or gifts that are similar to, or competitive with, the floral products or services, gourmet foods or gifts then being sold or provided by the Company or any of its subsidiaries or affiliated companies, including, without limitation, retail florists' business services, floral order transmission and related network services, development and distribution of branded floral products or other gifts on the Internet or other consumer direct segment of the floral or gifting industry (a "Competitive Activity"), in any 

		 

		

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	of: the City of Downers Grove, Illinois, the County of DuPage, Illinois or any other city or county in the State of Illinois; the District of Columbia or any other state, territory, district or commonwealth of the United States or any county, parish, city or similar political subdivision in any other state, territory, district or commonwealth of the United States; any other country or territory anywhere in the world or in any city, canton, county, district, parish, province or any other political subdivision in any such country or territory; or anywhere in the world (each city, canton, commonwealth, county, district, parish, province, state, country, territory or other political subdivision or other location in the world shall be referred to as a "Non-competition Area").  The parties to this Agreement intend that the covenant contained in the preceding sentence of this Section 1(a) shall be construed as a series of separate covenants, one for each city, canton, commonwealth, county, district, parish, state, province, country, territory, or other political subdivision or other area of the world specified.  Except for geographic coverage, each separate covenant shall be considered identical in terms to the covenant contained in the preceding sentence.  The parties further acknowledge the breadth of the covenants, but agree that such broad covenants are necessary and appropriate in the light of the global nature of the Competitive Activity.  If, in any judicial or other proceeding, a court or other body declines to enforce any of the separate covenants included in this Section 1(a), the unenforceable covenant shall be considered eliminated from these provisions for the purpose of those proceedings to the extent necessary to permit the remaining separate covenants to be enforced.  Notwithstanding the foregoing, the Employee may maintain or undertake purely passive investments on behalf of the Employee, the Employee's immediate family or any trust on behalf of the Employee or the Employee's immediate family in companies engaged in a Competitive Activity so long as the aggregate interest represented by such investments does not exceed 1% of any class of the outstanding publicly traded debt or equity securities of any company engaged in a Competitive Activity.

		
			 
		

			
	
			
				 (b)
			Nondisclosure of Confidential Information.  The Employee, except in connection with her employment hereunder, shall not disclose to any person or entity or use, either during the Employee's employment with the Company or at any time thereafter, any information not in the public domain, in any form, acquired by the Employee while employed by the Company or, if acquired following the Employee's employment with the Company, such information that, to the Employee's knowledge, has been acquired, directly or indirectly, from any person or entity owing a duty of confidentiality to the Company or any of its successors or their subsidiaries or affiliated companies (collectively, the "FTD Group"), including but not limited to trade secrets, technical information, systems, procedures, test data, price lists, financial or other data (including the revenues, costs or profits associated with any of the Company's products or services), business and product plans, code books, invoices and other financial statements, computer programs, discs and printouts, customer and supplier lists or names, personnel files, sales and advertising material, telephone numbers, names, addresses or any other compilation of information, written or unwritten, that is or was used in the business of the Company, any predecessor of the Company, or any of the Company's subsidiaries, affiliates, successors or assigns. The Employee agrees and acknowledges that all of such information, in any form, and copies and extracts thereof are and shall remain the sole and exclusive property of the Company or other FTD Group entity, and upon termination of her employment with the Company, the Employee shall return to the Company the originals and all copies (and shall delete all such items in electronic format) of any such information provided to or acquired by the Employee in connection with the performance of the Employee's duties for the Company, and shall return to the Company all files, correspondence, 

		 

		

			11

		

		

			 

		

 

	computer equipment and disks or other communications (including any such materials in electronic format) received, maintained or originated by the Employee during the course of the Employee's employment.

		
			 
		

			
	
			
				 (c)
			No Interference and Non-Solicitation. During the Restricted Period, the Employee shall not, whether for the Employee 's own account or for the account of any other individual, partnership, firm, corporation or other business organization (other than the Company), solicit, endeavor to entice away from the Company or any of the Company’s subsidiaries or affiliated companies, or otherwise interfere with the relationship of the Company or any of its subsidiaries or affiliated companies with, any person who, to the knowledge of the Employee, is (or has at any time within the preceding three months been) employed by or otherwise engaged to perform services for the Company or any of the Company's subsidiaries or affiliated companies (including, but not limited to, any independent sales representatives or organizations) or any entity who is, or was within the then most recent 12-month period, a customer or client of the Company, any predecessor of the Company or any of the Company's subsidiaries or affiliated companies (a "Customer") or a supplier or vendor of the Company or any of the Company's subsidiaries or affiliated companies (a "Supplier"); provided, however, that this Section l(c) shall not prohibit the Employee from employing, for the Employee's own account, following a termination of the employment of the Employee, any person employed by a Customer or Supplier, if such employment is not in connection with a Competitive Activity.

		
			 
		

		
			Section 2.Calculation of Time Period.  The Employee agrees that if the Employee violates the provisions of Section 1(a) of this Agreement, the running of the Restricted Period shall be tolled for the period in which the Employee is in violation of such non-competition provisions.  The Employee understands that the foregoing restrictions may limit the Employee's ability to earn a livelihood in a business engaged in a Competitive Activity, but the Employee nevertheless believes that the Employee will receive sufficient consideration and other benefits as an employee of the Company to clearly justify restrictions that, in any event, given her education, skills and ability, the Employee does not believe would prevent the Employee from earning a living.
		

		
			 
		

		
			Section 3.Inventions.
		

		
			 
		

			
	
			
				 (a)
			Defined.  The Employee understands that during term of the Employee's employment, there are certain restrictions on the Employee's development of technology, ideas, and inventions, referred to in this Agreement as "Invention Ideas."  The term Invention Ideas means all ideas, processes, trademarks, service marks. inventions, technology, computer programs, original works of authorship, designs, formulas, discoveries, patents and copyrights relating to any existing or planned service or product of the Company, and all improvements, rights, and claims related to the foregoing, that are conceived, developed, or reduced to practice by the Employee alone or with others. The Employee agrees that all original works of authorship which are made by the Employee (solely or jointly with others) within the scope of the Employee's employment and which are protectable by copyright are "works made for hire," as the term is defined in the United States Copyright Act ( 17 USCA, Section 10 1).

		
			 
		

			
	
			
				 (b)
			Disclosure.  The Employee agrees to maintain adequate and current written records on the development of all Invention Ideas and to disclose promptly to the Company all Invention Ideas and relevant records, which records will remain the sole property of the 

		 

		

			12

		

		

			 

		

 

	Company.  The Employee further agrees that all information and records pertaining to any idea, process, trademark, service mark, invention, technology, computer program, original work of authorship, design formula, discovery, patent, or copyright that might reasonably be construed to be an Invention Idea, but is conceived, developed, or reduced to practice by the Employee (alone or with others) during the Employee's employment or during the one-year period following termination of the Employee's employment, shall be promptly disclosed to the Company (such disclosure to be received in confidence). Any disclosure pursuant to this Section 3(b) will be received by the Company in confidence so that the Company may examine such information to determine if in fact it constitutes Invention Ideas subject to this Agreement.

		
			 
		

			
	
			
				 (c)
			Assignment.  The Employee agrees to, and does hereby continuously, assign to the Company, without further consideration, all right, title, and interest that the Employee may presently have or acquire (throughout the United States and in all foreign countries), free and clear of all liens and encumbrances, in and to each Invention Idea, which shall be the sole property of the Company, whether or not patentable.  In the event any Invention Idea shall be deemed by the Company to be patentable or otherwise registrable, the Employee shall assist the Company (at its expense) in obtaining patent or other applicable registrations, and the Employee shall execute all documents and do all other things (including testifying at the Company's expense) necessary or proper to obtain patent or other applicable registrations and to vest the Company with full title to them.  The Employee's obligation to assist the Company in obtaining and enforcing patents, registrations or other rights for such inventions in any and all countries, shall continue beyond the termination of her employment, but the Company shall compensate the Employee at a reasonable rate after such termination for the time actually spent by the Employee at the Company's request for such assistance.  Should the Company be unable to secure the Employee's signature on any document necessary to apply for, prosecute, obtain, or enforce any patent, copyright, or other right or protection relating to any Invention Idea, whether due to the Employee 's mental or physical incapacity or any other cause, the Employee hereby irrevocably designates and appoints the Company and each of its duly authorized officers and agents as the Employee's agent and attorney-in-fact, to act for and on the Employee's behalf, to execute and file any such document and to do all other lawfully permitted acts to further the prosecution, issuance, and enforcement of patents, copyrights, or other rights of protections with the same force and effect as if executed and delivered by the Employee. Notwithstanding the foregoing provisions of this Section 3:

		
			 
		

		
			This provisions of this Section 3(c) do not apply to any invention for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on the Employee's own time, unless (a) the invention relates (i) to the business of the Company or (ii) to the Employee's actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by the Employee for the Company.
		

		
			 
		

			
	
			
				 (d)
			Exclusions.  Except as disclosed in Exhibit A attached hereto, there are no ideas, processes, trademarks, service marks, inventions, technology, computer programs, original works of authorship, designs, formulas, discoveries, patents, copyrights, or improvements to the foregoing that the Employee wishes to exclude from this Agreement.  If nothing is listed on Exhibit A, the Employee represents that the Employee has no such inventions or improvements at the time of signing this Agreement, and that the Employee is not aware of any existing contract in conflict with this Agreement.

		
			

		 

		

			13

		

		

			 

		

 

 
		

			
	
			
				 (e)
			Post-Termination Period.  The Employee understands and acknowledges that because of the difficulty of establishing when any idea, process, invention, etc., is first conceived or developed by the Employee, or whether it results from access to confidential, trade secret or proprietary information or the Company's equipment, facilities, and data, the Employee agrees that any idea, process, trademark, service mark, invention, technology, computer program, original work of authorship, design, formula, discovery, patent, copyright, or any improvement, rights, or claims related to the foregoing shall be presumed to be an Invention Idea if it relates to any existing or planned service or product of the Company, subsidiaries or affiliates, and if it is conceived, developed, used, sold, exploited , or reduced to practice by the Employee or with the Employee's aid within six months after the Employee's termination of employment with the Company. The Employee may rebut the above presumption if the Employee proves that the invention, idea, process, etc., is not an Invention Idea as defined in Section 3(a).

		
			 
		

		
			(t)Illinois Statute.  The Employee understands that nothing in this Agreement is intended to expand the scope of protection provided the Employee by Illinois Statute 765 I LCS 1060.
		

