Document:

Exhibit 4.2

 

 

 

 

THE SOUTHERN COMPANY

 

TO

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, TRUSTEE.

 

 

 

THIRD SUPPLEMENTAL INDENTURE

 

DATED AS OF AUGUST 21, 2008

 

 

 

 

 

SERIES 2008A FLOATING RATE SENIOR NOTES

 

DUE AUGUST 20, 2010

 

 

 

 

 

TABLE OF CONTENTS1

 

 

	
             
 	
            PAGE
 

	
            ARTICLE 1
 	
             1
 

	
             
 	
            Series 2008A Notes
 	
            1
 

	
             
 	
            SECTION 101.Establishment
 	
            1
 

	
             
 	
            SECTION 102.Definitions
 	
            2
 

	
             
 	
            SECTION 103.Payment of Principal and Interest
 	
            3
 

	
             
 	
            SECTION 104.Determination of Interest
 	
            4
 

	
             
 	
            SECTION 105.Denominations
 	
            5
 

	
             
 	
            SECTION 106.Global Securities
 	
            5
 

	
             
 	
            SECTION 107.Transfer
 	
            5
 

	
            ARTICLE 2
 	
             6
 

	
             
 	
            Miscellaneous Provisions
 	
            6
 

	
             
 	
            SECTION 201.Recitals by Company
 	
            6
 

	
             
 	
            SECTION 202.Ratification and Incorporation of Original Indenture
 	
            6
 

	
             
 	
            SECTION 203.Executed in Counterparts
 	
            6
 

 

	
            EXHIBIT A
 	
            Form of Series 2008A Note
 

 

	
            EXHIBIT B
 	
            Certificate of Authentication
 

 

 

 

 

 

 

 

 

_________________________

1 Table of Contents does not constitute part of the Indenture or have any bearing upon the interpretation of any of its terms and provisions.

 

i

                        THIS THIRD SUPPLEMENTAL INDENTURE is made as of the 21st day of August, 2008, by and between THE SOUTHERN COMPANY, a Delaware corporation, 30 Ivan Allen Jr. Boulevard, N.W., Atlanta, Georgia 30308 (the “Company”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, 7000 Central Parkway, Suite 550, Atlanta, Georgia  30328 (the “Trustee”).

 

W I T N E S S E T H:

 

WHEREAS, the Company has heretofore entered into a Senior Note Indenture, dated as of January 1, 2007 (the “Original Indenture”), with the Trustee, as heretofore supplemented;

 

WHEREAS, the Original Indenture is incorporated herein by this reference and the Original Indenture, as heretofore supplemented and as further supplemented by this Third Supplemental Indenture, is herein called the “Indenture”;

 

WHEREAS, under the Original Indenture, a new series of Senior Notes may at any time be established pursuant to a supplemental indenture executed by the Company and the Trustee;

 

WHEREAS, the Company proposes to create under the Indenture a new series of Senior Notes;

 

WHEREAS, additional Senior Notes of other series hereafter established, except as may be limited in the Original Indenture as at the time supplemented and modified, may be issued from time to time pursuant to the Indenture as at the time supplemented and modified; and

 

WHEREAS, all conditions necessary to authorize the execution and delivery of this Third Supplemental Indenture and to make it a valid and binding obligation of the Company have been done or performed.

 

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE 1

 

Series 2008A Notes

 

SECTION 101. Establishment.  There is hereby established a new series of Senior Notes to be issued under the Indenture, to be designated as the Company’s Series 2008A Floating Rate Senior Notes due August 20, 2010 (the “Series 2008A Notes”).

 

There are to be authenticated and delivered $600,000,000 principal amount of Series 2008A Notes, and such principal amount of the Series 2008A Notes may be increased from time to time 

 

pursuant to Section 301 of the Original Indenture.  All Series 2008A Notes need not be issued at the same time and such series may be reopened at any time, without the consent of any Holder, for issuances of additional Series 2008A Notes.  Any such additional Series 2008A Notes will have the same interest rate, maturity and other terms as those initially issued.  No Series 2008A Notes shall be authenticated and delivered in excess of the principal amount as so increased except as provided by Sections 203, 303, 304 or 907 of the Original Indenture.  The Series 2008A Notes shall be issued in definitive fully registered form.

 

The Series 2008A Notes shall be issued in the form of one or more Global Securities in substantially the form set out in Exhibit A hereto.  The Depositary with respect to the Series 2008A Notes shall be The Depository Trust Company.

 

The form of the Trustee’s Certificate of Authentication for the Series 2008A Notes shall be in substantially the form set forth in Exhibit B hereto.

 

Each Series 2008A Note shall be dated the date of authentication thereof and shall bear interest from the date of original issuance thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for.

