Document:

ex4b4firstsupplindenture.htm

    Exhibit
      4(b) 4

    
 

     

    

     

    SOUTHWESTERN
      ELECTRIC POWER COMPANY,

     

    ISSUER

     

    TO

     

    THE
      BANK OF NEW YORK,

     

    TRUSTEE

     

    _______________________

     

    FIRST
      SUPPLEMENTAL INDENTURE

     

    DATED
      AS OF OCTOBER 1, 2003

     

    _______________________

     

    $113,403,000

     

    SERIES
      B JUNIOR SUBORDINATED DEBENTURES

     

    DUE
      OCTOBER 1, 2043

     

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Table
      of Contents

     

    
      
        	 	 	
                Page

              
	
                ARTICLE
                  1

              
	 	 	 
	
                Series
                  B Junior Subordinated Debentures

              
	
                SECTION
                  101.

              	
                Establishment

              	
                2

              
	
                SECTION
                  102.

              	
                Definitions

              	
                2

              
	
                SECTION
                  103.

              	
                Payment
                  of Principal and Interest

              	
                8

              
	
                SECTION
                  104.

              	
                Deferral
                  of Interest Payments

              	
                9

              
	
                SECTION
                  105.

              	
                Denominations

              	
                11

              
	
                SECTION
                  106.

              	
                Global
                  Securities

              	
                11

              
	
                SECTION
                  107.

              	
                Transfer

              	
                11

              
	
                SECTION
                  108.

              	
                Redemption

              	
                12

              
	
                ARTICLE
                  2

              
	 	 	 
	
                Interest
                  Procedures

              
	
                SECTION
                  201.

              	
                Interest
                  Payments

              	
                12

              
	
                SECTION
                  202.

              	
                Interest
                  Rate

              	
                13

              
	
                SECTION
                  203.

              	
                Interest
                  Periods

              	
                17

              
	
                ARTICLE
                  3

              
	 	 	 
	
                Remarketing
                  Procedures

              
	
                SECTION
                  301.

              	
                Election
                  to Remarket

              	
                18

              
	
                SECTION
                  302.

              	
                Notice
                  of Election

              	
                18

              
	
                SECTION
                  303.

              	
                Determination
                  of Interest Rate

              	
                19

              
	
                SECTION
                  304.

              	
                Remarketing
                  Agent

              	
                20

              
	
                ARTICLE
                  4

              
	 	 	 
	
                Miscellaneous
                  Provisions

              
	
                SECTION
                  401.

              	
                Recitals
                  by Company

              	
                20

              
	
                SECTION
                  402.

              	
                Ratification
                  and Incorporation of Original Indenture

              	
                20

              
	
                SECTION
                  403.

              	
                Trust
                  Costs and Expenses

              	
                21

              
	
                SECTION
                  404.

              	
                Executed
                  in Counterparts

              	
                22

              

      

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    THIS
      FIRST SUPPLEMENTAL INDENTURE is made as of the 1st day of October, 2003, by
      and
      between SOUTHWESTERN ELECTRIC POWER COMPANY, a Delaware corporation, 1 Riverside
      Plaza, Columbus, Ohio 43215 (the “Company”), and THE BANK OF NEW YORK, a New
      York banking corporation, 101 Barclay Street, New York, New York 10286, as
      trustee (the “Trustee”).

     

    W
      I T
      N E S S E T H:

     

    WHEREAS,
      the Company has heretofore entered into a Subordinated Indenture, dated as
      of
      September 1, 2003 (the “Original Indenture”) with The Bank of New York, as
      trustee;

     

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

     

    WHEREAS,
      under the Original Indenture, a new series of Junior Subordinated Debentures
      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 Junior
      Subordinated Debentures;

     

    WHEREAS,
      additional Junior Subordinated Debentures 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 First
      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
      B Junior Subordinated Debentures

     

    
      	
              SECTION
                101.  

            	
              Establishment

            

    

     

    There
      is
      hereby established a new series of Junior Subordinated Debentures to be issued
      under the Indenture, to be designated as the Company’s Series B Junior
      Subordinated Debentures due October 1, 2043 (the “Series B
      Debentures”).

