**Exhibit 4.2**

** **

Execution Copy

 

 

 

PSI ENERGY, INC.

 

AND

 

FIFTH THIRD BANK,

Trustee

 

 

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Eighth Supplemental Indenture

 

Dated as of September 23, 2003

 

To

 

Indenture

 

Dated as of November 15, 1996

 

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5.00% Debentures due 2013

 

 

 

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EIGHTHSUPPLEMENTAL INDENTURE, dated as of September  23, 2003, between PSIEnergy, Inc., a corporation duly organized and existing under the laws of theState of Indiana (herein called the “Company”), having its principal office at1000 East Main Street, Plainfield, Indiana 46168, and Fifth Third Bank, an Ohiobanking corporation, as Trustee (herein called the “Trustee”) under theIndenture, dated as of November 15, 1996, between the Company and theTrustee, as supplemented (the “Indenture”).

 

Recitals of the Company

 

TheCompany has executed and delivered the Indenture to the Trustee to provide forthe issuance from time to time of its unsecured debentures, notes or otherevidences of indebtedness (the “Securities”), to be issued in one or moreseries as provided in the Indenture.

 

Pursuantto the terms of the Indenture, the Company desires to provide for theestablishment of a new series of its Securities to be known as its 5.00%Debentures due 2013 (herein called the “Debentures”), in this EighthSupplemental Indenture.

 

Allthings necessary to make this Eighth Supplemental Indenture a valid agreementof the Company  have been done.

 

Now,Therefore, This Eighth Supplemental Indenture Witnesseth:

 

Forand in consideration of the premises and the purchase of the Debentures by theHolders thereof, it is mutually agreed, for the equal and proportionate benefitof all Holders of the Debentures, as follows:

 

ARTICLE ONE

 

Terms of the Debentures

 

Section 101.  There is hereby authorized a series ofSecurities designated the “5.00% Debentures due 2013”.  The Debentures shall mature and theprincipal shall be due and payable together with all accrued and unpaidinterest thereon on September 15, 2013 and shall be issued in the form ofa registered Global Security without coupons, registered in the name of Cede& Co., as nominee of The Depository Trust Company (the “Depository”).

 

Theinitial issue of Debentures shall be limited in aggregate principal amount to$400,000,000 (except as provided in Section 301(2) of the Indenture).  However, the Company may, from time to time,without notice to or the consent of the registered holders of the Debenturesthen outstanding, issue additional Debentures without limitation as to theaggregate principal amount thereof.

 

Section 102.  The provisions of Section 305 of theIndenture applicable to Global Securities shall apply to the Debentures.

 

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Section 103.  Interest on each of the Debentures shall bepayable semiannually on March 15 and September 15 in each year (eachan “Interest Payment Date”), commencing on March 15, 2004, at the rate perannum specified in the designation of Debentures from September 23, 2003,or from the most recent Interest Payment Date to which interest has been paid orduly provided for.  The interest sopayable, and punctually paid or duly provided for, on any Interest Payment Datewill be paid to the Person in whose name such Debenture (or one or morePredecessor Securities) is registered at the close of business on the Regular RecordDate for such interest, which shall be the Business Day immediately precedingsuch Interest Payment Date. The amount of interest payable for any period willbe computed on the basis of a 360-day year of twelve 30-day months.  As used herein, “Business Day” means any dayother than a Saturday or Sunday or a day on which banking institutions in NewYork, New York are authorized or obligated by law or executive order to beclosed.

 

Section 104.  Subject to agreements with or the rules ofthe Depository or any successor book-entry security system or similar systemwith respect to Global Securities, payments of interest will be made by checkmailed to the Holder of each Debenture at the address shown in the SecurityRegister, and payments of the principal amount of each Debenture will be madeat maturity by check against presentation of the Debenture at the office oragency of the Trustee.

 

Section 105.  The Debentures shall be issued indenominations of $1,000 or any integral multiple of $1,000.

 

Section 106.  Principal and interest on the Debenturesshall be payable in the coin or currency of the United States of America,which, at the time of payment, is legal tender for public and private debts.

 

Section 107.  The Debentures shall be subject to defeasanceand covenant defeasance, at the Company’s option, as provided for in Sections1302 and 1303 of the Indenture.

 

Section 108.  Subject to the terms of Article Elevenof the Indenture, the Company shall have the right to redeem the Debentures, atany time in whole or from time to time in part, as provided in the form of theDebenture herein below set forth.

 

ARTICLE TWO

 

Form of the Debentures

 

Section 201.  The Debentures are to be substantially inthe following form and shall include substantially the legend shown so long asthe Debentures are Global Securities:

 

[THE REMAINDER OF THISPAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

 

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(FORM OF FACE OFDEBENTURE)

 
| No. R- |   | $                        |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

 

CUSIP No.: 693627 AX 9

ISIN No.:  US693627AX97

 

PSI ENERGY, INC.