 

The Series 2008A Notes will not be redeemable at the option of the Company prior to the Stated Maturity and will not have a sinking fund.

 

SECTION 102.  Definitions.  The following defined terms used herein shall, unless the context otherwise requires, have the meanings specified below.  Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Original Indenture.

 

“Calculation Agent” means Wells Fargo Bank, National Association, or its successor appointed by the Company, acting as calculation agent for the Series 2008A Senior Notes. 

 

“Interest Determination Date” means the second London Business Day immediately preceding the first day of the relevant Interest Period. 

 

“Interest Payment Dates” means the 20th day of February, May, August and November, commencing November 20, 2008; provided, however, in the event that any Interest Payment Date (other than the Interest Payment Date that is the Stated Maturity) would otherwise be a day that is not a Business Day, the Interest Payment Date will be the next succeeding Business Day.

 

“Interest Period” means the period commencing on an Interest Payment Date (or, with respect to the initial Interest Period only, commencing on the Original Issue Date) and ending on the day before the next succeeding Interest Payment Date. 

 

“LIBOR” means, with respect to any Interest Period, the rate (expressed as a percentage per annum) for deposits in U.S. dollars for a three-month period commencing on the first day of that Interest Period and ending on the next Interest Payment Date that appears on Reuters LIBOR01 Page as of 11:00 a.m. (London time) on the Interest Determination Date for that 

 

 

 

 

2

Interest Period.  If such rate does not appear on the Reuters LIBOR01 Page as of 11:00 a.m. (London time) on the Interest Determination Date for that Interest Period, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars for the Interest Period and in a principal amount of not less than $1,000,000 are offered to prime banks in the London interbank market by four major banks in the London interbank market (which may include affiliates of one or more of the underwriters of the Series 2008A Notes) selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., London time on the Interest Determination Date for that Interest Period.  The Calculation Agent will request the principal London office of each such bank to provide a quotation of its rate.  If at least two such quotations are provided, LIBOR with respect to that Interest Period will
be the arithmetic mean of such quotations.  If fewer than two quotations are provided, LIBOR with respect to that Interest Period will be the arithmetic mean of the rates quoted by three major banks in New York City (which may include affiliates of one or more of the underwriters of the Series 2008A Notes) selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., New York City time, on the first day of that Interest Period for loans in U.S. dollars to leading European banks for that Interest Period and in a principal amount of not less than $1,000,000.  However, if fewer than three banks selected by the Calculation Agent to provide quotations are quoting as described above, LIBOR for that Interest Period will be the same as LIBOR as determined for the previous Interest Period.  

 

“London Business Day” means a day that is a Business Day and a day on which dealings in deposits in U. S. dollars are transacted, or with respect to any future date are expected to be transacted, in the London interbank market. 

 

	
             
 	
            “Original Issue Date” means August 21, 2008.
 

 

 “Regular Record Date” means, with respect to each Interest Payment Date, the close of business on the 15th calendar day preceding such Interest Payment Date, whether or not a Business Day.

 

 “Reuters LIBOR01 Page” means the display designated as Reuters LIBOR01 on the Reuters 3000 Xtra (or such other page as may replace the Reuters LIBOR01 Page on that service, or such other service as may be nominated as the information vendor, for the purpose of displaying rates or prices comparable to the London Interbank Offered rate for U.S. dollar deposits).  

 

“Stated Maturity” means August 20, 2010; provided that if the Stated Maturity is not a Business Day, the principal and interest due on that date will be payable on the next succeeding Business Day, and no interest shall accrue for the intervening period.

 

SECTION 103.  Payment of Principal and Interest.  The principal of the Series 2008A Notes shall be due at Stated Maturity.  The unpaid principal amount of the Series 2008A Notes shall bear interest at the rates set quarterly pursuant to Section 104 hereof until paid or duly provided for.  Interest shall be paid quarterly in arrears on each Interest Payment Date to the Person in whose name the Series 2008A Notes are registered on the Regular Record Date for such Interest Payment Date, provided that interest payable at the Stated Maturity of principal as provided herein 

 

 

 

 

3

will be paid to the Person to whom principal is payable.  Any such interest that is not so punctually paid or duly provided for will forthwith cease to be payable to the Holders on such Regular Record Date and may either be paid to the Person or Persons in whose name the Series 2008A Notes are registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Holders of the Series 2008A Notes not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Series 2008A Notes shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Original Indenture.

 

Payments of interest on the Series 2008A Notes will include interest accrued to but excluding the respective Interest Payment Dates.  Interest payments for the Series 2008A Notes shall be computed and paid on the basis of the actual number of days elapsed over a 360-day year.  

