Exhibit 4.2
AMERICAN ELECTRIC POWER COMPANY, INC.
AND
THE BANK OF NEW YORK,
as Trustee
-----------------------
THIRD SUPPLEMENTAL INDENTURE
Dated as of June 11, 2002
TO
INDENTURE
Dated as of May 1, 2001
5.75% Senior Notes Due August 16, 2007
-----------------------
TABLE OF CONTENTS*
ARTICLE ONE
GENERAL TERMS AND CONDITIONS OF THE SENIOR NOTES
Section 1.1. Definitions ..................................................... 1
Section 1.2. Establishment, Designation and Principal Amount ................. 3
Section 1.3. Payment of Principal and Interest ............................... 4
Section 1.4. Denominations ................................................... 5
Section 1.5. Global Securities ............................................... 5
Section 1.6. Remarketing ..................................................... 6
Section 1.7. Optional Remarketing ............................................ 10
Section 1.8. Sinking Fund .................................................... 11
Section 1.9. Redemption and Repurchase ....................................... 11
Section 1.10. Covenants ....................................................... 11
Section 1.11. Tax Event Redemption ............................................ 11
Section 1.12. Tax Treatment ................................................... 12
Section 1.13. Events of Default ............................................... 13
ARTICLE II
MISCELLANEOUS PROVISIONS
Section 2.1. Recitals by Company ............................................. 16
Section 2.2. Ratification and Incorporation of Original Indenture ............ 16
Section 2.3. Executed in Counterparts ........................................ 16
Section 2.4. Separability .................................................... 16
Section 2.5. Governing Law ................................................... 16
Exhibit A Form of Senior Note ............................................. A-1
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* This Table of Contents does not constitute part of the Indenture or have
any bearing upon the interpretation of any of its terms and provisions.
THIRD SUPPLEMENTAL INDENTURE, dated as of June 11, 2002 (the
"Third Supplemental Indenture"), between AMERICAN ELECTRIC POWER COMPANY, INC.,
a corporation duly organized and existing under the laws of the State of New
York (hereinafter sometimes referred to as the "Company"), and THE BANK OF NEW
YORK, a New York banking corporation, as trustee (hereinafter sometimes referred
to as the "Trustee"), under the Indenture dated as of May 1, 2001 between the
Company and the Trustee (the "Original Indenture"). The Original Indenture, as
previously supplemented from time to time, including by this Third Supplemental
Indenture, is hereafter referred to as the "Indenture."
WITNESSETH:
WHEREAS, the Company has executed and delivered the Original Indenture
to the Trustee to provide for the issuance of unsecured promissory notes or
other evidences of indebtedness (the "Securities") in an unlimited aggregate
principal amount, to be issued from time to time in one or more series as
provided in the Original Indenture; and
WHEREAS, pursuant to the terms of the Original Indenture, the Company
desires to provide for the establishment of a new series of its Securities (said
series being hereinafter referred to as the "Senior Notes"), the form and
substance of such Senior Notes and the terms, provisions and conditions thereof
to be set forth as provided in the Original Indenture and this Third
Supplemental Indenture; and
WHEREAS, the Company desires and has requested the Trustee to join
with it in the execution and delivery of this Third Supplemental Indenture, and
all requirements necessary to make this Third Supplemental Indenture a valid
instrument, in accordance with its terms, and to make the Senior Notes, when
executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been performed and fulfilled, and the
execution and delivery hereof have been in all respects duly authorized;
NOW THEREFORE, in consideration of the purchase and acceptance of the
Senior Notes by the holders thereof, and for the purpose of setting forth, as
provided in the Original Indenture, the form and substance of the Senior Notes
and the terms, provisions and conditions thereof, the Company covenants and
agrees with the Trustee as follows:
ARTICLE ONE
GENERAL TERMS AND CONDITIONS OF THE SENIOR NOTES
SECTION 1.1. Definitions.
Except as otherwise expressly provided in or pursuant to this
Third Supplemental Indenture or unless the context otherwise requires:
(1) a term defined in the Original Indenture has the same
meaning when used in this Third Supplemental Indenture;
(2) a term defined anywhere in this Third Supplemental Indenture
has the same meaning throughout;
(3) the singular includes the plural and vice versa;
(4) headings are for convenience of reference only and do not
affect interpretation;
(5) capitalized terms used herein for which no definition is
provided herein shall have the meanings set forth in the Original
Indenture, the Forward Purchase Contract Agreement, the Remarketing
Agreement or the Pledge Agreement, as the case may be and as the
context may require; and
(6) the following terms have the meanings given to them in this
Section 1.1(6):
"Business Day" means any day other than a Saturday, Sunday or any
other day on which banking institutions and trust companies the State of New
York or at a place of payment are authorized or required by law, regulation or
executive order to be closed.
"Company" has the meaning set forth in the preamble.
"Contingent Payment Regulations" has the meaning set forth in
Section 1.13.
"Forward Purchase Contract Agent" means The Bank of New York.
"Forward Purchase Contract Agreement" means the agreement, dated
as of June 11, 2002, between the Company and the Forward Purchase Contract
Agent.
"Global Securities" has the meaning set forth in Section 1.5.
"Interest Payment Date" has the meaning set forth in Section 1.3.
"Pledge Agreement" means the Pledge Agreement, dated as of June
11, 2002, between the Company and The Bank of New York, as Forward Purchase
Contract Agent, Collateral Agent, Custodial Agent and Securities Intermediary.
"Regular Record Date" means, with respect to each Interest
Payment Date, the close of business on the Business Day preceding such Interest
Payment Date; provided, that with respect to Separate Notes that are not in
book-entry only form, the Regular Record Date shall be the close of business on
the 15/th/ Business Day preceding such Interest Payment Date.
"Remarketing" means any remarketing conducted pursuant to and in
accordance with the Remarketing Agreement.
"Remarketing Agreement" means the Remarketing Agreement, dated as
of June 11, 2002, by and among the Company, the Remarketing Agent and the
Forward Purchase Contract Agent.
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"Remarketing Value" means
(i) the value at the Remarketing Date or any Subsequent
Remarketing Date, as the case may be, of either (a) U.S. Treasury
securities that will pay, on or prior to the Payment Date falling on
the Stock Purchase Date, an amount of cash equal to the aggregate
interest payment that is scheduled to be payable on that Payment Date,
on (x) the Notes which are included in Equity Units and are
participating in the remarketing and (y) the Separate Notes which are
to be remarketed pursuant to Section 4.5(d) of the Pledge Agreement,
assuming for that purpose that the interest rate on the Notes is equal
to the Coupon Rate, if the Remarketing occurs prior to the fourth
Business Day preceding the Stock Purchase Date, or (b) an amount of
cash equal to the aggregate interest payment that is scheduled to be
payable on that Payment Date, on (x) the Notes which are included in
Equity Units and are participating in the remarketing and (y) the
Separate Notes which are to be remarketed pursuant to Section 4.5(d)
of the Pledge Agreement and Section 1.6 of this Third Supplemental
Indenture, assuming for that purpose that the interest rate on the
Notes is equal to the Coupon Rate, if the Remarketing occurs on or
after the fourth Business Day preceding the Stock Purchase Date; and
(ii) the value at the Remarketing Date or any Subsequent
Remarketing Date, as the case may be, of either (a) U.S. Treasury
securities that will pay, on or prior to the Stock Purchase Date, an
amount of cash equal to the Stated Amount of (x) such Notes which are
included in Equity Units and are participating in the remarketing and
(y) the Separate Notes which are to be remarketed pursuant to Section
4.5(d) of the Pledge Agreement, if the Remarketing occurs prior to the
fourth Business Day preceding the Stock Purchase Date, or (b) an
amount of cash equal to the Stated Amount of (x) such Notes which are
included in Equity Units and are participating in the remarketing and
(y) the Separate Notes which are to be remarketed pursuant to Section
4.5(d) of the Pledge Agreement and Section 1.6 of this Third
Supplemental Indenture, if the Remarketing occurs on or after the
fourth Business Day preceding the Stock Purchase Date
provided that for purposes of clauses (1) and (2) above, the Remarketing Value
shall be calculated on the assumptions that (x) the U.S. Treasury securities are
highly liquid and mature on or within 35 days prior to the Stock Purchase Date,
as determined in good faith by the Remarketing Agent in a manner intended to
minimize the cash value of the U.S. Treasury securities, and (y) the U.S.