 

5.00% DEBENTURES DUE 2013

 

UNLESS THIS CERTIFICATEIS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, ANEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,EXCHANGE, OR PAYMENT AND SUCH CERTIFICATE ISSUED IS REGISTERED IN THE NAME OFCEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZEDREPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCHOTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANYTRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANYPERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HASAN INTEREST HEREIN.

 

PSIENERGY, INC., a corporation duly organized and existing under the laws of theState of Indiana (herein called the “Company”, which term includes anysuccessor Person under the Indenture hereafter referred to), for valuereceived, hereby promises to pay to CEDE & CO., or registered assigns, the principalsum of                                        and No/100 Dollars($              )on September 15, 2013, and to pay interest thereon fromSeptember  23, 2003, or from the most recent Interest Payment Date towhich interest has been paid or duly provided for, semiannually, onMarch 15, and September 15, in each year, commencing March 15,2004, at the rate of 5.00% per annum, until the principal hereof is paid ormade available for payment.  The amountof interest payable on any Interest Payment Date shall be computed on the basisof a 360-day year of twelve 30-day months. The interest so payable, and punctually paid or duly provided for, onany Interest Payment Date will, as provided in the Indenture, be paid to thePerson in whose name this Security (or one or more Predecessor Securities) isregistered at the close of business on the Record Date for such interest, whichshall be the Business Day immediately preceding such Interest PaymentDate.  Any such interest not sopunctually paid or duly provided for will forthwith cease to be payable to theHolder on such Regular Record Date and may either be paid to the Person inwhose name this Security (or one or more Predecessor Securities) is registeredat the close of business on a Special Record Date for the payment of suchDefaulted Interest to be fixed by the Trustee, notice whereof shall be given toHolders of Securities of this series not less than 10 days prior to suchSpecial Record Date, or be paid at any time in any other lawful manner not inconsistentwith the requirements of any securities exchange on which the Securities ofthis series may be listed, and upon such notice as may be required by suchexchange, all as more fully provided in the Indenture.

 

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Payment of the principal of (and premium, if any)and interest on this Security will be made at the corporate trust office of theTrustee maintained for that purpose in the City of Cincinnati, in such coin orcurrency of the United States of America as at the time of payment is legaltender for payment of public and private debts; provided, however, that at theoption of the Company payment of interest may be made by check mailed to theaddress of the Person entitled thereto as such address shall appear in theSecurity Register.

 

Anypayment on this Security due on any day which is not a Business Day in the Cityof New York need not be made on such day, but may be made on the nextsucceeding Business Day with the same force and effect as if made on the duedate and no interest shall accrue for the period from and after such date,unless such payment is a payment at maturity or upon redemption, in which caseinterest shall accrue thereon at the stated rate for such additional days.

 

Asused herein, “Business Day” means any day other than a Saturday or Sunday or aday on which banking institutions in New York, New York are authorized orobligated by law or executive order to be closed.

 

Referenceis hereby made to the further provisions of this Security set forth on thereverse hereof, which further provisions shall for all purposes have the sameeffect as if set forth at this place.

 

Unlessthe certificate of authentication hereon has been executed by the Trusteereferred to on the reverse hereof by manual signature, this Security shall notbe entitled to any benefit under the Indenture or be valid or obligatory forany purpose.

 

InWitness Whereof, the Company has caused this instrument to be duly executed.

 
|   | PSI ENERGY, INC. |
|--------|------------------|
|   |
|   |
|   | By               |   |   |

 

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CERTIFICATE OFAUTHENTICATION

 

Dated:

 

Thisis one of the Securities of the series designated therein referred to in thewithin-mentioned Indenture.

 
|   | FIFTH THIRD  BANK,   |
|--------|----------------------|
|   | as Trustee           |
|   |                 |
|   |                 |
|   | By                   |   |   |
|   | Authorized Signatory |

 

 

(FORM OF REVERSE OFDEBENTURE)

 

This Security is one of a duly authorized issue ofsecurities of the Company (herein called the “Securities”), issued and to beissued in one or more series under an Indenture, dated as of November 15,1996 (as supplemented, herein called the “Indenture”, which term shall have themeaning assigned to it in such instrument), between the Company and Fifth ThirdBank, as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture),and reference is hereby made to the Indenture for a statement of the respectiverights, limitations of rights, duties and immunities thereunder of the Company,the Trustee and the Holders of the Securities and of the terms upon which theSecurities are, and are to be, authenticated and delivered.  This Security is one of the seriesdesignated on the face hereof, which series is issuable without limitation asto the aggregate principal amount thereof.