 

Payment of the principal and interest due at the Stated Maturity of the Series 2008A Notes shall be made upon surrender of the Series 2008A Notes at the Corporate Trust Office of the Trustee.  The principal of and interest on the Series 2008A Notes shall be paid in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payments of interest (including interest on any Interest Payment Date) 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 or other electronic 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.

 

SECTION 104.  Determination of Interest.   The Series 2008A Notes will bear interest for each Interest Period at a per annum rate determined by the Calculation Agent, subject to the maximum interest rate permitted by New York or other applicable state law, as such law may be modified by United States law of general application.  The interest rate applicable during each Interest Period will be equal to LIBOR on the Interest Determination Date for such Interest Period plus 0.70%.  Promptly upon such determination, the Calculation Agent will notify the Company and the Trustee, if the Trustee is not then serving as the Calculation Agent, of the interest rate for the new Interest Period.  The interest rate determined by the Calculation Agent, absent manifest error, shall be binding and
conclusive upon the beneficial owners and Holders of the Series 2008A Notes, the Company and the Trustee. 

 

Upon the request of a Holder of the Series 2008A Notes, the Calculation Agent will provide to such Holder the interest rate in effect on the date of such request and, if determined, the interest rate for the next Interest Period. 

 

Accrued interest on a Series 2008A Note for any period shall be calculated by multiplying the principal amount of such Series 2008A Note by an accrued interest factor. The accrued interest factor shall be computed by adding the interest factor calculated for each day in the period for which accrued interest is being calculated. The interest factor (expressed as a decimal 

 

 

 

 

4

rounded upwards if necessary) shall be computed by dividing the interest rate (expressed as a decimal rounded upwards if necessary) applicable to such date by 360.

 

All percentages resulting from any calculation of the interest rate on the Series 2008A Notes shall be rounded, if necessary, to the nearest one-hundred thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards, and all dollar amounts used in or resulting from such calculation shall be rounded to the nearest cent (with one-half cent being rounded upwards).

 

SECTION 105.  Denominations.  The Series 2008A Notes may be issued in the denominations of $1,000, or any integral multiple thereof.

 

SECTION 106.  Global Securities.  The Series 2008A Notes will be issued in the form of one or more Global Securities registered in the name of the Depositary (which shall be The Depository Trust Company) or its nominee.  Except under the limited circumstances described below, Series 2008A Notes represented by one or more Global Securities will not be exchangeable for, and will not otherwise be issuable as, Series 2008A Notes in definitive form.  The Global Securities described above may not be transferred except by 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 to a successor Depositary or its nominee.

 

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 Series 2008A Note shall be exchangeable, except for another Global Security of like denomination and tenor to be registered in the name of the Depositary or its nominee or to a successor Depositary or its nominee.  The rights of Holders of such Global Security shall be exercised only through the Depositary.

 

Subject to the procedures of the Depositary, a Global Security shall be exchangeable for Series 2008A Notes registered in the names of persons other than the Depositary or its nominee only if (i) the Depositary notifies the Company that it is unwilling or unable to continue as a Depositary for such Global Security and no successor Depositary shall have been appointed by the Company, or if at any time the Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, at a time when the Depositary is required to be so registered to act as such Depositary and no successor Depositary shall have been appointed by the Company, in each case within 90 days after the Company receives such notice or becomes aware of such cessation, (ii) the Company in its sole discretion determines that such Global Security shall be so exchangeable, or (iii) there shall
have occurred an Event of Default with respect to the Series 2008A Notes.  Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Series 2008A Notes registered in such names as the Depositary shall direct.

 

SECTION 107  Transfer.  No service charge will be made for any transfer or exchange of Series 2008A Notes, but payment will be required of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.

 

 

 

 

5

 

ARTICLE 2

 

Miscellaneous Provisions

 

SECTION 201.  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 Series 2008A Notes and of this Third Supplemental Indenture as fully and with like effect as if set forth herein in full.

 

SECTION 202.  Ratification and Incorporation of Original Indenture.  As heretofore supplemented and as supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture as heretofore supplemented and as supplemented by this Third Supplemental Indenture shall be read, taken and construed as one and the same instrument.

 

SECTION 203.  Executed in Counterparts.  This Third Supplemental Indenture may be simultaneously 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.

 

 

 

 

 

6

                        IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and behalf by its duly authorized officers, all as of the day and year first above written.

