Document:

ffwm-ex1018_268.htm

Exhibit 10.18

 

CHANGE OF CONTROL SEVERANCE COMPENSATION AGREEMENT

This CHANGE OF CONTROL SEVERANCE COMPENSATION AGREEMENT, dated as of June 1,  2015 (the “Agreement”), is made by and between First Foundation Inc., a California corporation (the “Company”) and Robert S. Noble (the “Executive”), with reference to the following facts and circumstances:

R E C I T A L S:

A.The Company’s Board of Directors has determined that it is appropriate and in the Company’s best interests to reinforce and encourage the continued attention and dedication of key members of the management of the Company and its material subsidiaries, who include the Executive, to their assigned duties without distraction in potentially disturbing circumstances that would arise in the event of a threatened or actual Change in Control (as hereinafter defined) of the Company or such subsidiaries and thereby also provide the Company with greater assurance that it will be able to retain the key members of management, including Executive, in the employ of the Company or a material subsidiary (as the case may be) in the event of any threatened or actual Change in Control; and

B.This Agreement sets forth the severance compensation which the Company agrees it will pay, or cause the Subsidiary to pay, to Executive if his/her employment with the Company or First Foundation Bank (the “Subsidiary”), as the case may be, terminates under one of the circumstances described herein following a Change in Control of the Company or the Subsidiary.

C.Executive is employed as an Executive Vice President, Chief Lending Officer under an Executive Employment Agreement dated  June 1, 2015 herewith (the “Employment Agreement”).  This Change of Control Severance Compensation Agreement sets forth the rights and obligations of the Company and Executive in the event of a termination of Executive’s employment, for Good Reason (as defined below), that is attributable to, or that occurs concurrently with or within 24 months following, a Change in Control.  On the other hand, the Employment Agreement, rather than this Agreement, governs and determines the severance compensation to which Executive would be entitled upon any other termination of Executive’s employment. 

NOW, THEREFORE, it is agreed as follows:

1.Definitions.   The following terms shall have the respective meanings ascribed to them below in this Section 1:

1.1The terms “affiliate” and “associate” shall have the respective meanings given to such terms in Rule 12b-2 under the Exchange Act (even if the Company has no securities registered under that Act).

1.2The terms “beneficial ownership,” “beneficially owned” and “beneficial owner” shall have the meanings given to such terms in Rule 13d-3 under the Exchange Act (even if the Company has no securities registered under that Act).

1.3The term “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

1.4The term “Parent” of a corporation or other entity means any person that is the beneficial owner, directly or indirectly, of a majority of the Voting Securities of that corporation or other entity. 

 

 

 

 

1.5The term “Voting Securities” of any person that is a corporation means the combined voting power of that person’s then outstanding securities having the right to vote in an election of that person’s directors.  The term “Voting Securities” of any person, other than a corporation, such as a partnership or limited liability company, shall mean the combined voting power of that person’s outstanding ownership interests that are entitled to vote or select the individuals (such as the managers of a limited liability company) that have substantially the same authority or decision-making powers with respect to such person that are generally exercisable by directors of a corporation.

1.6The term “Common Stock” of the Company shall mean the shares of the Company’s common stock, par value $0.001 per share, and any voting securities into which such shares may be converted or exchanged in any merger, consolidation, reorganization or recapitalization of the Company.

1.7The term “person” shall have the meaning given to such term in Section 13(d) and Section 14(d) of the Exchange Act (even if the Company has no securities registered under that Act) and, therefore, the term “person” shall include any two or more persons acting together, whether as a partnership, limited partnership, joint venture, syndicate or other group, at least one of the purposes of which is to acquire, hold or dispose of beneficial ownership of securities of the Company or the Subsidiary.  The term “person also shall include any natural person, any corporation, limited liability company, general or limited partnership, joint venture, trust, estate, or unincorporated association.  

1.8The term “Change in Control” of the Company shall mean the occurrence of any of the following:

(a)Any person who (together with all of such person’s affiliates and associates) shall, at any time become the beneficial owner, directly or indirectly, of more than twenty-five percent (25%) of the Company’s Voting Securities Company, except (i) the Company or any of its subsidiaries, (ii) any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its subsidiaries or (iii) Ulrich E. Keller, Jr. (collectively, the Exempt Owners”); or

(b)There shall be consummated any consolidation, merger, or reorganization (as such term is defined in the California Corporations Code), of the Company with or into another person, or of another person with or into the Company, in which the holders of the Company’s outstanding Voting Securities immediately prior to the consummation of such consolidation, merger or reorganization would not, immediately after such consummation, own beneficially, directly or indirectly, (in the aggregate) at least sixty percent (60%) of the Voting Securities of (i) the continuing or surviving person in such merger, consolidation or reorganization (whether or not that is the Company) or (ii) the ultimate Parent, if any, of that continuing or surviving person; or

(c)There shall be consummated any consolidation, merger or reorganization of the Subsidiary with or into another person, or of another person with or into the Subsidiary, unless the persons that were the holders of the Company’s Voting Securities immediately prior to such consummation would have, immediately after such consolidation, merger or reorganization, substantially the same proportionate direct or indirect beneficial ownership of at least sixty (60%) of the Voting Securities of (i) the continuing or surviving person in such consolidation, merger or reorganization (whether or not that is the Subsidiary) or, (ii) the ultimate Parent, if any, of that continuing or surviving person; or

(d)There shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or of the Subsidiary; or 

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(e)The holders of the Voting Securities of the Company approve any plan or proposal for the liquidation or dissolution of the Company, unless the plan of liquidation provides for all or substantially all of the assets of the Company to be transferred to a person in which the holders of the Company’s Voting Securities immediately prior to such liquidation have or will have, immediately after such liquidation, substantially the same proportionate direct or indirect beneficial ownership of at least sixty percent (60%) of the Voting Securities of such person; or 

(f)During any period of two (2) consecutive years during the term of this Agreement, individuals who at the beginning of that two year period constituted the entire Board of Directors do not, for any reason, constitute a majority thereof, unless the election (or the nomination for election) by the holders of the Company’s Voting Securities, of each director who was not a member of the Board of Directors at the beginning of that two year period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the two year period.

Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have occurred within the meaning of Paragraph 1.8(a) above solely as the result of any acquisition of Voting Securities by the Company or any subsidiary thereof that has the effect of (i) reducing the number of the Company’s outstanding Voting Securities, or (ii) increasing the beneficial ownership of the Company’s Voting Securities by any person to more than twenty-five percent (25%) of the Company’s outstanding Voting Securities or by any Pre-September 1, 2007 Shareholder; provided, however, that, if any such person (other than any of the Exempt Owners, as defined above) shall thereafter become the direct or indirect beneficial owner of any additional Voting Securities of the Company (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from the Company) and immediately thereafter beneficially owns more than twenty-five percent (25%) of the then outstanding Voting Securities of the Company, then, a "Change of Control" shall be deemed to have occurred for purposes of this Agreement.

1.9The term “Employer” means whichever of the Company or Subsidiary is the principal employer of Executive. 

1.10The term “Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto.

2.Term.  The term of this Agreement shall commence on the date hereof and, subject to earlier termination pursuant to Section 6 hereof, shall end three (3) years following the date on which notice of non‐renewal or termination of this Agreement is given by either the Company or Executive to the other.  Thus, this Agreement shall renew automatically on a daily basis so that the outstanding term is always three (3) years following any effective notice of non‐renewal or of termination given by the Company or Executive, other than in the event of a termination pursuant to Section 6 hereof.