		
			 
		

		
			Section 4.Irreparable Injury.  It is further expressly agreed that the Company will or would suffer irreparable injury if the Employee were to compete with the Company or any of its subsidiaries or affiliated companies in violation of this Agreement or the Employee were to otherwise breach this Agreement.  Any such violation or breach will cause the Company irreparable harm, the amount of which may be extremely difficult to estimate, thus, making any remedy at law or in damages inadequate.  Consequently, the Company shall have the right to apply to a court of appropriate jurisdiction for, and the Employee consents and stipulates to the entry of, an order of injunctive relief in prohibiting the Employee from competing with the Company, its successors or any of its or their subsidiaries or affiliated companies in violation of this Agreement, an order restraining any other breach or threatened breach of this Agreement, and any other relief the Company and such court deems appropriate.  This right shall be in addition to any other remedy available to the Company in law or equity. The parties hereby agree that the attorneys' fees of the prevailing party in any such proceeding or action shall be paid by the non-prevailing party.
		

		
			 
		

		
			Section 5.Representation and Warranties of the Employee.  The Employee represents and warrants that the execution of this Agreement and subsequent employment with the Company does not and will not conflict with any obligations that the Employee has to any former employers or any other entity.  The Employee further represents and warrants that the Employee has not brought to the Company, and will not at any time bring to the Company, any materials, documents or other property of any nature of a former employer.
		

		
			 
		

		
			Section 6.Miscellaneous.
		

		
			 
		

		
			(a)Jurisdiction, Choice of Law and Venue.  The validity and construction of this Agreement shall be governed by the internal laws of the State of Illinois, excluding the conflicts-of-laws principles thereof. Each party hereto consents to the jurisdiction of, and venue in, any federal or state court of competent jurisdiction located in Chicago, Illinois.
		

		
			 
		

		
			

		 

		

			14

		

		

			 

		

 

(b)Entire Agreement.  This Agreement and any other agreement or document delivered in connection with this Agreement, including the Employment Agreement entered into as of the date hereof, between the Company and the Employee, state the entire agreement and understanding of the parties on the subject matter of this Agreement, and supersede all previous agreements, arrangements, communications and understandings relating to that subject matter.
		

		
			 
		

			
	
			
				 (c)
			Counterparts.  This Agreement may be signed in two or more counterparts, each of which shall be deemed an original, with the same effect as if all signatures were on the same document.

		
			 
		

			
	
			
				 (d)
			Amendment; Waiver; etc.  This Agreement, and each other agreement or document delivered in connection with this Agreement, may be amended, modified, superseded or canceled, and any of the terms thereof may be waived, only by a written document signed by each party to this Agreement or, in the case of waiver, by the party or parties waiving compliance.  The delay or failure of any party at any time or times to exercise any right or require the performance of any duty under this Agreement or any other agreement or document delivered in connection with this Agreement shall in no way affect the right of that party at a later time to exercise that right or enforce that duty or any other right or duty.  No waiver by any party of any condition or of any breach of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed or construed to be a further or continuing waiver of any such condition or breach or of the breach of any other term of this Agreement.  A single or partial exercise of any right shall not preclude any other or further exercise of the same right or of any other right.  The rights and remedies provided by this Agreement shall be cumulative and not exclusive of each other or of any other rights or remedies provided by law.

		
			 
		

			
	
			
				 (e)
			Severability.  If any provision of this Agreement  or any other agreement or document delivered in connection with this Agreement, if any, is partially or completely invalid or unenforceable in any jurisdiction, then that provision shall be ineffective in that jurisdiction to the extent of its invalidity or unenforceability, but the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement, all of which shall be construed and enforced as if that invalid or unenforceable provision were omitted, nor shall the invalidity or unenforceability of that provision in one jurisdiction affect its validity or enforceability in any other jurisdiction. The Company and the Employee agree that the period of time and the geographical area described in Section I are reasonable in view of the nature of the business in which the Company is engaged and proposes to be engaged, and the Employee's understanding of her prospective future employment opportunities.  However, if the time period or the geographical area, or both, described in Section I should be judged unreasonable in any judicial proceeding, then the period of time shall be reduced by that number of months and the geographical area shall be reduced by elimination of that portion, or both, as are deemed unreasonable, so that the restriction covenant of Section l may be enforced during the longest period of time and in the fullest geographical area as is adjudged to be reasonable.

			
	
			
				 (f)
			Employment "At-Will". Both the Employee and the Company acknowledge that nothing in this Agreement creates a contract for employment for any specific duration.  The Employee's employment shall be "at-will", meaning both the Company and the Employee can terminate the relationship at any time, with or without reason or notice.

		
			 
		

		 

		

			15

		

		

			 

		

 

			
	
			
				 (g)
			Survival of Obligations.  The obligations of the Employee set forth in this Agreement shall survive the termination of Employee's employment with the Company and the termination of this Agreement.

		
			 
		

			
	
			
				 (h)
			Assignment.  This Agreement may be freely assigned by the Company, but may not be assigned by the Employee without the prior written consent of the Company which may be withheld at the Company's sole discretion.

		
			 
		

		
			(i)Binding Effect. This Agreement shall inure to the benefit of the Company and its successors and assigns, and shall be binding upon the Employee and the Employee's heirs, personal representatives and any permitted assigns.
		

		
			 
		

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

		
			 
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						 

					
					
						FTD COMPANIES, INC.

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/ Robert S. Apatoff

				
	
					
						 

					
					
						 

					
					
						Robert S. Apatoff

				
	
					
						 

					
					
						 

					
					
						President

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						/s/ Anne Saunders

				
	
					
						 

					
					
						 

					
					
						Anne Saunders

				

		
			 
		

		
			 
		

		
			
		

		
			

		 

		

			16

		

		

			 

		

 

EXHIBIT A
		

		
			EMPLOYEE'S DISCLOSURE
		

		
			 
		

		
			Except as set forth below, there are no ideas, processes, trademarks , service marks, inventions, technology, computer programs, original works of authorship, designs, formulas, discoveries, patents, copyrights, or any claims, rights, or improvements to the foregoing that I wish to exclude from the operation of this Agreement:
		

		
			 
		

		
			 
		

			
					
						 

				
	
					
						 

				
	
					
						 

				
	
					
						 

				
	
					
						 

				
	
					
						 

				

		
			 
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						Date:  November 13, 2014

					
					
						/s/ Anne Saunders

				
	
					
						 

					
					
						Anne Saunders

				

		
			 
		

		 

		

			17Exhibit

Exhibit 4.1
Federal Home Loan Bank of San Francisco

Capital Plan of the
Federal Home Loan Bank of San Francisco
As amended and restated effective April 1, 2015
Updated August 3, 2015, to reflect adjustments to activity-based stock requirements

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

Table of Contents
		
	I.
	Definitions    4

		
	II.
	Capital Stock    7

		
	A.
	Characteristics of Capital Stock    7

		
	B.
	Interest in Retained Earnings    8

		
	III.
	Issuance of Capital Stock    8

		
	A.
	Exchange Pursuant to Plan of Reorganization    8

		
	1.
	Notice and Effective Date    8

		
	2.
	Exchange    8

		
	3.
	Right to Opt Out of Capital Plan    8

		
	4.
	Member in Process of Withdrawing from Membership on Effective Date    9

		
	5.
	Disposition of Claims    9

		
	B.
	Subsequent Issuances    9

		
	C.
	New Members    9

		
	D.
	Former Members    9

		
	IV.
	Minimum Stock Requirement    10

		
	A.
	Calculation of Minimum Stock Requirement    10

		
	B.
	Adjustments to Stock Requirements    12

		
	1.
	Adjustment to Membership Stock Requirement    12

		
	2.
	Adjustment to Activity-Based Stock Requirement    12

		
	C.
	Authorized Ranges    13

		
	1.
	Authorized Ranges for Membership Stock Requirement    13

		
	2.
	Authorized Ranges for Activity-Based Stock Requirement    13

		
	D.
	Factors to Consider in Establishing Adjustment Within Authorized Ranges    13

		
	V.
	Ownership and Transfer of Capital Stock    14

		
	A.
	Ownership Limited to Members    14

		
	B.
	Transfers at Par Value    14

		
	VI.
	Voting Rights    14

		
	A.
	Election of Directors    14

		
	B.
	Ratification of Voluntary Merger    14

		
	VII.
	Dividends    15

		
	A.
	Declaration of Dividends    15

		
	B.
	No Preference    15

		
	C.
	Stock Held by Withdrawing or Former Member    15

		
	VIII.
	Liquidation, Merger or Consolidation    15

		
	A.
	Liquidation    15

		
	B.
	Merger or Consolidation    15

		
	C.
	No Limitation on Finance Agency’s Authority    15

Federal Home Loan Bank of San Francisco    1 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

		
	IX.
	Redemption and Repurchase of Capital Stock (Continuing Membership)    16

		
	A.
	Redemption Upon Application by the Member    16

		
	1.
	Conditions Applicable to Redemption    16

		
	2.
	Cancellation of Redemption Notice    16

		
	3.
	Redemption    17

		
	B.
	Repurchase Upon Initiation by the Bank    17

		
	C.
	Continued Benefits of Ownership Prior to Redemption or Repurchase    17

		
	D.
	Limitations on Redemption and Repurchase of Capital Stock    17

		
	X.
	Redemption and Repurchase of Capital Stock (Withdrawal or Termination

of Membership)    17
		
	A.
	Voluntary Withdrawal    17

		
	1.
	Notice of Intention to Withdraw from Membership    17

		
	2.
	Termination of Membership    18

		
	3.
	Continued Benefits of Membership Prior to Termination    18

		
	4.
	Cancellation of Notice of Withdrawal    18

		
	5.
	Circumstances Requiring Finance Agency Certification for Withdrawal    19

		
	B.
	Termination of Membership as a Result of Merger, Consolidation, Relocation, or Self-Liquidation Resulting in Cancellation of Charter    19

		
	1.
	Consolidation of Members    19

		
	2.
	Consolidation of Member into Nonmember    19

		
	3.
	Relocation of Principal Place of Business    20

		
	4.
	Self-Liquidation Resulting in a Cancellation of Charter    20

		
	C.
	Other Involuntary Termination of Membership    21

		
	D.
	Redemption    21

		
	E.
	Limitations on Redemption and Repurchase of Capital Stock Following Withdrawal or

Termination of Membership    21
		
	XI.
	Priority of Redemption or Repurchase    22

		
	A.
	Initial Pro Rata Redemption    22

		
	B.
	Subsequent Pro Rata Redemption    22

		
	C.
	Pro Rata Repurchase    22

		
	D.
	No Priority for Notices of Redemption or Repurchase in the Event of Liquidation    23

		
	XII.
	Disposition of Claims    23

		
	A.
	In General    23

		
	B.
	Lien on Capital Stock    23

		
	C.
	Prepayment Fees    23

		
	XIII.
	Amendment to the Capital Plan    23

		
	XIV.
	Retained Earnings Enhancement Implementation and Definitions    23

		
	A.
	Implementation    24

		
	B.
	Definitions    24

Federal Home Loan Bank of San Francisco    2 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

