Document:

Unassociated Document

Exhibit 10(e)

 

EXECUTION VERSION

 

 

 

 

LETTER OF CREDIT ISSUANCE

AND REIMBURSEMENT AGREEMENT 

 

between 

 

PPL ENERGY SUPPLY, LLC 

and 

CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY 

 

dated as of 

July 27, 2012

 

 

  

 

 

CONTENTS

 

	
CLAUSE

	  	  	  	
PAGE

	  	  	  	  	  
	  	  	  	  	  
	
ARTICLE I

	  	
SCOPE OF AGREEMENT

	
1

	
ARTICLE II

	  	
DEFINITIONS, INTERPRETATION

	
1

	  	
Section 2.1

	  	
Defined Terms

	
1

	  	
Section 2.2

	  	
Other Definitional Provisions

	
4

	  	
Section 2.3

	  	
Incorporation by Reference to Existing Credit Agreement

	
4

	
ARTICLE III

	
LETTER OF CREDIT FACILITY

	
5

	  	
Section 3.1

	  	
Method of Issuance of Letters of Credit

	
5

	  	
Section 3.2

	  	
Conditions to Issuance of Letters of Credit

	
5

	  	
Section 3.3

	  	
Drawings under Letters of Credit

	
5

	  	
Section 3.4

	  	
ISP98

	
5

	  	
Section 3.5

	  	
Proof of Credit Obligations

	
6

	
ARTICLE IV

	
REIMBURSEMENT AND PAYMENT OBLIGATIONS

	
6

	  	
Section 4.1

	  	
Reimbursement Obligations

	
6

	  	
Section 4.2

	  	
Obligations in Respect of Letters of Credit Unconditional

	
6

	  	
Section 4.3

	  	
Indemnification in Respect of Letters of Credit

	
7

	  	
Section 4.4

	  	
Interest Calculations

	
7

	  	
Section 4.5

	  	
Fees

	
8

	  	
Section 4.6

	  	
General Provisions as to Payments

	
8

	  	
Section 4.7

	  	
Taxes

	
9

	
ARTICLE V

	
Conditions

	
12

	  	
Section 5.1

	  	
Conditions to Closing

	
12

	  	
Section 5.2

	  	
Conditions to Issuance

	
13

	
ARTICLE VI

	
REPRESENTATIONS AND WARRANTIES

	
13

	  	
Section 6.1

	  	
Status

	
13

	  	
Section 6.2

	  	
Authority; No Conflict

	
13

	  	
Section 6.3

	  	
Legality; Etc

	
13

	  	
Section 6.4

	  	
Financial Condition

	
14

	  	
Section 6.5

	  	
Rights to Properties

	
14

	  	
Section 6.6

	  	
Litigation

	
14

	  	
Section 6.7

	  	
No Violation

	
14

	  	
Section 6.8

	  	
ERISA

	
15

	  	
Section 6.9

	  	
Governmental Approvals

	
15

	  	
Section 6.10

	  	
Investment Company Act

	
15

	  	
Section 6.11

	  	
Restricted Subsidiaries, Etc

	
15

	  	
Section 6.12

	  	
Tax Returns and Payments

	
15

	  	
Section 6.13

	  	
Compliance with Laws

	
15

	  	
Section 6.14

	  	
No Default

	
16

	  	
Section 6.15

	  	
Environmental Matters

	
16

	  	
Section 6.16

	  	
Guarantees

	
17

	  	
Section 6.17

	  	
OFAC

	
17

	
ARTICLE VII

	
COVENANTS

	
17

	
ARTICLE VIII

	
DEFAULTS

	
17

	  	
Section 8.1

	  	
Events of Default

	
17

	
ARTICLE IX

	
MISCELLANEOUS

	
19

	  	
Section 9.1

	  	
Notices

	
19

	  	
Section 9.2

	  	
No Waivers; Non-Exclusive Remedies

	
20

	  	
Section 9.3

	  	
Expenses; Indemnification

	
20

	  	
Section 9.4

	  	
Amendments and Waivers

	
22

	  	
Section 9.5

	  	
Successors and Assigns

	
22

	  	
Section 9.6

	  	
Governing Law; Submission to Jurisdiction

	
22

	  	
Section 9.7

	  	
Counterparts; Integration; Effectiveness

	
22

	  	
Section 9.8

	  	
Generally Accepted Accounting Principles

	
22

	  	
Section 9.9

	  	
WAIVER OF JURY TRIAL

	
23

	  	
Section 9.10

	  	
Confidentiality

	
23

	  	
Section 9.11

	  	
USA PATRIOT Act Notice

	
23

	  	
Section 9.12

	  	
No Fiduciary Duty

	
24

  

 

THIS LETTER OF CREDIT ISSUANCE AND REIMBURSEMENT AGREEMENT dated as of July 27, 2012, by and between PPL ENERGY SUPPLY, LLC, a Delaware limited liability company (the “Company”), and Canadian Imperial Bank of Commerce, New York Agency (“CIBC”).

 

ARTICLE I 

 

SCOPE OF AGREEMENT

 

The Company has requested CIBC to issue one or more standby letters of credit in an Aggregate Stated Amount not to exceed the Maximum Stated Amount, for the account of the Company to support the Company’s obligation to post collateral in support of its energy hedging activities.  CIBC may (but shall not be obligated to) issue from time to time letters of credit for such purpose, and the Company and CIBC agree that the issuance of such letters of credit, and the obligations of the Company to CIBC with respect thereto, shall be governed by the terms and conditions of this Agreement.

 

ARTICLE II 

 

DEFINITIONS; INTERPRETATION

 

Section 2.1                      Defined Terms.  For the purposes of this Agreement, unless the context otherwise requires, the following terms shall have the respective meanings assigned to them in this Article II or in the section or recital referred to:

 

“Affiliate” means, with respect to any Person, any other Person who is directly or indirectly controlling, controlled by or under common control with such Person.  A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through the ownership of stock or its equivalent, by contract or otherwise.

 

“Aggregate Stated Amount” means, as of any date, the aggregate Stated Amount of all Letters of Credit issued hereunder that remain outstanding as of such date.

 

“Agreement” shall mean this Letter of Credit Issuance and Reimbursement Agreement, together with all amendments, waivers and modifications, and with all Letter of Credit Requests submitted by the Company.

 

“Applicable Lending Office” means CIBC’s office located at its address set forth in Section 9.1 or such other office as CIBC may hereafter designate by notice to the Company.

 

“Applicable Rate” means, as of any day, a rate per annum equal to the sum of (a) the higher of (i) the Prime Rate for such day, and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day, plus (b) 2.00%.

 

“Availability Termination Date” means the earlier of (i) the date that is the first anniversary of the Closing Date, (ii) the date that the commitment of CIBC under the Existing Credit Agreement terminates or is reduced to zero, (iii) the date that shall have been advised as such date to the Company in writing by CIBC, being a date not less than sixty (60) days after an effective amendment or waiver of any provision of the Existing Credit Agreement, and (iv) the date referred in Section 8.1.

 

“Available Amount” means, as of any date, the sum of the Maximum Stated Amount minus the Aggregate Stated Amount as of such date.

 

“Bankruptcy Code” means Title 11 of the United States Code, as now or hereafter in effect, or any successor thereto.

 

“Business Day” means a day, other than a Saturday or a Sunday, on which commercial banks are not authorized or required to be closed in New York, New York and Toronto, Canada.

 

“Cash Collateralize” means the provision of funds to CIBC by the Company by way of a deposit account at CIBC, or a blocked account arrangement for the sole benefit of CIBC, or such other arrangements as shall be acceptable to CIBC in its sole discretion.

 

“Change of Control” has the meaning set forth in the Existing Credit Agreement.

 

“CIBC” has the meaning set forth in the preamble.

 

“Closing Date” means the date that all the conditions in Section 5.1 shall have been satisfied, or waived by CIBC.

 

“Code” or “Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

“Company” shall have the meaning assigned to it in the preamble hereof.

 

“Consolidated Subsidiaries” has the meaning set forth in the Existing Credit Agreement.

 

“Credit Obligation” shall mean any and all obligations (including, without limitation, Reimbursement Obligations) of the Company to CIBC arising under or related to this Agreement, including, but not limited to, all present or future taxes, levies, imposts, duties, deductions, charges, liabilities or withholdings imposed, levied, collected, withheld or assessed by any governmental authority on CIBC.

 

“Debt” has the meaning set forth in the Existing Credit Agreement.

 

“Default” means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

 

“Dollars” “$” and “USD” shall mean the lawful currency of the United States of America.

 

“Drawing” shall mean a demand for payment under any Letter of Credit in accordance with its terms.

 

“Environmental Laws” has the meaning set forth in the Existing Credit Agreement.

 

“Environmental Liability” has the meaning set forth in the Existing Credit Agreement.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute.

 

“ERISA Group” has the meaning set forth in the Existing Credit Agreement.

 

“Event of Default” shall have the meaning assigned to it in Section 8.1 hereof.

 

“Existing Credit Agreement” means that certain $3,000,000,000 Revolving Credit Agreement, dated as of October 19, 2010, by and among the Company, the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as amended by Amendment No.1 thereto, dated as of October 19, 2011, without giving effect to any further amendments, waivers or consents in relation thereto, other than such amendments, waivers and consents as shall have been affirmatively granted by CIBC.

 

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code and any regulations (whether final, temporary or proposed) that are issued thereunder or official government interpretations thereof.

 

“Federal Funds Rate” means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, that (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average of quotations for such day on such transactions received by CIBC from three federal funds brokers of recognized standing selected by CIBC.

 

“Foreign Subsidiary” means a Subsidiary which is not formed under the laws of the United States or any territory thereof.

 

“GAAP” means United States generally accepted accounting principles applied on a consistent basis.

 

“Governmental Authority” means any federal, state or local government, authority, agency, central bank, quasi-governmental authority, court or other body or entity, and any arbitrator with authority to bind a party at law.

 

“Guarantee” has the meaning set forth in the Existing Credit Agreement.

 

“Hazardous Substance” has the meaning set forth in the Existing Credit Agreement.

 

“Indemnitee” has the meaning set forth in Section 9.3.

 

“Letter of Credit” shall mean any letter of credit issued pursuant to this Agreement, which letters of credit shall be documented in CIBC’s customary form.

 

“Letter of Credit Request” means a request and letter of credit application in CIBC’s customary form, duly completed and delivered by the Company to CIBC in accordance with Section 3.1 hereof.

 

“Material Adverse Effect” means (i) any material adverse effect upon the business, assets, financial condition or operations of the Company or the Company and its Subsidiaries, taken as a whole; (ii) a material adverse effect on the ability of the Company to perform its obligations under this Agreement, or (iii) a material adverse effect on the validity or enforceability of this Agreement.

 

“Material Debt” means Debt of the Company and/or one or more of its Restricted Subsidiaries in a principal or face amount exceeding $40,000,000.

 

“Material Plan” has the meaning set forth in the Existing Credit Agreement.

 

“Maximum Stated Amount” means $75,000,000.

 

“Multiemployer Plan” has the meaning set forth in the Existing Credit Agreement.

 

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

 

“Other Taxes” has the meaning set forth in Section 4.7(b).

 

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

 

“Person” shall mean an individual, sole proprietorship, partnership, joint venture, association, trust, estate, business trust, corporation, not-for-profit corporation, sovereign government or agency, instrumentality, or political subdivision thereof, or any similar entity or organization.

 

“Prime Rate” means the rate of interest publicly announced by CIBC from time to time as its Prime Rate for US credits.

 

“Reimbursement Obligations” means at any time all obligations of the Company to reimburse CIBC pursuant to Section 4.1 for amounts paid by CIBC in respect of drawings under Letters of Credit.

 

“Restricted Subsidiaries” means each Subsidiary listed on Schedule 6.11 and each other Subsidiary designated by the Company as a “Restricted Subsidiary” in writing to CIBC, in either case, for so long as such Restricted Subsidiary shall be a direct Wholly Owned Subsidiary of the Company or a direct Wholly Owned Subsidiary of a Restricted Subsidiary.

 

“Sanctioned Entity” shall mean (i) an agency of the government of, (ii) an organization directly or indirectly controlled by, or (iii) a Person resident in, a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/enforcement/ofac/sanctions/index.html, or as otherwise published from time to time as such program may be applicable to such agency, organization or Person.

 

“Sanctioned Person” shall mean a Person named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC available at http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as otherwise published from time to time.

 

“Stated Amount” shall mean, as of any date and with respect to any Letter of Credit, the aggregate maximum amount that is available to be paid under such Letter of Credit.

 

“Subsidiary” means, with respect to any Person, another Person the majority of the outstanding equity interest of which are owned, directly or indirectly, by such Person or one or more other Subsidiaries of such Person.

 

“Taxes” has the meaning set forth in Section 4.7(a).

 

“Termination Date” means the date that is the second anniversary of the Closing Date.

 

“Unreimbursed Amount” means the principal amount of all Drawings in respect of which the Company shall not have satisfied its Reimbursement Obligations.

 

“Wholly Owned Subsidiary” has the meaning set forth in the Existing Credit Agreement.

 

Section 2.2                      Other Definitional Provisions.

 

(a)           All terms defined in this Agreement shall have the above-defined meanings when used in any certificate, report or other document made or delivered pursuant to this Agreement, unless the context therein shall otherwise require.

 

(b)           Defined terms used in the singular shall import the plural and vice versa.

 

(c)           The terms “hereof,” “herein,” “hereunder,” and similar terms when used in this Agreement shall refer to this Agreement as whole and not to any particular provisions of this Agreement.

 

(d)           Any reference in this Agreement to a document or an instrument shall mean such document or instrument and all exhibits thereto as amended or supplemented from time to time.  Any reference in this Agreement to any Person as a party to any document or instrument shall include its successors and assigns to such status.