3.Change in Control.  No compensation shall be payable under this Agreement unless and until (i) there has been a Change in Control of the Company (as hereinafter defined) while the Executive is still an officer of the Company or the Subsidiary, and (ii) the Executive’s employment by the Company or the Subsidiary terminates under any of the circumstances or for any of the reasons set forth in Section 4 below.  

4.Termination by Executive for Good Reason.  If (i) a Change in Control of the Company occurs while the Executive is still employed as an officer of the Company or the Subsidiary or the surviving or continuing person in any such Change in Control, and (ii) any of the following events (each a “Good Reason Event”) shall occur (that is not consented to by Executive) as a result or at the time or within 12 months of the consummation of such Change in Control, then, Executive shall be entitled to the 

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compensation provided in Section 5 of this Agreement, provided that he gives the Company written notice of the termination of his/her employment and of all positions he/she may have with the Company and the Subsidiary for “Good Reason” within forty-five (45) days following the occurrence of any such Good Reason Event.  

4.1Reduction or Adverse Change of Responsibilities, Authority, Etc.  The scope of Executive’s authority or responsibilities is significantly reduced or diminished or there is an change in Executive’s position or title as an officer of the Company or the Subsidiary, or both, that constitutes or would generally be considered to constitute a demotion of Executive, unless such reduction, diminution or change is made as a consequence of (i) Executive’ disability (determined as provided in Section 6(e) of the Employment Agreement), or (ii)  any acts or omissions of Executive which would entitle the Company or Subsidiary to terminate Executive’s employment for Cause (as defined in Section 6(a) of the Employment Agreement); or

4.2Reduction in Base Salary.  Executive's Base Annual Salary (as defined in his Employment Agreement and as in effect immediately prior to the consummation of the Change in Control) is reduced, unless such reduction is made (i) as part of an across-the-board cost cutting measure that is applied equally or proportionately to all senior executives of the Employer, or (ii) as a result of Executive’s Disability (determined as provided in Section 6(e) of the Employment Agreement), or any acts or omissions of Executive which would entitle Employer to terminate Executive’s employment for Cause (as defined in Section 6(a) of the Employment Agreement);

4.3Discontinuance or Reduction of Bonus Opportunity Under Bonus Compensation Plan.  Executive's bonus and/or incentive compensation award opportunity under any incentive or bonus compensation plan or program in which he is participating immediately prior to the consummation of the Change of Control is discontinued or significantly reduced, unless such discontinuance or reduction (i) is expressly permitted under the terms of such plan or program, or (ii) is a result of a policy of Employer applied equally or proportionately to all senior executives of Employer participating in such plan or program, or (iii) is the result of the replacement of such plan or program with another bonus or incentive compensation plan in which Executive is afforded substantially comparable bonus or incentive compensation opportunities; 

4.4Discontinuance of Participation in Employee Benefit Plans.  Executive's participation in any other benefit plan maintained by the Company or Employer in which Executive was participating immediately prior to the consummation of the Change of Control (including any vacation program) is terminated or the benefits that had been afforded under any such benefit plan are significantly reduced, unless such discontinuance or reduction (as the case may be) is (i) expressly permitted by the terms of that plan or program, or (ii) due to a change in applicable law or the loss or reduction in the tax deductibility to Employer of the contributions to or payments made under such plan, or (iii) the result of a policy of Employer or the Company that is applied equally or proportionately to all senior executives participating in such benefit plan, or (iv) the result of the adoption of one or more other benefit plans providing reasonably comparable benefits (in terms of value) to Executive; or

4.5Relocation. The relocation of Executive to an office that located more than thirty (30) miles from Executive’s principal office location prior to the consummation of the Change of Control or to an office that is not the headquarters office of Executive’s employer (other than for temporary assignments or required travel in connection with the performance by Executive of his/her duties for Employer or the Company); or

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4.6Breach of Agreements.  A breach by the Company or Employer of any of its material obligations to Executive under the Employment Agreement or this Agreement which continues uncured for a period of thirty (30) days following written notice thereof from Executive.

5.Severance Compensation upon Termination of Employment for Good Reason.  Subject to Section 5.4 and Section 7 below, upon a termination of Executive’s employment by Executive pursuant to Section 4 hereof (a “Good Reason Termination”), then:

5.1Change of Control Severance Compensation.  Subject to Section 5.4 below, in lieu of any further salary and bonus payments or other payments that would otherwise be due to Executive under the Employment Agreement, or otherwise, for periods subsequent to the date of such Good Reason Termination, Executive shall become entitled to receive the following severance compensation and benefits: 

(a)Employer shall pay the Executive all amounts owed through the date of Executive’s Good Reason Termination; and

(b)Employer also shall pay to Executive, at the applicable time set forth in Section 5.3, an amount equal to the product of two (2) times the sum of (i) Executive’s Base Annual Salary in effect as of the date of termination and (ii) an amount equal to the Maximum Bonus Award (as hereinafter defined) payable to Executive under any incentive or bonus compensation plan in which he/she was participating at the time of such termination of employment, which amount shall be paid as provided in Section 5.3 hereof.  For purposes hereof, the term “Maximum Bonus Award” shall mean the amount of the bonus compensation that would be paid to Executive under such incentive or bonus compensation plan assuming that all performance goals or targets required to have been achieved as a condition of the payment of the maximum bonus under such plan were achieved and all other conditions precedent to the payment of such bonus compensation were satisfied.  

(c)All options to purchase stock of the Company granted to the Executive that had not vested as of the date of such Good Reason Termination shall vest effective immediately prior to such termination.

(d)All restricted stock awards, restricted stock unit awards, and other forms of equity-based compensation awards granted to the Executive, which had not vested as of the date of such Good Reason Termination, shall vest effective immediately prior to such termination.

(e)The Company or the Subsidiary shall maintain in full force and effect, during the period commencing on the date of such Good Reason Termination and ending on the December 31 of the second calendar year following the calendar year in which such termination occurred (the “Benefit Continuation Period”), all employee medical, dental and vision plans and programs, disability plans and programs and all life insurance programs in which the Executive and/or his/her family members were entitled to participate or under which they were entitled to receive benefits immediately prior to the date of the occurrence of the Good Reason Event, provided, however, that if such continued participation is prohibited under the general terms and provisions of such plans and programs, then, the Company or the Subsidiary shall, at its expense, arrange for substantially equivalent benefits to be provided to Executive and/or his/her family members during the Benefit Continuation Period.  Notwithstanding the foregoing, however, there shall only be included as benefits to which Executive and/or his/her family members shall be entitled under this Paragraph 5.1(e), and Executive and/or such family members shall only be entitled to, those benefits if the plans or programs in which Executive or his/her family members were participating immediately prior to the occurrence of the Good Reason Event were exempt from the term “nonqualified deferred compensation plan” under Section 409A of the Code.

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Notwithstanding any other provision in this Agreement to the contrary, under no circumstances, shall the Executive be permitted to exercise any discretion to modify the vesting of an award or the amount, timing or form of payment or benefit described in this Section 5.1.