 

	
             
 	
            THE SOUTHERN COMPANY

 

 

By:       /s/ W. Paul Bowers                                                                                                                                                                                                 

W. Paul
Bowers

Executive Vice President and Chief Financial               Officer

 

 

 

 
 
	
             
 	
            WELLS FARGO BANK, NATIONAL

ASSOCIATION, as Trustee

 

 

By:       /s/ Elizabeth T. Wagner                                                                                                                                               

Elizabeth T. Wagner

Vice President
 

 

 

 

EXHIBIT A

 

FORM OF SERIES 2008A NOTE

 

 

 

	
            NO. __
 	
            CUSIP NO. 842587 CD7
 

 

 

THE SOUTHERN COMPANY

SERIES 2008A FLOATING RATE SENIOR NOTE

DUE AUGUST 20, 2010

 

 

	
            Principal Amount:
 	
            $_____________
 
	
            Regular Record Date:
 	
            15th calendar day prior to Interest Payment Date, whether or not a Business Day
 
	
            Original Issue Date:
 	
            August 21, 2008
 
	
            Stated Maturity:
 	
            August 20, 2010; provided that if the Stated Maturity is not a Business Day, the principal and interest due on that date will be payable on the next succeeding Business Day, and no interest shall accrue for the intervening period.
 
	
            Interest Payment Dates:
 	
            20th day of February, May, August and November; provided, however, in the event that any Interest Payment Date (other than the Interest Payment Date that is the Stated Maturity) would otherwise be a day that is not a Business Day, the Interest Payment Date will be the next succeeding Business Day
 
	
            Interest Rate:
 	
            LIBOR plus 0.70% per annum, as set on each Interest Determination Date
 
	
            Interest Determination Dates:
 	
            2nd London Business Day immediately preceding the first day of the relevant Interest Period
 
	
            Authorized Denomination:
 	
            $1,000, or any integral multiple thereof
 

 

 

The Southern Company, a Delaware corporation (the “Company”, which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to _______________________________________________, or registered assigns, the principal sum of _________ DOLLARS ($__________) on the Stated Maturity shown above, and to pay interest thereon from the Original Issue Date shown above, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly in arrears on each Interest Payment Date as specified above, commencing on November 20, 2008, and on the Stated Maturity at the rates per annum determined in accordance with the provisions specified below until the principal hereof is paid or made available for payment and at such rates on any overdue principal and on any overdue
installment of interest.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date (other than an Interest Payment 

 

Date that is the Stated Maturity) will, as provided in such Indenture, be paid to the Person in whose name this Note (the “Note”) is registered at the close of business on the Regular Record Date as specified above next preceding such Interest Payment Date, provided that any interest payable at Stated Maturity will be paid to the Person to whom principal is payable.  Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Notes of this series shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Indenture.

 

The Series 2008A Notes (as defined on the reverse hereof) will bear interest for each Interest Period at a per annum rate determined by the Calculation Agent, subject to the maximum interest rate permitted by New York or other applicable state law, as such law may be modified by United States law of general application.  The interest rate applicable during each Interest Period will be equal to LIBOR on the Interest Determination Date for such Interest Period plus 0.70%.  Promptly upon such determination, the Calculation Agent will notify the Company and the Trustee, if the Trustee is not then serving as the Calculation Agent, of the interest rate for the new Interest Period.  The interest rate determined by the Calculation Agent, absent manifest error, shall be binding and conclusive upon the beneficial owners and Holders of the Series 2008A Notes, the Company and the Trustee. 

 

“Calculation Agent” means Wells Fargo Bank, National Association, or its successor appointed by the Company, acting as calculation agent for the Series 2008A Notes. 

 

“Interest Determination Date” means the second London Business Day immediately preceding the first day of the relevant Interest Period. 

 

“Interest Period” means the period commencing on an Interest Payment Date (or, with respect to the initial Interest Period only, commencing on the Original Issue Date) and ending on the day before the next succeeding Interest Payment Date. 

 

“LIBOR” means, with respect to any Interest Period, the rate (expressed as a percentage per annum) for deposits in U.S. dollars for a three-month period commencing on the first day of that Interest Period and ending on the next Interest Payment Date that appears on Reuters LIBOR01 Page as of 11:00 a.m. (London time) on the Interest Determination Date for that Interest Period.  If such rate does not appear on the Reuters LIBOR01 Page as of 11:00 a.m. (London time) on the Interest Determination Date for that Interest Period, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars for the Interest Period and in a principal amount of not less than $1,000,000 are offered to prime banks in the London interbank market by four major banks in the London interbank market (which may include affiliates of one or more of the underwriters of the Series 2008A
Notes) selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., London 

 

A-2

time on the Interest Determination Date for that Interest Period.  The Calculation Agent will request the principal London office of each such bank to provide a quotation of its rate.  If at least two such quotations are provided, LIBOR with respect to that Interest Period will be the arithmetic mean of such quotations.  If fewer than two quotations are provided, LIBOR with respect to that Interest Period will be the arithmetic mean of the rates quoted by three major banks in New York City (which may include affiliates of one or more of the underwriters of the Series 2008A Notes) selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., New York City time, on the first day of that Interest Period for loans in U.S. dollars to leading European banks for that Interest Period and in a principal amount of not less than $1,000,000.  However, if fewer than three banks
selected by the Calculation Agent to provide quotations are quoting as described above, LIBOR for that Interest Period will be the same as LIBOR as determined for the previous Interest Period.  