		
	XV.
	Establishment of Restricted Retained Earnings    26

		
	A.
	Segregation of Account    26

		
	B.
	Funding of Account    26

		
	1.
	Date on Which Allocation Begins    26

		
	2.
	Ongoing Allocation    27

		
	3.
	Treatment of Quarterly Net Losses and Annual Net Losses    27

		
	4.
	Funding at the Special Contribution Amount    27

		
	5.
	Release of Restricted Retained Earnings    27

		
	6.
	No Effect on Rights of Shareholders as Owners of Retained Earnings    28

		
	XVI.
	Limitation on Dividends, Stock Purchase and Stock Redemption    28

		
	A.
	General Rule on Dividends    28

		
	B.
	Limitations on Repurchase and Redemption    28

		
	XVII.
	Termination of Retained Earnings Capital Plan Amendment Obligations    28

		
	A.
	Notice of Automatic Termination Event    28

		
	1.
	Action by FHLBanks    28

		
	2.
	Action by Finance Agency    29

		
	3.
	Occurrence of Automatic Termination Event Declaration Date    29

		
	B.
	Notice of Voluntary Termination    30

		
	C.
	Consequences of Automatic Termination Event or Vote to Terminate the Agreement    30

		
	1.
	Consequences of Voluntary Termination    30

		
	2.
	Consequences of an Automatic Termination Event Declaration Date    30

		
	3.
	Deletion of Operative Provisions of Retained Earnings Capital Plan Amendment    30

Appendix A: Membership Asset Factors    31

Federal Home Loan Bank of San Francisco    3 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

		
	I.
	Definitions

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

		
	A.
	“Act” means the Federal Home Loan Bank Act, as amended from time to time.

		
	B.
	“Activity-Based Stock Requirement” means the amount of Capital Stock that a Member must own for as long as a particular transaction between the Bank and the Member remains outstanding.

		
	C.
	“Activity-Based Stock Retention Requirement” means the amount of Capital Stock that a Former Member must own for as long as a particular transaction between the Bank and the Former Member remains outstanding. The Activity-Based Stock Retention Requirement for a Former Member shall be calculated according to the same formula used to calculate the Activity-Based Stock Requirement for a Member.

		
	D.
	“Advance” or “Advances” means the principal balance of all loans from the Bank to a Member or Former Member that are outstanding from time to time and that are (1) provided pursuant to a written agreement, (2) supported by a note or other written evidence of the borrower’s obligation, and (3) fully secured by collateral in accordance with the Act and the Regulations, including, without limitation, all such loans that are outstanding on the Effective Date.

		
	E.
	“Advances Stock Requirement” means the amount of Capital Stock that a Member must own for as long as Advances made by the Bank to the Member remain outstanding.

		
	F.
	“Advances Stock Retention Requirement” means the amount of Capital Stock that a Former Member must own for as long as Advances made by the Bank to the Former Member remain outstanding. The Advances Stock Retention Requirement for a Former Member shall be calculated according to the same formula used to calculate the Advances Stock Requirement for a Member.

		
	G.
	“Bank” means the Federal Home Loan Bank of San Francisco.

		
	H.
	“Board of Directors” means the board of directors of the Bank.

		
	I.
	“Capital Plan” means this capital plan as adopted by the Board of Directors and approved by the Finance Agency.

		
	J.
	“Capital Stock” means capital stock that has the characteristics of class B stock as described in the Act and the Regulations, and as specified in Section II.A. of the Capital Plan.

		
	K.
	“Capital Stock Assessment” means the amount of Capital Stock that a Member must own, in addition to the greater of its Membership Stock Requirement or its Activity-Based Stock Requirement, or that a Former Member must own, in addition to the greater of its Membership Stock Retention Requirement or its Activity-Based Stock Retention Requirement, as applicable, for as long as may be necessary to enable the Bank to meet its Minimum Regulatory Capital Requirement and its Risk Management Policy Minimum, as determined by the Board of Directors in its sole discretion (subject to the regulatory oversight of the Finance Agency).

		
	L.
	“Effective Date” of the Capital Plan means the date of the Exchange as determined by the Board of Directors.

		
	M.
	“Excess Stock” of a Member or Former Member means the amount of Capital Stock held by the Member or Former Member that exceeds the amount of Capital Stock that the Member or Former Member is required to own in accordance with the provisions of the Capital Plan.

Federal Home Loan Bank of San Francisco    4 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

		
	N.
	“Exchange” means the exchange on the Bank’s books of each share of Bank stock outstanding prior to the exchange on the Effective Date for one share of Capital Stock, upon which each share of Bank stock shall be retired.

		
	O.
	“Finance Agency” means the Federal Housing Finance Agency, as successor to the Federal Housing Finance Board (“Finance Board”), or any successor agency to the Finance Agency.

		
	P.
	“Former Member” means an institution, other than a Member, that owns Capital Stock, and includes without limitation (1) a former Member that has withdrawn voluntarily from Membership, (2) a former Member whose Membership has been terminated as a result of merger or consolidation into a nonmember, (3) a former Member whose Membership has been terminated as a result of relocation of its principal place of business, (4) a former Member whose Membership has been terminated involuntarily by the Board of Directors, (5) a former Member that has become subject to the appointment of a conservator, receiver, or other legal custodian under federal or state law, (6) any other successor in interest to a Member or Former Member, and (7) a newly chartered nonmember institution under the control of a conservator, or deposit insurance agency, that has acquired some or all the assets and liabilities of a Member or Former Member.

		
	Q.
	“Indebtedness” means all indebtedness of the Member or Former Member to the Bank that is outstanding from time to time, including, without limitation, all Advances and all other obligations and liabilities of the Member or Former Member to the Bank.

		
	R.
	“Issue” or “Issuance” means the issuance of Capital Stock to a Member or Former Member by the Bank in (1) the Exchange, (2) a sale, (3) a transfer, or (4) a dividend.

		
	S.
	“Member” means a member of the Bank.

		
	T.
	“Member Mortgage Asset Program” means a program under which the Bank purchases mortgage loans from a Member.

		
	U.
	“Member Mortgage Asset Stock Requirement” means the amount of Capital Stock that a Member must own for as long as the Bank owns any mortgage loan or any portion of any mortgage loan sold by the Member to the Bank under a Member Mortgage Asset Program.

		
	V.
	“Member Mortgage Asset Stock Retention Requirement” means the amount of Capital Stock that a Former Member must own for as long as the Bank owns any mortgage loan or any portion of any mortgage loan sold by the Former Member to the Bank under a Member Mortgage Asset Program. The Member Mortgage Asset Stock Retention Requirement for a Former Member shall be calculated according to the same formula used to calculate the Member Mortgage Asset Stock Requirement for a Member.

		
	W.
	“Membership” means membership in the Bank.

		
	X.
	“Membership Assets” of a Member means all of the assets of the Member (other than Capital Stock) of a type that, at the time of origination of a transaction between the Member and the Bank, may qualify as collateral security for the Member under the Act or the Regulations. (Assets deemed to be Membership Assets for purposes of calculating a Member’s Membership Stock Requirement may or may not be accepted by the Bank as collateral security for any particular transaction.)

		
	Y.
	“Membership Asset Factor” means the percentage, from zero to one hundred, that the Bank has assigned to a category or type of asset that may constitute a Membership Asset of any Member. The Membership Asset Factor assigned to each category of Membership Assets is set forth in Appendix A.

Federal Home Loan Bank of San Francisco    5 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

		
	Z.
	“Membership Asset Value” of a Member means the sum of the amounts of each category of the Member’s Membership Assets, as determined by the Bank from the Member’s relevant regulatory reports (or, for a Member that does not file periodic regulatory reports of its financial condition, its most recent financial statements or other recent financial information provided by the Member as required or requested by the Bank from time to time), multiplied in each case by the Membership Asset Factor applicable to each such asset category.

		
	AA.
	“Membership Stock Requirement” means the amount of Capital Stock that a Member must own in order to become and remain a Member. 

		
	BB.
	“Membership Stock Retention Requirement” means the amount of Capital Stock that a Former Member must own until the expiration of the Redemption Period applicable to the Capital Stock. The Membership Stock Retention Requirement for a Former Member shall be the amount of Capital Stock that comprised its Membership Stock Requirement on the date on which its Membership was terminated, unless adjusted in accordance with the provisions of Section IV.B.1. of the Capital Plan.

		
	CC.
	“Minimum Regulatory Capital Requirement” means each and all of the following: (1) the Regulatory Leverage Capital Requirement, (2) the Regulatory Risk-Based Capital Requirement, and (3) the Regulatory Total Capital Requirement. 

		
	DD.
	“Minimum Stock Requirement” for a Member means (1) the greater of (a) the Member’s Membership Stock Requirement or (b) its Activity-Based Stock Requirement, plus (2) its Capital Stock Assessment, if any. The Minimum Stock Requirement for a Member shall not include the amount of any Capital Stock Assessment imposed prior to the date of Membership. 

		
	EE.
	“Minimum Stock Retention Requirement” for a Former Member means (1) the greater of (a) the Former Member’s Membership Stock Retention Requirement or (b) its Activity-Based Stock Retention Requirement, plus (2) any Capital Stock Assessment imposed prior to the date on which the Former Member’s Membership terminated, except that the Minimum Stock Retention Requirement for a Former Member whose membership is terminated in accordance with the provisions of Sections X.B.(2) or (4) of the Capital Plan, or is involuntarily terminated in accordance with the provisions of Section X.C. of the Capital Plan as a result of becoming subject to the appointment of a conservator, receiver, or other legal custodian under federal or state law shall be its Activity-Based Stock Retention Requirement. 

		
	FF.
	“Opt-Out Date” means the date that is three calendar months prior to the Effective Date.

		
	GG.
	“Permanent Capital” means the sum of (1) the Bank’s retained earnings, determined in accordance with generally accepted accounting principles, and (2) the paid-in amounts for Issued and outstanding shares of Capital Stock.

		
	HH.
	“Record Date” means (1) for purposes of Section VI.A., December 31 of the prior calendar year, and (2) for purposes of Section VI.B., the date established by the Board of Directors in accordance with the Regulations.

		
	II.
	“Redeem” or “Redemption” means the acquisition and retirement by the Bank of Capital Stock and payment at par value to the Member or Former Member following the expiration of the Redemption Period.