     

    There
      are
      to be authenticated and delivered $113,403,000 aggregate principal amount of
      Series B Debentures, and no further Series B Debentures shall be authenticated
      and delivered except as provided by Sections 303, 305 and 406 of the Original
      Indenture.  The Series B Debentures shall be issued in definitive
      fully registered form.

     

    The
      Series B Debentures shall be in substantially the form set out in Exhibit A
      hereto.  The entire principal amount of the Series B Debentures shall
      initially be evidenced by one certificate issued to the Property Trustee of
      SWEPCo Capital Trust I.

     

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

     

    Each
      Series B Debenture 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.

     

    
      	
              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.

     

    “Administrative
      Trustee” means each of the individuals identified as an “Administrative Trustee”
in the Trust Agreement.

     

    “Bankruptcy
      Event” means, with respect to any Person:

     

    (i)           the
      entry of a decree or order by a court having jurisdiction in the premises
      judging such Person a bankrupt or insolvent, or approving as properly filed
      a
      petition seeking reorganization, arrangement, adjudication or composition of
      or
      in respect of such Person under federal bankruptcy law or any other applicable
      federal or state law, or appointing a receiver, liquidator, assignee, trustee,
      sequestrator or other similar official of such Person or of any substantial
      part
      of its property, or ordering the winding up or liquidation of its affairs,
      and
      the continuance of such decree or order unstayed and in effect for a period
      of
      60 consecutive days; or

     

    (ii)           the
      institution by such Person of proceedings to be adjudicated a bankrupt or
      insolvent, or the consent by it to the institution of bankruptcy or insolvency
      proceedings against it, or the filing by it of a petition or answer or consent
      seeking reorganization or relief under federal bankruptcy law or any other
      applicable federal or state law, or the consent by it to the filing of such
      petition or to the appointment of a receiver, liquidator, assignee, trustee,
      sequestrator or similar official of such Person or of any substantial part
      of
      its property, or the making by it of an assignment for the benefit of creditors,
      or the admission by it in writing of its inability to pay its debts generally
      as
      they become due, or the taking of action by such Person in furtherance of any
      such action.

     

    “Business
      Day” means a day other than (i) a Saturday or a Sunday; (ii) a day on which
      banks in New York, New York are authorized or obligated by law or executive
      order to remain closed; or (iii) a day on which the Indenture Trustee’s
      corporate trust office is closed for business.

     

    “Calculation
      Agent” means The Bank of New York, or its successor appointed by the Company
      and, if applicable, the Administrative Trustees, acting as calculation
      agent.

     

    “Calculation
      Agent Agreement” means the agreement among the Company, the Trust and The Bank
      of New York, as calculation agent, dated as of October 1, 2003.

     

    “Calendar
      Period” has the meaning set forth in Section 202.

     

    “Clearing
      Agency” means an organization registered as a “clearing agency” pursuant to
      Section 17A of the Exchange Act.  The Depository Trust Company will be
      the initial Clearing Agency.

     

    “Clearing
      Agency Participant” is defined in the Trust Agreement.

     

    “Code”
      means the Internal Revenue Code of 1986, as amended.

     

    “Company”
      means Southwestern Electric Power Company.

     

    “Deferred
      Interest” means each installment of interest not paid during any Extension
      Period, and interest thereon.  Deferred installments of interest shall
      bear interest at the rate of the prevailing Interest Rate per annum from the
      applicable Interest Payment Date to the date of payment, compounded on each
      Interest Payment Date.

     

    “Definitive
      Preferred Securities Certificates” means Preferred Securities Certificates
      issued in certificated, fully registered form as provided in the Trust
      Agreement.

     

    “Distribution
      Payment Date” means each day on which Distributions are payable on the Preferred
      Securities determined based on the prevailing Distribution Rate.

     

    “Distribution
      Period” means each semiannual period in a Fixed Rate Period and each quarterly
      period in a Floating Rate Period for which Distributions are payable on the
      Trust Securities.

     

    “Distribution
      Rate” means the rate at which Distributions will accrue on the Trust
      Securities.