5.2Timing and Manner of Payment.  The amount that becomes payable to Executive pursuant to Section 5.1(b) above shall be paid as follows: 

(a)If, on the date that the Executive terminates his/her employment for Good Reason pursuant to Section 4 above, the Company is a reporting company under the Exchange Act, then Executive will be entitled to receive such payment in a single lump sum on the first business day that occurs at the end of the period commencing on the date of that termination and ending six months after the last day of the calendar month in which the date of termination occurred (e.g., if Executive were to terminate his/her employment for Good Reason on March 15, 2015, for example, then Employer would be required to pay the amount specified in Section 5.1(b) on the first business day immediately following September 30, 2015); or

(b)If, however, the Company is not a reporting company under the Exchange Act at the time the Executive terminates his/her employment for Good Reason pursuant to Section 4 above, then Executive shall be entitled to receive such payment in a single lump sum on the fifth (5th) business day following such termination of employment.

5.3No Requirement of Mitigation.  The Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Section 5 by seeking other employment or otherwise, nor shall any compensation or other payments received by the Executive from other persons after the date of termination reduce any payments due under this Section 5.

5.4Limitation. 

(a)Anything in this Agreement to the contrary notwithstanding, if any compensation, payment, benefit or distribution by the Company or Employer Subsidiary to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (collectively, the "Severance Payments"), would be subject to the excise tax imposed by Section 4999 of the Code, then, the following provisions shall apply: 

(i)If the Threshold Amount (as hereinafter defined) is less than (x) the Severance Payments, but greater than (y) the Severance Payments reduced by the-sum of (A) the Excise Tax (as defined below) and (B) the total of the Federal, state, and local income and employment taxes on the amount of the Severance Payments which are in excess of the Threshold Amount, then the Severance Payments that would otherwise be payable under this Agreement shall be reduced (but not below zero) to the extent necessary so that the maximum Severance Payments shall not exceed the Threshold Amount.  To the extent that there is more than one method of reducing the Severance Payments to bring them within the Threshold Amount, Executive shall determine which method shall be followed; provided that if Executive fails to make such determination within 45 days after the Company has sent Executive written notice of the need for such reduction, the Company may determine the amount of such reduction in its sole discretion. 

(ii)If, however, the Severance Payments, reduced by the sum of (A) the Excise Tax and (B) the total of the Federal, state and local income and employment taxes payable by Executive on the amount of the Severance Payments which are in excess of the Threshold Amount, are greater than or equal to the Threshold Amount, there shall be no reduction in the Severance Payments to Executive pursuant to Paragraph 5.4(a)(i) above. 

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(b)For the purposes of this Section 5.4, the term "Threshold Amount" shall mean three (3) times Executive's "base amount" (within the meaning of Section 280G(b)(3) of the Code and the regulations promulgated thereunder) less one dollar ($1.00); and the term "Excise Tax" shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by Executive with respect to such excise tax.

(c)The determination as to which of Paragraph 5.4(a)(i) or 5.4(a)(ii) shall apply to Executive shall be made by Vavrinek, Trine, Day & Co., LLP, independent registered public accountants, or any other independent accounting firm selected by mutual agreement of the Company and Executive (the "Accounting Firm"), which agreement shall not be unreasonably withheld or delayed by either party.  Such Accounting Firm shall provide detailed supporting calculations both to the Company and Executive within 15 business days of the date of Executive’s Good Reason Termination, if applicable, or at such earlier time as is reasonably requested by the Company or Executive.  For purposes of determining which of the alternative provisions of 5.4(a)(i) or 5.4(a)(ii) shall apply, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of Executive's residence on the Termination Date, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.  Any determination by the Accounting Firm shall be binding on the Company and Executive. 

5.5Withholding.  Notwithstanding anything to the contrary that may be contained elsewhere in this Agreement, all payments made to Executive under this Agreement shall be made net of all taxes and other amounts required to be withheld from the wages or salary of employees under applicable federal, state or local laws or regulations. 

6.Termination of Agreement.  Notwithstanding Section 2 hereof, this Agreement shall terminate sooner as provided in this Section 6. 

6.1Termination of Employment Other Than for Good Reason.  This Agreement shall terminate upon the happening, at any time prior to the termination of Executive’s employment for Good Reason pursuant to Section 4 hereof, of any of the following events:  

(a)Executive’s Disability or Death.  This Agreement shall terminate upon the termination of Executive’s employment as a result of Executive’s disability pursuant to and in accordance with Section 6(e) of the Employment Agreement.  This Agreement also shall terminate immediately in the event of the death of the Executive.  

(b)Retirement.  This Agreement shall terminate automatically on Retirement (as hereinafter defined) of Executive.  The term “Retirement” as used in this Agreement shall mean termination by the Company or the Executive of Executive’s employment based on the Executive’s having reached age 75 or such other age as shall have been fixed in any arrangement established with the Executive’s consent with respect to Executive retirement.

(c)Cause.  This Agreement shall terminate, if Executive’s employment with the Company or an Employer Subsidiary is terminated for Cause, as such term is defined in Section 6(a) of the Employment Agreement.  

(d)Termination by Executive without Cause.  This Agreement shall terminate upon any voluntary termination by Executive of his/her employment with the Company or the Subsidiary, as the case may be, other than pursuant to Section 4 of this Agreement. 

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In the event of a termination of this Agreement pursuant to this Section 6.1, then, notwithstanding anything to the contrary that may be contained elsewhere herein, except for any severance or other compensation to which Executive may be entitled, by reason of such termination, under the Employment Agreement, neither the Company nor the Subsidiary shall have any liability to Executive, or Executive’s estate, heirs, successors, representatives or assigns, due to such termination of this Agreement or by reason of any prior or subsequent Change in Control of the Company.

6.2Effect of Good Reason Termination on Term of this Agreement.  In the event of a Good Reason Termination pursuant to Section 4 hereof, Executive shall have no further rights or remedies under this Agreement, except his/her right to receive the severance compensation set forth in Section 5 hereof attributable to the occurrence of the Good Reason Event that entitled Executive to terminate his/her employment pursuant to Section 4 hereof.  Accordingly, but without limiting the generality of the foregoing, Executive shall be entitled to receive any compensation under this Agreement in the event of the occurrence of a second Change in Control of the Company after the date of the Executive’s Good Reason Termination. 

7.Release of Claims.  The obligations of the Company under this Agreement shall constitute the only obligations of the Company arising from a Good Reason Termination by Executive pursuant to Section 4 hereof.  Additionally, upon any such termination, except for Executive’s rights and the obligations of the Company or the Subsidiary (as the case may be) under Section 5 hereof, none of the Company, the Subsidiary or any of their affiliates shall have any obligation or liability of any kind or nature whatsoever to Executive by reason of or arising out of his/her employment with the Company or the Subsidiary or the termination thereof.  Executive further agrees that, except for his/her rights and the obligations of the Company or the Subsidiary (as the case may be) under Section 5 hereof, all demands, claims and causes of action that Executive may have against, and any and all rights that Executive may have to recover any payments, damages, liabilities or other amounts of any kind or nature whatsoever from, the Company, the Subsidiary or any of their affiliates , or any of their respective, officers, directors, shareholders, employees, agents or independent contractors (the “Company Related Parties”), shall be forever released by Executive as a condition precedent to Executive’s rights to receive and the obligations of the Company or Subsidiary (as the case may be) to pay or provide to Executive the severance compensation and benefits provided for in Section 5 hereof, irrespective of whether or not such demands, claims, causes of action or rights arise or have arisen under (i) this Agreement, the Employment Agreement, or any other contract, agreement or understanding, written or oral, between Executive and the Company or any of the Company Related Parties, or (ii) any employee or executive benefit plans or programs, including any stock incentive or stock based compensation plans, or (iii) any federal, state or local statutes or government regulations, or otherwise, and whether or not such demands, claims, causes of action or rights are known or unknown, certain or uncertain, or suspected or unsuspected by Executive.  Executive further covenants and agrees that such condition precedent shall not be satisfied unless and until he/she executes and delivers to the Company all appropriate written agreements reflecting such settlement and complete release in a form reasonably acceptable to the Company.