		
	JJ.
	“Redemption Period” for Capital Stock means the five-year period following (1) the Bank’s receipt of a Member’s written Redemption notice to the Bank provided in accordance with the provisions of Section IX.A. of the Capital Plan (which Redemption Period shall apply only to the 

Federal Home Loan Bank of San Francisco    6 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

shares determined in accordance with the provisions of Section IX.A. of the Capital Plan), (2) the Bank’s receipt of a Member’s written notice to the Bank of the Member’s intention to withdraw from Membership provided in accordance with the provisions of Section X.A. of the Capital Plan, or the date of acquisition or receipt by the Member of any additional shares of Capital Stock after the Bank’s receipt of such notice (which Redemption Period shall apply only to the shares determined in accordance with the provisions of Section X.A. of the Capital Plan), (3) a Member’s termination from Membership as a result of merger or consolidation into a nonmember, or the date of acquisition or receipt by the Former Member of any additional shares of Capital Stock after the termination from Membership (which Redemption Period shall apply only to the shares determined in accordance with the provisions of Section X.B.2. of the Capital Plan), (4) a Member’s termination from Membership as a result of relocation of its principal place of business, or the date of acquisition or receipt by the Former Member of any additional shares of Capital Stock after the termination of Membership (which Redemption Period shall apply only to the shares determined in accordance with the provisions of Section X.B.3. of the Capital Plan), or (5) a Member’s involuntary termination from Membership, or the date of acquisition or receipt by the Former Member of any additional shares of Capital Stock after the termination of Membership (which Redemption Period shall apply only to the shares determined in accordance with the provisions of Section X.C. of the Capital Plan).

		
	KK.
	“Regulations” means (i) the rules and regulations of the Finance Board (except to the extent that they are modified, terminated, set aside, or superseded by the Director of the Finance Agency, any court of competent jurisdiction, or operation of law), and (ii) the rules and regulations of the Finance Agency, both as amended from time to time.

		
	LL.
	“Regulatory Leverage Capital Requirement” means the ratio of Total Capital to total assets that the Bank is required to maintain in accordance with the Regulations.

		
	MM.
	“Regulatory Risk-Based Capital Requirement” means the amount of Permanent Capital that the Bank is required to maintain in accordance with the Regulations.

		
	NN.
	“Regulatory Total Capital Requirement” means the amount of Total Capital that the Bank is required to maintain in accordance with the Regulations.

		
	OO.
	“Repurchase” means the acquisition and retirement by the Bank of Excess Stock and payment at par value to the Member or Former Member without regard to the expiration of any Redemption Period. A “Repurchase” shall not include an acquisition of Capital Stock by the Bank related to the exercise of its rights as secured lender, and its security interest in Capital Stock pledged to secure any Advance.

		
	PP.
	“Risk Management Policy Minimum” means the minimum capital ratios specified from time to time in the Bank’s risk management policy as in effect from time to time.

		
	QQ.
	“Total Capital” means the sum of (1) Permanent Capital, (2) the amount of any general allowance for losses reserved on the books of the Bank, and (3) the value of other instruments identified in the Capital Plan that the Finance Agency has determined to be available to absorb losses incurred by the Bank.

		
	II.
	Capital Stock

		
	A.
	Characteristics of Capital Stock

The Board of Directors hereby authorizes the Bank to Issue, Redeem, and Repurchase Capital Stock, and take other actions in accordance with the provisions of the Capital Plan, at the Exchange and thereafter. Capital Stock shall have a par value of $100 per share and shall be

Federal Home Loan Bank of San Francisco    7 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

Issued, Redeemed, and Repurchased only at its stated par value. The Bank may Issue Capital Stock only in book-entry form.

		
	B.
	Interest in Retained Earnings

Each Issued and outstanding share of Capital Stock shall represent an undivided ownership interest (proportionate to the number of shares of Capital Stock Issued and outstanding from time to time) in the retained earnings, paid-in surplus, undivided profits, and equity reserves of the Bank. No Member or Former Member shall have a right to receive a distribution of its undivided interest in the retained earnings, paid-in surplus, undivided profits, or equity reserves of the Bank at any time, including but not limited to, upon withdrawal or termination from Membership, except through a dividend or capital distribution approved by the Board of Directors or as a result of the liquidation of the Bank.

		
	III.
	Issuance of Capital Stock

		
	A.
	Exchange Pursuant to Plan of Reorganization

		
	1.
	Notice and Effective Date

To implement the Capital Plan, the Bank will take the following actions, which constitute the Bank’s Plan of Reorganization, within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder. Within the three-year period following Finance Agency approval of the Capital Plan, the Bank shall effect the Exchange on the Effective Date by exchanging on the Bank’s books each share of Bank stock outstanding prior to the Exchange for one share of Capital Stock, upon which each share of Bank stock shall be retired. The Bank shall provide at least 240 days’ advance written notice of the Effective Date to Members and Former Members and to any institution with a pending application for Membership. Any institution that requests or submits an application for Membership subsequent to the date of notice to Members and Former Members, but prior to the Effective Date, shall receive written notice of the Effective Date with its application materials or at the time it submits its application.

		
	2.
	Exchange

Each Member must satisfy its Minimum Stock Requirement on the Effective Date. If, as of the Exchange, a Member holds shares of Capital Stock in an amount that is less than the amount required to satisfy the Member’s Minimum Stock Requirement, the Bank immediately shall (i) Issue sufficient additional shares of Capital Stock to the Member so that the Member meets its Minimum Stock Requirement; and (ii) debit the Member’s transaction account with the Bank in the amount of the par value of the additional shares of Capital Stock Issued. In the event that the Member’s transaction account reflects insufficient funds, the Bank may take any of the actions authorized pursuant to the transaction account terms and conditions then in effect.

		
	3.
	Right to Opt Out of Capital Plan

Any Member may opt out of participation in the Exchange by providing to the Bank and the Finance Agency a written notice of intention to withdraw from Membership, which notice must be received by the Bank and the Finance Agency on or before the Opt-Out Date. Unless the Bank has received written notice from the Member prior to the expiration of the three-month withdrawal notice period that the Member is canceling its notice of intention to withdraw from Membership, on the expiration of the three-month withdrawal notice period, the Bank shall terminate the Membership of that Member and shall, subject to the Act and Regulations and the other provisions of this Section III., cancel the Former Member’s outstanding stock and pay to the Former Member the par value of such stock. A Member may cancel its notice of 

Federal Home Loan Bank of San Francisco    8 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

intention to withdraw at any time prior to the date on which its Membership terminates by providing a written cancellation notice to the Bank. Any Member that submits a notice of intention to withdraw subsequent to the notice to Members of the Effective Date and cancels its notice of intention to withdraw prior to the Effective Date shall pay a fee to the Bank equal to $0.50 multiplied by the number of shares of outstanding stock held by the Member on the date that the Bank receives the notice of cancellation.

If the expiration of the three-month withdrawal notice period applicable to any withdrawing Member falls on the Effective Date, the Bank shall terminate the Member’s Membership and cancel the Former Member’s outstanding stock prior to effecting the Exchange. Any Member that has not withdrawn from Membership prior to the Exchange shall be deemed to have consented to the provisions of the Capital Plan, including, but not limited to, the Exchange.

Notwithstanding the immediately preceding paragraph, any Former Member that, prior to the Exchange, (i) has not repaid in full all Advances owed by the Former Member to the Bank, (ii) has sold any mortgage loan or any portion of any mortgage loan to the Bank under a Member Mortgage Asset Program, all or any portion of which mortgage loan continues to be owned by the Bank, or (c) has not extinguished or settled all other obligations to the Bank, shall participate in the Exchange to the extent necessary to comply with its Activity-Based Stock Retention Requirement. Any such Former Member shall be deemed to have consented to the provisions of the Capital Plan, including, but not limited to, the Exchange.

		
	4.
	Member in Process of Withdrawing from Membership on Effective Date

The Redemption Period for Capital Stock held by a Member that provides a written notice of intention to withdraw from Membership subsequent to the Opt-Out Date but prior to the Effective Date shall begin on the date the notice is received by the Bank and the Finance Agency.

		
	5.
	Disposition of Claims

The provisions of Section XII. of this Capital Plan shall apply to the disposition of claims against Members or Former Members arising in connection with the Exchange.

		
	B.
	Subsequent Issuances

The terms, rights, and preferences applicable to any Capital Stock Issued after the Exchange shall be identical to those set forth in this Capital Plan. The Bank may not issue Capital Stock other than in accordance with the Regulations and this Capital Plan.

		
	C.
	New Members

Any institution that becomes a Member on or after the Effective Date must, upon becoming a Member, purchase and hold sufficient shares of Capital Stock to satisfy its Minimum Stock Requirement.

		
	D.
	Former Members

Any Former Member must purchase and hold sufficient shares of Capital Stock to satisfy its Minimum Stock Retention Requirement.

Federal Home Loan Bank of San Francisco    9 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

		
	IV.
	Minimum Stock Requirement

		
	A.
	Calculation of Minimum Stock Requirement

From time to time, the Board of Directors shall set the Minimum Stock Requirement for Members so that the aggregate of (i) the Minimum Stock Requirements of all Members; (ii) the Minimum Stock Retention Requirements of all Former Members; (iii) other Capital Stock outstanding, and (iv) retained earnings, is sufficient for the Bank to meet its Minimum Regulatory Capital Requirement and its Risk Management Policy Minimum. The Board of Directors shall have a continuing obligation to review and adjust the capital composition of the Bank, including its retained earnings and the Minimum Stock Requirement to ensure that the Bank remains in compliance with its Minimum Regulatory Capital Requirement and its Risk Management Policy Minimum. Except as set forth in Section IV.A.2.a., each Member shall comply promptly with any such requirement. Subject to Paragraphs B. – D. of this Section IV., at the Effective Date, and for as long as its Membership continues or a relevant transaction is outstanding, each Member shall hold Capital Stock in an amount equal to:

		
	1.
	The greater of:

		
	a.
	The Member’s Membership Stock Requirement, which shall equal 1.00% of the Member’s Membership Asset Value, with each Member’s Membership Stock Requirement subject to a cap equal to $15 million; or

		
	b.
	The Member’s Activity-Based Stock Requirement, which shall equal the sum of:

		
	i.
	The Member’s Advances Stock Requirement, which shall equal 3.00%1 of the Member’s outstanding Advances; plus

		
	ii.
	The Member’s Member Mortgage Asset Stock Requirement, which shall equal 3.00%1 of any portion of any mortgage loan sold by the Member and owned by the Bank under a Member Mortgage Asset Program; plus

		
	2.
	The Member’s Capital Stock Assessment, if any.

The Board of Directors may impose a Capital Stock Assessment only if it determines that the aggregate of (i) the Minimum Stock Requirements of all Members, (ii) the Minimum Stock Retention Requirements of all Former Members, and (iii) its retained earnings will result in, or will be likely to result in, an amount of Total Capital that is not sufficient for the Bank to meet its Minimum Regulatory Capital Requirement and its Risk Management Policy Minimum. The aggregate amount of any Capital Stock Assessment shall not exceed (i) the amount of Capital Stock necessary to enable the Bank to meet its Minimum Regulatory Capital Requirement, plus (ii) the amount of Capital Stock necessary to enable the Bank to meet its Risk Management Policy Minimum.

