Document:

EX-4.2

 Exhibit 4.2 

Execution Version 
  

 
 CME GROUP INC. 

and 
 U.S. BANK NATIONAL
ASSOCIATION, 
 as Trustee 
  

 
 Seventh Supplemental Indenture

 Dated as of March 9, 2015 

to Senior Debt Indenture 
 Dated as
of August 12, 2008 
 Establishing a series of Securities designated 

3.000% Notes due 2025 
  

 

 SEVENTH SUPPLEMENTAL INDENTURE, dated as of March 9, 2015 (herein called the
“Seventh Supplemental Indenture”), between CME Group Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the “Company”), and U.S. Bank National Association, a
nationally chartered banking association, as Trustee under the Base Indenture referred to below (herein called the “Trustee”). 

WITNESSETH: 
 WHEREAS, the
Company has heretofore executed and delivered to the Trustee an indenture dated as of August 12, 2008 (herein called the “Base Indenture” and, together with this Seventh Supplemental Indenture, the
“Indenture”), to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein called the “Securities”), the form and terms of which are to be established
as set forth in Sections 201 and 301 of the Base Indenture; 
 WHEREAS, Section 901 of the Base Indenture provides, among other things,
that the Company and the Trustee may enter into indentures supplemental to the Base Indenture to, among other things, establish the form and terms of the Securities of any series as permitted in Sections 201 and 301 of the Base Indenture; 

WHEREAS, the Company desires to create a series of the Securities in an aggregate principal amount of $750,000,000 to be designated the
“3.000% Notes due 2025” (herein called the “Notes”) and all action on the part of the Company necessary to authorize the issuance of the Notes under the Base Indenture and this Seventh Supplemental Indenture has been duly
taken; 
 WHEREAS, the Company desires to issue the Notes in accordance with Section 2.3 of this Seventh Supplemental Indenture and
treat the Notes as a single series of Securities for all purposes, as amended or supplemented from time to time in accordance with the terms of this Seventh Supplemental Indenture and the Base Indenture; and 

WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and completed, authenticated and delivered by the
Trustee as provided in the Base Indenture and this Seventh Supplemental Indenture, the valid and binding obligations of the Company and to constitute a valid and binding supplemental indenture and agreement according to its terms, have been done and
performed. 
 NOW, THEREFORE, THIS SEVENTH SUPPLEMENTAL INDENTURE WITNESSETH: 

That in consideration of the premises and of the acceptance and purchase of the Notes by the Holders thereof and of the acceptance of this
trust by the Trustee, the Company covenants and agrees with the Trustee, for the equal benefit of Holders of the Notes, as follows: 

ARTICLE 1. 
 DEFINITIONS

 Except to the extent such terms are otherwise defined in this Seventh Supplemental Indenture or the context clearly requires
otherwise, all terms used in this Seventh Supplemental Indenture which are defined in the Base Indenture or the form of Note attached hereto as Exhibit A have the meanings assigned to them therein. With respect to the Notes, the term
“Managing Director” shall mean, when used in the Indenture with respect to the Company, any managing director, whether or not designated by a number or a word or words added before or after the title “managing director.”
For purposes of any requirement under the Base Indenture or this Seventh Supplemental Indenture for the Trustee to have its Corporate Trust Office in New York, New York, “Corporate Trust Office” means, and for purposes of the Place
of Payment in respect of the Notes, the office or agency of the Trustee when acting as the Paying Agent shall be, the office or agency of the Trustee in The City of New York, State of New York, which as of the date hereof is located at U.S. Bank
Global Corporate Trust Services, New York, 100 Wall St., 16th floor, New York, NY 10005. 

  
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 In addition, as used in this Seventh Supplemental Indenture, the following terms have the
following meanings: 
 “Applicable Procedures” has the meaning specified in Section 2.6 hereof. 

“Attributable Debt” with regard to a Sale and Lease-Back Transaction with respect to any Principal Property means, at the
time of determination, the present value of the total net amount of rent required to be paid under such lease during the remaining term thereof (including any period for which such lease has been extended), discounted at the rate of interest set
forth or implicit in the terms of such lease (or, if not practicable to determine such rate, the weighted average interest rate per annum borne by the Securities of all series then Outstanding under the Indenture) compounded semi-annually. In the
case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall be the lesser of (x) the net amount determined assuming termination upon the first date such lease may be terminated (in which case the net
amount shall also include the amount of the penalty, but shall not include any rent that would be required to be paid under such lease subsequent to the first date upon which it may be so terminated) or (y) the net amount determined assuming no
such termination. 
 “Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of
debtors. 
 “Base Indenture” has the meaning provided in the recitals hereof. 

“Below Investment Grade Rating Event” means the Notes are rated below an Investment Grade Rating by each of the Rating
Agencies on any date during the period commencing upon the first public notice of the occurrence of a Change of Control or the Company’s intention to effect a Change of Control and ending 60 days following public notice of the occurrence of the
related Change of Control (which 60-day period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies); provided that a Below Investment Grade Rating
Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the
definition of Change of Control Triggering Event hereunder) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Holders of the Notes in writing at
their request that the reduction was the result, in whole or in part, of any event or circumstance comprising or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have
occurred at the time of the Below Investment Grade Rating Event). 
 “Business Day” means any calendar day that is not a
Saturday, Sunday or a day on which banking institutions in New York City are authorized or obligated by law or regulation to close. 

“Capital Stock” means (i) in the case of a corporation or a company, corporate stock or shares; (ii) in the case of
an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (iii) in the case of a partnership or limited liability company, partnership or membership
interests (whether general or limited); and (iv) any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing person. 

“Change of Control” means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance
or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any Person or group of related Persons
for purposes of Section 13(d) of the Exchange Act (a “Group”) other than the Company or one of its Subsidiaries; (2) the approval by the holders of the Company’s common stock of any plan or proposal for the
liquidation or dissolution of the Company; (3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any Person or Group becomes the beneficial owner, directly or
indirectly, of more than 50% of the then outstanding number of shares of the Company’s Voting Stock; or (4) the first day on which a majority of the members of the Company’s Board of Directors are not Continuing Directors;
provided, however, that a transaction will not be deemed to involve a Change of Control if (1) the Company becomes a direct or indirect wholly owned Subsidiary of a holding company and (2)(A) the direct or indirect holders of
the Voting Stock of such holding company immediately following that transaction are substantially the same as the holders of the Company’s Voting Stock immediately prior to that transaction or (B) immediately following that transaction no
Person or Group (other than a holding company satisfying the requirements of this proviso) is the beneficial owner, directly or indirectly of more than 50% of the Voting Stock of such holding company. 

  
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 “Change of Control Offer” has the meaning specified in Section 2.8 hereof.

 “Change of Control Payment” has the meaning specified in Section 2.8 hereof. 

“Change of Control Payment Date” has the meaning specified in Section 2.8 hereof. 

“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating
Event occurring in respect of that Change of Control. 
 “Clearing House Facility” means the Credit Agreement, dated as of
November 6, 2014, among Chicago Mercantile Exchange Inc., the Banks (as defined therein), Bank of America, N.A., as administrative agent and Deutsche Bank Trust Company Americas, as collateral agent, as amended, restated, supplemented,
increased, extended, renewed, replaced, refinanced (with the same or other lenders) or otherwise modified from time to time. 

“Company” means the person named as such in the preamble hereof and, subject to the provisions of Article VIII of the Base
Indenture as amended by this Seventh Supplemental Indenture, any successor to that person. 
 “Comparable Treasury Issue”
means the United States Treasury security selected by a Reference Treasury Dealer as having an actual or interpolated maturity comparable to the remaining term of the Notes called for redemption, that would be utilized, at the time of selection and
in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes called for redemption. 

“Comparable Treasury Price” means, with respect to any Redemption Date, the average, as determined by the Company, of the
Reference Treasury Dealer Quotations for that Redemption Date after excluding the highest and lowest Reference Treasury Dealer Quotation. 

“Consolidated Net Tangible Assets” means, at any date, the aggregate amount of assets (less applicable reserves) of the
Company and its Significant Subsidiaries after deducting therefrom (a) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles and (b) all current liabilities (excluding any current
liabilities for money borrowed having a maturity of less than 12 months but by its terms being renewable or extendible beyond 12 months from such date at the option of the borrower), all as reflected in the Company’s most recent consolidated
balance sheet as at the end of the Company’s fiscal quarter ending not more than 135 days prior to such date, prepared in accordance with United States generally accepted accounting principles. 

“Continuing Directors” means, as of any date of determination, any member of the Company’s Board of Directors who
(1) was a member of the Company’s Board of Directors on the date of the issuance of the Notes; or (2) was nominated for election, elected or appointed to the Company’s Board of Directors with the approval of a majority of the
Continuing Directors who were members of the Company’s Board of Directors at the time of such nomination, election or appointment (either by a specific vote or by approval of the proxy statement issued by the Company in which such member was
named as a nominee for election as a director). 
 “Credit Facility” means Amendment No. 1 to Credit Agreement
and Joinder Agreement, dated as of November 30, 2012, among the Company, Bank of America, N.A., as administrative agent, and the several banks, financial institutions and other entities from time to time parties thereto as lenders, as amended,
restated, supplemented, increased, extended, renewed, replaced, refinanced (with the same or other lenders) or otherwise modified from time to time. 

“Definitive Securities” means certificated Securities registered in the name of the Holder thereof and issued in accordance
with Section 2.2(b) hereof, substantially in the form of Exhibit A hereto, except that such Security shall not bear the Global Security Legend. 

  
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 “Depositary” means DTC, together with any Person succeeding thereto by merger,
consolidation or acquisition of all or substantially all of its assets, including substantially all of its securities payment and transfer operations. 

“DTC” means The Depository Trust Company, a New York corporation, having a principal office at 55 Water Street, New York, New
York 10041-0099. 
 “Seventh Supplemental Indenture” has the meaning provided in the preamble hereof. 

“Global Security Legend” means the legend set forth in Section 202 of the Base Indenture. 

“Group” has the meaning given to such term in the definition of “Change of Control” herein. 

“Indebtedness” means any indebtedness (whether being principal, premium, interest or other amounts) for or in respect of any
notes, bonds, debentures or other instruments for money borrowed or any borrowed money or any liability under or in respect of any banker’s acceptance (other than a daylight overdraft). 

“Indenture” has the meaning provided in the recitals hereof. 

“Indirect Participant” means a Person who holds a beneficial interest in a Global Security through a Participant. 

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the
equivalent) by S&P or the equivalent investment grade credit rating from any additional Rating Agency or Rating Agencies selected by the Company. 

“Issue Date” means March 9, 2015, the date on which the Notes are originally issued under this Seventh Supplemental
Indenture. 
 “Lien” means any lien, mortgage, deed of trust, hypothecation, pledge, security interest, charge or
encumbrance of any kind. 
 “Moody’s” means Moody’s Investors Service, Inc. 

“Notes” has the meaning given to such term in the recitals hereof. 

“Optional Redemption Price” has the meaning specified in Section 4.1 hereof. 

“Participant” means, with respect to the Depositary, a Person who has an account with the Depositary. 