     

    “Distributions”
      means amounts payable in respect of the Preferred Securities pursuant to Section
      4.01 of the Trust Agreement.

     

    “Election
      Date” means a date that is no later than the fifth Business Day prior to the
      proposed Remarketing Date.

     

    “Exchange
      Act” means the Securities Exchange Act of 1934, as amended.

     

    “Extension
      Period” means any period during which the Company has elected to defer payments
      of interest on the Series B Debentures, which deferral may be for a period
      of up
      to five years.

     

    “Fixed
      Rate” means the Distribution Rate (or Interest Rate with respect to the Series B
      Debentures) during a Fixed Rate Period as determined by a
      Remarketing.

     

    “Fixed
      Rate Period” means the Initial Fixed Rate Period and each period set by the
      Company and, if applicable, the Administrative Trustees during a Remarketing
      for
      which the Fixed Rate determined in such Remarketing will apply; provided,
      however, that a Fixed Rate Period must be for a duration of at least six months,
      may not extend beyond the stated maturity of the Series B Debentures and may
      not
      end on a day other than a day immediately preceding a Distribution Payment
      Date
      (or Interest Payment Date with respect to the Series B Debentures).

     

    “Floating
      Rate” has the meaning set forth in Section 202.

     

    “Floating
      Rate Determination Date” means the second London Business Day immediately
      preceding the first day of the relevant Distribution Period (or Interest Period
      with respect to the Series B Debentures) in the Floating Rate
      Period.

     

    “Floating
      Rate Period” means any period during which a Floating Rate is in
      effect.

     

    “Indenture
      Trustee” means The Bank of New York, as Trustee under the Subordinated Indenture
      dated as of September 1, 2003, of the Company.

     

    “Initial
      Distribution Rate” means 5.25% per annum.

     

    “Initial
      Fixed Rate Period” means the period from the Original Issue Date through
      September 30, 2008.

     

    “Initial
      Interest Rate” means 5.25% per annum.

     

    “Interest
      Payment Dates” means the dates on which interest on the Series B Debentures is
      payable.

     

    “Interest
      Period” means the period for which interest on the Series B Debentures is
      payable.

     

    “Interest
      Rate” means the rate, in effect from time to time, at which interest shall
      accrue on the Series B Debentures.

     

    “Investment
      Company Event” means the receipt by the Administrative Trustees of an Opinion of
      Counsel to the Company experienced in these matters to the effect that, as
      a
      result of the occurrence of a change in law or regulation or a written
      change--including any announced prospective change--in interpretation or
      application of law or regulation by any legislative body, court, governmental
      agency or regulatory authority, there is more than an insubstantial risk that
      the Trust is or will be considered an “investment company” that is required to
      be registered under the 1940 Act, which change or prospective change becomes
      effective or would become effective, as the case may be, on or after the date
      of
      the issuance by the Trust of the Preferred Securities.

     

    “Liquidation
      Amount” means the stated amount of $1,000 per Trust Security or the principal
      amount of the Series B Debenture.

     

    “Liquidation
      Distribution” has the meaning specified in Section 9.05 of the Trust
      Agreement.

     

    “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.

     

    “1940
      Act” means the Investment Company Act of 1940, as amended.

     

    “Original
      Issue Date” means October 1, 2003.

     

    “Preferred
      Security” means an undivided beneficial ownership interest in the assets of the
      Trust having a Liquidation Amount of $1,000 and having rights provided therefor
      in the Trust Agreement, including the right to receive Distributions and a
      Liquidation Distribution as provided herein.

     

    “Preferred
      Securities Certificate” means a certificate evidencing ownership of a Preferred
      Security or Securities, substantially in the form attached as Exhibit A to
      the
      Trust Agreement.

     

    “Property
      Trustee” means the commercial bank or trust company identified as the “Property
      Trustee” in the Trust Agreement solely in its capacity as Property Trustee of
      the Trust.

     

    “Redemption
      Date” has the meaning set forth in Section 108.

     

    “Regular
      Record Date” means the opening of business on the Business Day immediately
      preceding the relevant Interest Payment Date.

     

    “Remarketing”
      means the conduct by which a Fixed Rate shall be determined in accordance with
      the Remarketing Procedures.