The amount of each Member’s Capital Stock Assessment shall be determined by allocating among all Members, in proportion to the number of shares of Capital Stock that then constitutes each Member’s Minimum Stock Requirement (specifically excluding any Excess Stock held by any Member or Former Member as of the effective date of the Capital Stock

	
					
	 
	 
	 
	 
	 

1    Effective August 3, 2015, the Bank reduced its activity-based stock requirements, within the ranges authorized in
Section IV.C in the Bank’s Capital Plan, as follows:
		
	•
	Member’s Advances Stock Requirement: Reduced from 3.0% to 2.7% of the Member’s outstanding advances.

		
	•
	Member’s Mortgage Asset Stock Requirement: Reduced from 3.0% to 0.0% of any portion of any mortgage sold by the Member and owned by the Bank under a Member Mortgage Asset Program.

Federal Home Loan Bank of San Francisco    10 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

 Assessment) before the assessment, the amount of additional Capital Stock necessary to enable the Bank to meet its Minimum Regulatory Capital Requirement and its Risk Management Policy Minimum. The amount of Excess Stock held by any Member as of the effective date of the Capital Stock Assessment shall be allocated toward satisfaction of that Member’s Capital Stock Assessment. 

The Bank shall notify the Finance Agency in writing within two business days following the determination by the Board of Directors to impose a Capital Stock Assessment. 

		
	a.
	Member Options in the Event of Capital Stock Assessment

In the event that the Board of Directors imposes a Capital Stock Assessment, the Bank shall provide written notice to each Member at least 20 business days prior to the effective date of the Capital Stock Assessment, specifying the amount of additional Capital Stock, if any, that the Member is required to purchase. On the effective date of the Capital Stock Assessment, the Bank shall Issue sufficient additional shares of Capital Stock so that the Member meets its adjusted Minimum Stock Requirement (including its Capital Stock Assessment), and the Bank shall debit the Member’s transaction account with the Bank in the amount of the par value of the additional shares of Capital Stock Issued, except as set forth in this Section IV.A.2.a. In the event that the Member’s transaction account reflects insufficient funds, the Bank may take any of the actions authorized pursuant to the transaction account terms and conditions then in effect.

The Bank shall not Issue Capital Stock to a Member in accordance with the provisions of this Section IV.A.2. if, at least one business day prior to the date of Issuance:

		
	i.
	To the extent permitted under the relevant governing agreements between the Bank and the Member (and subject to the payment of any applicable prepayment or termination fee) the Member has reduced the amount of any transactions outstanding between the Bank and the Member, and thereby reduced its Activity-Based Stock Requirement and its Minimum Stock Requirement to a level such that the Member then holds Capital Stock in an amount at least equal to the Member’s adjusted Minimum Stock Requirement (including its Capital Stock Assessment); or

		
	ii.
	The Member has provided written notice to the Bank not to Issue such Capital Stock, in which case the Member shall not be required to purchase additional Capital Stock to meets its Capital Stock Assessment. Such written notice shall constitute grounds for involuntary termination of Membership, and the Board of Directors shall terminate the Member’s Membership. The Bank may liquidate any Indebtedness of the Former Member in accordance with the relevant governing agreements and applicable Regulations. The Former Member shall have no right to exercise any of the benefits of Membership after the date on which its Membership terminates, other than to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through the date of Redemption or Repurchase by the Bank. 

		
	b.
	Reduction of Capital Stock Assessment

The Board of Directors, in its sole discretion (subject to the regulatory oversight of the Finance Agency), shall determine when all or any portion of the Capital Stock Issued in accordance with the Capital Stock Assessment is no longer necessary to enable the Bank to meet its Minimum Regulatory Capital Requirement and its Risk Management Policy Minimum. Upon such determination, the Board of Directors shall declare a pro rata reduction in the number of shares of each Member’s Capital Stock Assessment, based upon the number of shares of Capital Stock that are no longer required to enable the Bank to meet its Minimum Regulatory Capital Requirement and its Risk Management 

Federal Home Loan Bank of San Francisco    11 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

Policy Minimum. The number of shares subtracted from each Member’s Capital Stock Assessment shall immediately be deemed to be Excess Stock of that Member to the extent that the Member otherwise holds sufficient Capital Stock to meet its Minimum Stock Requirement (including any portion of the Capital Stock Assessment continuing in effect).

The Bank, in its sole discretion (subject to the regulatory oversight of the Finance Agency) may limit the amount of Capital Stock that any Member may own to that amount necessary for the Member to meet its Minimum Stock Requirement.

		
	B.
	Adjustments to Stock Requirements

		
	1.
	Adjustment to Membership Stock Requirement

The Bank shall recalculate each Member’s Membership Stock Requirement annually, using financial data from the prior calendar yearend. In its discretion, the Bank may recalculate any Member’s Membership Stock Requirement more frequently, using the most recently available financial data. The Bank shall also recalculate each Member’s Membership Stock Requirement for any adjustment to the Membership Stock Requirement within the authorized ranges described in Section IV.C.

The Bank shall notify each Member promptly of any adjustment to its Membership Stock Requirement. If the adjustment results in an increase in the Member’s Minimum Stock Requirement, within 15 business days the Bank shall (i) Issue sufficient additional shares of Capital Stock so that the Member meets its Minimum Stock Requirement; and (ii) debit the Member’s transaction account with the Bank in the amount of the par value of the additional shares of Capital Stock Issued. In the event that the Member’s transaction account reflects insufficient funds, the Bank may take any of the actions authorized pursuant to the transaction account terms and conditions then in effect.

		
	2.
	Adjustment to Activity-Based Stock Requirement

The Bank shall recalculate each Member’s Activity-Based Stock Requirement and each Former Member’s Activity-Based Stock Retention Requirement at the time of any change in the amount of transactions outstanding between the Bank and the Member or Former Member and at the time of any adjustment to the Activity-Based Stock Requirement within the authorized ranges described in Section IV.D. Any adjustment to the Activity-Based Stock Requirement for Members also shall apply to the Activity-Based Stock Retention Requirement for Former Members. The Bank shall promptly notify each Member of any adjustment to its Activity-Based Stock Requirement and each Former Member of any adjustment to its Activity-Based Stock Retention Requirement.

		
	a.
	Adjustment Caused by Change in Activity 

If the adjustment is caused by a change in the amount of transactions outstanding between the Bank and the Member, and the adjustment results in an increase in the Member’s Minimum Stock Requirement, the Bank immediately shall (i) Issue sufficient additional shares of Capital Stock so that the Member meets its Minimum Stock Requirement; and (ii) debit the Member’s transaction account with the Bank in the amount of the par value of the additional shares of Capital Stock Issued. In the event that the Member’s transaction account reflects insufficient funds, the Bank may take any of the actions authorized pursuant to the transaction account terms and conditions then in effect.

Federal Home Loan Bank of San Francisco    12 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

		
	b.
	Adjustment Caused by Change Within Authorized Ranges

If the adjustment is caused by a change to the Activity-Based Stock Requirement within the ranges set forth in Section IV.D., and the adjustment results in an increase in the Member’s Minimum Stock Requirement or to the Former Member’s Minimum Stock Retention Requirement, within 15 business days the Bank shall (i) Issue sufficient additional shares of Capital Stock so that the Member meets its Minimum Stock Requirement or the Former Member meets its Minimum Stock Retention Requirement; and (ii) debit the transaction account of the Member or Former Member in the amount of the par value of the additional shares of Capital Stock Issued. In the event that the transaction account of the Member or Former Member reflects insufficient funds, the Bank may take any of the actions authorized pursuant to the transaction account terms and conditions then in effect.

		
	C.
	Authorized Ranges

		
	1.
	Authorized Ranges for Membership Stock Requirement

From time to time, the Board of Directors may adjust the Membership Stock Requirement to an amount not less than 0.50% nor greater than 1.50% of the Member’s Membership Asset Value, with each Member’s Membership Stock Requirement subject to a cap not less than $10 million nor greater than $50 million.

		
	2.
	Authorized Ranges for Activity-Based Stock Requirement

From time to time, the Board of Directors may adjust the Activity-Based Stock Requirement to equal the sum of:

		
	a.
	The Advances Stock Requirement, which shall equal an amount not less than 2.00% nor greater than 5.00% of the Member’s outstanding Advances; plus

		
	b.
	The Member Mortgage Asset Stock Requirement, which shall equal an amount not less than 0.00% nor greater than 5.00% of any portion of any mortgage loan sold by the Member and owned by the Bank under a Member Mortgage Asset Program.

		
	D.
	Factors to Consider in Establishing Adjustment Within Authorized Ranges

In establishing any adjustment to the Membership Stock Requirement or to the Activity-Based Stock Requirement, the Board of Directors, in its sole discretion (subject to the regulatory oversight of the Finance Agency), shall take into consideration the following factors:

		
	1.
	The amount of Total Capital required for the Bank to meet its Minimum Regulatory Capital Requirement;

		
	2.
	The amount of Total Capital required for the Bank to meet its Risk Management Policy Minimum;

		
	3.
	The amount of Permanent Capital required for the Bank to meet the Regulatory Risk-Based Capital Requirement;

		
	4.
	The amount of Total Capital required because of losses that have resulted in, or are expected to result in, charges against the Total Capital of the Bank; 

		
	5.
	The amount of retained earnings held by the Bank; and

		
	6.
	Any other relevant factors as determined from time to time by the Board of Directors in its sole discretion (subject to the regulatory oversight of the Finance Agency).

Federal Home Loan Bank of San Francisco    13 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

		
	V.
	Ownership and Transfer of Capital Stock 

		
	A.
	Ownership Limited to Members

Except for any Former Member subject to a Minimum Stock Retention Requirement, Capital Stock may only be Issued to or held by Members of the Bank. Capital Stock shall be tradable only between a Bank and its Members or Former Members, and only as set forth in this Section V. 