“Permitted Liens” means (a) Liens imposed by law or any governmental authority for taxes, assessments, levies or charges
that are not yet overdue by more than 60 days or are being contested in good faith (and, if necessary, by appropriate proceedings) or for commitments that have not been violated; (b) carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s, landlords’ and similar Liens imposed by law or which arise by operation of law and which are incurred in the ordinary course of business or where the validity or amount thereof is being contested in good
faith (and, if necessary, by appropriate proceedings); (c) Liens incurred or pledges or deposits made in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations; (d) Liens incurred
or pledges or deposits made to secure the performance of bids, trade contracts, tenders, leases, statutory obligations, surety, customs and appeal bonds, performance bonds, customer deposits and other obligations of a similar nature, in each case in
the ordinary course of business; (e) judgment Liens in respect of judgments that do not constitute an Event of Default under the Indenture; (f) Liens securing Indebtedness incurred under the Clearing House Facility from time to time;
(g) Liens securing Indebtedness incurred in connection with the obligations of the Company or any Significant Subsidiary relating to clearing, settlement or regulated exchange activities; (h) Liens on (1) any property or asset prior
to the acquisition thereof, provided that such Lien may only extend to such property or asset, or (2) property of a Significant Subsidiary where (A) such Significant Subsidiary becomes a Subsidiary after March 4, 2015,
(B) the Lien exists at the time such Significant Subsidiary becomes a Subsidiary, (C) the Lien was not created in contemplation of such Significant Subsidiary becoming a Subsidiary, and (D) the Lien in effect at the time such
Significant Subsidiary becomes a Subsidiary is 

  
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not subsequently extended to any Principal Property acquired by such Significant Subsidiary after the time such Significant Subsidiary becomes a Subsidiary; (i) any Lien existing on
March 9, 2015; (j) Liens upon fixed, capital, real and/or tangible personal property acquired after March 9, 2015 (by purchase, construction, development, improvement, capital lease, Synthetic Lease or otherwise) by the Company or any
Significant Subsidiary, each of which Liens was created for the purpose of securing Indebtedness representing, or incurred to finance, refinance or refund, the cost (including the cost of construction, development or improvement) of such property;
provided that no such Lien shall extend to or cover any property other than the property so acquired and improvements thereon; (k) Liens in favor of the Company or any Subsidiary; (l) Liens arising from the sale of accounts
receivable for which fair equivalent value is received; (m) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part, of any Liens referred to in the foregoing clauses (f), (g), (h), (i),
(j), (k) and (l); provided that the principal amount of Indebtedness secured thereby and not otherwise authorized as a Permitted Lien shall not exceed the principal amount of Indebtedness, plus any premium or fee payable in
connection with any such extension, renewal or replacement, so secured at the time of such extension, renewal or replacement; (n) Liens securing obligations of the Company or any Subsidiary of the Company in respect of any swap agreements
entered into (1) in the ordinary course of business and for non-speculative purposes or (2) solely in order to serve as a clearinghouse in respect thereof; (o) easements, zoning restrictions, minor title defects, irregularities or
imperfections, restrictions on use, rights of way, leases, subleases and similar charges and other similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations (other
than customary maintenance requirements) and which could not reasonably be expected to have a material adverse effect on the business or financial condition of the Company and its Subsidiaries taken as a whole; (p) Liens created in connection
with any share repurchase program in favor of any broker, dealer, custodian, trustee and/or agent administering or effecting transactions pursuant to a share repurchase program; (q) Liens on (1) the land, improvements, fixtures and
buildings located at 141 West Jackson Boulevard and 333 S. LaSalle St. (formerly part of 141 West Jackson Boulevard) in Chicago, (2) the land, improvements, fixtures and buildings located at One North End Ave., New York, New York 10282 and
(3) the land, improvements, fixtures and buildings comprising the data center located in Aurora, Illinois and any additional data center facility that the Company or any Significant Subsidiary acquires or leases after the Issue Date (excluding
any data center facility (other than the data center located in Aurora, Illinois) that the Company or any Significant Subsidiary owns or leases as of the Issue Date); and (r) Liens consisting of an agreement to sell, transfer or dispose of any
asset or property (to the extent such sale, transfer or disposition is not prohibited by Article VIII of the Base Indenture as amended by this Seventh Supplemental Indenture). 

“Person” means any individual, firm, corporation, partnership, association, joint venture, tribunal, trust, government or
political subdivision or agency or instrumentality thereof, or any other entity or organization and, with respect to the definition of Change of Control only, includes a “person” as used in Section 13(d)(3) of the Exchange Act. 

“Principal Property” means the land, improvements, buildings and fixtures (including any leasehold interest therein)
constituting a corporate office, facility or other capital asset within the United States (including its territories and possessions) which is owned by the Company or any of its Significant Subsidiaries unless the Company’s Board of Directors
has determined in good faith that such office or facility is not of material importance to the total business conducted by the Company and its Significant Subsidiaries taken as a whole; provided that, with respect to any Sale and Lease-Back
Transaction or series of related Sale and Lease-Back Transactions, the determination of whether any property is a Principal Property shall be determined by reference to all properties affected by such transaction or series of transactions. 

“Rating Agencies” means (1) each of Moody’s and S&P; and (2) if any of Moody’s or S&P ceases to
rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) under the
Exchange Act, selected by the Company (as certified by an executive officer of the Company) as a replacement agency for Moody’s or S&P, or both of them, as the case may be. 

“Reference Treasury Dealer” means (i) each of Barclays Capital Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and each of their respective successors and (ii) two Primary Treasury Dealers (as defined below) selected by the Company. If any one shall cease to be a primary U.S. Government securities dealer (a “Primary Treasury
Dealer”), the Company will substitute another nationally recognized investment banking firm that is a primary U.S. Government securities dealer. 

  
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 “Reference Treasury Dealer Quotation” means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by
such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding that Redemption Date. 

“Regular Record Date” for the interest payable on any Interest Payment Date means the fifteenth day, whether or not a
Business Day, immediately preceding the applicable Interest Payment Date. 
 “Remaining Scheduled Payments” means the
remaining scheduled payments of principal of and interest on the Notes called for redemption that would be due after the related Redemption Date but for that redemption; provided that if that Redemption Date is not an Interest Payment Date
with respect to the Notes called for redemption, the amount of the next succeeding scheduled interest payment on such Notes will be reduced by the amount of interest accrued to such Redemption Date. 

“S&P” means Standard & Poor’s Ratings Services. 

“Sale and Lease-Back Transaction” means any arrangement with any Person providing for the leasing by the Company or any of
its Significant Subsidiaries of any Principal Property, whether now owned or hereafter acquired, which Principal Property has been or is to be sold or transferred by the Company or such Significant Subsidiary to such Person. 

“Securities” has the meaning given to such term in the recitals hereof. 

“Significant Subsidiary,” with respect to any Person, means any Subsidiary of such person that satisfies the criteria for a
“significant subsidiary” set forth in Rule 1-02(w) of Regulation S-X under the Exchange Act. 
 “Subsidiary”
means any corporation, limited liability company or other similar type of business entity in which the Company and/or one or more of its Subsidiaries together own more than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of the board of directors or similar governing body of such corporation, limited liability company or other similar type of business entity, directly or indirectly. 

“Synthetic Lease” means any tax retention or other synthetic lease which is treated as an operating lease under United States
generally accepted accounting principles, but the liabilities under which are or would be characterized as indebtedness for tax purposes. 

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to
maturity (computed as of the third Business Day immediately preceding that Redemption Date) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for that Redemption Date. 
 “Trustee” means the person named as such in the preamble hereof and,
subject to the provisions of Article VI of the Base Indenture, any successor to that person. 
 “Voting Stock” of any
specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote generally in the election of the Board of Directors of such Person. 

ARTICLE 2. 
 THE NOTES

 Section 2.1 Issue of Notes. A series of Securities which shall be designated the “3.000% Notes due 2025” shall
be executed, authenticated and delivered in accordance with the provisions of, and shall in all respects 

  
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be subject to, the terms, conditions and covenants of, the Base Indenture and this Seventh Supplemental Indenture (including the form of Notes set forth hereto as Exhibit A). The aggregate
principal amount of Notes which may be authenticated and delivered under this Seventh Supplemental Indenture shall not, except as permitted by the provisions of the Base Indenture, initially exceed $750,000,000; provided that the Company may
from time to time or at any time, without the consent of the Holders of the Notes, issue additional Notes, which additional Notes shall increase the aggregate principal amount of, and shall be consolidated and form a single series with, the Notes;
provided further that the Company may not issue additional Notes later than twelve calendar day after the Issue Date unless such additional Notes are sold at an initial price with no more than “de minimis” original issue discount
for U.S. federal income tax purposes. 
 Section 2.2 Form of Notes; Incorporation of Terms. (a) The Notes shall be issued
initially in the form of one or more Global Securities and, together with the Trustee’s certificate of authentication thereon, shall be in substantially the form set forth in Exhibit A attached hereto. The Notes may have such notations,
legends or endorsements approved as to form by the Company and required, as applicable, by law, stock exchange or depository rules and agreements to which the Company is subject and/or usage. The terms of the Notes set forth in Exhibit A are
herein incorporated by reference and are part of the terms of this Seventh Supplemental Indenture. The Notes shall be issuable in definitive, fully registered form without coupons only in minimum denominations of $2,000 and any integral multiples of
$1,000 in excess thereof. 
 (b) Notes issued in global form shall be substantially in the form of Exhibit A attached hereto
(including the Global Security Legend thereon). Notes issued in definitive certificated form in accordance with the terms of the Base Indenture and this Seventh Supplemental Indenture, if any, shall be substantially in the form of Exhibit A
attached hereto (but without the Global Security Legend thereon). Each Global Security shall represent such of the Outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of
Outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of Outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Security to reflect the amount of any increase or decrease in the aggregate principal amount of Outstanding Notes represented thereby shall be made by the Trustee in accordance with instructions given by the Holder thereof as
required by Section 2.6 hereof. 
 Section 2.3 Execution and Authentication. The Trustee, upon a Company Order and pursuant
to the terms of the Base Indenture and this Seventh Supplemental Indenture, shall authenticate and deliver the Notes for original issue in an initial aggregate principal amount of $750,000,000. Such Company Order shall specify the amount of the
Notes to be authenticated and the date on which the original issue of Notes is to be authenticated. All of the Notes issued under this Seventh Supplemental Indenture shall be treated as a single series for all purposes under the Base Indenture and
this Seventh Supplemental Indenture, including, without limitation, waivers, amendments and offers to purchase. 
 Section 2.4
Global Securities. The Depositary for the Global Securities issued under this Seventh Supplemental Indenture shall be DTC in the City of New York. The provisions of clauses (1), (2), (3) and (4) below shall apply only to Global
Securities: 
 (1) Each Global Security authenticated under this Seventh Supplemental Indenture shall be registered in the name of the
Depositary designated for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of the Indenture. 

(2) Notwithstanding any other provision in the Indenture, no Global Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (A) such Depositary has notified the Company that it is
unwilling or unable or no longer permitted under applicable law to continue as Depositary for such Global Security and the Company has not appointed a successor Depositary within 90 days of receipt of such notice, (B) there shall have occurred
and be continuing an Event of Default with respect to such Global Security or (C) the Company so directs the Trustee by Company Order. 

  
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 (3) Subject to clause (2) above, any exchange of a Global Security for other Securities may
be made in whole or in part, and all Securities issued in exchange for a Global Security or any portion thereof shall be registered in such names as the Depositary for such Global Security shall direct. 

(4) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof. 

Section 2.5 Place of Payment. The Place of Payment in respect of the Notes will be at the office or agency of the Company in The
City of New York, State of New York or at the office or agency of the Paying Agent in The City of New York, State of New York. 