8.Arbitration of Disputes.  Except as otherwise provided in the last sentence of this Section 9 with respect to equitable proceedings and remedies, any controversy or claim arising out of or relating to this Agreement, the performance or non-performance (actual or alleged) by either party of any of such party's respective obligations hereunder or any actual or alleged breach thereof, shall, to the fullest extent permitted by law, be resolved exclusively by binding arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Orange County, California in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  In the event that any person, other than Executive or the Company, may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration subject to such other person’s agreement thereto.  Judgment upon the award rendered by the arbitrator in any such arbitration 

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proceeding may be entered in any court having jurisdiction thereof.  This Section 8 shall be specifically enforceable.  The reasonable fees and disbursements of the prevailing party's legal counsel, accountants and experts incurred in connection with any such arbitration proceeding shall be paid by the non-prevailing party in such arbitration proceeding.  Notwithstanding anything to the contrary that may be contained in this Section 9, however, each party shall be entitled to bring an action in any court of competent jurisdiction for the purpose of obtaining a temporary restraining order or a preliminary or permanent injunction or other equitable remedies in circumstances in which such relief is appropriate.

9.Miscellaneous.  

9.1Entire Agreement.  This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral, between the parties with respect to that subject matter.

9.2Assignment; Successors and Assigns, etc.  Neither party may make any assignment, in whole or in part, of this Agreement or any interest herein, by operation of law or otherwise, or delegate any of their respective duties hereunder, without the prior written consent of the other party; except that in the event of a Change in Control of the Company, the rights and obligations of the Company under this Agreement may be assigned to the successor-in-interest of the Company in such Change in Control without the consent of Executive, provided that (i) such successor-in-interest enters into a written agreement, in a form reasonably acceptable to Executive, by which such successor-in-interest shall expressly agree to be bound by this Agreement and (ii) no such assignment shall relieve the Company of its obligations under this Agreement.  Subject to the foregoing restrictions on assignment, this Agreement shall inure to the benefit of and be enforceable by and shall be binding on the parties and their respective successors, legal representatives, executors, administrators, heirs, devisees and legatees, and permitted assigns.  If Executive should die while any amounts are still payable to him/her pursuant to Section 5 hereof, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee or, if there be no such designee, to the Executive’s estate.

9.3Severability.  If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.  

9.4Waiver.  No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party.  The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any right or obligation under or breach of this Agreement, shall not prevent any subsequent enforcement of such term, right or obligation or be deemed a waiver of any prior or subsequent breach of the same obligation.

9.5Notices.  Any notices, requests, demands and other communications provided for by this Agreement ("Notices") shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postage prepaid, return receipt requested, to Executive at the last address Executive has filed in writing with Employer or, in the case of any Notice to be given to the Company or the Employer (if other than the Company), at its headquarters offices, attention of the Chief Executive Officer, and shall be effective on the date of delivery in person or by courier or two (2) business days after the date such Notice is mailed by registered or certified mail, postage prepaid and return receipt requested (whether or not the requested receipt is returned).

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9.6Amendment.  This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized officer or other representative of the Company.

9.7Interpretation and Construction of this Agreement.  This Agreement is the result of arms-length bargaining by the parties, each party was represented by legal counsel of such party's choosing in connection with the negotiation and drafting of this Agreement and no provision of this Agreement shall be construed against a party, due to an ambiguity therein or otherwise, by reason of the fact that such provision may have been drafted by counsel for such party.  For purposes of this Agreement: (i) the term "including" shall mean "including without limitation" or "including but not limited to"; (iv) the term "or" shall not be deemed to be exclusive; and (v) the terms "hereof," "herein," "hereinafter," "hereunder," and "hereto," and any similar terms shall refer to this Agreement as a whole and not to the particular Section, paragraph or clause in which any such term is used, unless the context in which any such term is used clearly indicates otherwise.  

9.8Governing Law.  This Agreement is being entered into and will be performed in the State of California and shall be construed under and be governed in all respects by and enforced under the laws of the State of California, without giving effect to its conflict of laws rules or principles.

9.9Headings.  The Section and paragraph headings in this Agreement are inserted for convenience of reference only and shall not affect, nor shall be considered in connection with, the construction or application of any of the provisions of this Agreement.

9.10Counterparts.  This Agreement may be executed in any number of counterparts, and each such executed counterpart, and any photocopy or facsimile copy thereof, shall constitute an original of this Agreement; but all such executed counterparts and photocopies and facsimile copies thereof shall, together, constitute one and the same instrument.

 

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Signatures of parties follow on next page.]

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

“Company”“Executive”

First Foundation Inc.

By:

Name:Scott F. KavanaughName:  Robert S. Noble

Title:CEO

 

 

 

“Subsidiary”

First Foundation Bank

By:

Name:Scott F. Kavanaugh

Title:CEO

 

 

 

11Exhibit

Exhibit 4.2

WGL HOLDINGS, INC.,  
Issuer

AND

THE BANK OF NEW YORK MELLON,
Trustee
————————
SECOND SUPPLEMENTAL INDENTURE  
dated as of March 14, 2018

to

Indenture
dated as of November 29, 2017

relating to

Floating Rate Notes due 2020
————————

SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE, dated as of March 14, 2018 (this “Supplemental Indenture”), between WGL Holdings, Inc., a corporation organized under the laws of the Commonwealth of Virginia, and The Bank of New York Mellon, as trustee, to the Base Indenture (as defined below).
WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture, dated as of November 29, 2017 (the “Base Indenture” and, as amended and supplemented to the date hereof, including by this Supplemental Indenture, the “Indenture”), providing for the issuance from time to time of its debt securities, to be issued in one or more series as therein provided;
WHEREAS, pursuant to the terms of the Base Indenture, the Company desires to provide for the establishment of a series of notes to be known as its Floating Rate Notes due 2020 (the “Notes”), the form and substance of such Notes and the terms, provisions and conditions thereof to be set forth as provided in the Indenture; and
WHEREAS, the Company has requested that the Trustee execute and deliver this Supplemental Indenture and all requirements necessary to make this Supplemental Indenture a valid instrument in accordance with its terms, and to make the Notes, when executed by the Company and authenticated and delivered by the Trustee, the valid and legally binding obligations of the Company, and all acts and things necessary have been done and performed to make this Supplemental Indenture enforceable in accordance with its terms, and the execution and delivery of this Supplemental Indenture has been duly authorized in all respects.
NOW, THEREFORE, in consideration of the premises and the purchase of the Notes by the Securityholders thereof, it is mutually covenanted and agreed as follows for the equal and ratable benefit of the holders of the Notes:
ARTICLE I 
DEFINITIONS, ETC.
Section 1.1.    Definitions of Terms.  The terms defined in this Section 1.1 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Supplemental Indenture shall have the respective meanings specified in this Section 1.1 and shall include the plural as well as the singular.  All other terms used in this Supplemental Indenture but not defined in this Supplemental Indenture are defined in the Base Indenture.
“Base Indenture” has the meaning provided in the recitals.
“Bloomberg L.P.’s page ‘BBAM’” means the display designated as Bloomberg L.P.’s page “BBAM”, or any successor service for the purpose of displaying the London interbank rates of major banks for U.S. dollars. Bloomberg L.P.’s page “BBAM” is the display designated as “BBAM”, or such other page as may replace Bloomberg L.P.’s page “BBAM” on that service or such other service or services as may be nominated for the purpose of displaying London interbank offered rates for U.S. dollar deposits by ICE Benchmark Administration Limited 