Upon the written request of a Member or Former Member identifying the particular shares to be transferred, the Bank, in its sole discretion (subject to the regulatory oversight of the Finance Agency), may transfer Excess Stock held by the Member or Former Member to another Member or Former Member, or to an institution that has been approved for Membership and that has satisfied all conditions for becoming a Member (other than the purchase of Capital Stock), to assist the transferee to meet its Minimum Stock Requirement or its Minimum Stock Retention Requirement. Following any such transfer, the transferor Member or Former Member shall continue to maintain Capital Stock sufficient to meet its Minimum Stock Requirement or its Minimum Stock Retention Requirement, as applicable, in accordance with the provisions of the Capital Plan. A Member or Former Member may not otherwise transfer Capital Stock.

		
	B.
	Transfers at Par Value

Any transfer of Capital Stock shall be made at par value. The Bank shall act as the transfer agent for any such transfer, and it shall record promptly the transaction on the books of the Bank.

		
	VI.
	Voting Rights

For purposes of this Section VI., “Member” includes any Former Member that was a Member as of the Record Date.

		
	A.
	Election of Directors

The Members shall be entitled to vote in connection with the election of directors in accordance with the provisions of the Act and the Regulations. A Member may cast for each open directorship in any such election a number of votes equal to the number of shares of Capital Stock that it was required to hold pursuant to Section IV. of the Capital Plan as of the Record Date; provided, however, that the number of votes that any Member may cast for each open directorship in any such election shall not exceed the average of the number of shares of Capital Stock that all Members located in that Member’s state were required to hold pursuant to Section IV. of the Capital Plan as of the Record Date.

		
	B.
	Ratification of Voluntary Merger

The Members shall be entitled to vote in connection with the ratification of a merger agreement of the Bank with another Federal Home Loan Bank, in accordance with the provisions of the Act and the Regulations. A Member may cast a number of votes equal to the number of shares of Capital Stock that it was required to hold pursuant to Section IV. of the Capital Plan as of the Record Date; provided, however, that the number of votes that any Member may cast for such ratification

Federal Home Loan Bank of San Francisco    14 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

shall not exceed the average of the number of shares of Capital Stock that all Members were required to hold pursuant to Section IV. of the Capital Plan as of the Record Date.

		
	VII.
	Dividends

		
	A.
	Declaration of Dividends 

From time to time, the Board of Directors, in its sole discretion (subject to the regulatory oversight of the Finance Agency), may declare and the Bank may pay dividends on Capital Stock. Any such dividend may be paid in the form of cash or Capital Stock, shall be paid to the Members and Former Members holding Capital Stock during the time period for which the dividend is declared, and shall be computed on the amount of time during the relevant time period that the Capital Stock was outstanding. The Bank may not pay any dividends if it is not in compliance with its Minimum Regulatory Capital Requirement or if, after paying such dividends, it would fail to comply with its Minimum Regulatory Capital Requirement and its Risk Management Policy Minimum. 

		
	B.
	No Preference

All Capital Stock shall share in any dividends without preference. Any dividends shall be payable only from the net earnings or retained earnings of the Bank, determined in accordance with generally accepted accounting principles.

		
	C.
	Stock Held by Withdrawing or Former Member 

A Member or Former Member shall be entitled to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through the date of Redemption or Repurchase by the Bank.

		
	VIII.
	Liquidation, Merger or Consolidation

		
	A.
	Liquidation

In the event of the liquidation of the Bank, after making provision for the payment of the Bank’s liabilities, the Bank shall pay to each Member and Former Member the par value of its Capital Stock; provided, however, that if sufficient funds are not available to make payment in full to all Members and Former Members, payment shall occur on a pro rata basis. In addition, any undistributed retained earnings, paid-in surplus, undivided profits, equity reserves, and other assets not otherwise identified shall be allocated among the Members and Former Members, in proportion to the number of shares of Capital Stock owned by each.

		
	B.
	Merger or Consolidation

In the event that the Bank merges with or consolidates into another Federal Home Loan Bank, the Members and Former Members shall be entitled to the rights and benefits set forth in the agreement of merger or consolidation approved by the Board of Directors and the Finance Agency.

		
	C.
	No Limitation on Finance Agency’s Authority

Federal Home Loan Bank of San Francisco    15 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

Notwithstanding the provisions of Section VIII.A. and B., no provision of this Capital Plan shall limit the authority of the Finance Agency to prescribe rules, regulations or orders governing the liquidation or reorganization of the Bank.

		
	IX.
	Redemption and Repurchase of Capital Stock (Continuing Membership)

		
	A.
	Redemption Upon Application by the Member

		
	1.
	Conditions Applicable to Redemption

A Member may obtain Redemption of its Capital Stock by providing a written Redemption notice to the Bank, in a form acceptable to the Bank. The Redemption notice must identify the particular shares to be Redeemed, and the identified shares may not be the subject of an outstanding Redemption notice. If the Redemption notice fails to identify the particular shares to be Redeemed, the Member shall be deemed to have requested Redemption of the most recently-purchased shares that are not subject to a pending Redemption notice, followed by the shares most recently acquired in a manner other than by purchase that are not subject to a pending Redemption notice. If the shares identified in the Redemption notice are subject to a pending Redemption notice, the Redemption notice shall be deemed invalid.

		
	2.
	Cancellation of Redemption Notice

		
	a.
	Cancellation by Member 

A Member may cancel its Redemption notice at any time prior to the expiration of the Redemption Period by providing a written cancellation notice to the Bank. Any Member that cancels its Redemption notice shall pay a fee to the Bank determined as follows:

		
	i.
	If the Bank receives the notice of cancellation within 30 months following the Redemption notice, the fee shall be equal to $0.50 multiplied by the number of shares of Capital Stock to which the cancellation notice applies.

		
	ii.
	If the Bank receives the notice of cancellation more than 30 months following the Redemption notice, the fee shall be equal to $1.00 multiplied by the number of shares of Capital Stock to which the cancellation notice applies.

		
	b.
	Automatic Cancellation of Redemption Notice

The Bank shall not Redeem a Member’s Capital Stock if, following the Redemption, the Member would fail to meet its Minimum Stock Requirement. If, upon expiration of the Redemption Period, the Bank is prevented from Redeeming a Member’s Capital Stock for such reason, the Bank shall attempt the Redemption on each of the five business days following the expiration of the Redemption Period. If at the end of such time the Bank is prevented from Redeeming the Member’s Capital Stock because, following the Redemption, the Member would fail to meet its Minimum Stock Requirement, the Bank shall automatically cancel the Member’s Redemption notice. Such automatic cancellation shall have the same effect as a notice of cancellation provided by the Member to the Bank, and the Member shall pay a fee to the Bank equal to $1.00 multiplied by the number of shares of Capital Stock to which the automatic cancellation applies.

		
	c.
	Waiver of Cancellation Fee

Federal Home Loan Bank of San Francisco    16 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

The Board of Directors may waive a cancellation fee only for bona fide business purposes and only if consistent with the provisions of Section 7(j) of the Act.

		
	3.
	Redemption

Except as set forth in Sections IX.A.2, IX.D., and XI., and if the Member has complied with the conditions set forth in Section IX.A.1., the Bank shall Redeem the Member’s Capital Stock upon expiration of the Redemption Period.

		
	B.
	Repurchase Upon Initiation by the Bank

Upon 15 days’ advance written notice to a Member, the Bank, in its discretion, may Repurchase from a Member any Excess Stock then held by the Member. A Member, in its discretion, may waive this 15-day notice period. If the Bank intends to Repurchase Excess Stock from a Member that has submitted a Redemption notice pursuant to Section IX.A.1., before Repurchasing any other Excess Stock of the Member, the Bank shall first Repurchase from that Member the shares of Excess Stock that are subject to a Redemption notice, followed by the most recently-purchased shares of Excess Stock that are not subject to a Redemption notice, followed by the shares of Excess Stock most recently acquired in a manner other than by purchase that are not subject to a Redemption notice.

		
	C.
	Continued Benefits of Ownership Prior to Redemption or Repurchase

The Member shall be entitled to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through the date of Redemption or Repurchase by the Bank. The Member also shall be entitled to exercise the other benefits associated with ownership of such Capital Stock prior to the date of Redemption or Repurchase.

		
	D.
	Limitations on Redemption and Repurchase of Capital Stock

Notwithstanding any other provision of this Section IX., if the Finance Agency or the Board of Directors determines that the Bank has incurred or is likely to incur losses that result in, or are likely to result in, charges against Capital Stock that create an other than temporary decline in the Bank’s Total Capital such that the value of Total Capital falls below the Bank’s aggregate amount of Capital Stock, the Bank shall not Redeem or Repurchase any Capital Stock without the prior written approval of the Finance Agency for however long the Bank continues to incur such charges or until the Finance Agency determines that such charges are not expected to continue. The Bank shall not Redeem or Repurchase any Capital Stock if, following the Redemption or Repurchase, the Bank would fail to satisfy its Minimum Regulatory Capital Requirement or the Member would fail to maintain its Minimum Stock Requirement. Further, the Bank shall not Redeem or Repurchase any Capital Stock if prohibited from doing so by any Regulation or Finance Agency order.

If, upon expiration of the Redemption Period applicable to any Capital Stock, the Bank is unable to Redeem the Capital Stock because (i) following the Redemption, the Bank would fail to satisfy its Minimum Regulatory Capital Requirement or (ii) the Bank is otherwise prohibited from doing so by Regulation or Finance Agency order, Redemption shall occur in accordance with the provisions of Section XI. of the Capital Plan.

		
	X.
	Redemption and Repurchase of Capital Stock (Withdrawal or Termination of Membership)

		
	A.
	Voluntary Withdrawal

		
	1.
	Notice of Intention to Withdraw from Membership

Federal Home Loan Bank of San Francisco    17 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

A Member may voluntarily withdraw and terminate its Membership by providing to the Bank written notice of its intention to withdraw from Membership. The Redemption Period for all Capital Stock then held by that Member that is not subject to a pending Redemption notice shall begin on the date the notice is received by the Bank.

The Redemption Period for any Capital Stock acquired or received by the Member subsequent to the Bank’s receipt of the Member’s notice of intention to withdraw shall begin on the date of acquisition or receipt of the Capital Stock by the Member; provided, however, that any Capital Stock that is not required to meet the Member’s Minimum Stock Requirement shall be Excess Stock and shall be subject to Repurchase by the Bank.