Section 2.6 Transfer and Exchange. 

(a) The transfer and exchange of beneficial interests in the Global Securities shall be effected through the Depositary, in accordance with
the provisions of the Base Indenture, this Seventh Supplemental Indenture and the then applicable procedures of the Depositary (the “Applicable Procedures”). In connection with all transfers and exchanges of beneficial interests,
the transferor of such beneficial interest must deliver to the Trustee either (A)(1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to
credit or cause to be credited a beneficial interest in another Global Security in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such increase or, if Definitive Securities are at such time permitted to be issued pursuant to this Seventh Supplemental Indenture and the Base Indenture, (B)(1) a written order from
a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Security in an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given by the Depositary to the Security Registrar containing information regarding the Person in whose name such Definitive Security shall be registered to effect the transfer or exchange referred to in
(1) above. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Securities contained in the Base Indenture, this Seventh Supplemental Indenture and the Notes or otherwise applicable under the
Securities Act, the Security Registrar shall adjust the principal amount of the relevant Global Securities pursuant to Section 2.7 hereof. 

(b) Upon request by a Holder of Definitive Securities and such Holder’s compliance with the provisions of this Section 2.6(b), the
Security Registrar shall register the transfer or exchange of Definitive Securities. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Trustee the Definitive Securities duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the Security Registrar duly executed by such Holder or by its attorney, duly authorized in writing. The Trustee shall cancel any such Definitive Securities so surrendered, and
the Company shall execute and, upon receipt of a Company Order pursuant to Section 303 of the Base Indenture, the Trustee shall authenticate and deliver to the Person designated in the instructions a new Definitive Security in the appropriate
principal amount. Any Definitive Security issued pursuant to this Section 2.6(b) shall be registered in such name or names and in such authorized denomination or denominations as the Holder of such beneficial interest shall instruct the
Security Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Securities to the Persons in whose names such Definitive Securities are so registered. In addition,
the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to Section 305 of the Base Indenture. 

Section 2.7 Cancellation and/or Adjustment of Global Securities. At such time as all beneficial interests in a particular Global
Security have been exchanged for Definitive Securities or a particular Global Security has been redeemed, repurchased or cancelled in whole and not in part, each such Global Security shall be returned to or retained and cancelled by the Trustee in
accordance with Section 309 of the Base Indenture. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial
interest in another Global Security or for Definitive Securities, the principal amount of Securities represented by such Global Security shall be reduced accordingly and an endorsement shall be made on such Global Security by the Trustee or by the
Depositary at the 

  
 8 

 
direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial
interest in another Global Security, such other Global Security shall be increased accordingly and an endorsement shall be made on such Global Security by the Security Registrar or by the Depositary at the direction of the Security Registrar to
reflect such increase. 
 Section 2.8 Repurchase upon Change of Control Triggering Event. 

(a) If a Change of Control Triggering Event occurs with respect to the Notes, unless the Company shall have exercised its right pursuant to
Section 4.1 hereof to redeem the Notes, the Company shall make an offer to each Holder of the Notes to repurchase all or, at such Holder’s option, any part (equal to $2,000 or any integral multiple of $1,000 in excess thereof) of such
Holder’s Notes (the “Change of Control Offer”) for payment in cash equal to 101% of the aggregate principal amount of the Notes repurchased plus accrued and unpaid interest, if any, on the Notes repurchased to, but not
including, the date of purchase (the “Change of Control Payment”). 
 (b) Within 30 days following any Change of Control
Triggering Event with respect to the Notes or, at the Company’s option, prior to any Change of Control but after the public announcement of the transaction or transactions that constitutes or may constitute a Change of Control, the Company
shall cause a notice to be mailed to Holders of the Notes, with a copy to the Trustee for the Notes, describing the transaction or transactions that constitute or may constitute the Change of Control Triggering Event and offering to repurchase the
Notes on the date specified in the notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”), pursuant to the procedures required by the
Notes and described in such notice. The notice shall, if mailed prior to the date of consummation of the Change of Control, state that the offer to purchase is conditioned on the Change of Control Triggering Event occurring on or prior to the Change
of Control Payment Date. Upon 10 Business Days’ advance notice to the Trustee, the Company may request the Trustee to mail the notice to Holders described in this Section 2.8(b) in the name of and at the expense of the Company. 

(c) The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes as a result of a Change of Control Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict
with this Section 2.8, the Company shall comply with those securities laws and regulations and shall not be deemed to have breached its obligations under this Section 2.8 by virtue of such conflict. 

(d) On the Change of Control Payment Date, the Company shall, to the extent lawful: 

(i) accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer; 

(ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly
tendered; and 
 (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s
Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company. 
 (e) The Paying Agent
shall promptly mail, to each Holder who properly tendered Notes, the purchase price for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each such Holder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. 

(f) The Company shall not be required to make a Change of Control Offer upon a Change of Control Triggering Event if a third party makes a
Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Seventh Supplemental Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes properly
tendered and not withdrawn under such Change of Control Offer. In the event that such third party terminates or defaults on its Change of Control Offer, the Company shall be required to make a Change of Control Offer treating the date of such
termination or default as though it were the date of the Change of Control Triggering Event. 
 (g) The Company shall not be required to
purchase any Notes if there has occurred and is continuing on the Change of Control Payment Date an Event of Default under the Indenture, other than a default in the payment of the Change of Control Payment. 

  
 9 

 ARTICLE 3. 

COVENANTS 

Section 3.1 Limitations on Liens. The Company shall not (nor shall it permit any of its Significant Subsidiaries to) create any
Lien on any Principal Property of the Company or any of its Significant Subsidiaries (or on any Capital Stock of a Significant Subsidiary), whether such Principal Property or Capital Stock is now existing or owned or hereafter acquired, to secure
any Indebtedness, unless the Company shall contemporaneously secure the Notes (together with, if the Company so determines, any other Indebtedness of or guaranty by the Company or such Significant Subsidiary then existing or thereafter created which
is not subordinated to the Notes) equally and ratably with (or, at the Company’s option, prior to) such secured Indebtedness. 
 The
foregoing restriction, however, shall not require the Company to secure the Notes if the Lien consists of either of the following: 
 (a)
Permitted Liens; or 
 (b) Liens securing Indebtedness if at the time of determination, after giving pro forma effect to the incurrence,
creation, assumption or guaranty of such Indebtedness or the securing of outstanding Indebtedness and to the retirement of Indebtedness which is concurrently being retired, the sum of (without duplication) (i) the aggregate principal amount of
all Indebtedness of the Company and its Subsidiaries secured by Liens (other than Permitted Liens) and (ii) all Attributable Debt in respect of Sale and Lease-Back Transactions not otherwise permitted under the first sentence of
Section 3.2 hereof, does not exceed fifteen percent of Consolidated Net Tangible Assets. 
 Section 3.2 Limitation on Sale and
Lease-Back Transactions. The Company shall not, and shall not permit any of its Significant Subsidiaries to, enter into any Sale and Lease-Back Transaction with respect to any Principal Property, other than (x) any such Sale and Lease-Back
Transaction with respect to (i) the land, improvements, fixtures and buildings located at 141 West Jackson Boulevard and 333 S. LaSalle St. (formerly part of 141 West Jackson Boulevard) in Chicago, (ii) the land, improvements, fixtures and
buildings located at One North End Ave., New York, New York 10282 or (iii) the land, improvements, fixtures and buildings comprising the data center located in Aurora, Illinois and any additional data center facility that the Company or any
Significant Subsidiary acquires or leases after the Issue Date (excluding any data center facility (other than the data center located in Aurora, Illinois) that the Company or any Significant Subsidiary owns or leases as of the Issue Date),
(y) any such Sale and Lease-Back Transaction involving a lease for a term of not more than three years or (z) any such Sale and Lease-Back Transaction between the Company and one of its Subsidiaries or between its Subsidiaries, unless:

 (a) the Company or such Significant Subsidiary, as applicable, could have incurred Indebtedness secured by a Lien on the Principal
Property involved in such Sale and Lease-Back Transaction in an amount at least equal to the Attributable Debt with respect to such Sale and Lease-Back Transaction, without equally and ratably securing the Notes, pursuant to Section 3.1 hereof;
or 
 (b) the proceeds of such Sale and Lease-Back Transaction are at least equal to the fair market value of the affected Principal
Property (as determined in good faith by the Company’s Board of Directors) and the Company applies an amount equal to the net proceeds of such Sale and Lease-Back Transaction within 365 days of such Sale and Lease-Back Transaction to any (or a
combination) of: 
 (i) the prepayment or retirement of the Notes, 

  
 10 

 (ii) the prepayment or retirement (other than any mandatory retirement, mandatory prepayment or
sinking fund payment or by payment at maturity) of other Indebtedness of the Company or of one of its Subsidiaries (other than Indebtedness that is subordinated to the Notes or Indebtedness owed to the Company or one of its Subsidiaries) that
matures more than 12 months after its creation; or 
 (iii) the purchase, construction, development, expansion or improvement of other
comparable property. 
 Notwithstanding the foregoing, the Company and its Significant Subsidiaries shall be allowed to enter into any Sale
and Lease-Back Transaction if, after giving pro forma effect to such Sale and Lease-Back Transaction, the sum of (without duplication) (i) the aggregate principal amount of all Indebtedness of the Company and its Subsidiaries secured by Liens
(other than Permitted Liens) and (ii) all Attributable Debt in respect of Sale and Lease-Back Transactions not otherwise permitted under the first sentence of this Section 3.2, does not exceed fifteen percent of Consolidated Net Tangible
Assets. 
 Section 3.3 Limitations on Mergers and Other Transactions. With respect to the Notes only, the provisions of
Section 801 of Article VIII of the Base Indenture are amended and restated in their entirety as follows: 
 “SECTION 801.
Company May Merge, Etc., Only on Certain Terms. 
 The Company shall not merge with or into or consolidate with any
other Person or sell, assign, transfer, lease or convey all or substantially all of its properties and assets to any Person (other than a direct or indirect wholly-owned subsidiary of the Company), unless: 

(1) the Company is the surviving corporation or, in case the Company shall merge into or consolidate with another Person or
sell, assign, transfer, lease or convey all or substantially all of its properties and assets to any Person, the Person into which the Company is merged or formed by such consolidation or the Person which acquires by sale, assignment, transfer or
conveyance, or which leases, all or substantially all of its properties and assets of the Company shall be a corporation, partnership or trust, organized and validly existing under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on all
the Notes and the performance or observance of every covenant of the Base Indenture and the Seventh Supplemental Indenture on the part of the Company to be performed or observed; 

(2) immediately after giving effect to such transaction and treating any Indebtedness which becomes an obligation of the
Company or any Subsidiary as a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing; 
 (3) the Company has delivered to the Trustee an Officers’
Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article
and that all conditions precedent herein provided for relating to such transaction have been complied with.” 

  
 11 

 ARTICLE 4. 

REDEMPTION 
 Section 4.1
Optional Redemption by Company. 
 (a) Subject to Article XI of the Base Indenture, the Company shall have the right to redeem the
Notes, at any time in whole or from time to time in part, prior to December 15, 2024 at a redemption price equal to the greater of: 

(i) 100% of the principal amount of the Notes to be redeemed and 

(ii) the sum of the present values of the Remaining Scheduled Payments of principal and interest in respect of the Notes to be
redeemed discounted to the Redemption Date (excluding interest accrued to the Redemption Date) on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a rate equal to the Treasury Rate plus 15 basis points, 

plus, in each case, accrued and unpaid interest on the Notes to be redeemed to, but excluding, the Redemption Date. 