Treasury securities are valued based on the ask-side price of the U.S. Treasury
securities at a time between 9:00 a.m. and 11:00 a.m., New York City time,
selected by the Remarketing Agent, on the Remarketing Date or any Subsequent
Remarketing Date, as the case may be, as determined on a third-day settlement
basis by reasonable and customary means selected in good faith by the
Remarketing Agent, plus accrued interest to that date.
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"Reset Rate" means the interest rate per annum with respect to
the Senior Notes that is determined by the Remarketing Agent pursuant to the
Remarketing Agreement as follows:
(i) in connection with a successful Remarketing, the rate of
interest that, in the opinion of the Remarketing Agent, will, when
applied to the Outstanding Senior Notes, enable the then current
aggregate market value of the Senior Notes to have a value equal to
approximately, but not less than, 100.25% of the Remarketing Value as
of the Remarketing Date or as of any Subsequent Remarketing Date, as
the case may be; or
(ii) upon the occurrence of a Failed Remarketing, the rate of
interest applicable to the Senior Notes initially until (A) the Senior
Notes are successfully remarketed pursuant to the Forward Purchase
Contract Agreement and the Remarketing Agreement or (B) if the Last
Failed Remarketing shall have occurred, a market rate of interest as
determined in accordance with Section 1.6 of this Supplemental
Indenture.
"Senior Notes" has the meaning set forth in the recitals.
"Stated Maturity" means August 16, 2007.
"Telerate" means the Dow Xxxxx Telerate Service.
"Tax Event Redemption Date" has the meaning set forth in Section
1.11.
SECTION 1.2. Establishment, Designation and Principal Amount.
(a) There shall be and is hereby authorized a series of
Securities under the Original Indenture designated the "5.75% Senior
Notes Due August 16, 2007," in the initial aggregate principal amount
of $300,000,000, which amount shall be as set forth in the Company
Order for the authentication and delivery of the Senior Notes pursuant
to Section 2.04 of the Original Indenture. Such aggregate principal
amount of the 5.75% Senior Notes Due August 16, 2007 may be increased
from time to time in accordance with Section 2.01 of the Original
Indenture.
(b) The Senior Notes shall mature and the principal shall be due
and payable together with all accrued and unpaid interest thereon on
August 16, 2007.
(c) The Senior Notes that are part of the Equity Units shall be
issued in definitive fully registered form (the "Registered
Securities"), without coupons, in substantially the form set out in
Exhibit A hereto. The entire principal amount of the Senior Notes
shall initially be evidenced by one or more certificates issued to The
Bank of New York, as the Forward Purchase Contract Agent under the
Forward Purchase Contract Agreement (as defined below).
(d) The Senior Notes that, in accordance with the Forward
Purchase Contract Agreement, are no longer part of Equity Units shall
be represented initially by Global Securities (as defined below). Each
such Registered Security and Global Security shall represent such
aggregate principal amount of the Outstanding Senior Notes as shall be
from time to time endorsed thereon, which principal amounts may be
increased or
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decreased, as applicable, to reflect Transfers from Pledged Notes to
Separate Notes and Transfers from Separate Notes to Pledged Notes. Any
such increase or decrease in the aggregate principal amount of (i)
Registered Securities shall be made by the Collateral Agent and (ii)
Global Securities representing Senior Notes shall be made by the
Trustee, as custodian of the Global Securities, in each case upon the
instructions of the Collateral Agent given pursuant to Article IV of
the Pledge Agreement.
SECTION 1.3. Payment of Principal and Interest.
(a) The unpaid principal amount of the Senior Notes shall
initially bear interest at the rate of 5.75% per annum, payable on
each February 16, May 16, August 16 and November 16 (each, with
respect to the Senior Notes, an "Interest Payment Date"), from the
original date of issuance, to, but excluding, the earlier of (i) the
settlement date of a successful Remarketing under the Forward Purchase
Contract Agreement or (ii) the Stock Purchase Date, and, thereafter,
at the Reset Rate to, but excluding, the Stated Maturity of the Senior
Notes.
(b) Interest shall be payable quarterly in arrears on each
Interest Payment Date to the Person in whose name the Senior Notes are
registered on the Regular Record Date for such Interest Payment Date;
provided that interest payable on the Stated Maturity of principal as
provided herein shall be paid to the person to whom principal is
payable. Any such interest not punctually paid or duly provided for
with respect to any Interest Payment Date falling after the Stock
Purchase Date shall forthwith cease to be payable to the registered
holders on such regular record date, and may be paid to the person or
persons in whose name the Senior Notes are registered at the close of
business on a special record date to be fixed by the Trustee for the
payment of such defaulted interest, notice whereof shall be given to
the registered holders of the Senior Notes not less than ten (10) days
prior to such special record date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any
securities exchange, if any, on which the Senior Notes may be listed,
and upon such notice as may be required by such exchange, all as more
fully provided in Section 2.03 of the Original Indenture.
(c) The amount of interest payable for any period will be
computed (1) for any quarterly period, on the basis of a 360-day year
of twelve 30-day months, (2) for any period shorter than a full
quarterly period, on the basis of a 30-day month and (3) for periods
of less than a month, on the basis of the actual number of days
elapsed per 30-day month. If any date on which principal or interest
is payable is not a Business Day, then payment of principal or
interest payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force
and effect as if made on such date.
(d) Payment of the principal of and interest on the Senior Notes
shall be made at an Office or Agency of the Company or at the Office
of the Agent in The City of New York in such coin or currency of the
United States of America as at the time of payment
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is legal tender for payment of public and private debts, with any such
payment that is due on the Stated Maturity of any Senior Notes being
made upon surrender of such Senior Notes to the Office or Agency of
the Company or at the Office of the Agent in The City of New York.
Payments of interest will be made, subject to such surrender where
applicable, at the option of the Company, (i) by check mailed to the
address of the person entitled thereto as such address shall appear in
the Security Register or (ii) by wire transfer at such place and to
such account at a banking institution in the United States as may be
designated in writing to the Trustee at least sixteen (16) days prior
to the date for payment by the Person entitled hereto.
SECTION 1.4. Denominations. The Senior Notes shall be issued in
denominations of $50 and integral multiples of $50.
SECTION 1.5. Global Securities.
(a) The Senior Notes that, in accordance with the Forward
Purchase Contract Agreement, are no longer part of the Equity Units
will be issued initially in the form of one or more global securities
(the "Global Securities") registered in the name of DTC or its
nominee. Except under the limited circumstances described below or in
Section 1.3 above, Senior Notes represented by such Global Securities
will not be exchangeable for, and will not otherwise be issuable as,
Senior Notes in definitive form. The Global Securities described above
may not be transferred except by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC or to a successor
Depository or its nominee.