 

“London Business Day” means a day that is a Business Day and a day on which dealings in deposits in U. S. dollars are transacted, or with respect to any future date are expected to be transacted, in the London interbank market. 

 

“Reuters LIBOR01 Page” means the display designated as Reuters LIBOR01 on the Reuters 3000 Xtra (or such other page as may replace the Reuters LIBOR01 Page on that service, or such other service as may be nominated as the information vendor, for the purpose of displaying rates or prices comparable to the London Interbank Offered rate for U.S. dollar deposits).  

 

Payments of interest on this Note will include interest accrued to but excluding the respective Interest Payment Dates.  Interest payments for this Note shall be computed and paid on the basis of the actual number of days elapsed over a 360-day year.  A “Business Day” shall mean any day other than a Saturday or a Sunday or a day on which banking institutions in New York City are authorized or required by law or executive order to remain closed or a day on which the Corporate Trust Office of the Trustee is closed for business.

 

Payment of the principal of and interest due at the Stated Maturity of the Series 2008A Notes shall be made upon surrender of the Series 2008A Notes at the Corporate Trust Office of the Trustee.  The principal of and interest on the Series 2008A Notes shall be paid in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payment of interest (including interest on an Interest Payment Date) 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 or other electronic 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 16 days prior to the date
for payment by the Person entitled thereto.

 

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

 

A-3

Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

A-4

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

 

Dated:

 

 

	
             
 	
            THE SOUTHERN COMPANY

 

 

 

By:_______________________________________

Name:

Title:

 

 
 
	
            Attest:

 

 

__________________________________

Name:

Title:

 
 	
             
 

 

 

 

 

 

 

 

CERTIFICATE OF AUTHENTICATION

 

	
             
 	
            This is one of the Senior Notes referred to in the within-mentioned Indenture.
 

 

	
             
 	
            WELLS FARGO BANK, NATIONAL

ASSOCIATION,

as Trustee

 

 

 
 
	
             
 	
            By:________________________________

Authorized Officer
 

 

 

(Reverse Side of Note)

 

This Note is one of a duly authorized issue of Senior Notes of the Company (the “Notes”), issued and issuable in one or more series under a Senior Note Indenture, dated as of January 1, 2007, as supplemented (the “Indenture”), between the Company and Wells Fargo Bank, National Association, as Trustee (the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures incidental thereto reference is hereby made for a statement of the respective rights, limitation of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes issued thereunder and of the terms upon which said Notes are, and are to be, authenticated and delivered.  This Note is one of the series designated on the face hereof as Series 2008A Floating Rate Senior Notes due August 20, 2010 (the “Series
2008A Notes”) which is unlimited in aggregate principal amount.  Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Indenture.

 

	
             
 	
            The Series 2008A Notes will not have a sinking fund.
 

 

The Series 2008A Notes will not be redeemable at the option of the Company prior to the Stated Maturity.

 

If an Event of Default with respect to the Notes of this series shall occur and be continuing, the principal of the Notes of this series may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Notes at the time Outstanding of each series to be affected.  The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Notes of each series at the time Outstanding, on behalf of the Holders of all Notes of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

 

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

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company for such purpose, duly endorsed by, or accompanied 

 

A-7

by a written instrument of transfer in form satisfactory to the Company and the Security Registrar and duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series, of authorized denominations and of like tenor and for the same aggregate principal amount, will be issued to the designated transferee or transferees.  No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Prior to due presentment of this 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 Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

The Notes of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof.  As provided in the Indenture and subject to certain limitations therein set forth, Notes of this series are exchangeable for a like aggregate principal amount of Notes of this series of a different authorized denomination, as requested by the Holder surrendering the same upon surrender of the Note or Notes to be exchanged at the office or agency of the Company.

 

This Note shall be governed by, and construed in accordance with, the internal laws of the State of New York.

 

 

 

 

A-8

ABBREVIATIONS

 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

	
            TEN COM-       as tenants in

common
 	
            UNIF GIFT MIN ACT- _______ Custodian ________

                  (Cust)                        (Minor)
 
	
            TEN ENT-         as tenants by the

entireties
 	
             
 	
             
 
	
            JT TEN-            as joint tenants

with right of

survivorship and

not as tenants

in common
 	
             
 	
            under Uniform Gifts to

Minors Act

 

________________________

(State)
 

 

 

Additional abbreviations may also be used

though not on the above list.

 

	
             
 	
            FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto
 

_______________________________________________________________________________

(please insert Social Security or other identifying number of assignee)

 

_______________________________________________________________________________

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE
 OF ASSIGNEE

_______________________________________________________________________________

 

_______________________________________________________________________________

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

_______________________________________________________________________________

 

_______________________________________________________________________________

agent to transfer said 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.
 