     

    “Remarketing
      Agent” means Lehman Brothers Inc., its successors or assigns, or such other
      remarketing agent appointed to such capacity by the Company and, if applicable,
      the Administrative Trustees.

     

    “Remarketing
      Agreement” means the agreement among the Company, the Trust and Lehman Brothers
      Inc., as remarketing agent, dated as of October 1, 2003.

     

    “Remarketing
      Date” means any Business Day no later than the third Business Day prior to any
      Remarketing Settlement Date.

     

    “Remarketing
      Procedures” means those procedures set forth in Article 3.

     

    “Remarketing
      Settlement Date” means, to the extent applicable,  (i) the first
      Business Day of the next Distribution Period (or Interest Period with respect
      to
      the Series B Debentures) following the expiration of the Initial Fixed Rate
      Period and any subsequent Fixed Rate Period, (ii) any Distribution Payment
      Date
      (or Interest Payment Date with respect to the Series B Debentures) during a
      Floating Rate Period or (iii) any Distribution Payment Date (or Interest Payment
      Date with respect to the Series B Debentures) during a time in which Preferred
      Securities or Series B Debentures are redeemable in a Fixed Rate Period
      subsequent to the Initial Fixed Rate Period.

     

    “Securityholder”
      or “Holder” when used with respect to a Trust Security means a Person in whose
      name a Trust Security or Securities is registered in the Securities Register
      for
      the Trust Securities; any such Person is a beneficial owner within the meaning
      of the Delaware Statutory Trust Act.

     

    “Special
      Event” means an Investment Company Event or Tax Event.

     

    “Stated
      Maturity” means October 1, 2043.

     

    “Tax
      Event” means that the Company and, if applicable, Administrative Trustees shall
      have received an opinion from independent tax counsel experienced in such
      matters (which may be counsel to the Company) to the effect that, as a result
      of
      (a) any amendment to, or change (including any announced proposed change) in,
      the laws (or any regulations thereunder) of the United States or any political
      subdivision or taxing authority thereof or therein or (b) any amendment to,
      or
      change in, an interpretation or application of such laws or regulations, there
      is more than an insubstantial risk that (i) the Trust would be subject to United
      States federal income tax with respect to income accrued or received on the
      Series B Debentures; (ii) interest payable on the Series B Debentures would
      not
      be deductible, in whole or in part, by the Company for United States federal
      income tax purposes; or (iii) the Trust would be subject to more than a de
      minimis amount of other taxes, duties or other governmental charges, which
      change or amendment becomes effective on or after the date of issuance by the
      Trust of the Preferred Securities.

     

    “Telerate
      Page 3750” has the meaning set forth in Section 202.

     

    “10-year
      Treasury CMT” has the meaning set forth in Section 202.

     

    “30-year
      Treasury CMT” has the meaning set forth in Section 202.

     

    “3-month
      LIBOR Rate” has the meaning set forth in Section 202.

     

    “Trust”
      means SWEPCo Capital Trust I, a statutory trust formed by the Company under
      Delaware law to issue Trust Securities, the proceeds of which will be used
      to
      purchase the Series B Debentures.

     

    “Trust
      Agreement” means the SWEPCo Capital Trust I Amended and Restated Trust Agreement
      dated as of September 1, 2003 among the Company, the Trustees named therein,
      and
      the holders of undivided beneficial interests in the assets of the
      Trust.

     

    “Trust
      Agreement Event of Default” means any one of the following events (whatever the
      reason for such Trust Agreement Event of Default and whether it shall be
      voluntary or involuntary or be effected by operation of law or pursuant to
      any
      judgment, decree or order of any court or any order, rule or regulation of
      any
      administrative or governmental body):

     

    (i)           the
      occurrence of an Event of Default; or

     

    (ii)           default
      by the Trust in the payment of any Distribution when it becomes due and payable,
      and continuation of such default for a period of 30 days; or

     

    (iii)           default
      by the Trust in the payment of any redemption price of any Trust Security when
      it becomes due and payable; or

     