(b) Owners of beneficial interests in such a Global Security
will not be considered the Holders thereof for any purpose under the
Indenture, and no Global Security representing a Senior Note shall be
exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of DTC or its nominee or to a
successor Depository or its nominee or except as described below. The
rights of owners of beneficial interests in such a Global Security
shall be exercised only through DTC.
(c) A Global Security shall be exchangeable for Senior Notes
registered in the names of persons other than DTC or its nominee only
if (i) DTC notifies the Company that it is unwilling or unable to
continue as a Depository for such Global Security and no successor
Depository shall have been appointed by the Company within 90 days of
receipt by the Company of such notification, or if at any time DTC
ceases to be a clearing agency registered under the Securities
Exchange Act of 1934 at a time when DTC is required to be so
registered to act as such Depository and no successor Depository shall
have been appointed by the Company within 90 days after it becomes
aware of such cessation, or (ii) the Company in its sole discretion
determines that it no longer has any senior debt securities
represented by global securities or that it will permit a Global
Security to be exchangeable or an Event of Default under the Indenture
has occurred and is continuing. Any Global Security that is
exchangeable pursuant to the preceding
6
sentence shall be exchangeable for Senior Notes registered in such
names as DTC shall direct.
SECTION 1.6. Remarketing.
(a) The Pledged Notes comprising part of Equity Units and the
Separate Notes of holders of Separate Notes that have elected to
participate in the Remarketing shall be remarketed by the Remarketing
Agent on the Remarketing Date. A Holder of Equity Units may elect not
to participate in a Remarketing and retain the Senior Notes underlying
such Equity Units by notifying the Forward Purchase Contract Agent of
such election and delivering the Opt-out Treasury Consideration to the
Forward Purchase Contract Agent not later than 10:00 a.m. on the
fourth Business Day prior to the Remarketing Date, as applicable (or,
in the case of a Failed Remarketing, not later than 10:00 a.m. on the
fourth Business Day immediately prior to the subsequent Remarketing
Period). Upon receipt thereof by the Forward Purchase Contract Agent,
the Forward Purchase Contract Agent shall deliver such Opt-out
Treasury Consideration to the Collateral Agent, which will, for the
benefit of the Company, thereupon apply such Opt-out Treasury
Consideration to secure such Holder's obligations under the Forward
Purchase Contracts. On the first Business Day immediately preceding
the Remarketing Date (or, in the case of a Failed Remarketing, the
subsequent Remarketing Period), the Collateral Agent, pursuant to the
terms of the Pledge Agreement, will deliver the Pledged Notes to the
Forward Purchase Contract Agent. Within three Business Days following
any Remarketing Period (A) if the Remarketing was successful, the
Forward Purchase Contract Agent shall distribute such Notes to the new
Holders thereof and (B) if there was a Failed Remarketing, the Forward
Purchase Contract Agent will deliver such Notes to the Collateral
Agent, which will, for the benefit of the Company, thereupon apply
such Notes that are a component of Equity Units to secure such
Holders' obligations under the Forward Purchase Contracts, return any
Opt-out Treasury Consideration delivered by such Holders to such
Holders and return the Separate Notes to the holders thereof. A Holder
that does not so deliver the Opt-out Treasury Consideration or has not
settled the related Purchase Contract through a Cash Settlement or an
Early Settlement pursuant to Sections 5.4 and 5.9 of the Forward
Purchase Contract Agreement shall be deemed to have elected to
participate in the Remarketing.
(b) On the seventh Business Day prior to the Remarketing Date or
the first day of any subsequent Remarketing Period, the Company shall
give Holders of Equity Units and Holders of Separate Notes notice of
the Remarketing in an Authorized Newspaper, including the specific
U.S. Treasury security or securities (including the CUSIP number
and/or the principal terms of such Treasury security or securities)
that must be delivered by Holders of Equity Units that elect not to
participate in the Remarketing pursuant to Section 5.4(g) of the
Forward Purchase Contract Agreement, no later than 10:00 a.m. (New
York City time) on the seventh Business Day preceding the Remarketing
Date. Not later than seven nor more than 15 calendar days prior to any
Remarketing Period, the Company shall request DTC (or any successor
Clearing Agency) to notify, directly or indirectly, each Beneficial
Owner or Clearing Agency Participant holding Equity Units or Stripped
Units and each Beneficial Owner of a Separate Note of
7
the Remarketing and of the procedures that must be followed in
connection with the Remarketing.
(c) The Forward Purchase Contract Agent shall notify, by 10:00
a.m., New York City time, on the third Business Date preceding the
Remarketing Date or the first day of any subsequent Remarketing
Period, as applicable, the Remarketing Agent and the Collateral Agent
of the aggregate number of Senior Notes of Equity Units Holders to be
remarketed. On the third Business Day immediately preceding the
Remarketing Date or the first day of any subsequent Remarketing
Period, as applicable, no later than by 10:00 a.m. New York City time,
pursuant to the terms of the Pledge Agreement, the Custodial Agent
will notify the Remarketing Agent of the aggregate number of Separate
Notes to be remarketed. On the third Business Day immediately
preceding the Remarketing Date or the first day of any subsequent
Remarketing Period, as applicable, the Collateral Agent and the
Custodial Agent, pursuant to the terms of the Pledge Agreement, will
deliver for Remarketing to the Remarketing Agent all Notes to be
remarketed. Upon receipt of such notice from the Forward Purchase
Contract Agent and the Custodial Agent and such Notes from the
Collateral Agent and the Custodial Agent, the Remarketing Agent will,
on the Remarketing Date, use its commercially reasonable best efforts
to establish a Reset Rate pursuant to clause (i) of the definition of
Reset Rate and remarket such Senior Notes pursuant to the Remarketing
procedures in the Remarketing Agreement.
(d) The right of each Holder of Senior Notes to have its Senior
Notes tendered for purchase will be limited to the extent that (i) the
Remarketing Agent conducts a Remarketing pursuant to the terms of the
Remarketing Agreement, (ii) the Remarketing Agent is able to find a
purchaser or purchasers for the tendered Senior Notes and (iii) such
purchaser or purchasers deliver the purchase price therefor to the
Remarketing Agent.
(e) Upon receipt of the notice provided above in paragraph (c)
from the Forward Purchase Contract Agent and the Custodial Agent and
such Notes from the Collateral Agent and the Custodial Agent, the
Remarketing Agent will, on the Remarketing Date, use its commercially
reasonable best efforts to (i) establish a rate of interest that, in
the opinion of the Remarketing Agent, will, when applied to the
outstanding Notes, enable the then current aggregate market value of
the Notes to have a value equal to approximately, but not less than,
100.25% of the Remarketing Value as of the Remarketing Date or as of
any Subsequent Remarketing Date, as the case may be (the "Reset Rate")
and (ii) sell such Notes on such date at a price equal to
approximately, but not less than, 100.25% of the Remarketing Value.