 

Section 2.3                      Incorporation by Reference to Existing Credit Agreement.  The following rules of construction shall apply:

 

(a)           Terms defined in the Existing Credit Agreement and used in the provisions incorporated herein, unless otherwise defined herein or the context otherwise requires, shall have the definitions set forth in Section 1.01 of the Existing Credit Agreement, and such definitions are hereby incorporated herein by reference, mutatis mutandis, and the Existing Credit Agreement will be deemed to be and to continue to be (for purposes hereof) in effect for the benefit of CIBC whether or not the Existing Credit Agreement remains outstanding or in effect, except as expressly agreed otherwise by CIBC.  Without limitation of the foregoing, all definitions and covenants therein that are incorporated herein, shall be incorporated as of the date hereof and for purposes of this Agreement shall not be subject to any subsequent modification, supplement, amendment or waiver by the lenders under or other parties to the Existing Credit Agreement, unless CIBC agrees in writing to such modification, supplement, amendment or waiver in its capacity as a lender thereunder, or, if CIBC shall no longer be a lender thereunder, or the Existing Credit Agreement shall no longer remain outstanding, CIBC agrees in writing that any modification, supplement, amendment or waiver thereto shall apply to such provisions as incorporated herein.

 

(b)           In addition, the parties hereto agree that, for the purposes of Article VII, references in the Existing Credit Agreement to (i) “the Borrower” shall be references to the Company, (ii) “this Agreement” or “the Loan Document(s)” shall be references to this Agreement, (iii) “the Lenders” or the “Administrative Agent” shall be references to CIBC, (iv) references to the “Issuing Lender” shall be references to CIBC, and (v) a “Default” or “Event of Default” shall be references to a Default or Event of Default under this Agreement.

 

(c)           Unless the context otherwise requires, whenever any statement is qualified by “to the best knowledge of” or “known to” (or a similar phrase) any Person that is not a natural person, it is intended to indicate that the senior management of such Person has conducted a commercially reasonable inquiry and investigation prior to making such statement and no member of the senior management of such Person (including managers, in the case of limited liability companies, and general partners, in the case of partnerships) has current actual knowledge of the inaccuracy of such statement.

 

ARTICLE III 

 

LETTER OF CREDIT FACILITY

 

Section 3.1                      Method of Issuance of Letters of Credit.  At any time on or after the Closing Date until the Availability Termination Date, the Company may request CIBC issue one or more Letters of Credit hereunder.  The Company shall give CIBC a Letter of Credit Request, requesting the issuance or extension of a Letter of Credit, prior to 1:00 P.M. New York time on the proposed date of issuance or extension of any Letter of Credit (which shall be a Business Day) (or such shorter period as may be agreed by CIBC in any particular instance), specifying the date such Letter of Credit is to be issued or extended and describing the terms of such Letter of Credit and the nature of the transactions to be supported thereby.  The extension or renewal of any Letter of Credit shall be deemed to be an issuance of such Letter of Credit, and no Letter of Credit shall contain a provision pursuant to which it is deemed to be extended or shall automatically extend.  Accordingly, CIBC shall timely give such notice of termination unless it has theretofore timely received a Letter of Credit Request and the other conditions to issuance of a Letter of Credit have theretofore been met with respect to such extension.

 

Section 3.2                      Conditions to Issuance of Letters of Credit.  The issuance by CIBC of each Letter of Credit shall, in addition to the conditions precedent set forth in Article V, be subject to the conditions precedent that (i) such Letter of Credit shall be satisfactory in form and substance to CIBC, (ii) the Company shall have executed and delivered such other instruments and agreements relating to such Letter of Credit as CIBC shall have reasonably requested, (iii) the term of such Letter of Credit does not extend beyond 12 months after the date of issuance (after giving effect to any and all auto-renewal or extension provisions within such Letter of Credit), and does not extend beyond the Termination Date; and (iv) CIBC shall have confirmed on the date of (and after giving effect to) such issuance that the Aggregate Stated Amount will not exceed Maximum Stated Amount.  Notwithstanding any other provision of this Section 3.2, CIBC shall not be under any obligation to issue any Letter of Credit if: any order, judgment or decree of any governmental authority shall by its terms purport to enjoin or restrain CIBC from issuing such Letter of Credit, or any requirement of law applicable to CIBC or any request or directive (whether or not having the force of law) from any governmental authority with jurisdiction over CIBC shall prohibit, or request that CIBC refrain from, the issuance of letters of credit generally or such Letter of Credit in particular, or shall impose upon CIBC with respect to such Letter of Credit any restriction, reserve or capital requirement (for which CIBC is not otherwise compensated hereunder) not in effect on the date hereof, or shall impose upon CIBC any unreimbursed loss, cost or expense which was not applicable on the date hereof and which CIBC in good faith deems material to it.

 

Section 3.3                      Drawings under Letters of Credit.  Upon receipt from the beneficiary of any Letter of Credit of any notice of a Drawing under any Letter of Credit, CIBC shall determine in accordance with the terms of such Letter of Credit whether such Drawing should be honored.  If CIBC determines that any such Drawing shall be honored, CIBC shall make available to such beneficiary in accordance with the terms of such Letter of Credit the amount of the Drawing and shall notify the Company of the amount to be paid as a result of such Drawing and the payment date.

 

Section 3.4                      ISP98.  The rules of the “International Standby Practices 1998” as published by the International Chamber of Commerce most recently at the time of issuance of any Letter of Credit shall apply to such Letter of Credit unless otherwise expressly provided in such Letter of Credit.

 

Section 3.5                      Proof of Credit Obligations.  This Agreement, the executed Letter of Credit Requests, executed Letters of Credit issued pursuant to such Letter of Credit Requests, and executed Drawings presented under such Letters of Credit shall be presumptive evidence of the Company’s Credit Obligations.

 

ARTICLE IV 

 

REIMBURSEMENT AND PAYMENT OBLIGATIONS

 

Section 4.1                      Reimbursement Obligations.  The Company shall be irrevocably and unconditionally obligated forthwith to reimburse CIBC for any amounts paid by CIBC upon any Drawing under any Letter of Credit, together with any and all reasonable charges and expenses which CIBC may pay or incur relative to such Drawing and interest on the amount drawn at the Applicable Rate for each day from and including the date such amount is drawn to but excluding the date such reimbursement payment is due and payable.  Such reimbursement payment shall be due and payable (i) at or before 12:00 Noon New York time on the date CIBC notifies the Company of such Drawing, if such notice is given at or before 10:00 A.M. New York time on such date, or (ii) at or before 10:00 A.M. New York time on the next succeeding Business Day, if such notice is given after 10:00 A.M. New York time on such date; provided, that no payment otherwise required by this sentence to be made by the Company at or before 12:00 Noon New York time on any day shall be overdue hereunder if arrangements for such payment satisfactory to CIBC, in its reasonable discretion, shall have been made by the Company at or before 12:00 Noon. New York time on such day and such payment is actually made at or before 3:00 P.M. New York time on such day.  In addition, the Company agrees to pay to CIBC interest, which shall accrue and be payable daily, on any and all amounts not paid by the Company to CIBC when due under this Section 4.1, for each day from and including the date when such amount becomes due to but excluding the date such amount is paid in full, whether before or after judgment, at the Applicable Rate.  Each payment to be made by the Company pursuant to this Section 4.1 shall be made to CIBC in immediately available funds at its address referred to in Section 9.1.

 

 

Section 4.2                      Obligations in Respect of Letters of Credit Unconditional.  The obligations of the Company under Section 4.1 above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including, without limitation, the following circumstances:

 

(a)           any lack of validity or enforceability of this Agreement or any Letter of Credit or any document related hereto or thereto;

 

(b)           any amendment or waiver of or any consent to departure from all or any of the provisions of this Agreement or any Letter of Credit or any document related hereto or thereto;

 

(c)           the use which may be made of the Letter of Credit by, or any acts or omission of, a beneficiary of a Letter of Credit (or any Person for whom the beneficiary may be acting);

 

(d)           the existence of any claim, set-off, defense or other rights that the Company may have at any time against a beneficiary of a Letter of Credit (or any Person for whom the beneficiary may be acting), CIBC or any other Person, whether in connection with this Agreement or any Letter of Credit or any document related hereto or thereto or any unrelated transaction;

 

(e)           any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect whatsoever;

 

(f)           payment under a Letter of Credit against presentation to an Issuing Lender of a draft or certificate that does not comply with the terms of such Letter of Credit; provided, that CIBC’s determination that documents presented under such Letter of Credit comply with the terms thereof shall not have constituted gross negligence or willful misconduct of CIBC; or

 

(g)           any other act or omission to act or delay of any kind by CIBC or any other Person or any other event or circumstance whatsoever that might, but for the provisions of this subsection (g), constitute a legal or equitable discharge of the Company’s obligations hereunder.

 

Nothing in this Section 4.2 is intended to limit the right of the Company to make a claim against CIBC for damages as contemplated by the proviso to the first sentence of Section 4.3.

 

Section 4.3                      Indemnification in Respect of Letters of Credit.  The Company hereby indemnifies and holds harmless CIBC from and against any and all claims, damages, losses, liabilities, costs or expenses which CIBC may incur by reason of or in connection with the execution and delivery or transfer of or payment or failure to pay under any Letter of Credit, including, without limitation, any of the circumstances enumerated in Section 4.2, as well as (i) any error, omission, interruption or delay in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, (ii) any error in interpretation of technical terms, (iii) any loss or delay in the transmission of any document required in order to make a Drawing under a Letter of Credit, (iv) any consequences arising from causes beyond the control of such indemnitee, including without limitation, any government acts, or (v) any other circumstances whatsoever in making or failing to make payment under such Letter of Credit; provided, that the Company shall not be required to indemnify CIBC for any claims, damages, losses, liabilities, costs or expenses, and the Company shall have a claim against CIBC for direct (but not consequential) damages suffered by it, to the extent found by a court of competent jurisdiction in a final, non-appealable judgment or order to have been caused by (a) the willful misconduct or gross negligence of CIBC in determining whether a request presented under any Letter of Credit issued by it complied with the terms of such Letter of Credit or (b) CIBC’s failure to pay under any Letter of Credit issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit.  Nothing in this Section 4.3 is intended to limit the obligations of the Company under any other provision of this Agreement.

 

Section 4.4                      Interest Calculations.  Interest shall accrue on the outstanding Unreimbursed Amount, for each day from the date of the related Drawing until it is paid in full, at a rate per annum equal to the Applicable Rate.  CIBC shall determine the Applicable Rate hereunder, and shall give prompt notice to the Company of each change in the Applicable Rate as so determined, and its determination thereof shall be conclusive in the absence of manifest error.  Interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed.

 

Section 4.5                      Fees.  The Company shall pay to CIBC a fee, quarterly in arrears on the last day of each March, June, September and December falling after the Closing Date (or, if any such day is not a Business Day, the next succeeding Business Day), and on the Termination Date, at a rate equal to 1.25% per annum on the average Aggregate Stated Amount of all Letters of Credit outstanding on each day during such quarter, and for the number of days in such period.  For the avoidance of doubt, the first quarterly payment shall be due on September 30, 2012, in respect of the period beginning on the Closing Date and ending on such date, and the payment due on the Termination Date shall be in respect of the period from the preceding quarter-end through the Termination Date.  In addition, the Company shall pay to CIBC, upon each issuance of, payment under, and/or amendment of, a Letter of Credit, such amount as shall at the time of such issuance, payment or amendment be the administrative charges and expenses which CIBC is customarily charging for issuances of, payments under, or amendments to letters of credit issued by it.

 

Section 4.6                      General Provisions as to Payments.

 

(a)           Payments by the Company.  The Company shall make each payment of principal of and interest on the Credit Obligations hereunder on the date when due, without set-off, counterclaim or other deduction, in immediately available funds in New York, New York, to CIBC at its address referred to in Section 9.1.  Whenever any payment shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day.  If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time.

 

(b)           Increased Costs.  If after the date hereof, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by CIBC with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System), special deposit, insurance assessment or similar requirement against Letters of Credit issued by, assets of, deposits with or for the account of or credit extended by, CIBC or shall impose on CIBC or on the United States market for certificates of deposit, or on obligations hereunder in respect of Letters of Credit, and the result of any of the foregoing is to increase the cost to CIBC of issuing any Letter of Credit, or to reduce the amount of any sum received or receivable by CIBC under this Agreement with respect thereto, then, within fifteen (15) days after demand by CIBC, the Company shall pay to CIBC such additional amount or amounts, as determined by CIBC in good faith, as will compensate CIBC for such increased cost or reduction, solely to the extent that any such additional amounts were incurred by CIBC within ninety (90) days of such demand.

 

(c)           Capital Adequacy.  If CIBC shall have determined that, after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of CIBC (or any Person controlling CIBC) as a consequence of CIBC’s obligations hereunder to a level below that which CIBC (or any Person controlling CIBC) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy), then from time to time, within fifteen (15) days after demand by CIBC, the Company shall pay to CIBC such additional amount or amounts as will compensate CIBC (or any Person controlling CIBC) for such reduction, solely to the extent that any such additional amounts were incurred by the Lender within ninety (90) days of such demand.

 

(d)           Notices.  CIBC will promptly notify the Company of any event of which it has knowledge, occurring after the date hereof, that will entitle CIBC to compensation pursuant to this Section, and will use reasonable efforts to avoid the need for or to reduce the amount of such compensation as are not, in the judgment of CIBC, otherwise disadvantageous to CIBC.  A certificate of CIBC claiming compensation under this Section and setting forth in reasonable detail the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error.  In determining such amount, CIBC may use any reasonable averaging and attribution methods.

 

Section 4.7                      Taxes.

 

(a)           Payments Net of Certain Taxes.  Any and all payments by the Company to or for the account of CIBC hereunder shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges and withholdings and all liabilities with respect thereto, excluding: (i) taxes imposed on or measured by the net income (including branch profits or similar taxes) of, and gross receipts, franchise or similar taxes imposed on, CIBC by the jurisdiction (or subdivision thereof) under the laws of which CIBC is organized or in which its principal executive office is located or, in which its Applicable Lending Office is located, (ii) any United States withholding tax imposed on such payments, but only to the extent that CIBC is subject to United States withholding tax at the time CIBC first becomes a party to this Agreement or changes its Applicable Lending Office, (iii) any backup withholding tax imposed by the United States (or any state or locality thereof) on CIBC if it is a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code, and (iv) any taxes imposed by FATCA (all such nonexcluded taxes, duties, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”).  If the Company shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to CIBC, (i) the sum payable shall be increased as necessary so that after making all such required deductions (including deductions applicable to additional sums payable under this Section 4.7(a)) CIBC receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Company shall make such deductions, (iii) the Company shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) the Company shall furnish to CIBC the original or a certified copy of a receipt evidencing payment thereof.