    (iv)           default
      in the performance, or breach, of any covenant or warranty of the Trustees
      in
      the Trust Agreement (other than a covenant or warranty a default in whose
      performance or breach is dealt with in clause (ii) or (iii) above) and
      continuation of such default or breach for a period of 60 days after there
      has
      been given, by registered or certified mail, to the Trustees and the Company
      by
      the Holders of at least 33% in aggregate Liquidation Amount of the Outstanding
      (as defined in the Trust Agreement) Preferred Securities a written notice
      specifying such default or breach and requiring it to be remedied and stating
      that such notice is a “Notice of Default” hereunder; or

     

    (v)           the
      occurrence of a Bankruptcy Event with respect to the Trust.

     

    “Trustees”
      means the Persons identified as “Trustees” in the Trust Agreement.

     

    “Trust
      Indenture Act” means the Trust Indenture Act of 1939 as in force at the date as
      of which this instrument was executed; provided, however, that in the event
      the
      Trust Indenture Act of 1939 is amended after such date, “Trust Indenture Act”
means, to the extent required by any such amendment, the Trust Indenture Act
      of
      1939 as so amended.

     

    “Trust
      Security” means any one of the Common Securities (as defined in the Trust
      Agreement) or the Preferred Securities.

     

    
      	
              SECTION
                103.  

            	
              Payment
                of Principal and Interest

            

    

     

    The
      unpaid principal amount of the Series B Debentures shall bear interest at the
      Interest Rate per annum until paid or duly provided for.  Interest
      shall be paid on each Interest Payment Date to the Person in whose name the
      Series B Debentures are registered on the Regular Record Date for such Interest
      Payment Date, provided that interest payable at the Stated Maturity of principal
      or on a Redemption Date as provided herein will be paid to the Person to whom
      principal is payable.  So long as an Extension Period is not
      occurring, 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 B
      Debentures 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 (“Special
      Record Date”), notice whereof shall be given to Holders of the Series B
      Debentures 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 B
      Debentures shall be listed, and upon such notice as may be required by any
      such
      exchange, all as more fully provided in the Original Indenture.

     

    While
      the
      Preferred Securities are outstanding (i) the Interest Rate will be equal to
      the
      Distribution Rate payable on the Preferred Securities; (ii) the Interest Periods
      will be the same as Distribution Periods for the Preferred Securities; and
      (iii)
      the Interest Payment Dates will be the same as the Distribution Payment Dates
      for the Preferred Securities.

     

    If
      the
      Trust is terminated and the Series B Debentures are distributed to the holders
      of the Preferred Securities, the interest payable, Interest Rate, Interest
      Periods, Interest Payment Dates and redemption provisions with respect to Fixed
      Rate Periods will be determined in the same manner as the Distributions,
      Distribution Rate, Distribution Periods, Distribution Payment Dates and the
      redemption provisions with respect to Fixed Rate Periods for the Preferred
      Securities and the Remarketing Procedures shall remain the same except: (i)
      the
      effects of the Trust Agreement Events of Default shall be occasioned only by
      the
      Events of Default and (ii) the cure and waiver provisions relating to the Trust
      Agreement Events of Default shall be superceded by the cure and waiver
      provisions relating to the Events of Default.

     

    Payment
      of the principal and interest due at the Stated Maturity or earlier redemption
      of the Series B Debentures shall be made upon surrender of the Series B
      Debentures at the Corporate Trust Office of the Trustee, 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 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.  

            	
              Deferral
                of Interest Payments

            

    

     

    The
      Company has the right to defer payments of interest on the Series B Debentures
      by extending the interest payment period from time to time on the Series B
      Debentures (an “Extension Period”).  During an Extension Period,
      interest will continue to accrue on the Series B Debentures.