 

TheSecurities of this series are subject to optional redemption at any time inwhole or from time to time in part, until maturity (such redemption, a“Make-Whole Redemption,” at any time and the date thereof, the “RedemptionDate”), at a redemption price equal to the greater of (i) 100% of the principalamount of the Securities being redeemed and (ii) the Make-Whole Amount (asdefined below), plus, in either case, accrued and unpaid interest on theSecurities being redeemed to the Redemption Date.

 

“Make-WholeAmount” means the sum of the present value of the remaining scheduled paymentsof principal and interest on the Securities to be redeemed (not including anyportion of such payments of interest accrued as of the Redemption Date),discounted to the Redemption Date on a semi-annual basis (assuming a 360-dayyear consisting of twelve 30-day months) at the Adjusted Treasury Rate.

 

“AdjustedTreasury Rate” means, with respect to any Redemption Date, the rate per annumequal to the semi-annual equivalent yield to maturity of the ComparableTreasury Issue, calculated using a price for the Comparable Treasury Issue(expressed as a percentage of its

 

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principal amount) equalto the Comparable Treasury Price for such Redemption Date, calculated on thethird Business Day preceding the Redemption Date, plus in each case .15% (15basis points).

 

“ComparableTreasury Issue” means the United States Treasury security selected by theQuotation Agent as having a maturity comparable to the remaining term from theRedemption Date to the Stated Maturity of the Securities that would beutilized, at the time of selection and in accordance with customary financialpractice, in pricing new issues of corporate debt securities of comparablematurity to the remaining term of the Securities.

 

“QuotationAgent” means the Reference Treasury Dealer selected by the Trustee afterconsultation with the Company.

 

“ComparableTreasury Price” means, with respect to any Redemption Date, (i) the average ofthe bid and asked prices for the Comparable Treasury Issue (expressed in eachcase as a percentage of its principal amount) on the third Business Daypreceding such Redemption Date, as set forth in the daily statistical releasedesignated “H.15” (or any successor release) published by the Board ofGovernors of the Federal Reserve System or (ii) if such release (or anysuccessor release) is not published or does not contain such prices on suchBusiness Day, (A) the average of the Reference Treasury Dealer Quotations forsuch Redemption Date, after excluding the highest and lowest of such ReferenceTreasury Dealer Quotations, or (B) if the Trustee obtains fewer than four suchReference Treasury Dealer Quotations, the average of such Quotations.

 

“ReferenceTreasury Dealer” means each of Banc of America Securities LLC and LehmanBrothers Inc. and their respective successors, and two other firms that areprimary U.S. Government securities dealers (each a “Primary Treasury Dealer”)which the Company will specify from time to time, provided however, that if anyof them ceases to be a Primary Treasury Dealer, the Company will substituteanother Primary Treasury Dealer.

 

“ReferenceTreasury Dealer Quotations” means, with respect to each Reference TreasuryDealer and any Redemption Date, the average, as determined by the Trustee(after consultation with the Company), of the bid and asked prices for theComparable Treasury Issue (expressed in each case as a percentage of itsprincipal amount) quoted in writing to the Trustee by such Reference TreasuryDealer at 5:00 p.m., New York City time, on the third Business Day precedingsuch Redemption Date.

 

Noticeof any redemption by the Company will be mailed at least 30 days but not morethan 60 days before any Redemption Date to each Holder of Securities to beredeemed.  If less than all theSecurities are to be redeemed at the option of the Company, the Trustee shallselect, in such manner as it shall deem fair and appropriate, the Securities tobe redeemed.

 

Unlessthe Company defaults in payment of the Redemption Price, on and after anyRedemption Date, interest will cease to accrue on the Securities or portionsthereof called for redemption.

 

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TheIndenture contains provisions for defeasance at any time of the entireindebtedness of this Security or certain restrictive covenants and Events ofDefault with respect to this Security upon compliance with certain conditionsset forth in the Indenture.

 

If anEvent of Default with respect to Securities of this series shall occur and becontinuing, the principal of the Securities of this series may be declared dueand payable in the manner and with the effect provided in the Indenture.

 

TheIndenture permits, with certain exceptions as therein provided, the amendmentthereof and the modification of the rights and obligations of the Company andthe rights of the Holders of the Securities of each series to be affected underthe Indenture at any time by the Company and the Trustee with the consent ofthe Holders of a majority in principal amount of the Securities at the timeOutstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of amajority in principal amount of the Securities of each series at the timeOutstanding, on behalf of the Holders of all Securities of such series, towaive compliance by the Company with certain provisions of the Indenture andcertain past defaults under the Indenture and their consequences. Any suchconsent or waiver by the Holder of this Security shall be conclusive andbinding upon such Holder and upon all future Holders of this Security and ofany Security issued upon the registration of transfer hereof or in exchangeherefor or in lieu hereof, whether or not notation of such consent or waiver ismade upon this Security.