 

(b)           Other Taxes.  In addition, the Company agrees to pay any and all present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies, which arise from any payment made pursuant to this Agreement or from the execution, delivery, registration or enforcement of, or otherwise with respect to, this Agreement (collectively, “Other Taxes”).

 

(c)           Indemnification.  The Company agrees to indemnify CIBC for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 4.7(c)), whether or not correctly or legally asserted, paid by CIBC and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto as certified in good faith to the Company by CIBC seeking indemnification pursuant to this Section 4.7(c).  This indemnification shall be paid within 15 days after CIBC makes demand therefor.

 

(d)           Refunds or Credits.  If CIBC determines in its sole discretion it has received a refund from a taxation authority for any Taxes or Other Taxes for which it has been indemnified by the Company or with respect to which the Company has paid additional amounts pursuant to this Section 4.7, it shall within fifteen (15) days from the date of such receipt pay over the amount of such refund to the Company (but only to the extent of indemnity payments made or additional amounts paid by the Company under this Section 4.7 with respect to the Taxes or Other Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses of CIBC and without interest (other than interest paid by the relevant taxation authority with respect to such refund); provided, however, that the Company agrees to repay, upon the request of CIBC, the amount paid over to the Company (plus penalties, interest or other charges) to CIBC in the event CIBC or Agent is required to repay such refund to such taxation authority.

 

(e)           Tax Forms and Certificates.  On the date hereof, and from time to time thereafter if reasonably requested by the Company or CIBC, and at any time it changes its Applicable Lending Office: (i) if CIBC is a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code, it shall deliver to the Company two (2) properly completed and duly executed copies of Internal Revenue Service Form W-9, or any successor form prescribed by the Internal Revenue Service, or such other documentation or information prescribed by applicable law or reasonably requested by the Company, certifying that CIBC is a United States person and is entitled to an exemption from United States backup withholding tax or information reporting requirements; and (ii) if CIBC is not a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code, it shall deliver to the Company: (A) two (2) properly completed and duly executed copies of Internal Revenue Service Form W-8 BEN, or any successor form prescribed by the Internal Revenue Service, certifying that CIBC is entitled to the benefits under an income tax treaty to which the United States is a party which exempts CIBC from United States withholding tax or reduces the rate of withholding tax on payments of interest for the account of CIBC; (B) two (2) properly completed and duly executed copies of Internal Revenue Service Form W-8 ECI, or any successor form prescribed by the Internal Revenue Service, certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States; or (C) two (2) properly completed and duly executed copies of Internal Revenue Service Form W-8 BEN, or any successor form prescribed by the Internal Revenue Service, together with a certificate to the effect that (x) CIBC is not (1) a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (2) a “10-percent shareholder” of the Company within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code, or (3) a “controlled foreign corporation” that is described in Section 881(c)(3)(C) of the Internal Revenue Code and is related to the Company within the meaning of Section 864(d)(4) of the Internal Revenue Code and (y) the interest payments in question are not effectively connected with a U.S. trade or business conducted by CIBC or are effectively connected but are not includible in CIBC’s gross income for United States federal income tax purposes under an income tax treaty to which the United States is a party; or (D) to the extent CIBC is not the beneficial owner, two (2) properly completed and duly executed copies of Internal Revenue Service Form W-8 IMY, or any successor form prescribed by the Internal Revenue Service, accompanied by an Internal Revenue Service Form W-8 ECI, W-8 BEN, W-9, and/or other certification documents from each beneficial owner, as applicable.  If a payment made to CIBC hereunder would be subject to U.S. Federal withholding tax imposed by FATCA if CIBC fails to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), CIBC shall deliver to the Company (A) a certification that CIBC has complied with such applicable reporting requirements, and (B) other documentation required to be provided to a withholding agent by FATCA or otherwise reasonably requested by the Company sufficient for the Company to comply with their obligations under FATCA and to determine that CIBC has complied with such applicable reporting requirements.  In addition, CIBC agrees that from time to time after the date hereof, when a lapse in time or change in circumstances renders the previous certification obsolete or inaccurate in any material respect, it will upon the written request of the Company, deliver to the Company two new accurate and complete signed originals of Internal Revenue Service Form W-9, W-8 BEN, W-8 ECI or W-8 IMY or FATCA-related documentation described above, or successor forms, as the case may be, and, to the extent legally entitled to do so, such other forms as may be required in order to confirm or establish the entitlement of CIBC to a continued exemption from or reduction in United States withholding tax with respect to payments under this Agreement, or it shall immediately notify the Company of its inability to deliver any such Form or certificate.

 

(f)           Exclusions. The Company shall not be required to indemnify CIBC, or to pay any additional amount to CIBC, pursuant to Section 4.7(a), (b) or (c) in respect of Taxes or Other Taxes to the extent that the obligation to indemnify or pay such additional amounts would not have arisen but for the failure of CIBC to comply with the provisions of subsection (e) above.

 

(g)           Mitigation. If the Company is required to pay additional amounts to or for the account of CIBC pursuant to this Section 4.7, then CIBC will use reasonable efforts (which shall include efforts to rebook the Credit Obligations held by CIBC to a new Applicable Lending Office, or through another branch or affiliate of CIBC) to change the jurisdiction of its Applicable Lending Office if, in the good faith judgment of CIBC, such efforts (i) will eliminate or, if it is not possible to eliminate, reduce to the greatest extent possible any such additional payment which may thereafter accrue and (ii) is not otherwise disadvantageous, in the sole determination of CIBC, to CIBC.  If CIBC is claiming any indemnity payment or additional amounts payable pursuant to this Section, it shall use reasonable efforts (consistent with legal and regulatory restrictions) to file any certificate or document reasonably requested in writing by the Company or to change the jurisdiction of its Applicable Lending Office if the making of such a filing or change would avoid the need for or reduce the amount of any such indemnity payment or additional amounts that may thereafter accrue and would not, in the sole determination of CIBC, be otherwise disadvantageous to CIBC.

 

(h)           Confidentiality. Nothing contained in this Section shall require CIBC to make available any of its tax returns (or any other information that it deems to be confidential or proprietary).

 

ARTICLE V 

 

CONDITIONS

 

Section 5.1                      Conditions to Closing.  The initial availability of the facility contemplated by this Agreement is subject to the satisfaction of the following conditions:

 

(a)           This Agreement.  On or prior to August 1, 2012, CIBC shall have received a counterpart hereof signed by the Company.

 

(b)           Officers’ Certificates.  CIBC shall have received a certificate signed on behalf of the Company by the Chairman of the Board, the President, any Vice President, the Treasurer or the Assistant Treasurer of the Company stating that (A) on the Closing Date and after giving effect to the Letters of Credit being made or issued on the Closing Date, no Default shall have occurred and be continuing and (B) the representations and warranties of the Company contained herein are true and correct on and as of the Closing Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they were true and correct as of such earlier date.

 

(c)           Proceedings. On the Closing Date, CIBC shall have received (i) a certificate of the Secretary of State of the State of Delaware, dated as of a recent date, as to the good standing of the Company and (ii) a certificate of the Secretary or an Assistant Secretary of the Company dated the Closing Date and certifying (A) that attached thereto is a true, correct and complete copy of (x) the Company’s certificate of formation certified by the Secretary of State of the State of Delaware and (y) the limited liability company agreement of the Company, (B) as to the absence of dissolution or liquidation proceedings by or against the Company, (C) that attached thereto is a true, correct and complete copy of resolutions adopted by the managers of the Company authorizing the execution, delivery and performance of this Agreement and each other document delivered in connection herewith or therewith and that such resolutions have not been amended and are in full force and effect on the date of such certificate and (D) as to the incumbency and specimen signatures of each officer of the Company executing this Agreement or any other document delivered in connection herewith or therewith.

 

(d)           Opinions of Counsel. On the Closing Date, CIBC shall have received from counsel to the Company, opinions addressed to CIBC, dated the Closing Date, as to such customary matters as CIBC shall reasonably require.

 

(e)           Consents. All necessary governmental (domestic or foreign), regulatory and third party approvals, if any, in connection with the transactions contemplated by this Agreement and shall have been obtained and remain in full force and effect, in each case without any action being taken by any competent authority which could restrain or prevent such transaction or impose, in the reasonable judgment of CIBC, materially adverse conditions upon the consummation of such transactions.

 

(f)           Payment of Fees.  All costs, fees and expenses due to CIBC on or before the Closing Date shall have been paid.

 

(g)           Counsel Fees.  CIBC shall have received full payment from the Company of the fees and expenses of Mayer Brown LLP which are billed through the Closing Date.

 

Section 5.2                      Conditions to Issuance.  The obligation of CIBC to issue (or renew or extend the term of) any Letter of Credit, is subject to the satisfaction of the following conditions:

 

(a)           receipt by CIBC of a Letter of Credit Request as required hereunder;

 

(b)           after giving effect to the proposed issuance of such Letter of Credit, the Aggregate Stated Amount will not exceed the Maximum Stated Amount;

 

(c)           the fact that, immediately before and after giving effect to such issuance, renewal or extension, no Default shall have occurred and be continuing; and

 

(d)           the fact that the representations and warranties of the Company contained in this Agreement shall be true and correct on and as of the date of such issuance, renewal or extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they were true and correct as of such earlier date and except for the representations in Section 6.4(c), Section 6.6, Section 6.15 and Section 6.16, which shall be deemed only to relate to the matters referred to therein on and as of the Closing Date.

 

Each issuance, renewal or extension of a Letter of Credit under this Agreement shall be deemed to be a representation and warranty by the Company on the date of such event as to the facts specified in clauses (b) and (c) of this Section.

 

ARTICLE VI 

 

REPRESENTATIONS AND WARRANTIES

 

The Company represents and warrants that:

 

Section 6.1                      Status.  The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has the limited liability company authority to make and perform this Agreement.

 

Section 6.2                      Authority; No Conflict.  The execution, delivery and performance by the Company of this Agreement and each other Letter of Credit Request have been duly authorized by all necessary limited liability company action and do not violate (i) any provision of law or regulation, or any decree, order, writ or judgment, (ii) any provision of its limited liability company agreement, or (iii) result in the breach of or constitute a default under any indenture or other agreement or instrument to which the Company is a party.

 

Section 6.3                      Legality; Etc.  This Agreement and each Letter of Credit Request constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms except to the extent limited by (a) bankruptcy, insolvency, fraudulent conveyance or reorganization laws or by other similar laws relating to or affecting the enforceability of creditors’ rights generally and by general equitable principles which may limit the right to obtain equitable remedies regardless of whether enforcement is considered in a proceeding of law or equity or (b) any applicable public policy on enforceability of provisions relating to contribution and indemnification.

 

Section 6.4                      Financial Condition.

 

(a)           Audited Financial Statements. The consolidated balance sheet of the Company and its Consolidated Subsidiaries as of December 31, 2011 and the related consolidated statements of income and cash flows for the fiscal year then ended, reported on by Ernst & Young, LLP, copies of which have been delivered to CIBC, fairly present, in conformity with GAAP, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year.

 

(b)           Interim Financial Statements. The unaudited consolidated balance sheet of the Company and its Consolidated Subsidiaries as of March 31, 2012 and the related unaudited consolidated statements of income and cash flows for the three months then ended fairly present, in conformity with GAAP applied on a basis consistent with the financial statements referred to in subsection (a) of this Section, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such three-month period (subject to normal year-end audit adjustments).

 

(c)           Material Adverse Change. Since December 31, 2011, there has been no change in the business, assets, financial condition or operations of the Company and its Consolidated Subsidiaries, considered as a whole, that would materially and adversely affect the Company’s ability to perform any of its obligations under this Agreement.

 

Section 6.5                      Rights to Properties.  The Company and its Restricted Subsidiaries have good and valid fee, leasehold, easement or other right, title or interest in or to all the properties necessary to the conduct of their business as conducted on the Closing Date and as then proposed to be conducted, except to the extent the failure to have such rights or interests would not have a Material Adverse Effect.

 

Section 6.6                      Litigation.  Except as disclosed in or contemplated by the Company’s Form 10-K Report to the SEC for the year ended December 31, 2011 or in any subsequent Form 10-K, 10-Q or 8-K Report, no litigation, arbitration or administrative proceeding against the Company is pending or, to the Company’s knowledge, threatened, which would reasonably be expected to materially and adversely affect the ability of the Company to perform any of its obligations under this Agreement.  There is no litigation, arbitration or administrative proceeding pending or, to the knowledge of the Company, threatened which questions the validity of this Agreement.

 

Section 6.7                      No Violation.  No part of the proceeds of the borrowings by hereunder will be used, directly or indirectly by the Company for the purpose of purchasing or carrying any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, or for any other purpose which violates, or which conflicts with, the provisions of Regulations U or X of said Board of Governors.  The Company is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any such “margin stock”.

 

Section 6.8                      ERISA.  Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Material Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Material Plan. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Material Plan, (ii) failed to make any contribution or payment to any Material Plan, or made any amendment to any Material Plan, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any material liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA.

 

Section 6.9                      Governmental Approvals.  No authorization, consent or approval from any Governmental Authority is required for the execution, delivery and performance by the Company of this Agreement, except such authorizations, consents and approvals as shall have been obtained prior to the Closing Date and shall be in full force and effect.

 

Section 6.10                      Investment Company Act.  The Company is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

Section 6.11                      Restricted Subsidiaries, Etc.  Set forth in Schedule 6.11 hereto is a complete and correct list as of the Closing Date of the Restricted Subsidiaries of the Company, together with, for each such Subsidiary, the jurisdiction of organization of such Subsidiary. Except as disclosed in Schedule 6.11 hereto, as of the Closing Date, each such Subsidiary (i) was a Wholly Owned Subsidiary of the Company and (ii) was duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and had all corporate or other organizational powers to carry on its businesses as then conducted.