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(“IBA”) or its successor or such other entity assuming the responsibility of IBA or its successor in calculating the London Interbank Offered Rate in the event IBA or its successor no longer does so.
“Business Day” means any day which is not a Saturday or Sunday or any other day on which banks in New York City are authorized or obligated by law or regulation to close.
“Business Day Convention” means if any Interest Payment Date (other than the Stated Maturity) is not a Business Day, then such Interest Payment Date will be postponed to the next succeeding Business Day unless that Business Day is in the next succeeding calendar month, in which case the Interest Payment Date will be the immediately preceding Business Day. If any such Interest Payment Date (other than the Stated Maturity) is postponed or brought forward as described above, the interest amount will be adjusted accordingly and the Securityholder will be entitled to more or less interest, respectively. If the Stated Maturity is not a Business Day, the payment of principal and interest at the Stated Maturity will not be made until the next following Business Day and no further interest will be due in respect of the delay in such payment.
“Calculation Agent” means, initially, The Bank of New York Mellon, pursuant to the terms of the Calculation Agency Agreement, dated as of March 14, 2018, between the Company and The Bank of New York Mellon, and any successor Calculation Agent appointed thereunder.
“Capital Lease” means any Indebtedness represented by a lease obligation incurred with respect to real property or equipment acquired or leased and used in its business that is required to be recorded as a capital lease in accordance with GAAP.
“Consolidated Net Worth” means at any time the consolidated stockholders’ equity of the Company and its subsidiaries calculated on a consolidated basis as of such time.  For purposes of calculating the Consolidated Net Worth, “subsidiaries” means, at any time, the subsidiaries of the Company whose financial data is, in accordance with GAAP, reflected in the Company’s consolidated financial statements. 
“GAAP” means generally accepted accounting principles in the United States.  
“Indebtedness” means any indebtedness in respect of borrowed money of the Company.
“Indenture” has the meaning provided in the recitals.
“Interest Determination Date” means, with respect to an Interest Reset Date, the second London Business Day preceding such Interest Reset Date. 
“Interest Payment Date” means each March 12, June 12, September 12 and December 12, beginning June 12, 2018.
“Interest Reset Date” means for each Interest Reset Period, other than the first Interest Reset Period, the first day of such Interest Reset Period. 

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“Interest Reset Period” means each period from and including an Interest Payment Date (or, in the case of the first such period, the issue date of the Notes) to but excluding the next succeeding Interest Payment Date. 
“Issue Date” means March 14, 2018.
“Lien” means any lien, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest). 
“London Business Day” means any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. 
“Notes” has the meaning provided in the recitals.
“Regular Record Date” means each February 25, May 28, August 28 or November 27 immediately preceding the applicable Interest Payment Date.
“Stated Maturity” means March 12, 2020.
“Supplemental Indenture” has the meaning provided in the preamble.
“three-month LIBOR” means for any Interest Reset Period, the London interbank offered rate per annum determined by the Calculation Agent on the related Interest Determination Date, in accordance with the following provisions:
(i)  Three-month LIBOR will be the rate for deposits in U.S. dollars having a maturity of three months which appears on Bloomberg L.P.’s page “BBAM” (or such other page as may replace Bloomberg L.P.’s page “BBAM” on that service for the purpose of displaying London interbank offered rates) as of 11:00 a.m., London time, on the related Interest Determination Date.
(ii)  If, on any such Interest Determination Date, the rate for deposits in U.S. dollars having a maturity of three months does not appear on Bloomberg L.P.’s page “BBAM” (or such other page as may replace Bloomberg L.P.’s page “BBAM” on that service for the purpose of displaying London interbank offered rates) as specified in (i) above or such page is unavailable, three-month LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars having a maturity of three months and in a principal amount equal to an amount that is representative for a single transaction in such market at such time are offered by four major banks in the London interbank market selected by the Company at approximately 11:00 a.m., London time, on such Interest Determination Date to prime banks in the London interbank market. The Company will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, the rate in respect of such Interest Determination Date will be the arithmetic mean of the quotations. If fewer than two quotations are provided, three-month LIBOR in respect of such Interest Determination Date will be the arithmetic mean of the rates quoted by three major banks in New York City, selected by 

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the Company, at approximately 11:00 a.m., New York time, on such Interest Determination Date for loans in U.S. dollars to leading European banks, having a maturity of three months and in a principal amount equal to an amount that is representative for a single transaction in such market at such time. If fewer than three major banks in New York City so selected are quoting such rates as mentioned in the preceding sentence, three-month LIBOR with respect to such Interest Determination Date will be the same as three-month LIBOR in effect for the immediately preceding Interest Reset Period (or, if there was no preceding interest reset period, the rate of interest will be the initial interest rate).
Section 1.2.    References.  References in this Supplemental Indenture to article numbers, section numbers and exhibits shall be deemed to be references to articles and section numbers of, and exhibits to, this Supplemental Indenture, unless otherwise specified.
ARTICLE II     
GENERAL TERMS AND CONDITIONS OF THE NOTES
Section 2.1.    Designation and Principal Amount.
The Notes are hereby authorized and are designated the Floating Rate Notes due 2020, unlimited in aggregate principal amount.  The Notes issued on the Issue Date pursuant to the terms of the Indenture shall be in an initial aggregate principal amount of $250,000,000, which amount shall be set forth in the written order of the Company for the authentication and delivery of the Notes pursuant to Section 2.4 of the Base Indenture.
Section 2.2.    Maturity.
The principal amount of the Notes shall mature and be due and payable on the Stated Maturity, together with any accrued and unpaid interest thereon to, but not including, such date.
Section 2.3.    Form and Payment.
The Notes shall be issued as a Global Security and in the minimum denominations of one thousand Dollars ($1,000) and in integral multiples of $1,000 in excess thereof.
The Notes and the Trustee’s certificate of authentication to be endorsed thereon are to be substantially in the form of Exhibit A, which form is hereby incorporated in and made a part of this Supplemental Indenture.
The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Supplemental Indenture, and the Company and the Trustee, by their execution and delivery of this Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby.
Payments of principal, premium, if any, and/or interest on the Notes shall initially be paid to CEDE & CO., as nominee of the Depositary.