Subject to Article XI of the Base Indenture, commencing on December 15, 2024, the Company shall have the right to redeem the Notes, at
any time in whole or from time to time in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the Redemption Date. 

The applicable redemption price in connection with a redemption of Notes under either of the first two paragraphs of this Section 4.1(a)
is referred to herein as the “Optional Redemption Price” with respect to such redemption. 
 On and after a Redemption
Date, interest will cease to accrue on the Notes called for redemption (unless the Company defaults in the payment of the Optional Redemption Price and accrued interest). On or before a Redemption Date, the Company will deposit with a Paying Agent
(or the Trustee) money sufficient to pay the Optional Redemption Price of and accrued interest on the Notes to be redeemed on that date. If less than all of the Notes are to be redeemed, the Notes to be redeemed shall be selected by the Trustee pro
rata or by lot or by a method the Trustee deems to be fair and appropriate; provided that if at the time of redemption the Notes to be redeemed are registered as one or more Global Securities, the Depositary shall determine, in accordance
with its procedures, the principal amount of the Notes to be redeemed held by each Holder of such Notes. 
 (b) Notice of any redemption
pursuant to this Section 4.1 shall be given as provided in Section 1104 of the Base Indenture, except that any notice of such redemption shall not specify the related Optional Redemption Price but only the manner of calculation thereof.
The Trustee shall not be responsible for the calculation of such Optional Redemption Price. The Company shall calculate such Optional Redemption Price and promptly notify the Trustee thereof. 

ARTICLE 5. 
 REMEDIES

 Section 5.1 Events of Default. The provisions of Section 501 of the Base Indenture shall be applicable to the Notes;
provided, however, that clauses (1), (2), (3), (4), (5), (6) and (7) of Section 501 of the Base Indenture shall, with respect to the Notes only, read as follows: 

“(1) default in the payment of any interest on any Note when it becomes due and payable, and continuance of such default
for a period of 30 days; 
 (2) default in the payment of the principal of or premium, if any, on any Note when it becomes
due and payable, at its Maturity, upon acceleration, upon redemption or otherwise (including the failure to make a payment to purchase the Notes tendered pursuant to a Change of Control Offer); 

(3) default in the performance, or breach, of any covenant or warranty contained in the Indenture (other than a covenant or
warranty a default in the performance or the breach of which is specifically dealt with elsewhere in the Indenture or which is expressly included in the Indenture solely for the benefit of a particular series of debt instruments other than the
Notes), and continuance of such default 

  
 12 

 
or breach for a period of 90 days after there has been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding
Notes a written notice specifying such default or breach (and demanding that such default be remedied) and stating that such notice is a “Notice of Default” under the Indenture; 

(4) default on any indebtedness of the Company or any of its Significant Subsidiaries having an aggregate amount of at least
$250,000,000, constituting a default either (a) of payment of principal when due and payable (whether at scheduled maturity, required prepayment, acceleration, demand or otherwise) or (b) which results in acceleration of the indebtedness,
and continuance of such default for a period of 30 days after there has been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Notes a written notice
specifying such default and stating that such notice is a “Notice of Default” under the Indenture; 
 (5) the entry
by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or any of its Significant Subsidiaries in an involuntary case or proceeding under any applicable Bankruptcy Law, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the Company or any of its Significant Subsidiaries as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any of its Significant Subsidiaries under any applicable Bankruptcy Law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any
of its Significant Subsidiaries or of any substantial part of its or their property, or ordering the winding up or liquidation of its or their affairs, and the continuance of any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; 
 (6) the commencement by the Company or any of its Significant
Subsidiaries of a voluntary case or proceeding under any applicable Bankruptcy Law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it or any of them to the entry of a decree or order for relief in
respect of the Company or any of its Significant Subsidiaries in an involuntary case or proceeding under any applicable Bankruptcy Law, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it or any of them, or the filing by it or any of them of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it or any of them to the filing of such
petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any of its Significant Subsidiaries or of any substantial part of its property,
or the making by it or any of them of an assignment for the benefit of creditors, or the admission by it or any of them in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or
any of its Significant Subsidiaries in furtherance of any such action; or 
 (7) one or more judgments for the payment of
money in an aggregate amount in excess of $250,000,000 above available insurance or indemnity coverage shall be rendered against the Company or any of its Significant Subsidiaries and the same shall remain undischarged for a period of 45 consecutive
days during which execution shall not be effectively stayed, but only if such judgment is an event of default at that time under the Credit Facility.” 

Section 5.2 Acceleration of Maturity; Rescission and Annulment. The provisions of Section 502 of the Base Indenture shall be
applicable to the Notes; provided, however, that with respect to the Notes only, the amount that shall become due and payable pursuant to any acceleration under Section 502 of the Base Indenture shall include the principal amount
of and premium, if any, on the Notes plus accrued and unpaid interest through the date of such acceleration. 

  
 13 

 ARTICLE 6. 

RANKING 

Section 6.1 Senior in Right of Payment. The Notes shall be direct senior obligations of the Company and shall rank (a) senior
in right of payment to all existing and future indebtedness that is, by its terms, expressly subordinated in right of payment to the Notes and (b) pari passu in right of payment with all other unsecured senior indebtedness of the
Company. The Notes are not guaranteed. 
 ARTICLE 7. 

REPORTS 

Section 7.1 Reports by Company. The Base Indenture is hereby amended, with respect to the Notes only, by replacing the text of
Section 704 thereof with the following text: 
 “The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to the Trust Indenture Act; provided that
any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is filed with the Commission. For purposes of
this provision, any such information, document or report that the Company has filed with the Commission and that is publicly accessible on the Commission’s EDGAR system (or any successor thereto) shall be deemed to be filed with the
Trustee.” 
 ARTICLE 8. 

AMENDMENTS 

Section 8.1 Amendments. Supplemental indentures modifying the Indenture and the terms of the Notes may be entered into as set
forth in Article IX of the Base Indenture, provided that the Base Indenture is hereby amended, with respect to the Notes only, by replacing the text of Section 902(1)-(4) thereof with the following text: 

“(1) Reduce the percentage in principal amount of affected Notes the consent of whose Holders is required for an amendment
of the Indenture or for waiver of compliance with some provisions of the Indenture or for waiver of some defaults under the Indenture; 

(2) Reduce the rate of interest on any Note or change the time for payment of interest; 

(3) Reduce the principal amount of, or premium, if any, due on the Notes or change the Stated Maturity thereof; 

(4) Change the Place of Payment where, or the coin or currency in which, any Note or any premium or interest thereon is
payable; 
 (5) Change the provisions relating to waiver of defaults under the Indenture; 

(6) Modify the provisions of the Indenture relating to the ranking of the Notes in a manner adverse to Holders; 

(7) Modify the redemption provisions of the Indenture and the Notes in a manner adverse to Holders; 

(8) Impair the right of Holders to institute suit for the enforcement of any payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date); or 
 (9) Modify any of the provisions of this Section,
Section 513 or Section 1008, except to increase any such percentage or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby;
provided, however, that this Clause shall not be deemed to require the consent of any Holder with respect to changes in the references to “the Trustee” and concomitant changes in this Section and Section 1008, or the
deletion of this proviso, in accordance with the requirements of Sections 611 and 901(7).” 

  
 14 

 ARTICLE 9. 

MISCELLANEOUS 

Section 9.1 Execution as Supplemental Indenture. This Seventh Supplemental Indenture is executed and shall be construed as an
indenture supplemental to the Base Indenture and, as provided in the Base Indenture, this Seventh Supplemental Indenture forms a part thereof. 

Section 9.2 Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision
hereof, or with a provision of the Base Indenture, which is required to be included in this Seventh Supplemental Indenture, or in the Base Indenture, respectively, by any of the provisions of the Trust Indenture Act, such required provision shall
control to the extent it is applicable. 
 Section 9.3 Certificates, Opinions, Etc. In any case where, pursuant to the Base
Indenture with respect to the Notes and/or this Seventh Supplemental Indenture or pursuant to the Indenture, several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates,
statements, opinions or other instruments under the Base Indenture with respect to the Notes and/or this Seventh Supplemental Indenture or under the Indenture, they may, but need not, be consolidated and form one instrument. 

Section 9.4 Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the
construction hereof. 
 Section 9.5 Successors and Assigns. All covenants and agreements by the Company and the Trustee in this
Seventh Supplemental Indenture shall bind its successors and assigns, whether so expressed or not. 
 Section 9.6 Separability
Clause. In case any provision in this Seventh Supplemental Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired
thereby. 
 Section 9.7 Benefits of Seventh Supplemental Indenture. Nothing in this Seventh Supplemental Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Seventh Supplemental Indenture. 

Section 9.8 Execution and Counterparts. This Seventh Supplemental Indenture may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 

Section 9.9 Governing Law. This Seventh Supplemental Indenture and the Notes shall be governed by and construed in accordance with
the laws of the State of New York. 

  
 15 

 IN WITNESS WHEREOF, the parties hereto have caused this Seventh Supplemental Indenture to be duly
executed as of the day and year first above written. 
  

			
	CME GROUP INC.
		
	By:		 /s/ John W. Pietrowicz

	Name:		John W. Pietrowicz
	Title:		Senior Managing Director and Chief Financial Officer

  

			
	By:		 /s/ James A. Pribel

	Name:		James A. Pribel
	Title:		Executive Director and Treasurer

  
 Seventh Supplemental
Indenture Signature Page 

 
			
	U.S. BANK NATIONAL ASSOCIATION,
	as Trustee
		
	By:		 /s/ Linda Garcia

	Name:		Linda E. Garcia
	Title:		 Vice President

  
 Seventh Supplemental
Indenture Signature Page 

 EXHIBIT A 

[FORM OF FACE OF SECURITY] 

[THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.] 
 [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] 

[Insert any legend required by the Internal Revenue Code and the regulations thereunder.] 

CME Group Inc. 
 3.000% Notes due
2025 
  

			
	No.        		$        
		
			 [CUSIP No. 12572Q AG0]

[ISIN No. US 12572QAG01]

 CME Group Inc., a Delaware corporation (herein called the “Company,” which term includes any
successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to         , or registered assigns, the principal sum of
         Dollars on March 15, 2025, and to pay interest thereon from March 9, 2015 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in
arrears on March 15 and September 15 in each year, commencing September 15, 2015, at the rate of 3.000% per annum, until the principal hereof is paid or made available for payment, provided that any principal and premium,
and any such installment of interest, which is overdue shall bear interest at the rate of 3.000% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid
or made available for payment, and such interest shall be payable on demand. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name
this Security is registered at the close of business on the Regular Record Date for such interest, which shall be March 1 or September 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any
such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. 

  
 A-F-1 

 Payment of the principal of (and premium, if any) and any such interest on this Security will be
made at the office or agency of the Company maintained for that purpose in New York, New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register; and provided,
further, that if this Security is a Global Security, payment may be made pursuant to the Applicable Procedures of the Depositary as permitted in the Indenture. 

If any Interest Payment Date, Repurchase Date, Stated Maturity or Maturity is not a Business Day, then payment of principal, premium, if any,
or interest, as applicable, shall be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date, Repurchase Date, Stated Maturity or Maturity. No interest shall accrue on the amount so payable
for the period from the relevant Interest Payment Date, Repurchase Date, Stated Maturity or Maturity to the date on which the payment is made. 