 

Section 6.12                      Tax Returns and Payments.  The Company and each of its Restricted Subsidiaries has filed or caused to be filed all federal, state, local and foreign income tax returns required to have been filed by it and has paid or caused to be paid all income taxes shown to be due on such returns except income taxes that are being contested in good faith by appropriate proceedings and for which the Company or its Restricted Subsidiaries, as the case may be, shall have set aside on its books appropriate reserves with respect thereto in accordance with GAAP or that would not reasonably be expected to have a Material Adverse Effect.

 

Section 6.13                      Compliance with Laws.  To the knowledge of the Company or any of its Restricted Subsidiaries, the Company and each of its Restricted Subsidiaries is in compliance with all applicable laws, regulations and orders of any Governmental Authority, domestic or foreign, in respect of the conduct of its business and the ownership of its property (including, without limitation, compliance with all applicable ERISA and Environmental Laws and the requirements of any permits issued under such Environmental Laws), except to the extent (a) such compliance is being contested in good faith by appropriate proceedings or (b) non-compliance would not reasonably be expected to materially and adversely affect its ability to perform any of its obligations under this Agreement.

 

Section 6.14                      No Default.  No Default has occurred and is continuing.

 

Section 6.15                      Environmental Matters.

 

(a)           Except (i) as disclosed in or contemplated by the Company’s Form 10-K Report to the SEC for the year ended December 31, 2011 or in any subsequent Form 10-K, 10-Q or 8-K Report, or (ii) to the extent that the liabilities of the Company and its Subsidiaries, taken as a whole, that relate to or could reasonably be expected to result from the matters referred to in clauses (i) through (iii) of this Section 6.15(a), inclusive, would not reasonably be expected to result in a Material Adverse Effect:

 

	
  

	
(i)

	
no notice, notification, citation, summons, complaint or order has been received by the Company or any of its Subsidiaries, no penalty has been assessed nor is any investigation or review pending or, to the Company’s or any of its Subsidiaries’ knowledge, threatened by any governmental or other entity with respect to any (A) alleged violation by or liability of the Company or any of its Subsidiaries of or under any Environmental Law, (B) alleged failure by the Company or any of its Subsidiaries to have any environmental permit, certificate, license, approval, registration or authorization required in connection with the conduct of its business or (C) generation, storage, treatment, disposal, transportation or release of Hazardous Substances;

 

	
  

	
(ii)

	
to the Company’s or any of its Subsidiaries’ knowledge, no Hazardous Substance has been released (and no written notification of such release has been filed) (whether or not in a reportable or threshold planning quantity) at, on or under any property now or previously owned, leased or operated by the Company or any of its Subsidiaries; and

 

	
  

	
(iii)

	
no property now or previously owned, leased or operated by the Company or any of its Subsidiaries or, to the Company’s or any of its Subsidiaries’ knowledge, any property to which the Company or any of its Subsidiaries has, directly or indirectly, transported or arranged for the transportation of any Hazardous Substances, is listed or, to the Company’s or any of its Subsidiaries’ knowledge, proposed for listing, on the National Priorities List promulgated pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), on CERCLIS (as defined in CERCLA) or on any similar federal, state or foreign list of sites requiring investigation or clean-up.

 

(b)           Except as disclosed in or contemplated by the Company’s Form 10-K Report to the SEC for the year ended December 31, 2011 or in any subsequent Form 10-K, 10-Q or 8-K Report, to the Company’s or any of its Subsidiaries’ knowledge, there are no Environmental Liabilities that have resulted or could reasonably be expected to result in a Material Adverse Effect.

 

(c)           For purposes of this Section 6.15, the terms “the Company” and “Subsidiary” shall include any business or business entity (including a corporation) which is a predecessor, in whole or in part, of the Company or any of its Subsidiaries from the time such business or business entity became a Subsidiary of PPL Corporation, a Pennsylvania corporation.

 

Section 6.16                      Guarantees.  As of the Closing Date, except as set forth in Schedule 6.16 hereto, the Company has no Guarantees of any Debt of any Foreign Subsidiary of the Company other than such Debt not in excess of $25,000,000 in the aggregate.

 

Section 6.17                      OFAC.  None of the Company, any Subsidiary of the Company or any Affiliate of the Company: (i) is a Sanctioned Person, (ii) has more than 10% of its assets in Sanctioned Entities, or (iii) derives more than 10% of its operating income from investments in, or transactions with Sanctioned Persons or Sanctioned Entities.

 

ARTICLE VII 

 

COVENANTS

 

The Company agrees with CIBC that, until all Letters of Credit issued under this Agreement shall have terminated, and all Credit Obligations shall have been indefeasibly paid in full, the Company will perform or cause to be performed each covenant of the “Borrower” contained in Article VI of the Existing Credit Agreement, with each definition and related term, as in effect on the Closing Date (and thereafter as in effect) being incorporated in this Agreement by this reference as though specifically set forth herein, subject in all cases to the terms of Section 2.3; provided that if CIBC shall cease to be a Lender under the Existing Credit Agreement, the Company agrees to amend this Agreement by inserting substantially all of the affirmative and negative covenants of the Company under the Existing Credit Agreement into this Agreement directly.

 

ARTICLE VIII 

 

DEFAULTS

 

Section 8.1                      Events of Default.  If one or more of the following events (each an “Event of Default”) shall have occurred and be continuing:

 

(a)           the Company shall fail to pay when due any principal on any Credit Obligations; or

 

(b)           the Company shall fail to pay when due any interest on the Credit Obligations, any fee or any other amount payable hereunder for five (5) days following the date such payment becomes due hereunder; or

 

(c)           the Company shall fail to observe or perform any covenant or agreement (A) contained in clause (ii) of Section 6.05, or Sections 6.06, 6.08, 6.09, 6.11 or 6.12 of the Existing Agreement (as incorporated into this Agreement pursuant to Article VII), or (B) contained in Section 6.01(d)(i) of the Existing Agreement  (as incorporated into this Agreement pursuant to Article VII) for 30 days after any such failure, or (C) contained in Section 6.01(d)(ii) of the Existing Agreement (as incorporated into this Agreement pursuant to Article VII) for ten (10) days after any such failure; or

 

(d)           the Company shall fail to observe or perform any covenant or agreement contained in this Agreement, including covenants and agreements incorporated herein pursuant to Article VII (other than those covered by clauses (a), (b) or (c) above) for thirty (30) days after written notice thereof has been given to the Company by CIBC; or

 

(e)           any representation, warranty or certification made by the Company in this Agreement or in any certificate, financial statement or other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made or deemed made; or

 

(f)           the Company or any Restricted Subsidiary shall (i) fail to pay any principal or interest, regardless of amount, due in respect of any Material Debt beyond any grace period provided with respect thereto, or (ii) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Material Debt beyond any grace period provided with respect thereto if the effect of any failure referred to in this clause (ii) is to cause, or to permit the holder or holders of such Debt or a trustee on its or their behalf to cause, such Debt to become due prior to its stated maturity; or

 

(g)           the Company or any Restricted Subsidiary of the Company shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay, or shall admit in writing its inability to pay, its debts as they become due, or shall take any corporate action to authorize any of the foregoing; or

 

(h)           an involuntary case or other proceeding shall be commenced against the Company or any Restricted Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Company or any Restricted Subsidiary under the Bankruptcy Code; or

 

(i)           any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $50,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could reasonably be expected to cause one or more members of the ERISA Group to incur a current payment obligation in excess of $50,000,000; or

 

(j)           the Company or any of its Restricted Subsidiaries shall fail within sixty (60) days to pay, bond or otherwise discharge any judgment or order for the payment of money in excess of $20,000,000, entered against the Company or any such Restricted Subsidiary that is not stayed on appeal or otherwise being appropriately contested in good faith; or

 

(k)           a Change of Control shall have occurred;

 

then, and in every such event, while such event is continuing, CIBC may (A) by notice to the Company declare the Availability Termination Date to have occurred, and (B) by notice to the Company declare the Credit Obligations (together with accrued interest and accrued and unpaid fees thereon and all other amounts due hereunder) to be, and the Credit Obligations shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kin), all of which are hereby waived by the Company and require the Company to, and the Company shall, Cash Collateralize (in an amount not less than 100% thereof) all Credit Obligations then outstanding; provided, that, in the case of any Default or any Event of Default specified in clause 8.1(g) or 8.1(h) above with respect to the Company, without any notice to the Company or any other act by CIBC, the Availability Termination Date shall thereupon occur and the Credit Obligations (together with accrued interest and accrued and unpaid fees thereon and all other amounts due hereunder) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company, and the Company shall Cash Collateralize (in an amount not less than 100% thereof) all Credit Obligations then outstanding.

 

ARTICLE IX 

 

MISCELLANEOUS

 

Section 9.1                      Notices.  Except as otherwise expressly provided herein, all notices and other communications hereunder shall be in writing (for purposes hereof, the term “writing” shall include information in electronic format such as electronic mail and internet web pages) or by telephone subsequently confirmed in writing; provided that the foregoing shall not apply to notices to CIBC pursuant to Article III if CIBC has notified the Company that it is incapable of receiving notices under such Article in electronic format.  Any notice shall have been duly given and shall be effective if delivered by hand delivery or sent via electronic mail, telecopy, recognized overnight courier service or certified or registered mail, return receipt requested, or posting on an internet web page, and shall be presumed to be received by a party hereto (i) on the date of delivery if delivered by hand or sent by electronic mail, posting on an internet web page, or telecopy, (ii) on the Business Day following the day on which the same has been delivered prepaid (or on an invoice basis) to a reputable national overnight air courier service or (iii) on the third Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, in each case to the respective parties at the address or telecopy numbers set forth below, and, in the case of the Lenders, set forth on signature pages hereto, or at such other address as such party may specify by written notice to the other parties hereto:

 

if to the Company:

 

PPL Energy Supply, LLC

Two North Ninth Street (GENTW14)

Allentown, Pennsylvania 18101-1179

Attention: Russell R. Clelland

Telephone: 610-774-5151

Facsimile: 610-774-5235

 

with a copy to:

 

PPL Energy Supply, LLC

Two North Ninth Street (GENTW4)

Allentown, Pennsylvania 18101-1179

Attention: Frederick C. Paine, Esq.

Telephone: 610-774-7445

Facsimile: 610-774-6726

 

if to CIBC:

 

For Letter of Credit Requests:

 

Canadian Imperial Bank of Commerce, New York Agency

425 Lexington Avenue, 5th Avenue

New York, New York,  10017Attn: Blair Kissack/Fred Page/Ryan Moonilal

Telephone: (416) 780-5543 and (416) 542-4344

Facsimile: (905) 948-1934

 

For all other notices:

 

Canadian Imperial Bank of Commerce, New York Agency

425 Lexington Avenue

New York, New York,  10017

Attn: General Counsel

Telephone: (212) 667-8316

Facsimile: (212) 667-8366

 

Section 9.2                      No Waivers; Non-Exclusive Remedies.  No failure by CIBC to exercise, no course of dealing with respect to, and no delay in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies provided herein shall be cumulative and not exclusive of any rights or remedies provided by law.

 

Section 9.3                      Expenses; Indemnification.

 

(a)           Expenses.  The Company shall pay (i) all out-of-pocket expenses of CIBC, including legal fees and disbursements of Mayer Brown LLP and any other local counsel retained by CIBC, in its reasonable discretion, in connection with the preparation, execution, delivery and administration of this Agreement, any waiver or consent thereunder or any amendment thereof or any Default or alleged Default thereunder and (ii) all reasonable out-of-pocket expenses incurred by CIBC, including (without duplication) the fees and disbursements of outside counsel, in connection with any restructuring, workout, collection, bankruptcy, insolvency and other enforcement proceedings in connection with the enforcement and protection of its rights; provided, that the Company shall not be liable for any legal fees or disbursements of any counsel for CIBC other than Mayer Brown LLP associated with the preparation, execution and delivery of this Agreement and the closing documents contemplated hereby.

 

(b)           Indemnity in Respect of Agreement. The Company agrees to indemnify CIBC, its Affiliates and the respective directors, officers, trustees, agents, employees, trustees and advisors of the foregoing (each an “Indemnitee”) and hold each Indemnitee harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs and expenses or disbursements of any kind whatsoever (including, without limitation, the reasonable fees and disbursements of counsel and any civil penalties or fines assessed by OFAC), which may at any time (including, without limitation, at any time following the payment of the obligations of the Company hereunder) be imposed on, incurred by or asserted against such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened (by any third party, by the Company or any Subsidiary of the Company) in any way relating to or arising out of this Agreement or any documents contemplated hereby or referred to herein or any actual or proposed use of proceeds of Loans hereunder; provided, that no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee’s own gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final, non-appealable judgment or order.

 

(c)           Indemnity in Respect of Environmental Liabilities. The Company agrees to indemnify each Indemnitee and hold each Indemnitee harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs and expenses or disbursements of any kind whatsoever (including, without limitation, reasonable expenses of investigation by engineers, environmental consultants and similar technical personnel and reasonable fees and disbursements of counsel) which may at any time (including, without limitation, at any time following the payment of the obligations of the Company hereunder) be imposed on, incurred by or asserted against such Indemnitee in respect of or in connection with any actual or alleged presence or release of Hazardous Substances on or from any property now or previously owned or operated by the Company or any of its Subsidiaries or any predecessor of the Company or any of its Subsidiaries, or any and all Environmental Liabilities. Without limiting the generality of the foregoing, the Company hereby waives all rights of contribution or any other rights of recovery with respect to liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs and expenses and disbursements in respect of or in connection with Environmental Liabilities that it might have by statute or otherwise against any Indemnitee.

 

(d)           Waiver of Damages. To the fullest extent permitted by applicable law, the Company shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Letter of Credit or the use of the proceeds thereof.  No Indemnitee referred to in clause (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the transactions contemplated hereby.

 

Section 9.4                      Amendments and Waivers.  Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Company and CIBC.

 

Section 9.5                      Successors and Assigns.