		
	2.
	Termination of Membership

The Membership of a Member that has submitted a notice of intention to withdraw shall terminate on the date on which the Redemption Period ends with respect to the Capital Stock that comprised the Member’s Membership Stock Requirement on the date on which the Bank received the Member’s notice of intention to withdraw, unless the Bank has received written notice from the Member prior to the date on which its Membership terminates that the Member is canceling its notice of intention to withdraw. Until the date on which its Membership terminates, a Member shall continue to maintain Capital Stock sufficient to meet its Minimum Stock Requirement in accordance with the provisions of the Capital Plan.

		
	3.
	Continued Benefits of Membership Prior to Termination

A Member that has submitted a notice of intention to withdraw shall be entitled to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through the date of Redemption or Repurchase by the Bank. The Member also shall be entitled to exercise the other benefits associated with Membership until the date on which its Membership terminates, but the Bank in its sole discretion (subject to the regulatory oversight of the Finance Agency) may limit a Member’s ability to enter into transactions with the Bank, including but not limited to Advances, that would mature or otherwise terminate subsequent to the date on which its Membership terminates. 

		
	4.
	Cancellation of Notice of Withdrawal 

		
	a.
	Conditions Applicable to Cancellation 

A Member may cancel its notice of intention to withdraw at any time prior to the date on which its Membership terminates by providing a written cancellation notice to the Bank. Any Member that cancels its notice of intention to withdraw shall pay a fee to the Bank determined as follows:

		
	i.
	If the Bank receives the notice of cancellation within 30 months following the notice of intention to withdraw, the fee shall be equal to $0.50 multiplied by the number of shares of Capital Stock held by the Member on the date that the Bank receives the notice of cancellation. 

		
	ii.
	If the Bank receives the notice of cancellation more than 30 months following the notice of intention to withdraw, the fee shall be equal to $1.00 multiplied by the number of shares of Capital Stock held by the Member on the date that the Bank receives the notice of cancellation.

		
	b.
	Waiver of Cancellation Fee

The Board of Directors may waive a cancellation fee only for bona fide business purposes and only if consistent with the provisions of Section 7(j) of the Act.

Federal Home Loan Bank of San Francisco    18 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

		
	5.
	Circumstances Requiring Finance Agency Certification for Withdrawal

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

		
	B.
	Termination of Membership as a Result of Merger, Consolidation, Relocation, or Self-

Liquidation Resulting in Cancellation of Charter

		
	1.
	Consolidation of Members

If Membership is terminated as a result of a Member’s merger or other consolidation into another Member, the Membership of the disappearing Member shall terminate upon the cancellation of its charter. At such time, the Capital Stock of the disappearing Member shall be transferred on the Bank’s books to the account of the surviving Member. The Redemption Period for the Capital Stock previously held by the disappearing Member that is not subject to a pending Redemption notice shall not be deemed to begin solely by virtue of the termination of Membership, but shall begin only upon (i) the Bank’s receipt of the surviving Member’s written notice to the Bank requesting Redemption of Capital Stock, (ii) the Bank’s receipt of the surviving Member’s written notice to the Bank of intention to withdraw from Membership, (iii) the surviving Member’s termination from Membership as a result of merger or consolidation into a nonmember, (iv) the surviving Member’s termination from Membership as a result of relocation of its principal place of business, or (v) the surviving Member’s involuntary termination from Membership.

		
	2.
	Consolidation of Member into Nonmember

If Membership is terminated as a result of a Member's merger or other consolidation into an institution that is not a Member, the Membership shall terminate, and the Redemption Period for the Capital Stock then held by the Member that is not subject to a pending Redemption notice shall be deemed to begin, on the date on which the Member’s charter is cancelled. At such time, the Capital Stock of the disappearing Member shall be transferred on the Bank’s books to the account of the surviving institution.

Capital Stock held by such a Former Member shall not be deemed automatically to be Excess Stock solely by virtue of the Former Member’s termination of Membership; provided, however, that any Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention Requirement at the time the Former Member’s charter is cancelled, shall be Excess Stock and shall be subject to Repurchase by the Bank.

The Redemption Period for any Capital Stock acquired or received by a Former Member subsequent to the termination of Membership shall begin on the date of acquisition or receipt of the Capital Stock by the Former Member; provided, however, that any Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention Requirement shall be Excess Stock and shall be subject to Repurchase by the Bank.

Federal Home Loan Bank of San Francisco    19 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

The Former Member shall be entitled to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through the date of Redemption or Repurchase by the Bank, but the Former Member shall have no right to exercise any of the other benefits of Membership after the termination of Membership.

		
	3.
	Relocation of Principal Place of Business

If Membership is terminated as a result of a Member’s relocation of its principal place of business (as defined in the Regulations), the Membership shall terminate, and the Redemption Period for the Capital Stock then held by the Member that is not subject to a pending Redemption notice shall be deemed to begin, in accordance with applicable Regulations.

Capital Stock held by such a Former Member shall not be deemed automatically to be Excess Stock solely by virtue of the Former Member’s termination of Membership; provided, however, that any Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention Requirement shall be Excess Stock and shall be subject to Repurchase by the Bank. 

The Redemption Period for any Capital Stock acquired or received by the Former Member subsequent to the termination of Membership shall begin on the date of acquisition or receipt of the Capital Stock by the Former Member; provided, however, that any such Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention Requirement shall be Excess Stock and shall be subject to Repurchase by the Bank.

The Former Member shall be entitled to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through the date of Redemption or Repurchase by the Bank, but the Former Member shall have no right to exercise any of the other benefits of Membership after the termination of Membership.

		
	4.
	Self-Liquidation Resulting in a Cancellation of Charter

If a Member’s charter is cancelled pursuant to a self-liquidation ending its corporate existence, then the Member’s Membership in the Bank shall automatically terminate, and the Redemption Period for the Capital Stock then held by the Member that is not subject to a pending Redemption notice shall be deemed to begin, on the date on which the Member’s charter is cancelled. At such time, the Capital Stock of the disappearing Member shall be transferred on the Bank’s books to the account of the Former Member. 

Capital Stock held by such a Former Member shall not be deemed automatically to be Excess Stock solely by virtue of the Former Member’s termination of Membership; provided, however, that any Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention Requirement at the time the Former Member’s charter is cancelled shall be Excess Stock and shall be subject to Repurchase by the Bank. 

The Redemption Period for any Capital Stock acquired or received by a Former Member subsequent to the termination of Membership shall begin on the date of acquisition or receipt of the Capital Stock by the Former Member; provided, however, that any such Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention Requirement shall be Excess Stock and shall be subject to Repurchase by the Bank.

Federal Home Loan Bank of San Francisco    20 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

The Former Member shall be entitled to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through the date of Redemption or Repurchase by the Bank, but the Former Member shall have no right to exercise any of the other benefits of Membership after the termination of Membership.

		
	C.
	Other Involuntary Termination of Membership

The Board of Directors may immediately terminate the Membership of any Member that:

		
	1.
	Fails to comply with any requirement of the Act, the Regulations, or the Capital Plan;

		
	2.
	Becomes insolvent or otherwise subject to the appointment of a conservator, receiver, or other legal custodian under federal or state law; or

		
	3.
	Would jeopardize the safety or soundness of the Bank if it were to remain a Member.

If the Board of Directors terminates the Membership of any Member, the Membership shall terminate, and the Redemption Period for all Capital Stock then held by the terminated Member that is not subject to a pending Redemption notice shall begin, on the effective date of the Board of Directors’ action.

Capital Stock held by a Former Member whose Membership has been terminated by the Board of Directors shall not be deemed automatically to be Excess Stock solely by virtue of the termination of Membership; provided, however, that any Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention Requirement shall be Excess Stock and shall be subject to Repurchase by the Bank.

The Redemption Period for any Capital Stock acquired or received by the Former Member subsequent to the termination of Membership shall begin on the date of acquisition or receipt of the Capital Stock by the Former Member; provided, however, that any such Capital Stock that is not required to meet the Former Member’s Minimum Stock Retention Requirement shall be Excess Stock and shall be subject to Repurchase by the Bank. 

The Former Member shall be entitled to receive any dividends attributable to its Capital Stock (subject to the Bank’s lien thereon) through the date of Redemption or Repurchase by the Bank, but it shall have no right to exercise any of the other benefits of Membership after the termination of Membership.

		
	D.
	Redemption

Except as set forth in Sections X.E. and XI., and unless the Former Member must continue to comply with an Activity-Based Stock Retention Requirement, the Bank shall Redeem the Former Member’s Capital Stock upon expiration of the Redemption Period.

		
	E.
	Limitations on Redemption and Repurchase of Capital Stock Following Withdrawal or Termination of Membership

Notwithstanding any other provision of this Section X., if the Finance Agency or the Board of Directors determines that the Bank has incurred or is likely to incur losses that result in, or are likely to result in, charges against Capital Stock that create an other than temporary decline in the Bank’s Total Capital such that the value of Total Capital falls below the Bank’s aggregate amount of Capital Stock, the Bank shall not Redeem or Repurchase any Capital Stock without the prior written approval of the Finance Agency for however long the Bank continues to incur such charges or until the Finance Agency determines that such charges are not expected to continue. The Bank shall not Redeem or Repurchase any Capital Stock if, following the Redemption or Repurchase, 

Federal Home Loan Bank of San Francisco    21 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

the Bank would fail to satisfy its Minimum Regulatory Capital Requirement and its Risk Management Policy Minimum or the Former Member would fail to maintain its Minimum Stock Retention Requirement. Further, the Bank shall not Redeem or Repurchase any Capital Stock if prohibited from doing so by any Regulation or Finance Agency order.

If, upon expiration of the Redemption Period applicable to any Capital Stock, the Bank is unable to Redeem the Capital Stock because (i) following the Redemption, the Bank would fail to satisfy its Minimum Regulatory Capital Requirement or (ii) the Bank is otherwise prohibited from doing so by Regulation or Finance Agency order, Redemption shall occur in accordance with the provisions of Section XI. of the Capital Plan.

		
	XI.
	Priority of Redemption or Repurchase

		
	A.
	Initial Pro Rata Redemption

In the event that the Board of Directors determines for a given calendar quarter that the Bank may not be able to Redeem all Capital Stock with respect to which the Redemption Period has expired or will expire during that quarter because (i) following such Redemption, the Bank would fail to meet or would be likely to fail to meet its Minimum Regulatory Capital Requirement and its Risk Management Policy Minimum, or (ii) Redemption would otherwise prevent the Bank from operating in a safe and sound manner, including, without limitation, a reasonable belief that the Redemption would prevent the Bank from maintaining sufficient Permanent Capital or Total Capital against a potential risk that may not be reflected adequately in the Bank’s Minimum Regulatory Capital Requirement and Risk Management Policy Minimum, then the Board of Directors, in its sole discretion (subject to the regulatory oversight of the Finance Agency), may temporarily suspend Redemptions during that calendar quarter.