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place. 
 Unless the certificate of authentication hereof has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 

  
 A-F-2 

 IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed. 
  

			
	CME GROUP INC.
		
	By:		  

	Name:		
	Title:		
		
	By:		  

	Name:		
	Title:		

  

	
	Attest:
	
	  

	Name:
	Title:

 Global Note Signature Page 

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. 

Dated: 
  

			
	 U.S. BANK NATIONAL ASSOCIATION,

As Trustee

		
	By		  

			Authorized Signatory

  
 Global Note Signature
Page 

 [FORM OF REVERSE OF SECURITY] 

This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to
be issued in one or more series under a Senior Debt Indenture, dated as of August 12, 2008 (the “Base Indenture”), as supplemented by Seventh Supplemental Indenture, dated as of March 9, 2015 (the “Supplemental
Indenture” and, together with the Base Indenture, the “Indenture”), between the Company and U.S. Bank National Association, as Trustee (herein called the “Trustee,” which term includes any successor trustee
under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof initially limited in aggregate principal amount to $750,000,000, provided that the Company may, without the
consent of any Holder, at any time and from time to time increase the initial principal amount. 
 The Securities of this series are subject
to redemption as provided in Section 4.1 of the Supplemental Indenture and Article XI of the Base Indenture. 
 This Security will not
be subject to any sinking fund. 
 The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security
or certain restrictive covenants and Events of Default with respect to this Security, in each case upon compliance with certain conditions set forth in the Indenture. 

If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of, and premium, if any, plus
accrued and unpaid interest on the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations
of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of not less than a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all
Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security. 
 As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the
right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of
Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect
of such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction
inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for
the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein. 

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. 

  
 A-R-1 

 As provided in the Indenture and subject to certain limitations therein set forth, the transfer
of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are
payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more
new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 

The Securities of this series are issuable only in registered form without coupons in minimum denominations of $2,000 and integral multiples
of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering the same. 
 No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. 

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. 

This Security and all the obligations of the Company hereunder are direct, senior unsecured and unsubordinated obligations of the Company and
rank pari passu with all other senior unsecured and unsubordinated indebtedness of the Company from time to time outstanding. 

THE SECURITIES OF THIS SERIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 

  
 A-R-2Exhibit 10.40

 

EMPLOYMENT AND CONFIDENTIALITY AGREEMENT

Community West Bank

Executive Vice President & Chief Operating Officer

This Employment and Confidentiality Agreement (the "Agreement") is made and entered into as of December 1, 2014 (the "Effective Date") by and among Community West Bank, NA (“Bank”) a wholly owned subsidiary of Community West Bancshares, Community West Bancshares, a California corporation (“Parent”) and Charles Kohl ("Executive").

Witnesseth

Whereas the Bank is a California national banking association duly organized, validly existing, and in good standing under the laws of the United States of America, with power to own property and carry on its business as it is now being conducted, with its principal place of business located at 445 Pine Street, Goleta, California 93117;

Whereas the Bank desires to avail itself of the skill, knowledge and experience of Executive in order to insure the successful management of its business;

Whereas the parties desire to enter into this Agreement;

Whereas the parties hereto desire to specify the terms of Executive's employment by the Bank and Company as controlling Executive's employment at the Bank;

Now, therefore, in consideration of the representations, warranties, and mutual covenants set forth in this Agreement, the following terms and conditions shall apply to Executive's employment with the Bank on and after the Effective Date:

1. ARTICLE 1- EMPLOYMENT AND TERM

1.1. Employment. The Bank shall employ Executive as the Bank's Executive Vice President and Chief Operating Officer (the "Position"), and Executive accepts such employment, in accordance with the terms and conditions set forth in this Agreement. The place of Executive's employment under this Agreement shall be in Goleta, California, or at a location determined by the Board of Directors of the Bank (the "Board of Directors").

1.2. Term. The term of employment under this Agreement ("Initial Term") shall commence on the Effective Date and end on November 30, 2015, subject to early termination, provided in Article 4, below.  “Term” shall refer to the entire period of employment of Executive by Bank, commencing with the Effective Date, whether for the Initial Term, the Renewal Term as provided for in Section 1.3 below or whether terminated earlier as provided for in this Agreement.

1.3. Renewal. Upon the expiration of the Initial Term, Executive's employment under this Agreement shall automatically renew for a successive period of twelve (12) months ("Renewal Term"), and upon expiration of any subsequent Renewal Term shall automatically renew for a successive period of twelve (12) months; unless, at least three (3) months before the expiration of the Initial Term and any Renewal Term, as applicable, either (a) the Board provides written notice of non-renewal to Executive; or, (b) Executive provides written notice of non-renewal to Bank. Unless notice of non-renewal is provided, each party shall negotiate in good faith the terms and conditions for any Renewal Term of this Agreement.

1.4. Policies and Regulations. Executive shall observe, comply with and be bound by all of the policies, rules and regulations established by the Bank with respect to its executives and otherwise, all of which policies, rules and regulations are subject to change by the Bank from time to time.

2. ARTICLE 2- DUTIES OF EXECUTIVE

2.1. Powers. At all times Executive shall be empowered by and subject to the powers and authority of the Board of Directors and the Bank's shareholders. Executive shall report directly to the Bank's President and Chief Executive Officer (the "CEO").

2.2. Duties.

 

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(a) Executive Vice President and Chief Operating Officer of Bank. Executive shall have the title of Executive Vice President and Chief Operating Officer of the Bank and directly or through subordinate supervision, shall take a leadership role in building, implementing, and overseeing systems, processes, workflows, and procedures to effectively grow the organization. Working closely with the CEO, the Executive is responsible for technical and operational activities on a day-to-day basis, as well as formulation of strategies and business plans to achieve the Bank's long range objectives in accordance with the Position. The COO plays a critical role in planning, shaping, and guiding the future growth and development of the Bank. Executive agrees to render such services and perform such duties (the "Duties") in connection with all aspects of Bank's business as may be required by the Board of Directors and/or the CEO. Executive shall perform these Duties, and the Specific Duties as defined in Section 2.3, faithfully, diligently, to the best of Executive's ability and in the best interests of the Bank, consistent with the highest standards of the banking industries and in compliance with all applicable laws, rules, regulations, and policies applicable to the Bank, including, but not limited to, the Federal Deposit Insurance Act, as amended, and all regulations thereunder, and the Bank's Articles of Association and Bylaws.

 

2.3. Specific Duties and Essential Functions. Without limiting any of Executive's Duties and obligations under Section 2.2, above, Executive agrees to undertake and perform all duties required of the Position (the "Specific Duties"), including, but are not limited to each of the following:

		·	Work closely with the President/CEO to develop and accomplish goals and strategic plans established by the Board of Directors and company executives.

 

		·	Management responsibility for the strategic planning process and implementation of the plan.

 

		·	Provide clear directions on strategic goals, translating and prioritizing them into business and performance measures.

 

		·	Ensure strategic objectives are translated into tactical business plans with mechanisms for key measurements in place to monitor progress to completion.

 

		·	Contribute to the development of business unit strategy by providing a view on potential improvement for products or services and an assessment of the existing situation and anticipated changes in the external environment.

 

		·	Develop and implement plans for the operational infrastructure of operating systems, processes, and personnel designed to accommodate the growth objectives of the Bank.  Ensure that business projects are delivered in line with directions from Management.

 

		·	Develop and establish operating policies consistent with the Bank’s broad policies and objectives to insure execution.

 

		·	Coordinate the efforts of the different operational areas under management to ensure minimal duplication of efforts, maximum efficiency & effectiveness, and maximum value.

 

		·	Ensure that a proper infrastructure (building, systems, and staff complement) is maintained and developed for the Bank.

 

		·	Spearhead the development, communication, and implementation of effective growth strategies and processes; driving the achievement of sales, profitability, business goals, and objectives.

 

		·	Maintain knowledge of market and industry trends, competitors, and all aspects of the market.

 

		·	Establish and monitor key performance indicators for management of the assigned departments.

 

		·	Direct the development and establishment of adequate and equitable personnel policies throughout the organization, including compensation policies, employee benefit plans, training and career pathing.

 

		·	Lead, inspire and coach a team of high caliber professionals, creating succession to key roles and enhancing the Bank’s management capability.

 

		·	Foster a success-oriented, open, and accountable environment within the Bank.

 

		·	Represent the Bank with clients, prospects, investors, and business partners.

 

		·	Assist the CEO and the Board of Directors in accomplishing the activities to comply with the Bank's Strategic & Capital Plan.

 

		·	Serve as a member of the Executive Management Team

2.4. Conflict of Interests. Executive shall not directly or indirectly render any services of a business, commercial or professional nature, to any other person, firm or corporation, whether for compensation or otherwise, which create an actual or apparent conflict with the Bank's interests. Any determination as to a conflict of interest will be made by the Board of Directors in good faith.  Further, Executive shall not engage in any activity that would impair Executive's ability to act and exercise independent judgment in the best interests of Bank.

2.5. Exclusive Services. During employment by the Bank, Executive shall not, without the express prior written consent of the Board of Directors, engage directly or indirectly in any outside employment or consulting of any kind, whether or not Executive receives remuneration for such services. Nothing in this Section 2.5 shall prohibit Executive from providing volunteer consulting services (the "Volunteer Services") through established non-profit or charitable organizations in furtherance of such organization's purposes, so long as such Volunteer Services do not materially interfere with Executive's performance of Executive’s Duties and obligations under this Agreement.

 

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3. ARTICLE 3 - COMPENSATION. As the total consideration for the services that Executive renders under this Agreement, Executive shall be entitled to the following:

 

3.1. Base Salary. Effective December 1, 2014, the Bank shall pay Executive a Base Salary (“Base Salary”) of one hundred eighty thousand dollars ($180,000) per year, less income tax and other applicable withholdings. Executive’s Base Salary will be reviewed against the market every year and adjusted as warranted in the sole discretion of the Board of Directors. Base Salary shall be paid in accordance with Bank's regular payroll practices.

3.2. Annual Bonus. Executive shall be eligible to receive an annual bonus, at an amount, if any, determined by the Board of Directors, in its sole discretion. If it is determined that a Bonus will be paid Executive for any calendar year, the Bonus (the “Bonus”) will be paid at or near the close of the calendar year, but no later than sixty (60) days after year-end. Executive acknowledges and agrees that nothing in this Agreement or the Bank's general policies shall require the Bank to pay Executive a Bonus for any year, to pay Executive a Bonus in particular amount for any year, or to pay Executive a Bonus by reason of the Bank's payment of a Bonus to any other executives of the Bank.

3.3. Equity.  Executive will be eligible to be considered for participation in the equity programs of the Company at the discretion of the Bank.

 

3.4. Deferred Compensation.

(a) Deferred Compensation. The Bank hereby establishes a balance sheet liability account for the benefit of Executive (the “Deferred Account”). The provisions of this Section 3.4 shall control all obligations of the Bank with respect to all amounts credited to the Deferral Account.

 

		(i)	Monthly Credits. Subject to the provisions of Section 3.4(b)(ii) below, beginning as of December 1, 2014 and continuing throughout the Term, including any Renewal Term, of this Agreement, the Bank shall credit to the Deferral Account on the last day of each calendar month an amount equal to the product of (A) 1% and (B) the Executive’s Base Salary in effect at the time; provided that in no event shall the Bank be obligated to credit any amount to the Deferral Account with respect to any month unless Executive is employed by the Bank under this Agreement as of the last day of such calendar month.