(f) If, in spite of using its commercially reasonable best
efforts, the Remarketing Agent cannot establish the Reset Rate and
remarket the Notes included in the remarketing at a price equal to
approximately, but not less than, 100.25% of the Remarketing Value,
the Remarketing Agent will again attempt to establish the Reset Rate
and remarket the Notes included in the remarketing at a price equal to
approximately, but not less than, 100.25% of the Remarketing Value on
each of the two immediately following Business Days. If the
Remarketing Agent cannot remarket the Notes included in the
remarketing at a price equal to approximately, but not less than,
100.25% of the
8
Remarketing Value on any of those days, it will attempt to establish
the Reset Rate and remarket the Notes included in the remarketing at a
price equal to approximately, but not less than, 100.25% of the
Remarketing Value on each of the three Business Days immediately
preceding June 16, 2005. If the Remarketing Agent cannot remarket the
Notes included in the remarketing at a price equal to approximately,
but not less than, 100.25% of the Remarketing Value on any of those
days, it will attempt to establish the Reset Rate and remarket the
Notes included in the remarketing at a price equal to approximately,
but not less than, 100.25% of the Remarketing Value on each of the
three Business Days immediately preceding July 16, 2005. If the
Remarketing Agent cannot establish the Reset Rate and remarket the
Notes included in the remarketing at a price equal to approximately,
but not less than, 100.25% of the Remarketing Value either on any of
the two Business Days immediately following the Remarketing Date or on
any of the three Business Days immediately preceding June 16, 2005 or
on any of the three Business Days immediately preceding July 16, 2005,
the remarketing in each period will be deemed to have failed (each, a
"Failed Remarketing"). If the Remarketing Agent cannot establish the
Reset Rate and remarket the Notes included in the remarketing at a
price equal to approximately, but not less than, 100.25% of the
Remarketing Value on any of the three Business Days immediately
preceding July 16, 2005, the Remarketing Agent will further attempt to
establish the Reset Rate and remarket the Notes included in the
remarketing at a price equal to approximately, but not less than,
100.25% of the Remarketing Value on each of the three Business Days
immediately preceding August 12, 2005. If, in spite of using its
commercially reasonable best efforts, the Remarketing Agent fails to
remarket the Notes underlying the Equity Units at a price equal to
approximately, but not less than, 100.25% of the Remarketing Value in
accordance with the terms of the Pledge Agreement by 4:00 p.m., New
York City time, on the third Business Day immediately preceding the
Stock Purchase Date, a "Last Failed Remarketing" will be deemed to
have occurred.
(g) If a successful Remarketing shall have occurred prior to the
fourth Business Day preceding the Stock Purchase Date, the Remarketing
Agent will, in accordance with the Forward Purchase Contract Agreement
and the Remarketing Agreement:
(i) deduct and retain for itself the Remarketing Fee;
(ii) use the proceeds from such successful Remarketing to
purchase the Agent-purchased Treasury Consideration with the
CUSIP numbers, if any, selected by the Remarketing Agent,
described in clauses (1) and (2) of the definition of Remarketing
Value related to the Senior Notes of Holders of Equity Units that
were remarketed;
(iii) if any Separate Notes were remarketed, remit to the
Collateral Agent for payment to the Holders of such Separate
Notes sold in the Remarketing the remaining proceeds from such
successful Remarketing attributable to the Separate Notes; and
9
(iv) if there remain any proceeds from such successful
Remarketing, after the application of such proceeds as set forth
in clauses (i) through (iii) of this sentence, then remit such
remaining proceeds to the Forward Purchase Contract Agent for
payment to the Holders of the Equity Units that were remarketed,
on a pro rata basis, in accordance with the Remarketing
Agreement.
(h) In the case of a successful Remarketing occurring prior to
the fourth Business Day preceding the Stock Purchase Date, on or prior
to the third Business Day following the Remarketing Date or any
Subsequent Remarketing Date, the Remarketing Agent shall deliver such
Agent-purchased Treasury Consideration to the Forward Purchase
Contract Agent, which shall thereupon deliver such Agent-purchased
Treasury Consideration to the Collateral Agent. The Collateral Agent,
for the benefit of the Company, will thereupon apply such
Agent-purchased Treasury Consideration, in accordance with the Pledge
Agreement, to secure such Holders' obligations under the Forward
Purchase Contracts.
(i) If a successful Remarketing shall have occurred on or after
the fourth Business Day preceding the Stock Purchase Date, the
Remarketing Agent will, in accordance with the Forward Purchase
Contract Agreement and the Remarketing Agreement:
(i) deduct and retain for itself the Remarketing Fee;
(ii) pay the proceeds from such successful Remarketing to
the Forward Purchase Contract Agent, which shall thereupon
deliver such proceeds to the Collateral Agent which, for the
benefit of the Company, will thereupon apply such proceeds, in
accordance with the Pledge Agreement in direct settlement of the
Holders' obligations under the Forward Purchase Contracts;
(iii) if any Separate Notes were remarketed, remit to the
Collateral Agent for payment to the Holders of such Separate
Notes sold in the Remarketing the remaining proceeds from such
successful Remarketing attributable to the Separate Notes; and
(iv) if there remain any proceeds from such successful
Remarketing, after the application of such proceeds as set forth
in clauses (i) through (iii) of this sentence, then remit such
remaining proceeds to the Forward Purchase Contract Agent for
payment to the Holders of the Equity Units that were remarketed,
on a pro rata basis, in accordance with the Remarketing
Agreement.
(j) If a successful Remarketing occurs, by approximately 4:30
p.m. (New York City time) on the Remarketing Date, the Remarketing
Agent shall advise, by telephone (promptly confirmed in writing in the
case of clause (i)):
(i) the Company, the Forward Purchase Contract Agent, the
Collateral Agent, the Securities Intermediary, DTC and the
Trustee of the Reset Rate
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determined in the Remarketing;
(ii) each purchaser (or the Depository Participant thereof)
of Senior Notes in the Remarketing of the Reset Rate and the
number of Senior Notes such purchaser is to purchase; and
(iii) each purchaser to give instructions to its Depository
Participant to pay the purchase price on the date of settlement
for such Remarketing in same day funds against delivery of the
remarketed Senior Notes purchased through the facilities of DTC.
(k) Any distribution to Holders of excess funds and interest
described in this Section 1.6 shall be payable at the Office of the
Agent in The City of New York maintained for that purpose or, at the
option of the Holder or the holder of Separate Notes, as applicable,
by check mailed to the address of the Person entitled thereto at such
address as it appears on the relevant Register or by wire transfer to
an account specified by the Holder or the holder of Separate Notes, as
applicable.
(l) If a Failed Remarketing occurs, the Remarketing Agent and
the Company, as applicable, shall take the following actions:
(i) the Remarketing Agent shall notify by telephone the
Company, the Forward Purchase Contract Agent, the Collateral
Agent and the Trustee, that a Failed Remarketing has occurred,
whereupon the Company shall notify the Clearing Agency, by
telephone, that a Failed Remarketing has occurred;
(ii) with respect to any Remarketing Period during which no
successful Remarketing occurred, the Company shall publish notice
by means of Bloomberg and Reuters newswires, such notice to be
published no later than the fourth Business Day following the end
of such Remarketing Period;
(iii) the Remarketing Agent shall determine the Reset Rate
in accordance with clause (ii) of the Reset Rate definition; and
(iv) the Remarketing Agent shall remit, within three
Business Days following the end of a Remarketing Period which
constituted a Failed Remarketing, the Pledged Notes that were to
be remarketed to the Collateral Agent and the Separate Notes that
were to be remarketed to the Custodial Agent.