 

(a)           Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Company may not assign or otherwise transfer any of its rights under this Agreement without the prior written consent of CIBC, except to the extent any such assignment results from the consummation of a merger or consolidation permitted pursuant to this Agreement.

 

(b)           Assignments to Federal Reserve Banks. CIBC may at any time assign all or any portion of its rights under this Agreement to a Federal Reserve Bank.  No such assignment shall release CIBC from its obligations hereunder.

 

Section 9.6                      Governing Law; Submission to Jurisdiction.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.  The Company hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby.  The Company irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such court and any claim that any such proceeding brought in any such court has been brought in an inconvenient forum.

 

Section 9.7                      Counterparts; Integration; Effectiveness.  This Agreement shall become effective on the Closing Date.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  On and after the Closing Date, this Agreement and all the documents referred to herein shall constitute the entire agreement and understanding among the parties hereto and supersede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof and thereof.

 

Section 9.8                      Generally Accepted Accounting Principles.  Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Company’s independent public accountants) with the audited consolidated financial statements of the Company and its Consolidated Subsidiaries most recently delivered to the Lenders; provided, that, if the Company notifies CIBC that the Company wishes to amend any covenant herein to eliminate the effect of any change in GAAP on the operation of such covenant (or if CIBC notifies the Company that its wishes to amend this Agreenent for such purpose), then the Company’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and CIBC.

 

Section 9.9                      WAIVER OF JURY TRIAL.  THE COMPANY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 9.10                      Confidentiality.  CIBC agrees to hold all non-public information obtained pursuant to the requirements of this Agreement in accordance with its customary procedure for handling confidential information of this nature and in accordance with safe and sound banking practices; provided, that nothing herein shall prevent CIBC from disclosing such information (i) to any Person if reasonably incidental to the administration of the Credit Obligations, (ii) upon the order of any court or administrative agency, (iii) to the extent requested by, or required to be disclosed to, any rating agency or regulatory agency or similar authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (iv) which had been publicly disclosed other than as a result of a disclosure by CIBC prohibited by this Agreement, (v) in connection with any litigation to which CIBC or any of its Subsidiaries or Affiliates may be party, (vi) to the extent necessary in connection with the exercise of any remedy hereunder, (vii) to CIBC’s Affiliates and their respective directors, officers, employees and agents including legal counsel and independent auditors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such information and instructed to keep such information confidential), (viii) with the consent of the Company, (ix) to Gold Sheets and other similar bank trade publications, such information to consist solely of deal terms and other information customarily found in such publications and (x) subject to provisions substantially similar to those contained in this Section, to any securitization, swap or derivative transaction relating to the Credit Obligations hereunder.  Notwithstanding the foregoing, CIBC or Mayer Brown LLP may circulate promotional materials and place advertisements in financial and other newspapers and periodicals or on a home page or similar place for dissemination of information on the Internet or worldwide web, in each case, after the closing of the transactions contemplated by this Agreement in the form of a “tombstone” or other release limited to describing the names of the Company or its Affiliates, or any of them, and the amount, type and closing date of such transactions, all at their sole expense

 

Section 9.11                      USA PATRIOT Act Notice.  CIBC hereby notifies the Company that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub.L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow CIBC to identify the Company in accordance with the Patriot Act.

 

Section 9.12                      No Fiduciary Duty.  CIBC and its Affiliates (collectively, solely for purposes of this paragraph, the “CIBC Parties”), may have economic interests that conflict with those of the Company, its Affiliates and/or their respective stockholders (collectively, solely for purposes of this paragraph, the “Company Parties”).  The Company agrees that nothing in this Agreement or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty (other than any implied duty of good faith) between any CIBC Party, on the one hand, and any Company Party, on the other.  The CIBC Parties acknowledge and agree that (a) the transactions contemplated by this Agreement (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the CIBC Parties, on the one hand, and the Company, on the other and (b) in connection therewith and with the process leading thereto, (i) no CIBC Party has assumed an advisory or fiduciary responsibility in favor of any Company Party with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any CIBC Party has advised, is currently advising or will advise any Company Party on other matters) or any other obligation to any Company Party except the obligations expressly set forth in this Agreement and (ii) each CIBC Party is acting solely as principal and not as the agent or fiduciary of any Company Party. The Company acknowledges and agrees that the Company has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto.  The Company agrees that it will not claim that any CIBC Party has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to any Company Party, in connection with such transaction or the process leading thereto.

 

 

 

  

 

EXECUTED as of the day first written above. 

 

	  	  	
PPL ENERGY SUPPLY, LLC

	  	  	  
	  	  	  
	  	  	  
	  	  	
By:____________________________________

	  	  	
Name:

	  	  	
Title:

	  	  	
CANADIAN IMPERIAL BANK OF

	  	  	
COMMERCE, NEW YORK AGENCY

	  	  	  
	  	  	  
	  	  	
By:____________________________________

	  	  	
Name:

	  	  	
Title:

 

 

 

Schedule 6.111

	
Restricted Subsidiaries

	 	 
	
Restricted Subsidiary

	
Jurisdiction of Organization

	 	 
	
PPL Generation, LLC

	
Delaware

	
PPL Montana Holdings, LLC

	
Delaware

	
PPL Montana, LLC

	
Delaware

	
PPL Martins Creek, LLC

	
Delaware

	
PPL Brunner Island, LLC

	
Delaware

	
PPL Montour, LLC

	
Delaware

	
PPL Susquehanna, LLC

	
Delaware

	
PPL Holtwood, LLC

	
Delaware

	
PPL EnergyPlus, LLC

	
Pennsylvania

	
PPL Investment Corporation

	
Delaware

 

 

 

 

_____________________________

1 As of July 27, 2012Exhibit 10.2

X.L. AMERICA, INC.

DEFERRED COMPENSATION PLAN

 (effective January 1, 2012)

          X.L.
America, Inc. (the “Company”) adopted the X.L. America, Inc. Non-Qualified
Deferred Compensation Plan (the “Prior Plan”), effective as of December 1, 1998.
It was restated and renamed the X.L. America, Inc. Non-Qualified Benefit
Replacement Plan, effective January 1, 2004. Effective January 1, 2004, the
X.L. America, Inc. Key Employee Deferred Compensation Plan was merged into this
Plan and the Plan was again restated and renamed the X.L. America, Inc.
Deferred Compensation Plan. 

          The Plan
was amended and restated effective January 1, 2009, to comply with Code Section
409A, as enacted by the American Jobs Creation Act of 2004 and applicable
regulations thereunder; provided, however, that any provision required to be
effective on and after January 1, 2005 in order for the Plan to comply with
Code Section 409A shall become effective as of January 1, 2005 (or such later
date as shall be permitted under applicable Code Section 409A transition
rules). The Plan is amended and restated January 1, 2012. 

          The Plan is
unfunded and maintained primarily for the purpose of providing deferred
compensation to a select group of management or highly compensated employees,
and is not intended to be qualified under Section 401(a) of the Internal
Revenue Code. 

ARTICLE I

DEFINITIONS

          Each word
used herein not defined below that begins with a capital letter and is defined
in the Qualified Plan shall have the same definition as the definition given to
that word in the Qualified Plan. Wherever used herein, the following terms
shall have the meanings hereinafter set forth: 

          1.1          “Account” or “Deferred Compensation Account” means
the separate account established under the Plan for each Participant, as
described in Section 5.1. 

          1.2          “Administrator” means the Committee or
such person or persons as may be appointed by the Committee to be responsible
for those functions assigned to the Administrator under the Plan. 

          1.3          “Affiliate” means any entity that is a
member of a “controlled group” of corporations with the Company under Code
Section 414(b) or a trade or business under common control with the Company under
Code Section 414(c); provided, however, that solely for purposes of determining
whether a Termination of Employment has occurred, in applying Code Sections
1563(a)(1), (2) and (3) for purposes of Code Section 414(b), the language “at
least 50 percent” will be used instead of “at least 80 percent” each place it
appears, and in applying 

Treasury Regulation Section 1.414(c)-2 for purposes of Code Section
414(c), the language “at least 50 percent” will be used instead of “at least 80
percent” each place it appears. In addition, to the extent that the
Administrator determines that legitimate business criteria exist to use a
reduced ownership percentage to determine whether an entity is an Affiliate for
purposes of determining whether a Termination of Employment has occurred, the
Administrator may designate an entity that would meet the definition of
“Affiliate” substituting 20 percent in place of 50 percent in the preceding
sentence as an Affiliate in Appendix A hereto. Such designation shall be made
by December 31, 2007 or, if later, at the time a 20 percent or more ownership
interest in such entity is acquired. 

          1.4          “Annual Bonus” means any cash
compensation to which a Participant becomes entitled under a written plan or
arrangement of a Participating Employer providing for the calculation and
payment of incentive compensation with respect to a Plan Year after the close
of such Plan Year, determined prior to reduction for elective deferrals to this
Plan or to any qualified retirement plan, and for premium conversion and
flexible spending amounts under a cafeteria plan described in Code Section 125.

          1.5          “Base Salary” means the salary to which
a Participant becomes entitled from a Participating Employer during or with respect
to a Plan Year, including commissions, but not including Annual Bonus or other
incentive Compensation, determined prior to reduction for elective deferrals to
this Plan or to any qualified retirement plan, and for premium conversion and
flexible spending amounts under a cafeteria plan described in Code Section 125;
provided, however, that Annual Salary shall not include expense reimbursements,
severance, or the value of any benefits paid to or on behalf of the Executive
under any fringe benefit, pension or insurance plan or program. Only Annual
Salary which becomes payable while the Executive is a Participant shall be
taken into account for purposes of the Plan. 

          1.6          “Beneficiary” means the person, persons
or trust designated by a Participant as direct or contingent beneficiary in the
manner prescribed by the Administrator. The Beneficiary of a Participant who
has not effectively designated a beneficiary shall be the Participant’s estate.

          1.7          “Board of Directors” means the Board of
Directors of the Company. 

          1.8          “Change in Control” shall mean and shall
be deemed to have occurred as of the date of the first to occur of the
following events: 

	
  

 	
  

 	
  

 
	
  

 	
                 (a)          any
 Person or Group acquires stock of the Company that, together with stock held
 by such Person or Group, constitutes more than 50% of the total Fair Market
 Value or total voting power of the stock of the Company. However, if any
 Person or Group is considered to own more than 50% of the total Fair Market
 Value or total voting power of the stock of the Company, the acquisition of
 additional stock by the same Person or Group is not considered to cause a
 Change in Control of the Company. An increase in the percentage of stock
 owned by any Person or Group as a result of a transaction in which the
 Company acquires its stock in exchange for property will be treated as an
 acquisition of stock for purposes of this subsection. This subsection applies
 

 

- 2 -

	
  

 	
  

 
	
  

 	
 only when there is a transfer of stock of the Company (or issuance of
 stock of the Company) and stock in the Company remains outstanding after the
 transaction;

 
	
  

 	
  

 
	
  

 	
                 (b)          any
 Person or Group acquires (or has acquired during the 12-month period ending
 on the date of the most recent acquisition by such Person or Group) ownership
 of stock of the Company possessing 30% or more of the total voting power of
 the stock of the Company; 

 
	
  

 	
  

 
	
  

 	
                 (c)          a
 majority of members of the Company’s Board is replaced during any 12-month
 period by Directors whose appointment or election is not endorsed by a
 majority of the members of the Company’s Board prior to the date of the
 appointment or election; or 

 
	
  

 	
  

 
	
  

 	
                 (d)          any
 Person or Group acquires (or has acquired during the 12-month period ending
 on the date of the most recent acquisition by such Person or Group) assets
 from the Company that have a total gross fair market value equal to or more
 than 40% of the total gross fair market value of all of the assets of the
 Company immediately prior to such acquisition or acquisitions. For this
 purpose, gross fair market value means the value of the assets of the
 Company, or the value of the assets being disposed of, determined without
 regard to any liabilities associated with such assets. However, no Change in
 Control shall be deemed to occur under this subsection (d) as a result of a
 transfer to: 

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (i)           A
 shareholder of the Company (immediately before the asset transfer) in
 exchange for or with respect to its stock; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (ii)          An
 entity, 50% or more of the total value or voting power of which is owned,
 directly or indirectly, by the Company; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (iii)         A
 Person or Group that owns, directly or indirectly, 50% or more of the total
 value or voting power of all the outstanding stock of the Company; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
                     (iv)         An
 entity, at least 50% of the total value or voting power of which is owned,
 directly or indirectly, by a person described in clause (iii) above. 

 

          For these
purposes, the term “Person” shall mean an individual, corporation, association,
joint-stock company, business trust or other similar organization, partnership,
limited liability company, joint venture, trust, unincorporated organization or
government or agency, instrumentality or political subdivision thereof. The
term “Group” shall have the meaning set forth in Rule 13d-5 of the
Securities Exchange Commission (“SEC”), modified to the extent necessary to
comply with Treasury Regulation Section 1.409A-3(i)(5), or any successor
thereto in effect at the time a determination of whether a Change in Control
has occurred is being made. If any one Person, or Persons acting as a Group, is
considered to effectively control the Company as described in subsections (b)
or (c) above, the acquisition of additional control by the same Person or
Persons is not considered to cause a Change in Control.  

- 3 -

          1.9           “Committee” means the Pension Committee,
which is authorized to administer the Plan and to perform the functions
described in Article VII. 

          1.10          “Company” means X.L. America, Inc. 

          1.11          “Compensation” means Base Salary and/or
Annual Bonus, as applicable, determined prior to reduction for elective contributions
to this Plan, the Qualified Plan or any other employee benefit plan of the
Participating Employer. 

          1.12          “Deferral Period” means the period
described in Section 3.3 of the Plan. 

          1.13          “Disability” means that the Participant
(a) is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months; (b) is, by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan covering employees of the Company; or (c) has been determined
to be totally disabled by the Social Security Administration. 

          1.14          “Elective Deferral” means the amount of
Compensation a Participant elects to defer pursuant to Article III of the Plan.

          1.15          “Eligible Executive” or “Executive” means a member of a select
group of management or highly compensated employees of the Participating
Employers, who has been selected to be a Participant in the Plan by the
Committee. 