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The Global Security representing the Notes shall be deposited with, or on behalf of, the Depositary and shall be registered in the name of the Depositary or a nominee of the Depositary.  The Global Security representing the Notes may not be transferred except as a whole by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or such nominee to a successor of the Depositary or a nominee of such successor.
Section 2.4.    Interest.
Interest on the Notes will be paid quarterly in arrears on each Interest Payment Date, subject to the Business Day Convention, at a rate per annum, reset quarterly, equal to three-month LIBOR plus 0.55%, accruing from March 14, 2018, to the Persons in whose name such Notes are registered on the Regular Record Date immediately preceding such Interest Payment Date, except that interest payable at the Stated Maturity will be payable to the Person to whom the principal of the Note is paid.  Interest on the Notes with respect to any Interest Reset Period shall be determined by the Calculation Agent and calculated on the basis of a 360-day year for the actual number of days elapsed during the period, and shall be equal to three-month LIBOR for the related Interest Reset Period plus 0.55%. On the Stated Maturity, Securityholders will be entitled to receive 100% of the principal amount of the Notes plus any accrued and unpaid interest to, but not including, such date.
All percentages resulting from any calculation of the interest rate will be rounded, if necessary, to the nearest one thousandth of a percentage point, with five ten-thousandths of a percentage point rounded upward (e.g., 9.8765% (or 0.098765) will be rounded upward to 9.877% (or 0.09877)), and all U.S. dollar amounts used in or resulting from such calculation will be rounded to the nearest U.S. dollar (with one-half such dollar being rounded upward).
The Calculation Agent shall promptly notify the Company and the Trustee, if the Trustee is not then serving as the Calculation Agent, of each determination of the interest rate applicable to the Notes. The Trustee shall make such information available to the Securityholders of the Notes upon request. 
The Calculation Agent’s determination of any interest rate and its calculation of the amount of interest will be final and binding on the Company, the Trustee and the Securityholders of the Notes in the absence of manifest error. 

ARTICLE III     
COVENANTS
The Notes shall be subject to the following covenants in addition to the provisions of Article 4 of the Base Indenture.

Section 3.1.    Limitation on Liens.  The Company covenants that the Company and its Subsidiaries will not create or incur any Lien on any property of the Company or any of its Subsidiaries, whether now owned or hereafter acquired, in order to secure any Indebtedness, 

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without effectively providing that the Notes shall be equally and ratably secured until such time as such Indebtedness is no longer secured by such Lien, except:
(a)    Liens existing as of the Issue Date of the Notes;
(b)    Liens granted after the Issue Date of the Notes created in favor of the Securityholders of the Notes;
(c)    Liens securing Indebtedness which are incurred to extend, renew or refinance Indebtedness which is secured by Liens permitted to be incurred under this Section 3.1;
(d)    Liens created in substitution of or as replacements for any Lien permitted by clause (a), (b) or (c) of this Section 3.1; provided that based on a good faith determination of the Company, the property encumbered under any such substitute or replacement Lien is substantially similar in nature to the property encumbered by the otherwise permitted Lien which is being replaced;
(e)    Liens on any assets, created solely to secure obligations incurred to finance the refurbishment, improvement or construction of such asset, which obligations are incurred no later than 12 months after completion of such refurbishment, improvement or construction, and all renewals, extensions, refinancings, replacements or refundings of such obligations;
(f)    (i) Liens given to secure the payment of the purchase price incurred in connection with the acquisition (including acquisition through merger or consolidation) of any property, including Capital Lease transactions in connection with any such acquisition, and (ii) Liens existing on any property at the time of acquisition thereof or at the time of acquisition by the Company or any of its Subsidiaries of any Person then owning such property whether or not such existing Liens were given to secure the payment of the purchase price of the property to which they attach; provided that with respect to clause (i), the Liens shall be given within 12 months after such acquisition and shall attach solely to the property acquired or purchased and any improvements then or thereafter placed thereon and any proceeds thereof;
(g)    pre-existing Liens on assets acquired after the Issue Date of the Notes;
(h)    Liens in favor of the Company or any of its Subsidiaries;
(i)    purchase money Liens or purchase money security interests upon or in any property acquired or held by the Company or any of its Subsidiaries in the ordinary course of business to secure the purchase price of such property or to secure Indebtedness incurred solely for the purpose of financing the acquisition of such property;
(j)    Liens on any property in favor of the United States of America or any State thereof or any political subdivision thereof to secure progress or other payments or 

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to secure Indebtedness incurred for the purpose of financing the cost of acquiring, constructing or improving such property;
(k)    the pledge or assignment in the ordinary course of business of electricity, gas (either natural or artificial) or steam, accounts receivable or customers’ installment paper;
(l)    Liens securing hedges, swaps, derivatives and other similar transactions entered into in the ordinary course of business;
(m)    Liens incurred in connection with an acquisition of assets or a project financed on a non-recourse basis;
(n)    Liens for taxes, assessments or governmental charges for the then current year and taxes, assessments or governmental charges not then delinquent;
(o)    Liens for workers’ compensation awards and similar obligations not then delinquent;
(p)    mechanics’, laborers’, materialmen’s and similar Liens not then delinquent;
(q)    judgment Liens;
(r)    easements or reservations in respect of the Company’s property or property of a Subsidiary for the purpose of roads, pipelines, utility transmission and distribution lines or other rights-of-way and similar purposes;
(s)    zoning ordinances, regulations, reservations, restrictions, covenants, party wall agreements, conditions of record and other encumbrances, other than to secure the payment of money, none of which, in the opinion of counsel, are such as to interfere with the proper operation and development of the affected property for its intended use in the Company’s business or the business of any of its Subsidiaries;
(t)    any defects of title and any terms, conditions, agreements, covenants, exceptions and reservations in deeds or other instruments under which the Company or any of its Subsidiaries has acquired or may in the future acquire any property, none of which, in the opinion of counsel, materially adversely affects the operation of the Company’s properties and those of its Subsidiaries, taken as a whole;
(u)    rights reserved to or vested in others to take or receive any part of the electricity, gas (either natural or artificial), steam or any by-products generated or produced by or from any of the Company’s or any of its Subsidiaries’ properties or with respect to any other rights concerning electricity, gas (either natural or artificial) or steam supply, transportation or storage which are in use in the ordinary course of the electricity, gas (either natural or artificial) or steam business;

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(v)    Liens created or assumed by the Company or any of its Subsidiaries in connection with the issuance of tax-exempt state and local bonds for purposes of financing, in whole or in part, the acquisition or construction of property to be used by the Company or any of its Subsidiaries, provided the Liens are limited to the property financed and the related real estate;
(w)    Liens incurred in the creation or existence of leases made, or existing on property acquired, in the ordinary course of business; and
(x)    any extension, renewal, substitution or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in this Section 3.1.
Notwithstanding anything to the contrary in this Section 3.1, the Company and any of its Subsidiaries may, without equally and ratably securing the Notes, create or incur Liens which would otherwise be subject to the restrictions set forth in this Section 3.1 if, after giving effect thereto, the aggregate principal amount of Indebtedness incurred after the Issue Date of the Notes and secured by Liens not permitted under this Section 3.1 does not exceed the greater of (i) 15% of Consolidated Net Worth calculated as of the date of the creation or incurrence of such Lien or (ii) 15% of Consolidated Net Worth calculated as of the Issue Date of the Notes.
ARTICLE IV     
MISCELLANEOUS
Section 4.1.    Application of Supplemental Indenture.
This Supplemental Indenture shall amend and supplement the Base Indenture in the manner and to the extent herein and therein provided.
Section 4.2.    Trust Indenture Act Controls.
If any provision hereof limits, qualifies or conflicts with the duties imposed by Sections 310 through 317 of the Trust Indenture Act, the imposed duties shall control.
Section 4.3.    Conflict with Base Indenture.
To the extent not expressly amended or modified by this Supplemental Indenture, the Base Indenture shall remain in full force and effect.  If any provision of this Supplemental Indenture relating to the Notes is inconsistent with any provision of the Base Indenture, the provision of this Supplemental Indenture shall control.
Section 4.4.    Governing Law.
THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.