		(ii)	No Credit During Disability. Notwithstanding anything in this Agreement to the contrary, the Bank shall not be obligated to credit any amount to the Deferral Account under Section 3.4(a)(i) above with respect to any period during which Executive is disabled (as defined in Section 4.6 below). Notwithstanding the foregoing, interest shall accrue on the balance of the Deferral Account during any period during which Executive is disabled at the rate set forth in Section 3.4(b) below.

 

(iii) All provisions outlined in the deferred compensation portions of this Agreement will vest 100% at Change in Control (as defined in Section 3.4(d) below.

(b) Interest Accrual. The Bank shall credit to the Deferral Account at the end of each calendar month interest on the balance of the Deferral Account at such date at a rate equal to the then current rate offered by the Bank on a six (6) month certificate of deposit. Interest shall continue to accrue on the balance in the Deferral Account so long as any amounts remain credited to the Deferral Account and unpaid to Executive.

(c) Payment of Deferral Amounts.

(i)  No Payment if Termination of Employment Prior to Normal Retirement Age or the later of 5 years of service. Except as provided in Section 3.4(d) below, if Executive's employment under this Agreement terminates for any reason other than only Executive's death or disability prior to the date on which he attains Normal Retirement Age or the later of 5 years of service, the Bank shall have no obligation to pay any amount to Executive with respect to any amounts credited to the Deferral Account whether pursuant to this Agreement or otherwise. Normal Retirement Age means the latter of (A) the Executive’s attainment of age 65, or (B) the 5th anniversary of the Effective Date hereunder.

 

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(ii)  Payment After Normal Retirement Age. Subject to the provisions of Section 3.4(c)(i), above, at such time as Executive attains Normal Retirement Age, whether or not he is then employed with the Bank, the Bank shall make payments to Executive with respect to amounts credited to the Deferred Account as follows:

(A) Beginning on the first day of the 13th calendar month after Executive attains Normal Retirement Age, the Bank shall pay to Executive the Deferred Account in a series of five equal annual amounts.  Executive may change the amount and the time for payment of any amounts under this Section 3.4(c)(ii)(A) so long as such change is made in compliance with the election and other requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code").

(B) The parties intend that the provisions of Section 3.4(c)(ii)(A) provide for the payment of the Deferred Account balance at a specified time (or pursuant to a fixed schedule) within the meaning of Section 409A(a)(2)(A)(iv) of the Code.  Such series of payments is to be treated, at all times and for all purposes, as an entitlement to a series of separate payments.

(iii)  Payment on Executive's Disability. If the Bank terminates this Agreement by reason of Executive's Disability (as defined in Section 4.6 below), the Bank shall pay to Executive an annual amount at a rate of up to $50,000 per year.  Executive may change the amount and the time for payment of any amounts under this Section 3.4(c)(ii)(A) so long as such change is made in compliance with the election and other requirements of Section 409A of the Code until all amounts credited to the Deferral Account have been paid to or for the account of Executive.  Notwithstanding the foregoing, once Executive attains age 66, the amounts payable by the Bank to Executive shall be determined under Section 3.4(c)(ii) above and not this Section 3.4(c)(iii). If Executive dies after the Bank has commenced paying his amounts under this Section 3.4(c)(iii), the Bank shall pay to Executive's Designated Heirs (as defined below) in accordance with the provisions of Section 3.4(c)(iv), below, the balance in the Deferred Account on the date of Executive's death.

Executive may change the amount and the time for payment of any amounts under this Section 3.4(c)(ii)(A) so long as such change is made in compliance with the election and other requirements of Section 409A of the Code.

(iv) Payment on Executive's Death. If Executive dies prior to the Bank's payment to Executive of all amounts credited to the Deferral Account, the entire balance of the Deferral Account on the date of Executive's death shall be paid by the Bank to Executive's Designated Heirs (as defined below) within thirty (30) days after the later of(A) the date of the delivery to the Bank of written notice of Executive's death or (B) the date on which the Bank receives a court order or written instructions from legal counsel for Executive or Executive's estate reasonably acceptable to the Bank authorizing and confirming the payment of the account balance to the Designated Heirs. Set forth in Exhibit A hereto is a schedule of Executive's heirs (the "Designated Heirs") for purposes of this Agreement. Executive may change the Designated Heirs at any time and from time to time; provided that the Bank shall not be bound by any change to the Designated Heirs unless and until the Bank has received written notice of the change.

(v) Termination of Payment Obligation. The Bank shall have no obligation to pay Executive any amounts under this Section 3.4(c) on or after the date on which the Bank has paid to Executive the entire amount credited to the Deferral Account.

(vi) Performance of Services. All amounts credited to the Deferral Account under this Section 3.4 are deemed credited with respect to services performed or to be performed by Executive under this Agreement after the Effective Date.

 

(d) Vesting on Change in Control.  All provisions outlined in the deferred compensation portions of this Agreement will vest 100% at Change in Control as defined herein.

Change in Control Definition: Change in Control (the “Change in Control”) means a change in control of the Bank or Parent of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934 (the “Act”), whether or not the Bank or Parent is then subject to such reporting requirement; provided Change in Control shall be deemed to have occurred if:

 

(i)  any person or group (as such terms are used in connection with Sections 13(d) and 14(d) of the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 and 13d-5 under the Act), directly or indirectly, of securities of the Bank or Parent representing 51% or more of the combined voting power of the Bank’s or Parent’s then outstanding securities; or

 

(ii) the Bank or Parent is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or

 

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(iii) during any period of twelve (12) consecutive months, individuals who at the beginning of such period constituted the Board of Directors of the Bank or Parent (including for this purpose any new director whose election or nomination for election by the Bank’s or Parent’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors.

 

Notwithstanding the foregoing provisions of this Section, Change in Control will not be deemed to have occurred solely because of the acquisition of securities of the Bank or Parent (or any reporting requirement under the Act relating thereto) by an employee benefit plan maintained by the Bank or Parent for its employees.

 

(e) Tax Election. To the extent that this Agreement or the provisions of this Section 3.4 constitute a nonqualified deferred compensation plan within the meaning of Section 409A of the Code, Executive hereby makes an irrevocable election as to the payment of any deferred compensation in accordance with the provisions of this Section 3.4.

(f) Status of Deferred Account. Executive agrees that the Bank shall establish and maintain the Deferral Account only as a balance sheet liability account and that the Bank shall have no obligation to deposit or maintain any cash or other assets in a separate or segregated account for the benefit of Executive.

 

3.5. 401K Plan. Subject to Executive's compliance with the eligibility and other terms and conditions of the Bank’s 401(k) Plan (the “Plan”), Executive will be eligible to participate In the Bank's 401(k) Plan.

3.6. Bank Executive Benefits. Subject to Executive's satisfaction of any eligibility requirements, Executive shall be eligible to participate in other Bank employee benefit plans, for both Executive and family (including medical, dental, vision, prescription plan, life insurance, and short-term disability benefits) generally provided by the Bank to its senior executives. In all events, the Bank's liability to Executive shall be limited to the amount of premiums payable by the Bank to obtain the coverage(s) contemplated herein. Nothing in this Section 3.6 or any other provision of this Agreement shall prohibit the Bank from, or limit the right of the Bank to, changing or modifying the terms of any of the foregoing employee benefit plans or terminating any of such plans.

3.7. Vacation. Executive shall be entitled to vacation time of not more than four (4) weeks per year. Executive shall be entitled to accumulate up to six (6) weeks of accrued vacation, after which additional vacation will not accrue. The Bank shall not be obligated to pay or reimburse Executive at the end of any calendar year any amount for any unused vacation time. The Bank shall pay or reimburse Executive at the end of the Term or any Renewal Term after which there is no further Renewal Term, for any unused vacation time.

3.8. Reimbursement for Expenses. The Bank shall reimburse Executive for any and all reasonable business expenses incurred by Executive on behalf of Bank in the performance of this Agreement, approved expenditures to be determined by the Board of Directors (the "Business Expenses"). A reimbursable Business Expense shall be of a nature qualifying it as a proper business expense deduction on the federal and state income tax returns of the Bank. Executive must be able to furnish adequate records and any other documentary evidence as may be required by Federal and State statues.  If such expenses are disallowed Executive agrees to reimburse Bank.

4. ARTICLE 4- TERMINATION

4.1. Termination At Will. Notwithstanding anything to the contrary herein, the Bank may terminate this Agreement at any time and for any reason, with or without cause, in accordance with the provisions of this Section 4. Except as otherwise specifically provided in this Agreement, such termination shall be effective either immediately upon receipt of notice of termination by Executive from the Bank or at such later date as the Bank may specify in the notice of termination. Notwithstanding anything in this Agreement to the contrary, the Bank shall have no obligation to continue Executive's employment under this Agreement for any period or any particular period.

4.2 Involuntary Termination or Non-Renewal; Without Cause.

 

(a)   If Executive’s employment is terminated under the provisions of this Agreement and such termination is not within one year following a Change in Control, Executive shall receive:

 

(i)  any incentive compensation earned but not yet paid, and

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(ii)   reimbursement of expenses incurred  but not yet reimbursed.

(iii)  three months (3) months of Executive’s annual base salary as in effect on the date the Term of Employment ends.

(b)  During the twelve (12) month period commencing upon a termination of employment under the terms of this Agreement, Executive (and, where applicable, his dependents) shall be entitled to continue participation in the group insurance health plans maintained by the Bank through “ COBRA” the Consolidated Omnibus Budget Reconciliation Act of 1986 or health insurance programs with Bank contributing it’s portion of cost of premium to executive as if he were still an employee.  The foregoing notwithstanding, in the event that Executive becomes eligible for comparable group insurance coverage in connection with new employment, the coverage provided by the Bank under Section 3.6 shall terminate immediately. Any group health continuation coverage that the Bank is required to offer under the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”) shall commence when coverage under this Agreement terminates.

 

(c) Except as provided in this Agreement or required by law, all of Executive’s employee benefits and compensation shall cease on the last day on which Executive performs services as an employee of the Bank.

 

(d) Executive shall not be required to mitigate the amount of any payment or benefit contemplated by this Agreement (whether by seeking new employment or otherwise) and no such payment or benefit shall be reduced by earnings that Executive may receive from any other source.

 

(e) Deferred Compensation. If applicable, the Bank shall pay Executive the balance in the Deferral Account in accordance with the provisions of Section 3.4(c), above.

4.3. Termination by the Bank for Cause. The Bank may terminate this Agreement at any time for "cause" (as defined below) by giving to Executive ten (10) days prior written notice of termination.

(a) Definition of Cause. For purposes of this Section 4.3, the term "cause" means only:

(i)  conviction of or confession by Executive to theft, fraud, or embezzlement including, but not limited to, against the Bank;

(ii) Executive's refusal or failure, after specific written notice and demand by the Bank, to diligently perform services for the Bank as required by Article 2 hereof;

(iii) Executive's breach or violation of any material written policy or regulation of the Bank, including, but not limited to, any written policy or regulation dealing with sexual harassment, discrimination based on age, sex, race, religion or other protected category, illicit drugs, and environmental protection matters;

(iv) Executive's willful breach or violation of any law, rule or regulation (other than traffic violations or similar offenses);

(v)Executive's taking of any material action which requires the prior approval of the Board of Directors without such approval; and

(vi) Executive's breach of or failure to perform any of his fiduciary duties to the Bank or Parent or to any of the Parent’s shareholders which involves personal profit to Executive or such shareholders.