          1.16          “Excess Compensation” means the
Participant’s Compensation payable during a Plan Year which exceeds the
limitation on compensation applicable to qualified plans under Code Section
401(a)(17), as such limitation may be adjusted from time to time. 

          1.17          “Hardship” means an unforeseeable
emergency that is caused by an event beyond the control of the Participant that
would result in severe financial hardship to the Participant resulting from (a)
a sudden and unexpected illness or accident of the Participant or the spouse or
a dependent of the Participant (as defined in Code Section 152(a)), (b) a loss
of the Participant’s property due to casualty (including the need to rebuild a
home following damage to a home not otherwise covered by insurance, for
example, not as a result of a natural disaster), or (c) such other
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant, all as determined in the sole discretion
of the Administrator. In addition, the need to pay for medical expenses,
including non-refundable deductibles, as well as for the costs of prescription
drug medication, or the need to pay for the funeral expenses of a spouse or a
dependent may also constitute a Hardship event. The Administrator shall
determine whether the circumstances presented by the Participant constitute an
unanticipated emergency. Such circumstances and the Administrator’s determination
will depend on the facts of each case, but, in any case, payment may not be
made to the extent that such hardship is or may be relieved as described in
Sections 6.1.1 through 6.1.4 below. 

- 4 -

          1.18          “Key Employee” means a “key employee” as
defined for purposes of Code Section 416(i), without regard to paragraph (5)
thereof, of the Company or any Affiliate, subject to the following
modifications. An employee is a Key Employee if, as of the date of
determination, he or she is (a) one of the 50 (or, if less, the greater of
three or 10% of all employees) highest-paid officers of the Company or any
Affiliate having annual compensation greater than $135,000 (as adjusted under
Code Section 415(d)); (b) a 5% owner of the Company or any Affiliate; or (c) a
1% owner of the Company or any Affiliate having annual compensation of more
than $150,000. If an individual is a Key Employee at any time during the twelve
month period ending on December 31 of a Plan Year, he or she shall be treated
as a Key Employee for the 12-month period beginning on April 1 of the Plan Year
following such December 31. For purposes of this Section 1.18, the term
“compensation” will be defined in accordance with Treasury Regulation Section
1.415(c)-2(d)(2); provided, however, that compensation paid to or on behalf of
an individual who is not a Participant and who is a non-resident alien of the
U.S. will not be taken into account hereunder to the extent that the
compensation is not includable in gross income under the Code and is not
effectively connected to the conduct of a trade or business within the U.S.
Whether an individual is a Key Employee will be determined in accordance with
the requirements of Code Section 409A. 

          1.19          “Matching Contribution” means the
amounts credited to a Participant’s Account under Article IV of the Plan with
respect to Elective Deferrals. 

          1.20          “Participant” means an Executive or
former Executive who elects to participate in the Plan in accordance with the
terms and conditions of the Plan or who has an Account in the Plan that has not
been fully distributed. 

          1.21          “Participating Employer” means the
Company, Global Credit Analytics, Inc., XL Insurance Company of New York, Inc.,
XL Specialty Insurance Company, XL Reinsurance America, Inc., XL Global
Services, Inc., XL Insurance America, Inc. and each other Affiliate that, with
the approval of the Administrator, has joined the Plan by executing a
declaration of joinder. 

          1.22          “Plan” means X.L. America, Inc. Deferred
Compensation Plan, as set forth herein or as it may be amended or restated from
time to time. 

          1.23          “Plan Year” means the calendar year. 

          1.24          “Qualified Plan” means the X.L. America,
Inc. Employee Savings Plan, as from time to time amended. 

          1.25          “Scheduled Distribution” means a
distribution from a Participant’s Scheduled Distribution Sub-Account in
accordance with Section 6.3. 

          1.26          “Scheduled Distribution Sub-Accounts” or
“Sub-Accounts” means the
separate bookkeeping accounts established by the Administrator under Section
5.1 to record the portion(s) of a Participant’s Account subject to separate
Scheduled Distribution elections. 

- 5 -

         1.27          “Termination of Employment” means, with
respect to an Executive, the severing of employment with the Company and any
Affiliates, voluntarily or involuntarily, for any reason. A Termination of
Employment will be deemed to have occurred if the facts and circumstances
indicate that the Company and the Participant reasonably anticipate that no
further services will be performed after a certain date or that the level of bona fide services the Participant will
perform for the Company and its Affiliates after such date (whether as an
employee or as an independent contractor) will permanently decrease to no more
than 20% of the average level of bona fide
services performed (whether as an employee or an independent contractor) over
the immediately preceding 36-month period (or the full period of services to
the employer if the Participant has been providing services to the Company and
its Affiliates less than 36 months). A Participant will not be deemed to have
incurred a Termination of Employment while he or she is on military leave, sick
leave, or other bona fide leave
of absence (such as temporary employment by the government) if the period of
such leave does not exceed six months or such longer period as the
Participant’s right to reemployment with the Company is provided either by
statute or by contract. For this purpose, a leave of absence is bona fide only if there is a reasonable
expectation that the Participant will return to employment at the conclusion of
the leave. If the period of leave exceeds six months and the Participant’s
right to reemployment is not provided either by statute or by contract, the
Termination of Employment will be deemed to occur on the first date immediately
following such six-month period. Whether an individual has incurred a
Termination of Employment shall be determined in accordance with the provisions
of Section 409A. 

         1.28          “Valuation Date” means the close of
business of each business day, or such other valuation date or dates established
by the Administrator. 

ARTICLE II

PARTICIPATION

          2.1           Eligibility. Each Executive may
become a Participant upon the effective date of his or her designation as an
Executive eligible for participation in the Plan by the Committee. 

          2.2           Participation in the Plan. An
Eligible Executive may elect to participate in the Plan for any Plan Year by
delivering to the Administrator a properly executed election at the time and in
the form provided by the Administrator, pursuant to which the Eligible
Executive elects to defer receipt of a specified portion of the Compensation
that would otherwise be payable to such Executive for the Plan Year, as
described in Article III hereof. 

          2.3           Cessation of Participation. An
Executive shall cease to be a Participant in the Plan if (a) he or she incurs a
Termination of Employment for any reason, (b) he or she remains in the service
of a Company but ceases to be an Eligible Executive as described in Section
1.15 due to a change in employment status, except to the extent that the
Committee determines otherwise, or (c) the Plan is terminated or otherwise
amended so that the Executive ceases to be eligible for participation;
provided, however, that such individual shall continue to be a Participant
solely with respect to his or her vested Account balance until such Account
balance is distributed from the Plan. Such cessation of participation shall be
effective upon the date of the change in status 

- 6 -

described in clause (a) above, on the last day of a designated Deferral
Period in the case of a change in status described in clause (b) above, or upon
the effective date of an amendment or termination described in (c) above. 

ARTICLE III 

DEFERRAL OF COMPENSATION

          3.1           Election to Defer. A Participant may
elect to defer receipt of a portion of his or her Compensation for a Plan Year
by delivering a properly executed election to the Administrator within the time
specified in Section 3.2. The Participant’s election shall be in a written form
acceptable to the Administrator and shall specify: 

	
  

 	
  

 
	
  

 	
                  3.1.1.    
 the whole percentage of Excess Compensation for the Plan Year to be deferred
 to the Plan, which percentage may not exceed 5%; 

 
	
  

 	
  

 
	
  

 	
                  3.1.2.     the
 whole percentage of Base Salary, other than Annual Bonus, for the Plan Year
 to be deferred to the Plan, which percentage may not exceed 50%; 

 
	
  

 	
  

 
	
  

 	
                  3.1.3.     the
 whole percentage of Annual Bonus for the Plan Year to be deferred to the Plan,
 which percentage may not exceed 100% (reduced as necessary to provide for the
 deferral under Section 3.1.1); 

 
	
  

 	
  

 
	
  

 	
                  3.1.4.     if
 applicable, the investment fund or funds in which the Participant’s Elective
 Deferrals, and Matching Contributions attributable to such Elective
 Deferrals, will be deemed to be invested pursuant to Section 5.2; 

 
	
  

 	
  

 
	
  

 	
                  3.1.5.    
 if applicable, the specific Scheduled Distribution Sub-Account or
 Sub-Accounts into which all or a portion of such Elective Deferrals and
 Matching Contributions will be directed, as described in Section 6.3; and 

 
	
  

 	
  

 
	
  

 	
                  3.1.6.     to
 the extent permitted by the Administrator under Section 6.4.1, the payment
 commencement date and method of distribution to apply to benefits distributable
 upon the Participant’s Termination of Employment. 

 

          The
deferral percentages under Section 3.1.2 and 3.1.3 shall be applied without
regard to an election to defer under Section 3.1.1. Elective Deferrals to the
Plan shall be reduced to the extent necessary to pay federal, state or local
employment taxes, including applicable FICA and FUTA taxes required to be
withheld under Section 3101 of the Code, and any other required withholdings as
determined by the Administrator. 

          An Executive
who elects not to participate in the Plan at the time he or she first becomes
eligible to do so may elect to become a Participant in any subsequent Plan Year
by filing an election to defer Compensation as described above within the time
provided in Section 3.2, provided that he or she is then eligible to
participate in the Plan. 

- 7 -

	
  

 	
  

 
	
  

 	
 3.2          Date for Filing Election.

 
	
  

 	
  

 
	
  

 	
                3.2.1.     Except
as provided below, an election to defer Compensation to be earned in a Plan
Year shall be filed by the Participant with the Administrator as of a date
established by the Administrator which is no later than December 31 of the Plan
Year preceding the year in which such Compensation is earned. 

 
	
  

 	
  

 
	
  

 	
                3.2.2.     In
the case of an individual first employed as an Executive or first becoming
eligible for this Plan (and any similar account-based deferred compensation
plan of the Company) during a Plan Year, an election to defer Compensation
(which may include Annual Bonus) earned subsequent to the initial date of
employment or eligibility and subsequent to the date of such election may, to
the extent permitted by the Plan Administrator, be filed by such Executive with
the Administrator within thirty (30) days of such initial date of service or
eligibility. 

 
	
  

 	
  

 
	
  

 	
               3.2.3.    
An election to defer Annual Bonus meeting the requirements for
“performance-based” compensation under Treasury Regulation Section 1.409A-1(e)
shall be filed with the Administrator as of a date established by the
Administrator which is at least six months prior to the end of the performance
period in which such Annual Bonus is earned, provided that (a) performance
criteria have been established in writing by not later than 90 days after the
commencement of the applicable performance period and the outcome is
substantially uncertain at the time the criteria are established, (b) the
Participant is in employment with the Company continuously from the later of
the beginning of the performance period or the date such performance criteria are
set, and (c) the election is made before such performance-based compensation
has become readily ascertainable (i.e.,
is both calculable in amount and substantially certain to be paid). 

 

          3.3         Deferral Period. The Deferral Period
for a Participant’s Compensation earned during any Plan Year shall begin on the
first day of such Plan Year, provided that the Participant has filed an
election to defer Compensation prior thereto, as described in Section 3.2.1.
Notwithstanding the foregoing, in the case of an individual who is first
employed as an Executive or who first becomes eligible for participation during
a Plan Year, the Deferral Period shall begin as of the first day of the payroll
period beginning after the filing of a timely election by the Participant in
such Plan Year, as described in Section 3.2.2. In each case, such Deferral
Period shall end on the last day of the Plan Year. The Deferral Period for
Annual Bonus meeting the requirements for “performance-based” compensation
under Treasury Regulation Section 1.409A-1(e) shall be the performance period
(which shall not be shorter than a Plan Year) to which such Annual Bonus
relates. 

          3.4
         Revocation or Change of Deferral Election.

	
  

 	
  

 
	
  

 	
                3.4.1.     
 A Participant may not voluntarily revoke or amend an election to defer
 Compensation under Section 3.1.1 after commencement of the Deferral Period.
 Such election shall automatically expire at the conclusion of the applicable
 Deferral Period, unless renewed within the time provided in Section 3.2. 

 

- 8 -

	
  

 	
  

 
	
  

 	
                3.4.2.     A
 Participant may not revoke or amend an election to defer Annual Bonus meeting
 the requirements for “performance-based” compensation under Treasury
 Regulation Section 1.409A-1(e) after a date established by the Administrator
 which is not later than six months prior to the end of the performance period
 in which such Annual Bonus is earned; except that an election to defer Annual
 Bonus under Section 3.2.2 may not be revoked during the Deferral Period. 

 
	
  

 	
  

 
	
  

 	
                3.4.3.     Notwithstanding
 the above, if a Participant incurs a Hardship, the Participant’s Elective
 Deferrals under this Plan may, upon the request of the Participant and with
 the consent of the Administrator, be permanently suspended for a period of
 six (6) months (the “suspension period”). At the end of the suspension
 period, the Participant’s Elective Deferrals shall automatically resume,
 provided that the Participant has timely filed a deferral election under
 Sections 3.1 and 3.2 with respect to the Deferral Period in effect when the
 suspension period ends. 

 

          3.5          Vesting of Elective Deferrals. A
Participant shall be 100% vested in the balance of his or her Deferred
Compensation Account attributable to Elective Deferrals at all times. 

ARTICLE IV 

COMPANY CONTRIBUTIONS

          4.1          Matching Contributions. For each Plan
Year in which a Participant elects under Section 3.1.1 to defer Excess
Compensation, the Company shall make a Matching Contribution to the
Participant’s Deferred Compensation Account equal to 140% (or such other
percentage as the Board of Directors shall determine) of the amount of such
Elective Deferral up to 5% of Excess Compensation. 

          4.2          Company Profit Sharing Contributions.
The Board of Directors may, in its sole discretion, make such additional
contributions to the Plan for a Plan Year as it determines from time to time.
Such contributions shall be allocated among Participants in such manner as the
Board of Directors shall determine at the time the contribution is determined. 