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Section 4.5.    Successors.
All agreements of the Company in the Base Indenture, this Supplemental Indenture and the Notes shall bind its successors.  All agreements of the Trustee in the Base Indenture and this Supplemental Indenture shall bind its successors.
Section 4.6.    Counterparts.
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
Section 4.7.    Trustee Disclaimer.
The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture other than as to the validity of its execution and delivery by the Trustee.  The recitals and statements herein are deemed to be those of the Company and not the Trustee.
[Remainder of page intentionally left blank]

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

By:    /S/ Douglas I. Bonawitz    
Name: Douglas I. Bonawitz
Title: Vice President and Treasurer

THE BANK OF NEW YORK MELLON, as Trustee

By:    /S/ Laurence J. O’Brien    
Name: Laurence J. O’Brien
 Title: Vice President

Signature Page to Supplemental Indenture

Exhibit A
Form of Global Note representing the Notes
WGL HOLDINGS, INC.
FLOATING RATE NOTE DUE 2020
THIS IS A SECURITY IN GLOBAL FORM WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE “DEPOSITARY”), TO THE COMPANY 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 THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITARY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
CUSIP No. 92924F AD8
ISIN No. US92924FAD87
No. 1    Principal Amount $250,000,000
WGL HOLDINGS, INC.
FLOATING RATE NOTES DUE 2020
WGL Holdings, Inc., a corporation organized under the laws of the Commonwealth of Virginia (the “Company”), for value received, hereby promises to pay to CEDE & CO. or registered assigns the principal sum of two hundred and fifty million United States Dollars ($250,000,000), at the Company’s office or agency for said purposes, on March 12, 2020 (the “Stated Maturity”) or upon earlier redemption.
The Company promises to pay interest on the principal amount of this Security quarterly in arrears on March 12, June 12, September 12 and December 12 of each year, subject to the 

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Business Day Convention, each an “Interest Payment Date,” beginning  June 12, 2018 at a rate per annum, reset quarterly, equal to three-month LIBOR plus 0.55%, accruing from March 14, 2018, to the Persons in whose name this Security is registered on the February 25, May 28, August 28 or November 27, as the case may be, immediately preceding such Interest Payment Date, except that interest payable at the Stated Maturity will be payable to the Person to whom the principal of this Security is paid. Interest on this Security with respect to any Interest Reset Period shall be determined by the Calculation Agent and calculated on the basis of a 360-day year for the actual number of days elapsed during the period, and shall be equal to three-month LIBOR the related Interest Reset Period plus 0.55%. On the Stated Maturity, Securityholders will be entitled to receive 100% of the principal amount of this Security plus any accrued and unpaid interest to, but not including, such date. The Company will pay interest in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.  The Company will make payments in respect of this Security in global form (including principal and interest) to the Securityholder thereof or a nominee of the Securityholder, by wire transfer of immediately available funds as of the close of business on the date such payments are due.
“Bloomberg L.P.’s page ‘BBAM’” means the display designated as Bloomberg L.P.’s page “BBAM”, or any successor service for the purpose of displaying the London interbank rates of major banks for U.S. dollars. Bloomberg L.P.’s page “BBAM” is the display designated as “BBAM”, or such other page as may replace Bloomberg L.P.’s page “BBAM” on that service or such other service or services as may be nominated for the purpose of displaying London interbank offered rates for U.S. dollar deposits by ICE Benchmark Administration Limited (“IBA”) or its successor or such other entity assuming the responsibility of IBA or its successor in calculating the London Interbank Offered Rate in the event IBA or its successor no longer does so.
“Business Day” means any day which is not a Saturday or Sunday or any other day on which banks in New York City are authorized or obligated by law or regulation to close.
“Business Day Convention” means if any Interest Payment Date (other than the Stated Maturity) is not a Business Day, then such Interest Payment Date will be postponed to the next succeeding Business Day unless that Business Day is in the next succeeding calendar month, in which case the Interest Payment Date will be the immediately preceding Business Day. If any such Interest Payment Date (other than the Stated Maturity) is postponed or brought forward as described above, the interest amount will be adjusted accordingly and the Securityholder will be entitled to more or less interest, respectively. If the Stated Maturity is not a Business Day, the payment of principal and interest at the Stated Maturity will not be made until the next following Business Day and no further interest will be due in respect of the delay in such payment.
“Calculation Agent” means, initially, The Bank of New York Mellon, pursuant to the terms of the Calculation Agency Agreement, dated as of March 14, 2018, between the Company and The Bank of New York Mellon, and any successor Calculation Agent appointed thereunder.
“Interest Determination Date” means, with respect to an Interest Reset Date, the second London Business Day preceding such Interest Reset Date. 

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“Interest Reset Date” means for each Interest Reset Period, other than the first Interest Reset Period, the first day of such Interest Reset Period. 
“Interest Reset Period” means each period from and including an Interest Payment Date (or, in the case of the first such period, the issue date of the Notes) to but excluding the next succeeding Interest Payment Date. 
“London Business Day” means any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. 
“Notes” has the meaning provided on the reverse of this Security.
“three-month LIBOR” means for any Interest Reset Period, the London interbank offered rate per annum determined by the Calculation Agent on the related Interest Determination Date, in accordance with the following provisions: 
(i)  Three-month LIBOR will be the rate for deposits in U.S. dollars having a maturity of three months which appears on Bloomberg L.P.’s page “BBAM” (or such other page as may replace Bloomberg L.P.’s page “BBAM” on that service for the purpose of displaying London interbank offered rates) as of 11:00 a.m., London time, on the related Interest Determination Date. 
(ii)  If, on any such Interest Determination Date, the rate for deposits in U.S. dollars having a maturity of three months does not appear on Bloomberg L.P.’s page “BBAM” (or such other page as may replace Bloomberg L.P.’s page “BBAM” on that service for the purpose of displaying London interbank offered rates) as specified in (i) above or such page is unavailable, three-month LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars having a maturity of three months and in a principal amount equal to an amount that is representative for a single transaction in such market at such time are offered by four major banks in the London interbank market selected by the Company at approximately 11:00 a.m., London time, on such Interest Determination Date to prime banks in the London interbank market. The Company will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, the rate in respect of such Interest Determination Date will be the arithmetic mean of the quotations. If fewer than two quotations are provided, three-month LIBOR in respect of such Interest Determination Date will be the arithmetic mean of the rates quoted by three major banks in New York City, selected by the Company, at approximately 11:00 a.m., New York time, on such Interest Determination Date for loans in U.S. dollars to leading European banks, having a maturity of three months and in a principal amount equal to an amount that is representative for a single transaction in such market at such time. If fewer than three major banks in New York City so selected are quoting such rates as mentioned in the preceding sentence, three-month LIBOR with respect to such Interest Determination Date will be the same as three-month LIBOR in effect for the immediately preceding Interest Reset Period (or, if there was no preceding interest reset period, the rate of interest will be the initial interest rate).