The Bank shall notify the Finance Agency in writing within two business days following the determination by the Board of Directors to suspend Redemption of Capital Stock, informing the Finance Agency of the reasons for the suspension and of the Bank’s strategies and time frames for addressing the conditions that led to the suspension.

Unless the Finance Agency directs otherwise, within 20 business days following the end of the calendar quarter, the Board of Directors, in its sole discretion (subject to the regulatory oversight of the Finance Agency), shall determine the total amount of funds, if any, to be made available for Redemption for that calendar quarter. Within 10 business days following the determination by the Board of Directors, the Bank shall Redeem at par value a pro rata number of shares, based upon the number of shares of Capital Stock with respect to which the Redemption Period has expired, of the total amount available for Redemption. 

All Redemption payments for a given calendar quarter made pursuant to this Section XI.A. shall be made on the same business day.

The Bank shall not Repurchase any Excess Stock without the prior written approval of the Finance Agency during any period in which the Board of Directors has suspended Redemption of Capital Stock.

		
	B.
	Subsequent Pro Rata Redemption

The Board of Directors, in its sole discretion (subject to the regulatory oversight of the Finance Agency), may follow the procedure for pro rata Redemption described in Section XI.A. for any calendar quarter in which the conditions described therein occur.

		
	C.
	Pro Rata Repurchase

Federal Home Loan Bank of San Francisco    22 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

The Board of Directors, in its sole discretion (subject to the regulatory oversight of the Finance Agency), may implement the pro rata procedure described in this Section XI. to Repurchase Excess Stock for any calendar quarter in which (i) no Redemption Period has expired or (ii) the Bank will Redeem all Capital Stock for which the Redemption Period has expired and will Repurchase additional Capital Stock. All Repurchase payments for a given calendar quarter made pursuant to this Section XI.C. shall be made on the same business day.

		
	D.
	No Priority for Notices of Redemption or Repurchase in the Event of Liquidation

In the event that the Finance Agency determines to liquidate the Bank, from and after the date of any such determination, all of the Capital Stock held by the Members, whether or not subject to a notice of Redemption or Repurchase, shall thereafter be treated exactly the same, and no further Redemptions or Repurchases shall occur except in connection with the liquidation of the Bank in accordance with the provisions of the Act, the Regulations and this Capital Plan.

		
	XII.
	Disposition of Claims 

		
	A.
	In General

If a Member withdraws from Membership or its Membership is otherwise terminated, the Bank, in its sole discretion (subject to the regulatory oversight of the Finance Agency), shall determine an orderly manner for liquidating all Indebtedness owed by the Former Member to the Bank and for settling all other claims against the Former Member. After the obligations and claims have been extinguished or settled, the Bank shall return to the Former Member the collateral pledged by the Former Member to the Bank to secure its obligations to the Bank.

		
	B.
	Lien on Capital Stock

The Bank shall have a lien on all of the Capital Stock of a Member or Former Member, and all dividends and other proceeds of such Capital Stock, to secure the performance by the Member or Former Member of its obligations pursuant to the Capital Plan and to secure its performance with respect to any Indebtedness to the Bank or any transaction with the Bank. The Bank shall not Redeem or Repurchase any Capital Stock that is required to meet the Member’s Activity-Based Stock Requirement or the Former Member’s Activity-Based Stock Retention Requirement until after the relevant Indebtedness or transactions have been extinguished or settled. The Bank shall have the right to collect any dividends and other proceeds of Capital Stock otherwise payable to a Member or Former Member in default to satisfy any monetary obligations of the Member or Former Member to the Bank or, in the sole discretion of the Bank (subject to the regulatory oversight of the Finance Agency), to pay any dividends to the Member or Former Member in Capital Stock.

		
	C.
	Prepayment Fees

Any liquidation of Indebtedness that results in payment of the Indebtedness before its stated maturity shall be deemed a prepayment of the Indebtedness, and shall be subject to any fees applicable to the prepayment.

		
	XIII.
	Amendment to the Capital Plan

Any amendment to the Capital Plan must be approved by the Board of Directors and by the Finance Agency. The Bank shall provide written notice to each Member and Former Member at least five business days prior to the effective date of any amendment.

		
	XIV.
	Retained Earnings Enhancement Implementation and Definitions

Federal Home Loan Bank of San Francisco    23 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

		
	A.
	Implementation

The provisions of Sections XIV. through XVII. below shall become effective upon, and only upon, the occurrence of the Interim Capital Plan Amendment Implementation Date (defined in Section XIV.B. below). Until the Restriction Termination Date (defined in Section XIV.B. below), in the event of any conflict between Sections XIV. through XVII. and the remainder of the Capital Plan, the applicable terms of Sections XIV. through XVII. 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 the Capital Plan.

		
	B.
	Definitions

As used in these Sections XIV. through XVII. of the Capital Plan, the following capitalized terms have the following meanings. Other capitalized terms used but not defined in these Sections XIV. through XVII. have the meanings assigned to them in Section I. of the 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 Finance Agency 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 XVII. of the 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 XVII.A.1. or XVII.A.2. of the 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 Member or a Former Member with respect to its holdings of Capital Stock.

Federal Home Loan Bank of San Francisco    24 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

“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.

“FHLBank” means a Federal Home Loan Bank chartered under the Act.

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

“Interim Capital Plan Amendment Implementation Date” means 31 days after the date by which the Finance Agency has approved a capital plan amendment substantially the same as 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. 

“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” means: (i) the rules and regulations of the Finance Board (except to the extent that they may be modified, terminated, set aside or superseded by the Director of the Finance Agency) in effect on the Effective Date; and (ii) the rules and regulations of the Finance Agency, 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 a 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.

Federal Home Loan Bank of San Francisco    25 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

“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 XVII. of the Capital Plan.

“Retained Earnings” means the retained earnings of an FHLBank calculated pursuant to GAAP.

“Retained Earnings Capital Plan Amendment” means the amendment to the Capital Plan adopted effective on the Interim Capital Plan Amendment Implementation Date adding Sections XIV. through XVII. to the 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. 

“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. 

		
	XV.
	 Establishment of Restricted Retained Earnings

		
	A.
	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.

		
	B.
	Funding of Account

		
	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 

Federal Home Loan Bank of San Francisco    26 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

positive Adjustment to Prior Net Income to its Restricted Retained Earnings account than the percentages set forth in the Retained Earnings Capital Plan Amendment.

		
	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 Section XV.B.4. below, its Special Contribution Amount) to its Restricted Retained Earnings account.

		
	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 so that the cumulative addition to the Restricted Retained Earnings account for the 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 so that the cumulative addition to the Restricted Retained Earnings account for the calendar year-to-date 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 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.

		
	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 Sections XV.B.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 Section XV.B.4.). 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 Section XV.B.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.

		
	5.
	Release of Restricted Retained Earnings

Federal Home Loan Bank of San Francisco    27 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

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 Section XV.B.3. is not a reallocation).

		
	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.

		
	XVI.
	Limitation on Dividends, Stock Purchase and Stock Redemption

		
	A.
	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 Section XV.B.5., and further provided that a reduction in the Restricted Retained Earnings account following a Net Loss pursuant to Section X.V.B.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.

		
	B.
	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 Finance Agency falls below the Bank’s aggregate paid-in amount of Capital Stock.

		
	XVII.
	Termination of Retained Earnings Capital Plan Amendment Obligations

		
	A.
	Notice of Automatic Termination Event

		
	1.
	Action by FHLBanks

If the Bank elects 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 Finance Agency) 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

Federal Home Loan Bank of San Francisco    28 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

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 Event shall be delivered by the Bank to the Finance Agency 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 Finance Agency, or is delivered to the Finance Agency 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 Section XVII.A.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 Finance Agency that the specific statutory or regulatory change constitutes an Automatic Termination Event. Such request must be filed with the Finance Agency 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.

		
	2.
	Action by Finance Agency

The Bank may request a determination from the Finance Agency 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 Section XVII.A.1. above.

If within 60 calendar days after the Bank delivers such a request to the Finance Agency, or another FHLBank delivers such a request pursuant to its capital plan, the Finance Agency 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 Section XVII.A.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 Section XVII.A.3.) no matter on which day prior to the expiration of the 60 calendar day period the Finance Agency has provided its written determination.

If the Finance Agency fails to make a determination within 60 calendar days after an FHLBank delivers such request to the Finance Agency, 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 Section XVII.A.3.); provided, however, that the Finance Agency may make a written request for information from that FHLBank, and toll such 60 calendar day period from the date that the Finance Agency transmits its request until that FHLBank delivers to the Finance Agency information responsive to its request.

If within 60 calendar days after an FHLBank delivers to the Finance Agency 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 Finance Agency 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.

		
	3.
	Occurrence of Automatic Termination Event Declaration Date

Federal Home Loan Bank of San Francisco    29 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

In no case under this Section XVII.A. 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.

		
	B.
	Notice of Voluntary Termination

If the FHLBanks terminate the Agreement, then the Bank and the other FHLBanks shall provide written notice to the Finance Agency that the FHLBanks have voted to terminate the Agreement. 

		
	C.
	Consequences of Automatic Termination Event or Vote to Terminate the Agreement

		
	1.
	Consequences of Voluntary Termination

In the event the FHLBanks deliver written notice to the Finance Agency that the FHLBanks have voted to terminate the Agreement, then without any further action by the Bank or the Finance Agency: (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.

		
	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 Finance Agency: (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.

		
	3.
	Deletion of Operative Provisions of Retained Earnings Capital Plan Amendment

Without any further action by the Bank or the Finance Agency, on the Restriction Termination Date, Sections XIV. through XVII. of the Capital Plan shall be deleted.

Federal Home Loan Bank of San Francisco    30 

Capital Plan as Amended and Restated Effective April 1, 2015
Updated August 3, 2015

Appendix A: Membership Asset Factors

	
		
	 
	Initial Value

	Residential 1-4 Family First Mortgage Loans
	85%

	Residential 1-4 Family Second Mortgage Loans
	55%

	Home Equity Lines of Credit
	55%

	Multifamily First Mortgage Loans
	70%

	MBS Pass-Throughs
	95%

	CMO’s
	95%

	Other Investment Securities
	75%

	U.S. Agency and Government Securities
	97%

	Commercial Real Estate and Non-Residential First Mortgage Loans
	55%

	Investments in Mutual Funds and Other Investment Securities
	75%

	Small Business Loans
	30%

	Small Farm Loans
	30%

	Small Agribusiness Loans
	30%

Federal Home Loan Bank of San Francisco    31

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