          4.3          Vesting of Company Contributions. A
Participant shall be vested in the balance of his or her Deferred Compensation
Account attributable to Matching Contributions to the same extent that the
Participant is vested in matching contributions under the terms of the
Qualified Plan. Unless the Board of Directors determines otherwise, a
Participant shall be vested in the balance of his or her Deferred Compensation
Account attributable to Company contributions under Section 4.2 to the same
extent that the Participant is vested in similar Company contributions under
the terms of the Qualified Plan. Amounts in the Participant’s Deferred
Compensation Account attributable to benefits accrued under the Amended and
Restated XL America Inc. Excess Benefit Savings Plan (the “Excess Plan”) shall
vest in accordance with the terms of the Excess Plan. All benefits under the
Plan shall become 100% vested upon the occurrence of a Change in Control. 

- 9 -

ARTICLE V 

INVESTMENT OF DEFERRED COMPENSATION

          5.1          Deferred Compensation Account. The
Administrator shall establish a Deferred Compensation Account on the books of
the Plan for each Participant, reflecting Elective Deferrals, Matching
Contributions and other Company contributions made for the Participant’s
benefit, any amounts transferred to the Plan from the XL America Inc. Key
Employee Deferred Compensation Plan and the Amended and Restated XL America
Inc. Excess Benefit Savings Plan, together with any adjustments for income,
gain or loss attributable thereto under Section 5.2, and any payments,
distributions, transfers or forfeitures therefrom. The opening balance of the
Participant’s Deferred Compensation Account as of January 1, 2012 shall equal
the balance of such Account as of the close of the preceding business day. 

          5.2          Time for Crediting Contributions.
Elective Deferrals to the Plan with respect to any pay period will normally be
credited to the Participant’s Account within five (5) business days of the date
that corresponding contributions attributable to Compensation earned in such
pay period are credited under the Qualified Plan or would otherwise be paid to
the Participant; provided, however, that no adjustment of earnings or losses
shall be made with respect to Elective Deferrals under Section 5.3 prior to the
earlier of (a) the 15th business day of the calendar month following
the calendar month in which the Elective Deferral would otherwise have been
paid to the Participant but for the Participant’s deferral election, or (b) the
date such amounts are actually credited to the Participant’s Account on the
books of the Plan. Company contributions for any Plan Year will be credited to
the Plan no later than the date for filing the Company’s Federal income tax
returns for the Company’s corresponding fiscal year, with extensions. 

          5.3          Hypothetical Investment of Accounts.
The Deferred Compensation Account of a Participant, including each Sub-Account
thereof, shall be adjusted as of each Valuation Date to reflect the income,
gain or loss that would accrue to such Account, if assets in the Account were
invested as described in this Section 5.2. Each Participant shall direct the
hypothetical investment of the Elective Deferrals and Matching Contributions
credited to the Plan on his or her behalf among such investment funds as are
from time to time made available by the Committee. A Participant may, as of any
Valuation Date, change the investment allocation of future Elective Deferrals
or Matching Contributions, and may elect to transfer all or a portion of the
balance of his or her Account hypothetically invested in one investment fund to
any other investment fund or funds then available under the Plan, by directing
the Administrator in such form and at such time as the Administrator shall
require. 

          The
hypothetical investment fund options available under the Plan shall be those
designated by the Committee from time to time in its discretion. The
Administrator may promulgate uniform and nondiscriminatory rules and procedures
governing investment elections under the Plan, including rules governing how
credits or debits to an Account or Sub-Account shall be allocated among
investment funds in the absence of a valid election. 

- 10 -

          5.4          Statement of Account. A statement shall
be sent to each Participant as to the balance of his or her Deferred
Compensation Account at least once each Plan Year. Electronic distribution (including
a reminder that such statement is available electronically) will satisfy this
requirement. 

ARTICLE VI 

PAYMENT OF DEFERRED COMPENSATION

          6.1          Hardship Distributions. A Participant
may request that all or a portion of his or her vested Account balance be
distributed at any time by submitting a written request to the Administrator,
provided that the Participant has incurred a Hardship, and the distribution is
necessary to alleviate such Hardship. In determining whether the Hardship
distribution request should be approved, the Administrator may rely on the
Participant’s representation that the Hardship cannot be alleviated: 

	
  

 	
  

 
	
  

 	
                 6.1.1.     through
 reimbursement or compensation by insurance or otherwise; 

 
	
  

 	
  

 
	
  

 	
                 6.1.2.     by
 the Participant taking any withdrawals then available to him or her under the
 terms of the Qualified Plan; 

 
	
  

 	
  

 
	
  

 	
                 6.1.3.     by
 reasonable liquidation of the Participant’s assets, including amounts
 available for withdrawal from the Qualified Plan, to the extent such
 liquidation would not itself cause a severe financial hardship; or 

 
	
  

 	
  

 
	
  

 	
                 6.1.4.     by
 cessation of his or her elective deferrals under Section 3.4.3 of this Plan
 or a similar deferred compensation plan to the extent available. 

 

          6.2          Administration of Hardship Distributions.
The Administrator shall deem a distribution to be necessary to alleviate a
Hardship if the distribution does not exceed the amounts necessary to satisfy
the Participant’s Hardship, plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution. The Account balance that is not
distributed pursuant to the Hardship request shall remain in the Plan.
Distributions to alleviate a Hardship will be made as soon as administratively
feasible after the Administrator has reviewed and approved the request. An
amount to be distributed for Hardship shall be debited from the Participant’s
Deferred Compensation Account not held in a Scheduled Distribution Sub-Account,
or (if such amount is not sufficient) from the Sub-Account(s) having the latest
scheduled distribution date. 

          6.3          Scheduled Distribution. A Participant
may elect to receive a Scheduled Distribution with respect to an Elective
Deferral at the time he or she files the applicable deferral election under
Section 3.1. A Participant may elect in accordance with Section 3.1.5 to direct
all or a portion of his or her Elective Deferrals for the Plan Year into one
(or, if permitted by the Administrator, more than one) Sub-Account(s), provided
that any such Sub-Account has a scheduled distribution date which is not
earlier than twelve (12) months after the end of the Deferral Period to which
the Elective Deferral relates. The Administrator may establish uniform and
nondiscriminatory rules and procedures governing Scheduled Distribution
Sub-Accounts, 

- 11 -

including establishing limitations on the number of Sub-Accounts
available to Participants for any Deferral Period or in the aggregate, and the
minimum length of deferral to be provided under any newly-established
Sub-Account, as the Administrator deems appropriate. 

          To the
extent permitted by the Administrator at the time of election, such election
may designate whether the elected Scheduled Distribution will be paid as a
result of the Participant’s intervening death, Disability or Termination of
Employment, or alternatively will continue to apply notwithstanding such
intervening event. Except as otherwise elected by a Participant under the
preceding sentence, an election of a Scheduled Distribution shall automatically
terminate upon the Participant’s death, Disability or Termination of Employment
prior to age 65, at which time the provisions of Sections 6.4, 6.5 and 6.6
shall govern distribution of the Participant’s Account; provided, however,
that, unless the Participant elects otherwise with the consent of the
Administrator, (1) a Scheduled Distribution Sub-Account payable at age 65 shall
be paid when the Participant attains age 65, without regard to the
Participant’s intervening Termination of Employment (other than due to death);
and (2) a Participant’s intervening Termination of Employment (other than due
to death) shall not accelerate a Scheduled Distribution then in pay status. 

          A
Participant may, with the consent of the Administrator and to the extent
permitted under Code Section 409A and regulations thereunder, elect to (a)
revoke a Scheduled Distribution (provided that the Participant’s Scheduled
Distribution election would otherwise automatically terminate upon the
Participant’s Termination of Employment for any reason), in which case the
balance of the applicable Sub-Account will be restored to the Participant’s
Deferred Compensation Account, or (b) extend to a later date the date permitted
under Section 6.6 on which a Scheduled Distribution will occur, in which case
the applicable Sub-Account will be redesignated (and merged with another
existing Sub-Account having the same designated distribution date). A
Participant may make an election under the preceding sentence by filing a new
election prior to his or her Termination of Employment at such time and in such
form as the Administrator shall designate. Any election to revoke or extend the
date of a Scheduled Distribution shall not take effect until at least twelve
months after the date on which it is made and must provide for a deferred
distribution date not earlier than five years after the date such Scheduled
Distribution was otherwise scheduled to be made and not later than the date set
forth in Section 6.6. A Scheduled Distribution may be made in a single lump sum
payment or in installments over two to eleven years (as described in Section
6.5.1 or 6.5.2, respectively). 

          6.4          Death or Other Termination of Employment.

	
  

 	
  

 
	
  

 	
                 6.4.1.     Initial Distribution Election. A
 Participant who has incurred a Termination of Employment, whether by reason
 of voluntary or involuntary termination, death or Disability (each a
 “Distribution Event”), shall receive distribution of his or her Account
 (other than a Scheduled Distribution Sub-Account having a Scheduled
 Distribution date prior to the date of Termination of Employment or a
 Scheduled Distribution Sub-Account subject to a later Scheduled Distribution
 date with respect to which the Participant has elected under Section 6.3 that
 no intervening Distribution Event shall apply) in a single lump sum payment
 as soon as practicable but in any event within 

 

- 12 -

	
  

 	
  

 
	
  

 	
 ninety (90) days following such Termination of Employment.
 Notwithstanding the foregoing, the Administrator may permit a Participant to
 elect a later payment commencement date permitted under Section 6.6, or an
 alternate method of distribution permitted under Section 6.5, by filing a
 written request with the Administrator at the time the Participant files an
 initial deferral election under Section 3.2. To the extent permitted under
 rules established by the Administrator at the time of election, such an
 election may separately specify different times or available methods of
 payment for different Distribution Events. 

 
	
  

 	
  

 
	
  

 	
                 6.4.2.     Changes in Distribution Election.
 The Administrator may permit a Participant to defer the commencement of his
 or her distribution to a date permitted under Section 6.6, or select an
 alternative method of distribution permitted under Section 6.5, after the
 initial deferral election by filing a written request with the Administrator.
 Such a change election shall not take effect until at least twelve months
 after the date on which it is made and shall be effective only if (a) the
 election is filed with the Administrator before the Participant’s Termination
 of Employment; (b) the election does not accelerate the timing or payment
 schedule of any distribution; (c) the payment commencement date in the change
 election is not less than five years after the date the distribution would
 otherwise have commenced for the Distribution Event without regard to such
 election; and (d) the Administrator approves such election. Except as
 otherwise provided in Section 6.7, a Participant’s distribution election
 shall become irrevocable upon the Participant’s Termination of Employment. 

 
	
  

 	
  

 
	
  

 	
                 6.4.3.     Key Employees. Notwithstanding the
 foregoing, in the case of a Key Employee who has a Termination of Employment
 (other than due to death) while any stock of the Company or any Affiliate is
 publicly traded on an established securities market or otherwise,
 distribution of the Participant’s Account on account of such Termination of
 Employment may not be made earlier than six months after the date of the
 Termination of Employment (or if the Participant dies during such six month
 period, earlier than the date of the Participant’s death). Such Participant’s
 Account will be deemed to continue to be adjusted for investment gains or
 losses pending distribution as set forth in Section 5.3. 

 
	
  

 	
  

 
	
  

 	
                 6.4.4.     Death. If a Participant dies before
 distribution of his or her Account has commenced, the Participant’s benefit
 under the Plan shall be paid to his or her Beneficiary in a single lump sum
 payment as soon as practicable following the Participant’s death. 

 
	
  

 	
  

 
	
  

 	
                 6.4.5.     Distribution Event. Whether a
 Participant has incurred a Distribution Event shall be determined by the Administrator
 in a manner consistent with the requirements of Section 409A and regulations
 thereunder. 

 

- 13 -

	
  

 	
  

 
	
  

 	
 6.5           Method of Payment. 

 
	
  

 	
  

 
	
  

 	
                 6.5.1.     Lump Sum Payment. Distribution of a
 Participant’s Account pursuant to Section 6.1, 6.3 or 6.4, may be made in a
 cash lump sum. 

 
	
  

 	
  

 
	
  

 	
                 6.5.2.     Installment Distribution. A
 Participant requesting distribution of an Account pursuant to Section 6.4
 may, with the approval of the Administrator, receive distribution in periodic
 payments in lieu of a lump sum. Periodic payments shall be paid on an annual
 or quarterly basis, as permitted by the Administrator and elected by the
 Participant, over a period that does not exceed eleven (11) years. Each
 installment payment shall be determined by dividing the Participant’s
 then-current Account balance by the number of payments remaining to be paid;
 provided, however, that if the Participant’s (or Beneficiary’s) aggregate
 vested Account balance is less than $100,000 at the time distributions
 commence due to Termination of Employment, the entire vested account balance
 shall be paid in a single lump sum payment at the time the Participant’s (or
 Beneficiary’s) initial installment distribution would otherwise be paid. The
 Administrator may establish uniform and nondiscriminatory rules and
 procedures governing the payment of installment distributions, including the
 maximum period over which installment distributions shall be made and the
 minimum amount which must be distributed in each installment, as the Administrator
 deems appropriate. 

 
	
  

 	
  

 
	
  

 	
                 6.5.3.     Death of Participant During Installment
 Distribution Period. If a Participant who has elected
 installment payments under Section 6.5.2 dies before all amounts held in the
 Account have been distributed, the remaining Account balance shall be paid to
 the Beneficiary or Beneficiaries in a single lump sum payment as soon as
 practicable after the Participant’s death. 

 
	
  

 	
  

 
	
  

 	
                 6.5.4.     Limit on Distribution Method.
 Notwithstanding the foregoing, to the extent permitted under Section 409A, if
 the Deferred Compensation Account does not exceed $100,000 at the time
 distributions commence due to the Participant’s Termination of Employment,
 the distribution shall be made in a single lump-sum payment. 

 

          6.6          Payment Commencement Date. A
Participant may not elect a distribution date later than (a) April 1 of the
calendar year after the year in which the Participant attains age 701⁄2, or (b)
five years after the Participant’s Termination of Employment, if later. 