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All percentages resulting from any calculation of the interest rate will be rounded, if necessary, to the nearest one thousandth of a percentage point, with five ten-thousandths of a percentage point rounded upward (e.g., 9.8765% (or 0.098765) will be rounded upward to 9.877% (or 0.09877)), and all U.S. dollar amounts used in or resulting from such calculation will be rounded to the nearest U.S. dollar (with one-half such dollar being rounded upward).
The Calculation Agent shall promptly notify the Company and the Trustee, if the Trustee is not then serving as the Calculation Agent, of each determination of the interest rate applicable to the Notes. The Trustee shall make such information available to the Securityholders of the Notes upon request. 
The Calculation Agent’s determination of any interest rate and its calculation of the amount of interest will be final and binding on the Company, the Trustee and the Securityholders of the Notes in the absence of manifest error.
Payments of interest on this Security will include interest accrued to but excluding the respective Interest Payment Date.  
Payment of the principal and interest due at the Stated Maturity shall be made upon the surrender of this Security at the Corporate Trust Office of the Trustee (as defined below).  Principal of and any premium and interest on the Security will, at the option of the Company, be paid either (i) by check mailed to the Person entitled to such payment at its address set forth in the Security Register or (ii) wired to such account at a banking institution in the United States as may be designated in writing to the Trustee by the Person entitled to such payment at least 16 days prior to the date of such payment or otherwise in accordance with the procedures of the Depositary.
Reference is made to the further provisions set forth on the reverse hereof, including the definitions of certain capitalized terms.  Such further provisions shall for all purposes have the same effect as though fully set forth at this place.
This Security shall not be valid or obligatory until the certificate of authentication hereon shall have been duly signed by The Bank of New York Mellon, as trustee (the “Trustee”) acting under the Indenture dated as of November 29, 2017 between the Company and the Trustee.

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IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
Dated: March 14, 2018
WGL HOLDINGS, INC.

By:    ___________________________________________
Name: 
Title:

By:    _________________________________________
Name: 
Title:

TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Securities issued under the within-mentioned Indenture. 
Dated: March 14, 2018
THE BANK OF NEW YORK MELLON, as Trustee

By:    _________________________________________
          Authorized Signatory

REVERSE OF SECURITY
WGL HOLDINGS, INC.
Floating Rate Notes Due 2020
This Security is one of a duly authorized issue of debt securities of the Company, of the series hereinafter specified, all issued or to be issued under a Second Supplemental Indenture, dated as of March 14, 2018 (the “Supplemental Indenture”), to an Indenture, dated as of November 29, 2017 (the “Base Indenture” and, as amended and supplemented to the date hereof, including by the Supplemental Indenture, the “Indenture”), and duly executed and delivered by the Company to The Bank of New York Mellon, as trustee (hereinafter, the “Trustee”).  Reference to the Indenture is hereby made for a description of the respective rights and duties thereunder of the Trustee, the Company and the Securityholders of the Securities.  This Security is one of a series designated as the “Floating Rate Notes Due 2020” of the Company (hereinafter called the “Notes”), issued under the Indenture.  Each Securityholder, by accepting a Note, agrees to be bound by all terms and provisions of the Indenture, as amended from time to time, applicable to the Notes.
The Notes issued under the Indenture are senior unsecured obligations of the Company and will mature on March 12, 2020.  The Notes rank on parity with all other existing and future senior unsecured obligations of the Company from time to time outstanding.
The Notes are not redeemable.
The Notes are not entitled to any sinking fund, and no Securityholder of the Notes may require the Company to make any mandatory redemption of the Notes or purchase or make an offer to purchase the Notes.
The Notes are subject to satisfaction and discharge pursuant to Article XI of the Base Indenture.
In case an Event of Default shall have occurred and is continuing with respect to the Notes, the principal hereof may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture.  The Indenture provides that in certain circumstances such declaration and its consequences may be waived by the Securityholders of not less than a majority in aggregate principal amount of the Notes then Outstanding.  However, any such consent or waiver by the Securityholder shall not affect any subsequent default or impair any right consequent thereon.
The Base Indenture permits the Company and the Trustee, without the consent of the Securityholders of the Notes for certain situations and with the consent of not less than a majority of the Securityholders in aggregate principal amount of the Outstanding Notes of each series affected by such supplemental indenture in other situations, to execute supplemental indentures adding to, modifying, or changing various provisions of, the Base Indenture; provided that no such supplemental indenture, without the consent of the Securityholder of each Outstanding Note affected thereby, shall (i) change the maturity date of any Securities of any 

series, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, (ii) reduce the amount of principal of an Original Issue Discount Security or any other Security payable upon acceleration of maturity, (iii) change the currency in which any Security or any premium or interest is payable, (iv) impair the right to receive payment of principal of and interest on any Security (whether upon redemption, repurchase, maturity, or otherwise) or payment or delivery of any amounts due upon conversion of Securities of any series that are convertible into shares of common stock or other securities on or after the due dates or to institute suit for the enforcement of any payment on or with respect to any Security, (v) adversely change the right to convert or exchange, including decreasing the conversion rate or increasing the conversion price of, that Security (if applicable), (vi) if the Securities are secured, change the terms and conditions pursuant to which the Securities are secured in a manner adverse to the holders of the Securities, (vii) reduce the percentage in principal amount of outstanding Securities of any series, the consent of whose holders is required for modification or amendment of the Indenture or for waiver of compliance with any provision of the Indenture, (viii) reduce the requirements contained in the Indenture for a quorum for a meeting or for voting, (ix) change any obligations of the Company to maintain an office or agency in the places and for the purposes required by the Indenture, (x) in the case such series of Securities is subordinated to other indebtedness of the Company pursuant to a supplement indenture, modify the subordination provisions in such supplemental indenture in a manner adverse to the holders of such Securities, or (xi) modify Sections 9.1 or 9.2 of the Base Indenture.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the principal of or interest on this Security at the respective times and at the rate herein prescribed.
The Notes are issuable in registered form without coupons in minimum denominations of $1,000 and in integral multiples of $1,000 in excess thereof.  A Securityholder may exchange the Notes for a like aggregate principal amount of Notes of other authorized denominations in the manner and subject to the limitations provided in the Indenture.
Upon due presentment for registration of transfer of the Notes at the office or agency for said purpose of the Company, a new Note or Notes of authorized denominations, for a like aggregate principal amount, will be issued to the transferee as provided in the Indenture.  No service charge shall be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto.
Prior to due presentation of this Security for registration of transfer, the Company, the Trustee, and any agent of the Company or the Trustee, may deem and treat the Securityholder hereof as the owner of this Security (whether or not any payment with respect to this Security shall be overdue), for the purpose of receiving payment of principal of and (subject to the provisions of the Indenture) interest hereon and for all other purposes whatsoever, whether or not 

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any payment with respect to this Security shall be overdue, and neither the Company, nor the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of or interest on this Security, for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, or because of the creation of any indebtedness represented thereby, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK.
All defined terms used in this Security (and not otherwise defined in this Security) shall have the meanings assigned to them in the Indenture.

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ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

______________________________________________________________________________
(Name and address of Assignee, including zip code, must be printed or typewritten)

______________________________________________________________________________

______________________________________________________________________________
the within Note, and all rights thereunder, hereby irrevocably, constituting and appointing

______________________________________________________________________________

______________________________________________________________________________
to transfer the said Note on the books of WGL Holdings, Inc. with full power of substitution in the premises.

Dated: ______    ____________________________________                                                                        
NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Note in every particular, without alteration or enlargement or any change whatever.

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