 

 

A-9

EXHIBIT B

 

CERTIFICATE OF AUTHENTICATION

 

	
             
 	
            This is one of the Senior Notes referred to in the within-mentioned Indenture.
 

 

	
             
 	
            WELLS FARGO BANK, NATIONAL

ASSOCIATION,

as Trustee

 

 

 
 
	
             
 	
            By:________________________________

Authorized Officer
 

 

 

 

B-1Exhibit 10.1

[LOGO]

 

FIRSTPOWER

 

ANNUAL BONUS PLAN

 

Corporate Staff and

Shared Services

 

Effective January 1, 2008

 

 

	
            1.0
 	
            OBJECTIVE
 

 

The purpose of this Annual Bonus Plan ("Plan") is to motivate employees to achieve the Company's strategic objectives, ensure linkage between rewards/performance to strategic objectives, and provide significant awards for top performance commensurate with achieved results.

 

	
            2.0
 	
            PLAN PERFORMANCE PERIOD
 

 

The Plan Performance Period will be the Company's fiscal year beginning January 1st and ending December 31st annually.

 

	
            3.0  
 	
            ELIGIBILITY
 

 

3.1   Designated Employees in salary job grades L05 to L07, E06 and E07 may participate in the Plan provided they do not participate in any other bonus or incentive plan.  Non-Employee Directors are not eligible to participate in this Plan.

 

3.2   Designated Employees in salary job grades L04 or E05 may be eligible to participate in the Plan provided their duties meet the following guidelines as determined by their Group or Staff Division Manager:  

 

	
            3.2.1 Major revenue production.
 

 

	
            3.2.2
 	
            Significant expense control management.
 

 

3.2.3       Operating unit management with a large employee base and subordinate managers.

 

3.2.4       Significant responsibility to develop or recommend plans that effect corporate performance.

 

3.3   A written FirstPower Plan that complies with Section 5.0 must be submitted on a form approved by the Committee in order to be eligible for any incentive award under this Plan. 

 

3.3.1       The Committee is composed of the EVP - Employee Services and any other officers of the Company as designated by the EVP - Employee Services ("Committee").

 

3.4   Designated Employees promoted or hired into the eligible salary job grades during the Plan Performance Period shall be automatically eligible to 

 

participate in the Plan provided they meet the criteria specified in paragraphs 3.1 and 3.2 and they are promoted or hired no later than September 30th of the plan year.  

 

3.4.1 These employees will participate on a prorated basis according to the number of months of eligibility provided the written FirstPower Plan as described in paragraph 3.3 is submitted and approved by the Group Manager within one month from the date of hire or promotion.

 

3.4.2 Designated Employees promoted during the annual officer review cycle (normally in February) will be eligible to participate as if they were eligible on January 1st of the Plan year. 

 

3.4.3 Employees hired or promoted into the eligible salary job grades after September 30th will become eligible to participate in the Plan beginning January 1 of the following Plan year.

 

3.5    Subject to Section 3.6, a Participant who terminates employment, either voluntarily or involuntarily, before payment of a Bonus Award is ineligible for any Bonus Award (defined as "The cash award determined by the Committee pursuant to Section 4.1, as adjusted by Sections 7.0 and 8.0) under this Plan.  

 

3.5.1 In the event of death, disability or retirement, the Committee may at its discretion grant a Bonus Award depending on the circumstances of the particular case.

 

3.6    Terminated Participants who have received notice of the amount of their Bonus Award but have not received actual payment due to their execution of a deferral agreement as described herein will continue to be entitled to receive payment of their award as provided in the deferral agreement.

 

	
            4.0  
 	
            ADMINISTRATION AND PROCESS OF THE PLAN
 

 

4.1    Each participant in the Plan must have a FirstPower Plan (Paragraph 3.3) for the Plan Year completed and signed by his manager in accordance with the published schedule.  

 

4.1.1 The FirstPower Plans will be held by the participant’s manager during the Plan Year.  

 

4.1.2 The FirstPower Plans will then be forwarded to the participants' respective managers for grading in accordance with Section 6.0 and returned to the Compensation Department where the awards will be tentatively calculated. 

 

4.1.3 Group Managers and Staff Division Managers will be provided a list of their employees by name and of the tentatively calculated awards for review.  

 

4.1.4 Following management's review, the recommended awards will be reviewed and a Bonus Award for each Participant shall be determined and approved by the Committee whose decision is final. 

 

4.1.5 After approval by the Committee, payment of awards under the Plan will be made as soon as practicable.

 

 

 

4.2    The participant may elect to defer payment of his Bonus Award by execution of the Deferral Agreement for the currently offered deferral program(s).  