 

Asprovided in and subject to the provisions of the Indenture, the Holder of thisSecurity shall not have the right to institute any proceeding with respect tothe Indenture or for the appointment of a receiver or trustee or for any otherremedy thereunder, unless such Holder shall have previously given the Trusteewritten notice of a continuing Event of Default with respect to the Securitiesof this series, the Holders of not less than 35% in principal amount of theSecurities of this series at the time Outstanding shall have made writtenrequest to the Trustee to institute proceedings in respect of such Event ofDefault as Trustee and offered the Trustee reasonably satisfactory indemnity,and the Trustee shall not have received from the Holders of a majority inprincipal amount of Securities of this series at the time Outstanding adirection inconsistent with such request, and shall have failed to instituteany such proceeding, for 60 days after receipt of such notice, request and offerof indemnity. The foregoing shall not apply to any suit instituted by theHolder of this Security for the enforcement of any payment of principal hereofor any premium or interest hereon on or after the respective due datesexpressed herein.

 

Noreference herein to the Indenture and no provision of this Security or of theIndenture shall alter or impair the obligation of the Company, which isabsolute and unconditional, to pay the principal of (and premium, if any) andinterest on this Security at the times, place and rate, and in the coin orcurrency, herein prescribed.

 

Asprovided in the Indenture and subject to certain limitations therein set forth,the transfer of this Security is registrable in the Security Register, uponsurrender of this Security for registration of transfer at the office or agencyof the Company in any place where the principal of (and premium, if any) andinterest on this Security are payable, duly endorsed by, or accompanied by awritten instrument of transfer in form satisfactory to the Company and the

 

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Security Registrar dulyexecuted by, the Holder hereof or his attorney duly authorized in writing, andthereupon one or more new Securities of this series and of like tenor, ofauthorized denominations and for the same aggregate principal amount, will beissued to the designated transferee or transferees.

 

TheSecurities of this series are issuable only in registered form without couponsin denominations of $1,000 and any integral multiple thereof. As provided inthe Indenture and subject to certain limitations therein set forth, Securitiesof this series are exchangeable for a like aggregate principal amount ofSecurities of this series and of like tenor of a different authorizeddenomination, as requested by the Holder surrendering the same. No servicecharge shall be made for any such registration of transfer or exchange, but theCompany may require payment of a sum sufficient to cover any tax or othergovernmental charge payable in connection therewith.

 

Priorto due presentment of this Security for registration of transfer, the Company,the Trustee and any agent of the Company or the Trustee may treat the Person inwhose name this Security is registered as the owner hereof for all purposes,whether or not this Security be overdue, and neither the Company, the Trusteenor any such agent shall be affected by notice to the contrary.

 

Allterms used in this Security which are defined in the Indenture shall have themeanings assigned to them in the Indenture.

 

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ARTICLE THREE

 

Original Issue of Debentures

 

Section 301.  An initial issue of the Debentures in theaggregate principal amount of $400,000,000, may, upon execution of this EighthSupplemental Indenture, or from time to time hereafter, be executed by theCompany and delivered to the Trustee for authentication, and the Trustee shallthereupon authenticate and deliver said Debentures upon a Company Order withoutany further action by the Company. Additional Debentures may be issued by the Company pursuant to the termsof the Indenture and this Eighth Supplemental Indenture.

 

ARTICLE FOUR

 

Paying Agent and Security Registrar

 

Section 401.  Fifth Third Bank will be the Paying Agentand Security Registrar for the Debentures.

 

ARTICLE FIVE

 

Sundry Provisions

 

Section 501.  Except as otherwise expressly provided inthis Eighth Supplemental Indenture or in the form of Debenture or otherwiseclearly required by the context hereof or thereof, all terms used herein or insaid form of Debenture that are defined in the Indenture shall have the severalmeanings respectively assigned to them thereby.

 

Section 502.  The Indenture, as supplemented by thisEighth Supplemental Indenture, is in all respects ratified and confirmed, andthis Eighth Supplemental Indenture shall be deemed part of the Indenture in themanner and to the extent herein and therein provided.

 

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Thisinstrument may be executed in any number of counterparts, each of which soexecuted shall be deemed to be an original, but all such counterparts shalltogether constitute but one and the same instrument.

 

 

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INWITNESS WHEREOF, the parties hereto have caused this Eighth SupplementalIndenture to be duly executed as of the day and year first above written.

 

 
|   | PSI ENERGY, INC.              |
|--------|-------------------------------|
|   |                          |
|   |                          |
|   | By                            | /s/ Wendy L.  Aumiller |   |
|   |                          | Wendy L.  Aumiller |
|   |                          | Treasurer |
|   |                          |
|   |                          |
|   | FIFTH THIRD  BANK, as Trustee |
|   |                          |
|   |                          |
|   | By                            | /s/ Christine M.  Schaub |   |
|   |                          | Christine M. Schaub |
|   |                          | Vice President |
|        |                               |  |  |  |  |  |

 

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