          6.7          Transition Rules. Pursuant to Internal
Revenue Service Notice 2005-1, Q&A-19(c), as extended by Notice of Proposed
Rulemaking REG-158080-04, a Participant may, prior to December 31, 2007, modify
or make new elections regarding distribution of his or her Account(s) under
Sections 6.3, 6.4 and 6.5, at such time and in such form as the Administrator
shall designate in 2007; provided, however, that no such distribution election
may affect payments that the Participant would otherwise receive in 2007 or
cause payments to be made in 2007. Pursuant to IRS Notice 2007-78, a
Participant may, prior to December 31, 2008, modify or make new elections
regarding distribution of his or her Account at such time and in such form as the
Administrator shall designate; provided, however, that no such distribution
election may 

- 14 -

affect
payments that the Participant would otherwise receive in 2008 or cause payments
to be made in 2008. 

          6.8          Acceleration of Payment Date.
Notwithstanding the foregoing, the distribution of benefits hereunder may be
accelerated, with the consent of the Administrator, under the following
circumstances: 

	
  

 	
  

 
	
  

 	
                 6.8.1.     Compliance with Domestic Relations Order.
 To permit payment to an individual other than the Participant as necessary to
 comply with the provisions of a domestic relations order (as defined in Code
 Section 414(p)(1)(B)); 

 
	
  

 	
  

 
	
  

 	
                 6.8.2.     Conflicts of Interest. To permit
 payment as necessary to comply with the provisions of a Federal government
 ethics agreement or to avoid violation of an applicable Federal, state, local
 or foreign ethics law or conflicts of interest law; 

 
	
  

 	
  

 
	
  

 	
                 6.8.3.     Payment of Employment Taxes. To
 permit payment of federal employment taxes under Code Sections 3101, 3121(a)
 or 3121(v)(2), or to comply with any federal tax withholding provisions or
 corresponding withholding provisions of applicable state, local, or foreign
 tax laws as a result of the payment of federal employment taxes, and to pay
 the additional income tax at source on wages attributable to the pyramiding
 Code Section 3401 wages and taxes; or 

 
	
  

 	
  

 
	
  

 	
                 6.8.4.     Tax Event. Upon a good faith,
 reasonable determination by the Administrator, and upon advice of counsel,
 that the Plan fails to meet the requirements of Code Section 409A and
 regulations thereunder. Such payment may not exceed the amount required to be
 included in income as a result of the failure to comply with the requirements
 of Code Section 409A. 

 

          6.9          Delay of Payments. A payment otherwise
required to be made under the terms of the Plan may be delayed solely to the
extent necessary under the following circumstances, provided that payment is
made as soon as possible within the first calendar year after the reason for
delay no longer applies: 

	
  

 	
  

 
	
  

 	
                 6.9.1.     Payments Subject to the Deduction Limitation.
 The Company reasonably anticipates that such payment would not be deductible
 under Code Section 162(m); 

 
	
  

 	
  

 
	
  

 	
                 6.9.2.     Violation of Law. The Administrator
 reasonably determines that making the payment will violate Federal securities
 or other applicable laws; or 

 
	
  

 	
  

 
	
  

 	
                 6.9.3.     Other Permitted Event. Upon such
 other events and conditions as the Commissioner of Internal Revenue shall
 prescribe in generally applicable guidance 

 

- 15 -

ARTICLE VII 

ADMINISTRATION OF THE PLAN

          7.1          Administration by the Company. The
Committee shall be responsible for the general operation and administration of
the Plan and for carrying out the provisions thereof. The Committee may appoint
such person or persons as it deems appropriate to perform all or any of the
functions of the Administrator under the terms of the Plan. To the extent that
no such person or persons are appointed, the Committee shall serve as
Administrator. 

          7.2          General Powers of Administration.
The Committee shall have authority and discretion to control and manage the
operation and administration of the Plan, including all rights and powers
necessary or convenient to the carrying out of its functions hereunder, whether
or not such rights and powers are specifically enumerated herein. The Committee
may, in its discretion, delegate authority with regard to the administration of
the Plan to any individual, officer or committee in accordance with Section
7.2.7 below. Notwithstanding any other provision of the Plan, if an action or
direction of any person to whom authority hereunder has been delegated
conflicts with an action or direction of the Committee, then the authority of
the Committee shall supersede that of the delegate with respect to such action
or direction. 

          Without
limiting the generality of the foregoing, and in addition to the other powers
set forth in this Section 7.2, the Committee or its delegate shall have the
following express authorities: 

	
  

 	
  

 
	
  

 	
                 7.2.1.     To
 construe and interpret the provisions of the Plan; to decide all questions
 arising thereunder, including, without limitation, questions of eligibility
 for participation, eligibility for benefits, the validity of any election or
 designation made under the Plan, and the amount, manner and time of payment
 of any benefits hereunder; and to make factual determinations necessary or
 appropriate for such decisions or determination; 

 
	
  

 	
  

 
	
  

 	
                 7.2.2.     To
 prescribe procedures to be followed by Participants, Beneficiaries or
 alternate payees in filing applications for benefits and any other elections,
 designations and forms required or permitted under the Plan; 

 
	
  

 	
  

 
	
  

 	
                 7.2.3.     To
 prepare and distribute information explaining the Plan; 

 
	
  

 	
  

 
	
  

 	
                 7.2.4.     To
 receive from the Company and from Participants, Beneficiaries and alternate
 payees such information as shall be necessary for the proper administration
 of the Plan; 

 
	
  

 	
  

 
	
  

 	
                 7.2.5.     To
 furnish the Company or the Board of Directors, upon request, such reports
 with respect to the administration of the Plan as are reasonable and
 appropriate; 

 
	
  

 	
  

 
	
  

 	
                 7.2.6.     To
 appoint or employ advisors, including legal and actuarial counsel (who may
 also be counsel to the Company) to render advice with regard to any
 responsibility of the Committee under the Plan or to assist in the
 administration of the Plan; 

 

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                 7.2.7.     To
 designate in writing other persons to carry out a specified part or parts of
 its responsibilities hereunder (including this power to designate other
 persons to carry out a part of such designated responsibility). Any such
 person may be removed by the Committee at any time with or without cause; 

 
	
  

 	
  

 
	
  

 	
                 7.2.8.     To
 rule on claims, and to determine the validity of domestic relations orders
 and comply with such orders; and 

 
	
  

 	
  

 
	
  

 	
                 7.2.9.     All
 rules, actions, interpretations and decisions of the Committee are conclusive
 and binding on all persons, and shall be given the maximum possible deference
 allowed by law. 

 

          7.3          Rules of the Administrator. The
Administrator may adopt such rules as it deems necessary, desirable or
appropriate. When making a determination or calculation, the Administrator
shall be entitled to rely upon information furnished by a Participant or
Beneficiary, the Company, the legal counsel of the Company, or such other
person as it deems appropriate, and shall further be entitled to rely
conclusively upon all tables, valuations, certificates, opinions and reports
furnished by any actuary, accountant, controller, counsel or other person
employed or engaged by the Company with respect to the Plan. 

          7.4          Claims Procedure. Any person who
believes that he or she is then entitled to receive a benefit under the Plan
may file a claim in writing with the Administrator. Except to the extent the
Committee adopts an alternate procedure for the review of claims, the
procedures in this Section 7.4 shall apply. The Administrator shall, within
ninety (90) days of the receipt of a claim, either allow or deny the claim in
writing. A denial of a claim shall be written in a manner calculated to be
understood by the claimant and shall include: (a) the specific reason or
reasons for the denial; (b) specific references to pertinent Plan provisions on
which the denial is based; (c) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and (d) an explanation of the Plan’s
claim review procedure. A claimant whose claim is denied (or his or her duly
authorized representative) may, within sixty (60) days after receipt of denial
of the claim: (1) submit a written request for review to the Committee; (2)
review pertinent documents; and (3) submit issues and comments in writing. The
Administrator shall notify the claimant of the decision of the Committee on
review within sixty (60) days of receipt of a request. No legal action may be
commenced by a Participant or Beneficiary with respect to a benefit under this
Plan without first exhausting the Plan’s administrative claims procedures, and
any legal action with respect to a claim that has been finally denied must be
commenced no later than one year after the date of the Plan’s final denial of
such claim upon appeal. 

ARTICLE VIII

GENERAL PROVISIONS

          8.1          Participant’s Rights Unsecured. The
right of any Participant to receive future payments under the provisions of the
Plan shall be an unsecured claim against the general assets of the Company. The
Company shall be under no obligation to establish any separate fund, 

- 17 -

 purchase any annuity contract,
or in any other way make any special provision or specifically earmark any
funds for the payment of amounts called for under the Plan. If the Company
chooses to establish such a fund, or purchase such an annuity contract or make
any other agreement to provide for such payments, that fund, contract or
arrangement shall remain part of the Company’s general assets and no person
claiming payments under the Plan shall have any right, title or interest in or
to any such fund, contract or arrangement. 

          8.2          Non-assignability. None of the
benefits, payments, proceeds or claims of any Participant or Beneficiary shall
be subject to any claim of any creditor of any Participant or Beneficiary and,
in particular, the same shall not be subject to attachment or garnishment or
other legal process by any creditor of such Participant or Beneficiary, nor
shall any Participant or Beneficiary have any right to alienate, anticipate,
commute, pledge, encumber or assign any of the benefits or payments or proceeds
which he or she may expect to receive, contingently or otherwise, under the
Plan. Notwithstanding the foregoing, the Company shall comply with the terms of
a domestic relations order applicable to a Participant’s interest in the Plan,
provided that such order does not require the payment of benefits in a manner
or amount, or at a time, inconsistent with the terms of the Plan. The Company
shall have no liability to any Participant or Beneficiary to the extent that
his or her benefit is reduced in accordance with the terms of a domestic
relations order that the Company applies in good faith. 

          8.3          Taxes. The Administrator shall withhold
all federal, state or local taxes that it reasonably believes are required to
be withheld from any payments under the Plan. 

          8.4          Limitation of Participant’s Rights.
Nothing contained in the Plan shall confer upon any person a right to be
employed or to continue in the employ of the Company, or interfere in any way
with the right of the Company to terminate the employment of a Participant at
any time, with or without cause. 

          8.5          Receipt and Release. Any payment to any
Participant or Beneficiary in accordance with the provisions of the Plan shall,
to the extent thereof, be in full satisfaction of all claims against the
Company or the Plan, and the Administrator may require such Participant or
Beneficiary, as a condition precedent to such payment, to execute a receipt and
release to such effect. If requested, such receipt and release shall be
executed by the Participant or Beneficiary no later than 90 days after the
Participant’s scheduled distribution commencement date. If the period for
signing and returning the Release designated by the Company extends into a
later taxable year, any payments contingent upon the Release will be made (or
begin) in the later taxable year. If any Participant or Beneficiary is
determined by the Administrator to be incompetent by reason of physical or mental
disability (including minority) to give a valid receipt and release, the
Administrator may cause the payment or payments becoming due to such person to
be made to another person for his or her benefit without responsibility on the
part of the Administrator or the Company to follow the application of such
funds. 

          8.6          Governing Law. The Plan shall be
construed, administered, and governed in all respects under and by the laws of
the state of New York. If any provision shall be held by a 

- 18 -

court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully effective. 

          8.7          Designation of Beneficiary. A
Participant may designate a Beneficiary by so notifying the Administrator in
writing, in a form acceptable to the Administrator, at any time before the
Participant’s death. A Participant may revoke any Beneficiary designation or
designate a new Beneficiary at any time without the consent of a beneficiary or
any other person. If no Beneficiary is designated or no designated Beneficiary
survives the Participant, payment shall be made in a single lump sum to the
Participant’s estate. 

          8.8          Successorship. The Plan shall be
binding upon and inure to the benefit of the Company and its successors and
assigns, and the Participants, and the successors, assigns, designees and
estates of the Participants. The Plan shall also be binding upon and inure to
the benefit of any successor Company or organization succeeding to
substantially all of the assets and business of the Company, but nothing in the
Plan shall preclude the Company from merging or consolidating into or with, or
transferring all or substantially all of its assets to, another Company which
assumes the Plan and all obligations of the Company hereunder. The Company
agrees that it will make appropriate provision for the preservation of
Participants’ rights under the Plan in any agreement or plan which it may enter
into to effect any such merger, consolidation, reorganization or transfer of
assets. In such a merger, consolidation, reorganization, or transfer of assets
and assumption of Plan obligations of the Company, the term Company shall refer
to such other Company and the Plan shall continue in full force and effect. 

          8.9          Indemnification. No Committee member
shall be personally liable by reason of any instrument executed by him or on
his behalf, or action taken by him, in his capacity as a Committee member nor
for any mistake of judgment made in good faith. The Company shall indemnify and
hold harmless the Plan and each Committee member and each employee, officer or
director of the Company or the Plan, to whom any duty, power, function or
action in respect of the Plan may be delegated or assigned, or from whom any
information is requested for Plan purposes, against any cost or expense
(including fees of legal counsel) and liability (including any sum paid in
settlement of a claim or legal action with the approval of the Company) arising
out of anything done or omitted to be done in connection with the Plan, unless
arising out of such person’s fraud or bad faith. 

          8.10        Headings and Subheadings. Headings and
subheading in this Plan are inserted for convenience only and are not to be
considered in the construction of the provisions hereof. 

          8.11        Amendment and Termination. The Plan may
at any time or from time to time be amended, modified, or terminated by the
Board of Directors. No amendment, modification, or termination shall, without
the consent of a Participant, adversely affect the Participant’s Deferred
Compensation Account at that time. Upon termination of the Plan, the Board of
Directors may elect to (a) pay benefits hereunder as they become due as if the
Plan had not terminated or (b) to extent permitted by Code Section 409A and
regulations thereunder, direct that all payments remaining to be made under the
Plan be made in a single lump sum to Participants (or their Beneficiaries). 

- 19 -

          IN
WITNESS WHEREOF, and pursuant to adoption of this Plan
Document by the Board of Directors of the Company has caused this Plan Document
to be executed this 26th day of July, 2012 by: 

	
  

 	
  

 
	
 /s/ Richard
 Pikowski 

 	
  

 
	 

 	
  

 
	
 
Richard
 Pikowski 

 	
  

 
	
 Assistant
 Secretary

 	
  

 
	
 X.L.
 America, Inc. 

 	
  

 

- 20 -

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