 

	
            4.2.1
 	
            Only cash awards may be deferred.
 

 

4.3    No employee has any claim or right to be included in the Plan or to be granted a Bonus Award.  

 

4.3.1 The designation of an individual as a participant in the Plan does not alter the nature of the Participant's employment relationship.  

 

4.3.2 The Committee reserves the right to modify or terminate the Plan with or without notice, in whole or in part, at any time.

 

4.4    Employees are encouraged to be aggressive in pursuing business objectives; however, as noted in our ethics policies, employees are expected to maintain the highest level of integrity.  Misrepresentation or manipulation of objectives results will be grounds for termination.  Employees should consult with their manager or ESRM for guidance.  Corporate ethics policies are located on Firstnet at http://www.myfirstnet.com/Corpcomm/Ethics/default.shtml.

 

 

	
            5.0  
 	
            FIRSTPOWER PLAN
 

 

5.1    The FirstPower Plan (paragraph 3.3) is a written document approved by the Committee that formalizes the participant's Key Result Areas, Specific Measures and Goals, Action Plan, Target Weighting, and percentage achievement of bonus measures.

 

5.2    The Key Result Areas (KRA's) should include both Financial and Strategic components.  

 

5.2.1 As part of the goals to achieve these KRAs, goals relating to the creation of value and loyalty of all relevant constituencies (employees, customers, shareholders and communities) may be included.

 

5.3    Plans will normally not have more than five objectives that measure the Key Result Areas.  This limitation is intended to establish a sharp focus and priority on objectives that support Company strategy.

 

	
            6.0  
 	
            CALCULATION OF INCENTIVE AWARDS
 

 

6.1    The maximum performance level assigned to each FirstPower plan component (i.e., Financial, Strategic) will be 100%.  

 

6.2    Extraordinary achievement may be considered in applying a + 25% discretionary adjustment (See Section 7.0).  

 

	
            6.3
 	
            The maximum Bonus Award is 150% of the target award.  
 

 

6.3.1 The maximum Bonus Award may be achieved with a combination of the discretionary adjustment and a positive adjustment by The Corporate Performance factor.  Please refer to paragraphs 7.0 and 8.0 respectively for additional information on the discretionary adjustment and the Corporate Performance factor.

 

 

 

 

	
            6.4
 	
            Awards as a percent (%) of eligible salary in the Plan:
 

 

	
            Grades
 	
            Target
 
	
             
	
            100%
 	
             

	
            L07, L06 and E07
 	
            45.0%
 	
             

	
            L05 and E06
 	
            40.0%
 	
             

	
            L04 and E05
 	
            20.0%
 	
             

				

 

 

6.5    Eligible Salary is defined as actual earnings in the following payroll categories:

 

	
            6.5.1
 	
            Base Pay
 

 

	
            6.5.2
 	
            Overtime Pay
 

 

	
            6.5.3
 	
            Paid Leave
 

 

	
            6.5.4
 	
            Paid Time Off
 

 

6.6    Earnings under payroll categories not listed in section 6.5 are not included in the eligible salary amount for bonus calculation 

 

	
            7.0  
 	
            DISCRETIONARY ADJUSTMENT
 

 

7.1    After the overall award is calculated, the Participant's manager shall make an evaluation of the participant's performance taking into account his or her overall performance over the year as it relates to achieving company strategy.  This evaluation would consider significant individual contributions affecting the performance of the Company: i. e., initiatives regarding income production, productivity, employee and/or customer loyalty, product or process improvement, leadership initiatives, etc.  

 

7.2    The discretionary adjustment may be +25% of the eligible Bonus Award.  

 

7.3    The maximum Bonus Award after applying the discretionary adjustment is 125% of the target award.  

 

7.3.1 For example, if employee in job grade E07 earning $100,000 achieves 90% of his Personal Plan, he would be entitled to a Bonus award of $18,000 ($100,000 x 20%x90%).  

 

7.3.2 If the manager determines that a discretionary award of 10% has been earned, then an additional Bonus of $2,000 ($100,000x20%x10%) will be awarded.  The total Bonus Award would be $20,000.

 

	
            8.0  
 	
            CORPORATE PERFORMANCE FACTOR
 

 

8.1    The Corporate Performance Factor links Plan awards to the achievement of corporate strategic objectives.  This factor will apply to those participants whose positions have a significant relationship to the attainment of the Corporation’s strategic objectives.

 

 

 

8.1.1 Salary Job Grade L07; The Corporate Performance Factor will apply to 40% of the bonus for all Corporate and Shared Services participants.  The remaining 60% of the bonus will not be adjusted for by the Corporate Performance Factor.