(m) If upon a Last Failed Remarketing, the Collateral Agent
delivers any Senior Notes to the Company in full satisfaction of the
Holder's obligation under the related Forward Purchase Contracts, any
accumulated and unpaid interest on such Notes will become payable by
the Company to the Forward Purchase Contract Agent for payment to the
Holder of the Equity Units to which such Notes relate. Such payment
will be made by the Company on or prior to 11:00 a.m., New York City
time, on the Stock Purchase Date in lawful money of the United States
by certified or cashier's check or wire transfer in immediately
available funds payable to or upon the order of the Forward
11
Purchase Contract Agent. Upon the occurrence of a Last Failed
Remarketing, the Company will retain and dispose of the Pledged Notes
of all Holders in satisfaction of the Holders' obligations under the
related Forward Purchase Contracts. The Company will publish notice by
means of Bloomberg and Reuters newswires of any Remarketing Period
during which no successful Remarketing occurred, such notice to be
published not later than the fourth Business Day following the end of
such Remarketing Period. The Company will cause a notice of the Last
Failed Remarketing to be published on the fourth Business Day
following the date of the Last Failed Remarketing in an Authorized
Newspaper.
(n) In the event of a Last Failed Remarketing, the Remarketing
Agent shall determine the Reset Rate that shall apply to the Senior
Notes held by the Holders of Equity Units that elected not to
participate in the remarketing and Holders of Separate Notes according
to the following method, provided that in no event shall the Reset
Rate exceed the maximum rate permitted by state usury laws and other
applicable laws. After the Last Failed Remarketing, the Remarketing
Agent will take the average of the interest rates quoted to it by
three nationally recognized investment banks selected by the Company,
which are underwriters or dealers in debt securities similar to the
Senior Notes, that in their judgment reflects an accurate market rate
of interest applicable to the Senior Notes at that time. Following
receipt of these quotes, the Remarketing Agent will have the right, in
its sole judgment, to either recalculate the average based on only two
of the quoted interest rates if one of the three quotes, in the
Remarketing Agent's sole discretion, did not reflect market conditions
or, alternatively, determine a consensus among the investment banks
rather than a strict mathematical average by taking into account all
relevant qualitative and quantitative factors. These factors may
include, but shall not limited to, maturity of the Senior Notes, the
credit rating and credit risk of the Company and companies of similar
industries, the then yield to maturity of the Senior Notes and the
state of the markets for primary and secondary sales of similar debt
securities.
(o) In accordance with DTC's normal procedures, on the date of
settlement of such Remarketing or the Stock Purchase Date, as
applicable, the transactions described above with respect to each
Senior Notes remarketed in the Remarketing shall be executed through
DTC, and the accounts of the respective Depository Participants shall
be debited and credited and such remarketed Senior Notes delivered by
book entry as necessary to effect purchases and sales of such
remarketed Senior Notes. DTC shall make payment in accordance with its
normal procedures.
(p) If any Holder of Senior Notes selling Senior Notes in the
Remarketing fails to deliver such Senior Notes, the direct or indirect
Depository Participant of such selling Holder and of any other Person
who was to have purchased Senior Notes in the Remarketing may deliver
to any such other Person an aggregate principal amount of Senior Notes
that is less than the aggregate principal amount of Senior Notes that
otherwise was to be purchased by such Person. In such event, the
aggregate principal amount of Senior Notes to be so delivered shall be
determined by such direct or indirect Depository Participant, and
delivery of such lesser aggregate principal amount of Senior Notes
shall constitute good delivery.
12
(q) The Remarketing Agent is not obligated to purchase any
Senior Notes that otherwise would remain unsold in the Remarketing.
Neither the Company nor the Remarketing Agent shall be obligated in
any case to provide funds to make payment upon tender of the Senior
Notes for Remarketing.
(r) Under the Remarketing Agreement, the Company, in its
capacity as issuer of the Senior Notes, shall be liable for, and shall
pay, any and all costs and expenses incurred in connection with the
Remarketing, other than the Remarketing Fee.
(s) The settlement procedures set forth herein, including
provisions for payment by purchasers of the remarketed Senior Notes in
the Remarketing, shall be subject to modification to the extent
required by DTC or if the book-entry system is no longer available for
the remarketed Senior Notes at the time of the Remarketing, to
facilitate the Remarketing of the remarketed Senior Notes in
certificated form, and shall provide for the authentication and
delivery of Senior Notes in a principal amount equal to the
unremarketed portion of such Senior Notes. In addition, the
Remarketing Agent may modify the settlement procedures set forth
herein in order to facilitate the settlement process.
SECTION 1.7. Optional Remarketing.
(a) On or prior to the fourth Business Day immediately preceding
either the Remarketing Date or if applicable, the first day of any
subsequent Remarketing Period, but no earlier than the Interest
Payment Date immediately preceding the last Interest Payment Date
before the Stock Purchase Date, holders of Separate Notes may elect to
have their Separate Notes remarketed by Transferring their Separate
Notes and delivering a notice of such election, substantially in the
form of Exhibit C to the Pledge Agreement, to the Collateral Agent. On
the third Business Day immediately prior to the Remarketing Date or
the first day of any subsequent Remarketing Period, by 10:00 a.m., New
York City time, the Collateral Agent shall notify the Remarketing
Agent of the number of such Separate Notes to be remarketed. The
Collateral Agent will hold such Separate Notes in an account separate
from the Collateral Account. A holder of Separate Notes electing to
have its Separate Notes remarketed will also have the right to
withdraw such election by written notice to the Collateral Agent,
substantially in the form of Exhibit D to the Pledge Agreement, on or
prior to the fourth Business Day immediately preceding the applicable
Remarketing Date or the first day of a subsequent Remarketing Period,
upon which notice the Collateral Agent will return such Separate Notes
to such holder.
(b) On the third Business Day immediately preceding the
Remarketing Date or the first day of any subsequent Remarketing
Period, the Collateral Agent at the written direction of the
Remarketing Agent will deliver to the Remarketing Agent for
Remarketing all Separate Notes delivered to the Collateral Agent
pursuant to Section 4.5(d) of the Pledge Agreement and not withdrawn
pursuant to the terms thereof prior to such date. If the holder of the
Separate Notes delivers only such notice but not the Separate Notes
subject to such notice, then none of such holder's Separate Notes
shall be included in the Remarketing. Once the holder of Separate
Notes elects to participate in
13
the Remarketing, such Separate Notes will be remarketed in the
Remarketing, unless such notice is properly withdrawn. In accordance
with Section 4.5(d) of the Pledge Agreement, upon the occurrence of a
Failed Remarketing, the Remarketing Agent will promptly return such
Separate Notes to the Collateral Agent for redelivery to such holders
of such Separate Notes.
SECTION 1.8. Sinking Fund. The Senior Notes shall not be entitled
to any sinking fund.
SECTION 1.9. Redemption and Repurchase. Except as provided in
Section 1.12, the Senior Notes shall not be redeemable prior to their Stated
Maturity.
SECTION 1.10. Covenants.
(a) For so long as any Senior Notes of this series remain
outstanding, the Company will not create or incur or allow any of its
subsidiaries to create or incur any pledge or security interest on any
of the capital stock of a Public Utility Subsidiary held by the
Company or one of its subsidiaries or a Significant Subsidiary.
For purposes of this covenant:
(i) Public Utility Subsidiary means, at any particular
time, a direct or indirect subsidiary of the Company that, as a
substantial part of its business, distributes or transmits
electric energy to retail or wholesale customers at rates or
tariffs that are regulated by either a state or Federal
regulatory authority.