(b) Notice of Termination. If the Bank proposes to terminate this Agreement under clause (a)(i) above, this Agreement shall terminate automatically at the end of such 10-day period and the Bank shall have no further obligation to give Executive any further notice of termination. If the Bank proposes to terminate this Agreement under any of Section 4.3(a) above, this Agreement shall terminate automatically at the end of such 10-day period and the Bank shall have no further obligation to give Executive any further notice of termination unless Executive has cured, to the reasonable satisfaction of the Bank, during such 10-day period the alleged cause of termination and the Bank provides Executive written notice of its acceptance of such cure. Notwithstanding anything in this Agreement to the contrary, if the Bank proposes to terminate this Agreement for cause under this Section 4.3, so long as the Bank provides Executive a reasonable opportunity to cure any alleged cause, if the Bank is required to do so, the Bank may terminate this Agreement as of the date of the initial notice of termination and pay Executive an additional ten (10) days of severance compensation.

(c) Compensation.

 

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(i)  Earned Compensation. Executive shall have the right to receive compensation which has already vested or been earned as of the date of termination of this Agreement under this Section 4.3.

(ii) Deferred Compensation. If applicable, the Bank shall pay Executive the balance in the Deferral Account in accordance with the provisions of Section 3.4(c), above.

(d) Benefits.

(i)  Earned Benefits. Executive shall have the right to receive benefits which have already vested or been earned as of the date of termination of this Agreement under this Section 4.3, unless expressly prohibited by the terms of any plan, program or agreement governing such compensation or benefits.

(ii)  Additional Benefits. Executive shall be entitled to receive only the right to participate in the Bank's medical plan in accordance with the provisions of COBRA; provided that Executive shall be responsible for paying all applicable insurance premiums and the Bank shall have no obligation to pay any such premiums.

 

4.4. Termination by Executive on Other Event.

(a) Right to Terminate. Executive may terminate this Agreement at any time upon the occurrence of an Other Event (as defined below) by giving to the Bank sixty (60) days prior written notice of termination. Executive must deliver his notice of termination under this Section 4.4(a) within sixty (60) days after the occurrence of any Other Event specified below. Executive shall specify in reasonable detail in such notice of termination the basis for the claim that the Bank has breached or failed to perform any of its material obligations or covenants. This notice of termination must set forth in reasonable detail the facts and circumstances that support Executive's claim of right to terminate this Agreement under this Section 4.4.

(b) Definition. For purposes of this Agreement the term "Other Event" shall mean the Bank's breach or failure to perform any of its material obligations or covenants under this Agreement, and either the Bank's failure to cure such breach or failure of performance within the 15-day period specified in Section 4.4(c) below, or the continuation of such breach or failure of performance after such 15-day period without Executive's written consent.

 

(c) Right to Cure. The Bank shall have an opportunity to cure said breach or failure of performance within fifteen (15) days of Bank's receipt of written notice specifying the material breach and the opportunity for Bank to resolve said breach.

(d) Compensation.

(i) Earned Compensation. Executive shall have the right to receive compensation which has already vested or been earned as of the date of termination of this Agreement under this Section 4.3.

(ii) Deferred Compensation. If applicable, the Bank shall pay Executive the balance in the Deferral Account in accordance with the provisions of Section 3.4(c), above.

(e) Benefits.

(i)  Earned Benefits. Executive shall have the right to receive benefits which have already vested or been earned as of the date of termination of this Agreement under this Section 4.3, unless expressly prohibited by the terms of any plan, program or agreement governing such compensation or benefits.

(ii) Additional Benefits. Executive shall be entitled to receive the Benefits specified in Section 4.2, above, in accordance with and subject to the terms of such Section.

4.5. Termination on Death of Executive. This Agreement shall terminate automatically upon Executive's death.

(a) Compensation. The Bank shall pay to Executives’ beneficiary or beneficiaries or estate, as the case may be:

(i)the compensation which has been earned through the date of termination of this Agreement under this Section 4.5; and

(ii) the balance in the Deferral Account in accordance with the provisions of Section 3.4(c)(iv), above.

(b) Benefits. Executives’ beneficiary or beneficiaries or estate, as the case may be, shall have the right to receive benefits which have already vested or been earned as of the date of termination of this Agreement under this Section 4.6, unless expressly prohibited by the terms of any plan, program or agreement governing such compensation or benefits.

 

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4.6. Termination on Mental or Physical Disability of Executive.

(a) Right to Terminate. If Executive is found to have a Disability (as defined in Section 4.6(b) below) that renders him incapable of performing Executive's Duties and/or Specific Duties for a period of thirty (30) consecutive days, or a cumulative period of one hundred twenty (120) days in any one (1) calendar year, the Bank, acting in good faith, may terminate this Agreement as of the termination date specified in a written notice of termination delivered to Executive, except that there is no minimum Notice Period requirement.

(b) Definition of Disability. For purposes of this Agreement only, Executive shall be considered disabled and shall be considered to have a disability (a “Disability”) if Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which 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 Executive’s employer.

(c) Compensation.

(i)  Earned Compensation. Executive shall have the right to receive compensation which has already vested or been earned as of the date of termination of this Agreement under this Section 4.6.

(ii) Deferred Compensation. If applicable, the Bank shall pay Executive the balance in the Deferral Account in accordance with the provisions of Section 3.4(c)(iii) above.

(d) Benefits.

(i)  Earned Benefits. Executive shall have the right to receive benefits which have already vested or been earned as of the date of termination of this Agreement under this Section 4.6, unless expressly prohibited by the terms of any plan, program or agreement governing such compensation or benefits.

(ii) Additional Benefits. Executive shall be entitled to receive the Benefits specified in Section 4.2, above, in accordance with and subject to the terms of such Section.

(e) Dispute re Disability. If there should be a dispute between the Bank and Executive as to Executive's physical or mental Disability for purposes of this Agreement, the question shall be settled by the opinion of an impartial reputable physician or psychiatrist mutually agreed upon by the parties or their representatives, or if the parties cannot agree within ten (10) days after a request for designation of such party, then by a physician or psychiatrist designated by the Santa Barbara County Medical Association.  Such physician or psychiatrist shall be instructed to make the determination in accordance with the definition of Disability set forth in Section 4.6 hereof.

4.7. Termination on Change in Control.

(a)   If, within one year following a Change of Control, Executive’s employment is terminated under the provisions of this Agreement or as a result of the Bank’s election not to extend this Agreement and the Term of Employment pursuant to this Agreement, Executive shall receive:

(i)   The sum of twelve months (12) months of the Executive’s annual Base Salary under Section 6(a) hereof as in effect on the date the Term of Employment ends,

(ii)   any incentive compensation earned but not yet paid, and

(iii)   any expenses incurred under this Agreement but not yet reimbursed.

 

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(b)  The payment to which Executive is entitled pursuant to this Agreement shall be paid in a single installment within forty-five (45) days of his termination with no percent value or other discount or, at Executive’s option, on a deferred basis with no premium.

 

(c) During the twelve months (12) month period commencing on the date his Term of Employment ends under this Agreement, Executive (and, where applicable, his dependents) shall be entitled to continue participation in the group health insurance plans maintained by the Bank the Consolidated Omnibus Budget Reconciliation Act of 1986 under “COBRA”, or health insurance programs with Bank contributing it’s portion of cost of premium to executive as if he were still an employee of the Bank. Where applicable, Executive’s salary for purposes of such plans shall be deemed to be equal to his annual Base Salary in effect immediately prior to his termination.  The foregoing notwithstanding, in the event that Executive becomes eligible for comparable group insurance coverage in connection with new employment, the coverage provided by the Bank under this Section 4.2 shall terminate immediately. Any group health continuation coverage that the Bank is required to offer under the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”) shall commence when coverage under this Section 4.2 terminates.

 

(d) Except as provided in this Agreement or required by law, all of Executive’s employee benefits and compensation shall cease on the last day on which he performs services as an employee of the Bank.

 

(e) Executive shall not be required to mitigate the amount of any payment or benefit contemplated by this Agreement) (whether by seeking new employment or otherwise) and no such payment or benefit shall be reduced by earnings that Executive may receive from any other source.

 

(f) Notwithstanding any other provision of this Agreement, the Bank shall not be required to make any payment or property transfer to, or for the benefit of, Executive (under this Agreement or otherwise) that would be nondeductible by the Bank by reason of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or that would subject Executive to the excise tax described in Section 4999 of the Code.

 

(g) Deferred Compensation. If applicable, the Bank shall pay Executive the balance in the Deferral Account in accordance with the provisions of Section 3.4(d) above.

4.8. Clawback Right.

 

(a)  To the extent permitted under controlling state and federal law, if at any time, either before or after Executive’s resignation or termination (for any reason) of employment with the Bank under Section 4.2, above, or otherwise, it is determined that any of the circumstances described in this Section 4.8(b) apply, then the Bank shall have the following rights (the “Clawback Rights”):

 

(i) To deem as forfeited any and all payments and benefits or other amounts to which Executive has, may have, or may claim to have, a right to receive under this Agreement;

 

(ii) To recover from Executive or require Executive to reimburse the Bank for any and all payments and benefits or other amounts already paid to Executive under this Agreement, and

 

(iii) To recover any amount described in this Agreement.

 

(b)  The Bank’s Clawback Rights shall apply in the following circumstances:

 

(i) The Bank determines that during Executive’s employment with the Bank Executive engaged in conduct that would constitute “Cause” under the terms of this Agreement, or subsequently resulted in Executive’s felony conviction or entry of a guilty plea or plea of no lo contendere to a felony charge as a result of such conduct.

 

(ii) In addition to any recovery triggered under this Agreement, if the Bank is required to prepare an accounting restatement due to the material noncompliance of the Bank with any financial reporting requirement under applicable law, and such restatement results in Executive have been paid an incentive payment or bonus payment larger than that which would have been due based on the accounting restatement, then the Bank shall be entitled to recover from Executive the excess of any incentive payment or bonus payment paid to Executive during the 3-year period preceding the date on which the Bank is required to prepare the accounting restatement, over the amount of the incentive payment or bonus which should have been paid based on the restated financial reports during such 3-year period.

 

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5. ARTICLE 5- CONFIDENTIALITY AND NON-SOLICITATION

5.1. Confidentiality and Trade Secrets. Executive acknowledges that, in the course of his employment with the Bank, Executive will acquire information about the Bank's borrowers and customers, and about the terms and conditions of Bank business plans, transactions, pricing information for the purchase or sale of assets, financing and securitization arrangements, research materials, manuals, computer programs, formulas analyzing assets portfolios, techniques, data, marketing plans and tactics, technical information, lists of asset sources, the processes and practices of the Bank and related companies, information contained in electronic or computer files, financial information, salary and wage information, and other information that is designated by the Bank or its affiliates to be confidential or that Executive knows or should know is confidential information provided by third parties and that the Bank or its affiliates are obligated to keep confidential as well as other proprietary information of the Bank or its affiliates ("Confidential Information"). Executive acknowledges that all Confidential Information is and shall continue to be the exclusive property of the Bank. Executive agrees not to disclose any Confidential Information, either during the Term or thereafter, directly or indirectly, under any circumstances or by any means, to any third person or party without the prior written consent of the Bank.