 

8.1.2 Salary Job Grades L05-L06 and E06-E07; The Corporate Performance Factor will apply to 25% of the bonus for all Corporate and Shared Services participants.  The remaining 75% of the bonus will not be adjusted by the Corporate Performance Factor.

 

8.1.3 Salary Job Grades L04 and E05 will not be subject to The Corporate Performance Factor.  

 

8.2    Once the Participant's award has been determined, The Corporate Performance Factor will be applied to the awards of those Participants subject to the Factor. 

 

8.3    The Corporate Factor will be determined by the Committee and typically is defined by pertinent base Corporate financial criteria.  

 

8.4    The Corporate Performance Factor that will be applied to the awards under this Plan will be determined at a later date.

 

	
            9.0
 	
            CHANGE IN CONTROL
 

 

9.1    For purposes of this Plan, a “Change in Control” means the occurrence of any one of the following events:

 

9.1.1 Individuals who, on January 21, 1997, constitute the Board (the “Incumbent Directors”)  cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to January 21, 1997, whose election or nomination for election was approved by a vote of at least three-fourths (3/4) of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director;  provided, however, that no individual elected or nominated as a director of the Company initially as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies
or consents by or no behalf of any person other than the Board shall be deemed to be an Incumbent Director;

 

9.1.2 Any “Person” (as defined under Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Section 13(d) or Section 14(d) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company Voting Securities;  provided, however, that the event described in this paragraph (9.1.2) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions:  

 

	
            9.1.2.1
 	
            (A) by the Company or any Subsidiary,
 

 

9.1.2.2             (B) by an employee stock ownership or employee benefit plan or trust sponsored or maintained by the Company or any Subsidiary, 

 

 

 

9.1.2.3             (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, or 

 

9.1.2.4             (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (9.1.3);

 

9.1.3 The consummation of a merger, consolidation, share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business combination:  

 

9.1.3.1             (A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities that were outstanding immediately prior to the consummation of such Business Combination (or, if applicable, is represented by shares in which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such
Company Voting Securities among the holders thereof immediately prior to the Business Combination, 

 

9.1.3.2             (B) no person (other than any employee benefit plan sponsored or maintained by the surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and 

 

9.1.3.3             (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (9.1.3.1 (A), 9.1.3.2 (B), and 9.1.3.3 (C) above shall be deemed to be a “Non-Qualifying Transaction”);  or 

 

9.1.3.4             The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or a sale of all or substantially all of the Company’s assets.

 

9.1.4 Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 20% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding;  provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.  

 

9.1.5 For purposes of this Section, “Company Voting Securities” means the Company’s then outstanding securities eligible to vote for the 

 

election of the Board, and “Subsidiary” means an entity in which the Company directly or indirectly beneficially owns more than 50% of the voting securities or interests.

 

9.2    Notwithstanding anything herein to the contrary, in the event of a Change in Control, neither this Plan nor any corporate or individual performance criteria may be amended or terminated with respect to the Plan year in which the Change in Control occurs in a manner that will result in a decrease in Bonus Awards, and Bonus Awards will be paid on a pro-rata(1) basis through the date of the Change in Control, based on performance through the date of Change in Control, as determined by the Plan Committee.  

 

9.3    The Committee shall exclude the effect of the payment, accrual for or incurrence of all expenses related to the Change in Control (including, but not limited to, investment banker fees, legal fees, and out-of-pocket expenses) in determining the Participant’s achievement of his personal plan goals and in applying the Corporate Performance Factor pursuant to Section 8.0 of the plan.  

 

9.4    Payment of Bonus Awards shall be made, if triggered by subsection 9.1.3 or 9.1.4 of the definition, prior to the closing of the transaction contemplated by such subsections and shall be made immediately upon a determination that a Change in Control has occurred under subsection 9.1.1 or 9.1.2 of the definition.

 

	
            10.0
 	
            Clawback
 

 

The Company will, in the event of a material restatement of the Company’s financial statements and to the extent permitted by governing law and any employment arrangements, in all appropriate cases, seek reimbursement of a portion of any incentive or bonus compensation paid or awarded to any employee for performance periods beginning on or after January 1, 2008 where: a) the payment or award was predicated upon the achievement of certain financial results that were subsequently the subject of a material restatement, b) the Board or an appropriate committee thereof concludes in good faith that the employee engaged in fraud or intentional misconduct that was a material cause of the need for the restatement, and c) a lower payment or award would have been made to the employee based upon the restated financial results. In each such instance, the Company will, to the extent practicable, seek to recover the
amount by which the individual employee’s incentive or bonus compensation for the relevant period exceeded the incentive or bonus compensation that would have been paid or awarded based on the restated financial results.  

 

________________________________

 (1) “Pro-rata” means a percentage determined by dividing the number of days from the beginning of the performance period through the date of the Change in Control by 365.

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