(ii) Significant Subsidiary means, at any particular time,
any direct subsidiary of the Company whose consolidated gross
assets or consolidated gross revenues (having regard to the
Company's direct beneficial interest in the shares, or the like,
of that subsidiary) represent at least 25% of the Company's
consolidated gross assets or consolidated gross revenues
appearing in the most recent audited financial statements of the
Company as of the date of determination.
(b) The provisions of Article Ten of the Original Indenture
shall be applicable to the Senior Notes.
SECTION 1.11. Defeasance. The provisions of Section 11.01 of the
Original Indenture shall not apply to the Senior Notes.
SECTION 1.12. Tax Event Redemption.
(a) If a Tax Event shall occur, the Company may, at its
option, redeem the
14
Senior Notes in whole (but not in part) at any time at a price per
Senior Note equal to the Redemption Price. Installments of interest on
the Senior Notes that are due and payable on or prior to the date of
redemption (the "Tax Event Redemption Date") will be payable to the
Holders of the Senior Notes registered as such on the Record Date next
preceding such Tax Event Redemption Date. If, following the settlement
of the Forward Purchase Contracts and following the occurrence of a
Tax Event, the Company, at its option, redeems the Senior Notes, the
proceeds of the redemption will be payable in cash to the Holders of
the Senior Notes.
(b) If the Company exercises its option to redeem the Senior
Notes following the occurrence of a Tax Event prior to the Remarketing
Date, or if there has not been a successful Remarketing prior to the
Stock Purchase Date, the Company shall in the notice to the Trustee
pursuant to Section 3.02 of the Original Indenture specify the
Redemption Price. Upon the specification of the Redemption Price by
the Company, the Company shall appoint the Collateral Agent to acquire
the Treasury Portfolio in consultation with the Company and in
accordance with the Forward Purchase Contract Agreement. The
Collateral Agent shall then apply, out of the aggregate Redemption
Price for the Senior Notes that are components of Equity Units, an
amount equal to the aggregate Redemption Amount for the Senior Notes
that are components of Equity Units to purchase on behalf of the
Holders of Equity Units the Treasury Portfolio and promptly remit the
remaining portion, if any, of such aggregate Redemption Price to the
Forward Purchase Contract Agent for payment to the Holders of such
Equity Units. The Treasury Portfolio will be substituted for the
Pledged Notes, and will be pledged to the Collateral Agent in
accordance with the terms of the Pledge Agreement to secure the
obligation of each Holder of an Equity Unit to purchase the Common
Stock under the Forward Purchase Contract constituting a part of such
Equity Units. Payment of the Redemption Price to Holders of Separate
Notes shall be made in cash on the Tax Event Redemption Date.
(c) If a Tax Event Redemption occurs after the earlier of a
successful Remarketing or the Stock Purchase Date, payment of the
Redemption Price to each Holder of Senior Notes shall be made by the
Trustee (subject to its receipt of funds), no later than 12:00 noon,
New York City time, on the Tax Event Redemption Date, by check or wire
transfer in immediately available funds (provided the necessary wire
instructions have been provided to the Trustee at least 15 days prior
to the Tax Event Redemption Date) at such place and to such account as
may be designated by each such Holder of Senior Notes, including the
Collateral Agent. If the Trustee holds immediately available funds
sufficient to pay the Redemption Price of the Senior Notes, then, on
such Tax Event Redemption Date, such Senior Notes will cease to be
Outstanding.
(d) The Trustee shall have no duty or liability to determine or
verify the Redemption Price. Notice of any redemption will be mailed
at least 30 days but not more than 60 days before the Tax Event
Redemption Date to each registered Holder of the Senior Notes to be
repaid at its registered address. Unless the Company defaults in
payment of the Redemption Price, on and after the Tax Event Redemption
Date interest shall cease to accrue on the Senior Notes, whether or
not such Senior Notes have been received by the Company, and all other
rights of the Holders in respect of the Senior Notes shall terminate
and lapse (other than the right to receive the Redemption Price
15
upon delivery of such Senior Notes but without interest on such
Redemption Price).
SECTION 1.13. Tax Treatment. The Company agrees, and by acceptance
of a beneficial ownership interest in the Senior Notes, each beneficial holder
of Senior Notes will be deemed to have agreed (1) to treat the acquisition of an
Equity Unit as the acquisition of the Senior Note and the Forward Purchase
Contract constituting the Equity Unit and to allocate the purchase price of the
Equity Unit between the Senior Note and the Forward Purchase Contract as $50 and
$0, respectively, (2) to treat the Senior Notes as indebtedness that is subject
to Treas. Reg. Sec. 1.1275-4 (the "Contingent Payment Regulations") for United
States federal income tax purposes and (3) to be bound by the Company's
determination of the "comparable yield" and "projected payment schedule," within
the meaning of the Contingent Payment Regulations, with respect to the Senior
Notes for United States federal income tax purposes. A Holder of Senior Notes
may obtain the amount of original issue discount, issue date, yield to maturity,
comparable yield and projected payment schedule by submitting a written request
for it to the Company at the following address: American Electric Power,
Investor Relations, Xxx Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxxx 00000.
ARTICLE TWO
MISCELLANEOUS PROVISIONS
SECTION 2.1. Recitals by Company. The recitals in this Third
Supplemental Indenture are made by the Company only and not by the Trustee, and
all of the provisions contained in the Original Indenture in respect of the
rights, privileges, immunities, powers and duties of the Trustee shall be
applicable in respect of the Senior Notes and of this Third Supplemental
Indenture as fully and with like effect as if set forth herein in full.
SECTION 2.2. Ratification and Incorporation of Original Indenture.
As supplemented hereby, the Original Indenture is in all respects ratified and
confirmed, and the Original Indenture and this Third Supplemental Indenture
shall be read, taken and construed as one and the same instrument.
SECTION 2.3. Executed in Counterparts. This Third Supplemental
Indenture may be executed in several counterparts, each of which shall be deemed
to be an original, and such counterparts shall together constitute but one and
the same instrument.
SECTION 2.4. Separability. In case any provisions contained in this
Third Supplemental Indenture or in any Senior Note 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 2.5. Governing Law. THIS THIRD SUPPLEMENTAL INDENTURE
16
AND EACH SENIOR NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE OR INSTRUMENTS
ENTERED INTO AND, IN EACH CASE, PERFORMED IN SAID STATE.
17
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed, all as of the day and year first above written.
AMERICAN ELECTRIC POWER COMPANY,
INC.
By:________________________________
Name:
Title:
00
XXX XXXX XX XXX XXXX, as Trustee
By:______________________________
Name:
Title:
19
EXHIBIT A
FORM OF SENIOR NOTE
[Face of Note]
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY OR ANY SUCCESSOR DEPOSITARY
APPOINTED AS SUCH PURSUANT TO THE INDENTURE (THE "DEPOSITARY") TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO SUCH A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
GLOBAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE OR PAYMENT,
AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF THE DEPOSITARY OR ITS
NOMINEE OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY AND ANY PAYMENT IS MADE TO THE DEPOSITARY OR ITS NOMINEE, ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF HAS AN INTEREST HEREIN.]*
CUSIP No.
ISIN No.
No. ___ $_______________
AMERICAN ELECTRIC POWER COMPANY, INC.