 

5.2. Non-Solicitation of Executives. Except as permitted by the prior written consent of either the President/CEO of the Bank or the Chairman of the Board of Directors, during the one (1) year period following the termination date, Executive shall not directly or indirectly solicit for employment or for independent contractor work any employee of the Bank, and shall not encourage any such employee to leave the employment of Bank.

5.3. Non-Solicitation of Customers. During the one (1) year period following the termination date, Executive shall not directly: (a) solicit business from any present or potential customers of the Bank; (b) encourage any such customers to stop using the facilities or services of the Bank; or (c) encourage any such customers to use the facilities or services of any competitor of the Bank.

5.4. Parent to Benefit from Provisions. To the extent any provisions of this Article 5 relate in any way to Confidential Information and trade secrets of the Bank or the Parent, then the obligations of Executive set forth herein shall also extend to the Parent and inure to its benefit.

6. ARTICLE 6- BANK'S OWNERSHIP IN EXECUTIVE'S WORK

6.1. Bank's Ownership. Executive agrees that all inventions, discoveries, improvements, trade secrets, formulas, techniques, processes, and know-how, whether or not patentable, and whether or not reduced to practice, that are conceived or developed during Executive's employment with the Bank, either alone or jointly with others, or relating to the Bank or to the banking industry ("Bank's Work"), and any written record that Executive may maintain of Bank's Work, shall be owned exclusively by the Bank. Executive hereby assigns to Bank, all of Executive's right, title, and interest, if any, in such intellectual property defined as Bank's Work. Executive shall furnish to Bank any and all such records pertaining to Bank's Work, immediately upon request. Notwithstanding anything in this Section 6.1 to the contrary, any inventions, discoveries, improvements, trade secrets, formulas, techniques, processes and know-how conceived or developed by Executive solely while providing Volunteer Services (as defined in Section 2.5, above) shall not be considered Bank’s Work.

6.2. Return of Bank's Property and Materials. Upon termination of his employment with the Bank, Executive shall deliver to the Bank all Bank property and materials that are in Executive's possession or control, including Bank's Work, within five (5) calendar days.

6.3. Bank to Benefit from Provisions. To the extent any provisions of this Article 6 relate in any way to information, property, rights, projects, ventures, or inventions of the Bank, then the obligations of Executive set forth in this Article 6 shall also extend to the Bank and inure to its benefit.

7. ARTICLE 7- ARBITRATION

7.1. Obligation to Arbitrate. If any dispute, controversy or claim arises out of or relates to this Agreement, such dispute, controversy, or claim shall be settled by binding arbitration only, in accordance with the Rules of the American Arbitration Association (“AAA”) or legal principles and damages according to California Law, and shall be selected by and agreed upon by both parties. Judgment upon the arbitrator's award shall be entered in the jurisdiction thereof. The arbitrator shall determine which party is the prevailing party and shall include in the award, the prevailing party's actual attorney's fees and costs. The arbitrator shall have no authority to grant either punitive or consequential damages to any party. Nothing in this Article 7 shall prohibit or limit the right of the Bank to commence suit or other judicial proceedings seeking injunction or other equitable relief in the event of Executive's breach or threatened breach of any of his obligations under any of Sections 5 or 6 of this Agreement.

7.2. Arbitrator. If the parties cannot agree upon the selection of the arbitrator within ten (10) days of written demand upon the other, the parties shall choose from a list to be provided by the main Los Angeles office of the AAA using the strike method, with the first to strike being determined by the flip of a coin and proceeding alternatively until one arbitrator remains.

 

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7.3. Fee Deposit. As soon as practicable after selection of the arbitrator, the arbitrator or its designated representative shall determine a reasonable estimate of anticipated fees and costs setting forth that parry's pro rata share of said fees and costs. Thereafter, each party shall, within ten (10) days of receipt of said statement, deposit said sum with the arbitrator.

7.4. Hearing Schedule. Unless the parties or the arbitrator agree otherwise, within one hundred and twenty (120) days of the selection of the arbitrator, a hearing shall be conducted at a time and a place in Santa Barbara County agreed upon by the parties.

7.5. Award. Unless the parties or the arbitrator agree otherwise, within thirty (30) days of conclusion of the arbitration hearing, the arbitrator shall issue an award, accompanied by a written decision explaining the basis for the arbitrator's award. The Award of the arbitrator shall be final, binding, and non­ appealable, except as otherwise permitted by California law, and may be enforced by obtaining a final judgment in any court of competent jurisdiction.

8. ARTICLE 8- MISCELLANEOUS

8.1. Parent as a Party. Parent is a party to this Agreement solely for purpose of receiving the benefits of Sections 5, 6 and 8 hereof. Parent shall have no liability or obligation to Executive with respect to the Bank's performance or non-performance of any of its obligations under this Agreement.

8.2. Injunctive Relief. Executive hereby acknowledges and agrees that it would be difficult to fully compensate the Bank for damages for a breach or threatened breach of any of the provisions of Sections 5 or 6 hereof. Accordingly, Executive specifically agrees that the Bank and/or Parent shall be entitled to temporary and permanent injunctive relief to enforce the provisions of Sections 5 or 6 hereof and that such relief may be granted without the necessity of proving actual damages. The foregoing provision with respect to injunctive relief shall not, however, prohibit the Bank or Parent from pursuing any other rights or remedies available to the Bank or Parent for such breach or threatened breach, including, but not limited to, the recovery of damages from Executive or any third parties.

8.3. Authorized Representative of the Bank. Although Executive is an officer of the Bank, any and all actions and decisions to be taken or made by the Bank under this Agreement or with respect to the employment relationship described in this Agreement, and any and all consents, approvals and agreements permitted or required to be given or made on the part of the Bank under this Agreement, shall be made and accomplished by the Bank only through the actions taken, in writing, of its CEO or such other person or persons as the Board of Directors may from time to time designate.

8.4. Tax Advice. Executive represents and warrants to the Bank that he has sought and received independent professional advice concerning the treatment of the transactions contemplated by this Agreement under the Code, the rules and regulations promulgated thereunder by the Internal Revenue Service (the “IRS”), and the income tax laws of any other applicable taxing jurisdictions, and that he is not relying upon any representation, warranty or other statement made by the Bank, its counsel or anyone acting on behalf of the Bank with respect to such treatment or the structuring of the compensation payable under this Agreement as assuring any particular income tax treatment. Executive understands and agrees that neither the Bank, its counsel nor anyone acting on behalf of the Bank has made or is making any representation, warranty or other statement with respect to such income tax treatment.

8.5. Notice. Any notice or other communication required or permitted under this Agreement shall be in writing and shall be deemed received (i) when personally delivered, or, (ii) if mailed, one (1) week after having been placed in the United States mail, registered, or certified, postage prepaid, addressed to the party to whom it is directed at the address listed below or (iii) if sent by facsimile, email or other form of electronic transmission, one (1) business day after the notice is transmitted to the facsimile number, email address or other address specified on the signature page of this Agreement, and the transmitting party either receives confirmation of transmission or does not receive notice of non­delivery.

8.6. Entire Agreement. This Agreement, including any documents expressly incorporated into it by the terms of this Agreement, constitutes the entire agreement between the parties. This Agreement supersedes and rescinds any and all prior oral and written agreements, understandings, negotiations, and discussions relating to the employment of Executive by Bank. This Agreement may not be modified, supplemented or amended by oral agreement, but only by an agreement in writing signed by Bank and Executive.

8.7. Amendment. This Agreement may be amended only in writing duly executed by all of the parties hereto. Notwithstanding anything in this Agreement to the contrary, any amendment to Section 3.4 of this Agreement shall be made in compliance with the requirements of Section 409A of the Code and the Treasury Regulations thereunder.  This Agreement is intended to company with Section 409A of the Code and shall be interpreted so that it is in compliance.  To the extent necessary to such compliance, any payment due under this Agreement otherwise payable by Bank may be delayed for six (6) months or such longer period of time, following the date of Executive’s termination as is necessary to fully comply with Section 409A of the Code.

 

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8.8. Survival of Certain Provisions. Notwithstanding anything to the contrary contained herein, in the event of any termination of this Agreement, the rights and obligations of the parties under Sections 3.4, 4.2, 4.3(c), 4.3(d), 4.4(d), 4.4(e), 4.5(a), 4.5(b), 4.6(c), 4.6(d), 4.6(e), 4.7 and 4.8 and Articles 5, 6, 7 and 8 hereof shall survive such termination and shall continue in full for and effect until fully performed.

 

8.9. Waivers. All rights and remedies of the parties hereto are separate and cumulative, and no one of them, whether exercised or not, shall be deemed to limit or exclude any other rights or remedies which the parties hereto may have. Neither party hereto shall be deemed to waive any rights or remedies under this Agreement unless such waiver be in writing and signed by such party. No delay or omission on the part of either party hereto in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver of any right or remedy on any one occasion shall not be construed as a bar to or waiver of any such right or remedy on any future occasion.

8.10. Successors and Assigns. The Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation, or otherwise to all or substantially all of the business or assets of the Bank to expressly assume and agree to perform in writing this Agreement in the same manner and to the same extent that the Bank would be required to perform it if no such succession or assignment had taken place. This Agreement shall inure to the benefit of and be binding upon the Bank, its successors and assigns, and upon Executive and Executive's heirs, executors, administrators and legal representatives. No party to this Agreement may delegate its or their duties hereunder without the prior written consent of the other party to this Agreement.

8.11. Governing Law. This Agreement is entered into in the State of California, and California law shall in all respects govern the validity, construction, and interpretation of this Agreement.

8.12. Attorney's Fees. In any arbitration, suit or other action between the parties seeking enforcement of any of the terms and provisions of this Agreement, the prevailing party in such arbitration, suit or other action shall be awarded, in addition to damages, injunctive or other relief, its reasonable costs and expenses, not limited to taxable costs, and a reasonable attorney's fees. In order for a party to change its address or other information for the purpose of this section, the party must first provide notice of that change in the manner required by this section.

8.13.   Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

8.14. Advice of Counsel.  Before signing this Agreement, Executive either (i) consulted with and obtained advice from his independent legal counsel in respect to the legal nature and operation of this Agreement, including its impact on his rights, privileges and obligations, or (ii) freely and voluntarily decided not to have the benefit of such consultation and advice with legal counsel.

9. ARTICLE 9- RECEIPT OF AGREEMENT

9.1. Receipt of Agreement. Each of the parties hereto acknowledges that they have read this Agreement in its entirety and does hereby acknowledge receipt of a fully executed copy thereof. A fully executed copy shall be an original for all purposes, and is a duplicate original.

IN WITNESS WHEREOF, the parties hereto have caused this Employment and Confidentiality Agreement to be executed as of the Effective Date set forth above.

ACCEPTED AND AGREED:

EXECUTIVE

By: /s/ Charles Kohl

Name: Charles Kohl

Address for Notice:

25662 Shaw Place

Stevenson Ranch, CA  91381

Telephone: (661) 877-8609

COMMUNITY WEST BANK

A National Banking Association

By:  /s/ Martin E. Plourd

Martin E. Plourd, President & CEO

 

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EXHIBIT A

DESIGNATED HEIRS

Set forth below is a list of the names and addresses of Executive's heirs to whom the Bank shall pay the balance of the Deferred Account in the event of Executive's death.

	
NAME

	
ADDRESS

	
PERCENTAGE INTEREST

	 	 	     
	   	      	      
	            	     	 

 

 

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