5.75% Senior Notes Due August 16, 2007
American Electric Power Company, Inc., a corporation duly
organized and existing under the laws of New York (the "Company," which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to [Cede & Co.]* or registered
assigns, the principal sum of _______________________ United States Dollars [,
or such other principal amount as shall be set forth in the Schedule of
Increases or Decreases attached hereto,]** at the Company's Office or Agency or
Office of the Agent in The City of New York for said purpose, on August 16, 2007
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, and
to pay interest thereon from June 11, 2002 or from the next most recent date to
which interest has been paid or duly provided for, quarterly in arrears on each
February 16, May 16, August 16 and November 16 of each year (each such date, an
"Interest
------------------
* Insert in Global Securities.
** Insert in Global Securities and Pledged Notes.
A-1
Payment Date"), commencing on August 16, 2002, at the rate of 5.75% per annum
to, but excluding, the earlier of (i) the settlement date of a successful
Remarketing under the Forward Purchase Contract Agreement or (ii) the Stock
Purchase Date, and, thereafter, at the Reset Rate to, but excluding, the Stated
Maturity.
The amount of interest so payable for any period shall be
computed (i) for any full quarterly period on the basis of a 360-day year of
twelve 30-day months and (ii) for any period shorter than a full quarterly
period, on the basis of a 30-day month and, for periods of less than a month, on
the basis of the actual number of days elapsed per 30-day month. In the event
that any Interest Payment Date is not a Business Day, then payment of the
interest or principal payable on such date will be made on the next succeeding
day which is a Business Day and no interest shall accrue in respect of the
amounts which payment is so delayed for the period from and after such interest
payment date or other payment date, except that, if such Business Day is in the
next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
Payments of the principal of and interest on the Senior Notes
shall be made at said Office or Agency of the Company or at the Office of the
Agent in The City of New York to which interest on the Senior Notes has been
paid or duly provided for, until payment of said principal sum has been made or
duly provided for; provided that, unless this Senior Note is a Senior Note
issued in global form ("Global Security"), interest may be paid, at the option
of the Company, (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or (ii) by wire
transfer at such place and to such account at a banking institution in the
United States as may be designated in writing to the Trustee at least sixteen
(16) days prior to the date for payment by the Person entitled thereto. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date, as provided in the Indenture, as hereinafter defined, shall be
paid to the Person in whose name this Note (or one or more Predecessor
Securities) shall have been registered at the close of business on the Regular
Record Date with respect to such Interest Payment Date, provided that interest
payable on the Stated Maturity or any redemption date shall be paid to the
Person to whom principal is paid. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date and shall be paid as provided in said Indenture.
Reference is hereby made to the further provisions of this Senior
Note set forth herein, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to herein by manual signature, this Senior Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
A-2
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
Dated: ___________________
AMERICAN ELECTRIC POWER COMPANY, INC.
By: _________________________________
Name
Title:
A-3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated in
accordance with, and referred to in, the within-mentioned Indenture.
Dated: ___________________
THE BANK OF NEW YORK, as Trustee
By: ___________________________
Authorized Signatory
A-4
[Reverse of Note]
American Electric Power Company, Inc.
5.75% Senior Notes Due August 16, 2007
This Senior Note is one of a duly authorized issue of securities
of the Company (the "Securities"), issued and to be issued in one or more series
under an Indenture, dated as of May 1, 2001 (the "Original Indenture"), as
previously supplemented and as to be supplemented by a third supplemental
indenture, dated as of June 11, 2002 (the "Third Supplemental Indenture" and the
Original Indenture, as so supplemented, the "Indenture"), between the Company
and The Bank of New York, a New York banking corporation, as trustee (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 and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Senior Note is one of a series
designated as 5.75% Senior Notes Due August 16, 2007 of the Company (hereinafter
called the "Senior Notes"), issued under the Original Indenture, which is
limited in aggregate principal amount to $300,000,000.
Neither the Original Indenture nor the Senior Notes limit or
otherwise restrict the amount of indebtedness which may be incurred or other
securities which may be issued by the Company. The Senior Notes issued under the
Indenture are direct, unsecured obligations of the Company and will mature on
August 16, 2007. The Senior Notes rank on parity with all other unsecured,
unsubordinated indebtedness of the Company.
The Senior Notes will bear interest as set forth on the face
hereof and in the Third Supplemental Indenture. The Reset Rate will be the
interest rate per annum that is determined by the Remarketing Agent pursuant to
the Remarketing Agreement as follows: (i) in connection with a successful
Remarketing, the rate of interest that will, when applied to the Outstanding
Notes, enable the then current aggregate market value of the Notes to have a
value equal to approximately, but not less than, 100.25% of the Remarketing
Value as of the Remarketing Date or as of any Subsequent Remarketing Date, as
the case may be, or (ii) upon the occurrence of a Failed Remarketing the rate of
interest applicable to the Senior Notes initially until (A) the Senior Notes are
successfully remarketed pursuant to the Forward Purchase Contract Agreement and
the Remarketing Agreement or (B) if the Last Failed Remarketing shall have
occurred, in accordance with the method as described below.
Notwithstanding anything herein to the contrary, the Reset Rate
shall in no event exceed the maximum rate, if any, permitted by applicable law.
In the event of a Last Failed Remarketing, the Remarketing Agent
shall determine the Reset Rate that shall apply to the Senior Notes held by the
Holders of Equity Units that elected not to participate in the remarketing and
Holders of Separate Notes according to the following method. After the Last
Failed Remarketing, the Remarketing Agent will take the average of the interest
rates quoted to it by three nationally recognized investment banks selected
A-5
by the Company, which are underwriters or dealers in debt securities similar to
the Senior Notes, that in their judgment reflects an accurate market rate of
interest applicable to the Senior Notes at that time. Following receipt of these
quotes, the Remarketing Agent will have the right, in its sole judgment, to
either recalculate the average based on only two of the quoted interest rates if
one of the three quotes, in the Remarketing Agent's sole discretion, did not
reflect market conditions or, alternatively, determine a consensus among the
investment banks rather than a strict mathematical average by taking into
account all relevant qualitative and quantitative factors. These factors may
include, but shall not limited to, maturity of the Senior Notes, the credit
rating and credit risk of the Company and companies of similar industries, the
then yield to maturity of the Senior Notes and the state of the markets for
primary and secondary sales of similar debt securities.
The Senior Notes are not redeemable prior to maturity except
pursuant to a Tax Event in accordance with the Third Supplemental Indenture. If
a Tax Event shall occur, the Company may, at its option, redeem the Senior Notes
in whole (but not in part) at any time at a price per Senior Note equal to the
Redemption Price. Installments of interest on the Senior Notes that are due and
payable on or prior to the date of redemption will be payable to the Holders of
the Senior Notes registered as such at the close of business on the Record Date
next preceding such Tax Event Redemption Date. If, following the settlement of
the Forward Purchase Contracts and following the occurrence of a Tax Event, the
Company, at its option, redeems the Senior Notes, the proceeds of the redemption
will be payable in cash to the Holders of the Senior Notes.
The Company agrees, and by acceptance of a beneficial ownership
interest in the Senior Notes, each beneficial holder of Senior Notes will be
deemed to have agreed (1) for United States federal, state and local income and
franchise tax purposes to treat the acquisition of an Equity Unit as the
acquisition of the Senior Note and the Forward Purchase Contract constituting
the Equity Unit, (2) to treat the Senior Notes as indebtedness that is subject
to Treas. Reg. Sec. 1.1275-4 (the "Contingent Payment Regulations") for United
States federal income tax purposes and (3) to be bound by the Company's
determination of the "comparable yield" and "projected payment schedule," within
the meaning of the Contingent Payment Regulations, with respect to the Senior
Notes for United States federal income tax purposes. A Holder of Senior Notes
may obtain the amount of original issue discount, issue date, yield to maturity,
comparable yield and projected payment schedule by submitting a written request
for it to the Company at the following address: American Electric Power,
Investor Relations, Xxx Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxxx 00000.
The Senior Notes are not entitled to any sinking fund.
The Senior Notes that are a component of Equity Units or that so
elect under Section 1.7 of the Indenture will be subject to Remarketing and, in
the case of a Failed Remarketing, the Collateral Agent for the benefit of the
Company reserves all of its rights as a secured party of the Pledged Notes with
respect thereto and, subject to applicable law and Section 5.4 of the Forward
Purchase Contract Agreement, may, among other things, permit the Company to
cause the Senior Notes to be sold or to retain and cancel such Senior Notes, in
either case, in full satisfaction of the Holders' obligations under the Forward
Purchase Contracts.
A-6
If an Event of Default with respect to the Senior Notes shall
occur and be continuing, the principal of the Senior Notes may be declared due
and payable in the manner and with the effect provided in the Indenture. The
Senior Indenture provides that in certain circumstances such declaration and its
consequences may be waived by the Holders of a majority in aggregate principal
amount of the Senior Notes then Outstanding. However, any such consent or waiver
by the Holder shall not affect any subsequent default or impair any right
consequent thereon.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of all series affected by such
supplemental indenture or indentures at the time outstanding voting as one
class, as defined in the Indenture, to execute supplemental indentures for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Securities; provided,
however, that no such supplemental indenture shall (i) extend the fixed maturity
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, or reduce the amount of the
principal of a Discount Security that would be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to the Indenture,
without the consent of the holder of each Senior Note then outstanding and
affected; (ii) reduce the aforesaid percentage of Senior Notes, the holders of
which are required to consent to any such supplemental indenture, or reduce the
percentage of Senior Notes, the holders of which are required to waive any
default and its consequences, without the consent of the holder of each Senior
Note then outstanding and affected thereby; or (iii) modify any provision of
Section 6.01(c) of the Indenture (except to increase the percentage of principal
amount of securities required to rescind and annul any declaration of amounts
due and payable under the Senior Notes), without the consent of the holder of
each Senior Note then outstanding and affected thereby. The Indenture also
contains provisions permitting the Holders of a majority in aggregate principal
amount of the Senior Notes of any series at the time outstanding affected
thereby, on behalf of the Holders of the Senior Notes of such series, to waive
any past default in the performance of any of the covenants contained in the
Indenture, or established pursuant to the Indenture with respect to such series,
and its consequences, except a default in the payment of the principal of or
premium, if any, or interest on any of the Notes of such series. Any such
consent or waiver by the registered Holder of this Note (unless revoked as
provided in the Indenture) shall be conclusive and binding upon such Holder and
upon all future Holders and owners of this Note and of any Note issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Note.
Restrictive Covenants
Limitation upon Liens of Certain Subsidiaries
For so long as any Senior Notes of this series remain outstanding, the
Company will not create or incur or allow any of its subsidiaries to create or
incur any pledge or security interest on any of the capital stock of a Public
Utility Subsidiary held by the Company or one of its subsidiaries or a
Significant Subsidiary.
A-7
For purposes of this covenant:
(i) Public Utility Subsidiary means, at any particular time, a
direct or indirect subsidiary of the Company that, as a substantial
part of its business, distributes or transmits electric energy to
retail or wholesale customers at rates or tariffs that are regulated
by either a state or Federal regulatory authority.
(ii) Significant Subsidiary means, at any particular time, any
direct subsidiary of ours whose consolidated gross assets or consolidated gross
revenues (having regard to the Company's direct beneficial interest in the
shares, or the like, of that subsidiary) represent at least 25% of the Company's
consolidated gross assets or consolidated gross revenues appearing in the most
recent audited financial statements of the Company as of the date of
determination.
Limitation upon Mergers, Consolidations and Sale of Assets
The provisions of Article Ten of the Indenture shall be applicable to
the Senior Notes of this series.
The Indenture contains provisions for defeasance of (a) the entire
indebtedness evidenced by this Senior Note and (b) certain restrictive covenants
upon compliance by the Company with certain conditions set forth therein;
provided, however, Section 11.01 of the Original Indenture shall not apply to
the Senior Notes.
No reference herein to the Indenture and no provision of this Senior
Note or of the Indenture shall alter or impair the obligation of the Company,
which are absolute and unconditional, to pay the principal of (and premium, if
any) and interest, if any, on this Senior Note at the times, places and rates,
and in the coin or currency, herein prescribed.
The Senior Notes of this series are issuable only in registered form
without coupons in minimum denominations of $50 or any integral multiple of $50
over such minimum denomination. At the Office or Agency of the Company or at the
Office of the Agent in The City of New York referred to on the face hereof and
as provided in the Indenture and subject to certain limitations therein set
forth, the Senior Notes are exchangeable for a like aggregate principal amount
of Senior Notes and of like tenor of a difference authorized denomination, as
requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, this Senior Note is transferable by the registered holder
hereof on the Security Register of the Company, upon surrender of this Senior
Note for registration of transfer at the office or agency of the Company as may
be designated by the Company accompanied by a written instrument or instruments
of transfer in form satisfactory to the Company or the Trustee duly executed by
the registered Holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Senior Notes of authorized denominations and for
the same aggregate principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for any such transfer,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in relation thereto.
A-8
Prior to due presentment of this Senior Note 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 Senior Note is registered as the owner
hereof for all purposes, whether or not this Senior Note be overdue and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse shall be had for the payment of the principal of or
the interest on this Senior Note, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, or any indenture
supplement thereto, against any incorporator, stockholder, officer or director,
past, present or future, as such, of the Company or of any predecessor or
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 SENIOR NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE.
All terms used in this Senior Note (and not otherwise defined in
this Senior Note) that are defined in the Indenture, the Forward Purchase
Contract Agreement, the Remarketing Agreement or the Pledge Agreement, as the
case may be, shall have the meanings assigned to them in the Indenture, the
Forward Purchase Contract Agreement, the Remarketing Agreement or the Pledge
Agreement, as the case may be and as the context may require.
A-9
FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto
_____________________________________________________________________________.
(please insert Social Security or other identifying number of assignee)
_____________________________________________________________________________.
_____________________________________________________________________________.
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PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
the within Senior Note and all rights thereunder, hereby irrevocably
constituting and appointing
_____________________________________________________________________________.
_____________________________________________________________________________.
_____________________________________________________________________________.
_____________________________________________________________________________.
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_____________________________________________________________________________.
agent to transfer said Senior Note on the books of the Company, with full power
of substitution in the premises.
Dated:_______________ __, ______
____________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular without
alteration or enlargement, or any change whatever.
[TO BE ATTACHED TO GLOBAL CERTIFICATES AND PLEDGED NOTES]
SCHEDULE OF INCREASES OR DECREASES
The following increases or decreases in this [Global
Certificate] [Pledged Note] have been made:
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Principal amount of
Amount of decrease Amount of increase in Senior Notes
in principal amount principal amount of evidenced by the
of Senior Notes Senior Notes [Global Certificate] Signature of
evidenced by the evidenced by the [Pledged Note] authorized signatory
[Global Certificate] [Global Certificate] following such of Trustee or
Date [Pledged Note] [Pledged Note] decrease or increase Collateral Agent
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