     

    If
      the
      Company decides to defer interest payments on the Series B Debentures, the
      Extension Period shall not exceed five consecutive years.  An
      Extension Period shall not extend beyond the stated maturity of the Series
      B
      Debentures.  Prior to the termination of any Extension Period, the
      Company may further defer payments of interest provided that the Extension
      Period, together with all previous and further extensions thereof, may not
      exceed five consecutive years.  There could be multiple Extension
      Periods of varying lengths throughout the term of the Series B
      Debentures.  Upon the termination of any such Extension Period and
      upon the payment of all accrued and unpaid interest then due, the Company may
      select a new Extension Period, subject to the above limitations and
      requirements.  Upon the termination of any Extension Period, which
      termination shall be on an Interest Payment Date, the Company shall pay all
      Deferred Interest on the next succeeding Interest Payment Date to the Person
      in
      whose name the Series B Debentures are registered on the Regular Record Date
      for
      such Interest Payment Date, provided that Deferred Interest payable at Stated
      Maturity or on any Redemption Date will be paid to the Person to whom principal
      is payable.

     

    If
      the
      Company shall have given notice of its election to select any Extension Period,
      the Company shall not (1) declare or pay any dividends or distributions on,
      or
      redeem, purchase, acquire or make a liquidation payment with respect to, any
      of
      its capital stock, (2) make any payment of principal of or interest or premium,
      if any, on or repay, repurchase or redeem any of its debt securities that rank
      equally with, or junior to, the Series B Debentures, or (3) make any guarantee
      payments with respect to any guarantee issued by the Company if such guarantee
      ranks equally with, or junior to, the Series B Debentures, other than, in each
      case, repurchases, redemptions or other acquisitions of shares of
      its:

     

    (i)  capital
      stock in connection with any employment contract, benefit plan or other similar
      arrangement with or for the benefit of any one or more employees, officers,
      directors or consultants or in connection with a dividend reinvestment or
      shareholder stock purchase plan;

     

    (ii)  as
      a
      result of an exchange or conversion of any class or series of the Company’s
      capital stock, or any capital stock of a subsidiary of the Company, for any
      class or series of the Company’s capital stock or of any class or series of the
      Company’s then outstanding indebtedness for any class or series of the Company’s
      capital stock;

     

    (iii)  the
      purchase of fractional interests in shares of the Company’s capital stock
      pursuant to the conversion or exchange provisions of the capital stock or the
      security being converted or exchanged;

     

    (iv)  payments
      under any guarantee executed and delivered by the Company concurrently with
      the
      issuance of any Preferred Securities;

     

    (v)  any
      declaration of a dividend in the form of capital stock in connection with any
      shareholders’ rights plan, or the issuance of rights to capital stock under any
      shareholders’ rights plan, or the redemption or repurchase of rights pursuant to
      any such plan; or

     

    (vi)  any
      dividend in the form of stock, warrants, options or other rights where the
      dividend stock or the stock issuable upon exercise of the warrants, options
      or
      other rights is the same stock as that on which the dividend is being paid
      or
      ranks on a parity with or junior to the stock,

     

    if
      at
      such time

     

    (i)           the
      Company has actual knowledge of any event that (a) with the giving of notice
      or
      the lapse of time, or both, would constitute an event of default under the
      applicable indenture, and (b) the Company has not taken reasonable steps to
      cure
      the same;

     

    (ii)           the
      Company is in default with respect to payment of any obligations under any
      guarantee executed and delivered concurrently with the issuance of any Preferred
      Securities; or

     

    (iii)           an
      extension period is continuing.

     

    The
      Company shall give the Holder or Holders of the Series B Debentures, the
      Trustee, the Remarketing Agent and the Calculation Agent, notice as provided
      in
      Sections 105 and 106, respectively, of the Original Indenture of its selection
      or extension of an Extension Period at least one Business Day prior to the
      earlier of (i) the Regular Record Date relating to the Interest Payment Date
      on
      which the Extension Period is to commence or relating to the Interest Payment
      Date on which an Extension Period that is being extended would otherwise
      terminate, or (ii) the date the Company or the Trust is required to give notice
      to any applicable self-regulatory organization of the record date or the date
      such distributions are payable. The Company shall cause the Trust to give notice
      of the Company’s selection of such Extension Period to Holders of the Trust
      Securities, the Calculation Agent and the Remarketing Agent.

     

    At
      any
      time any of the foregoing notices are given to the Trustee, the Company shall
      give to the Paying Agent for the Series B Debentures such information as said
      Paying Agent shall reasonably require in order to fulfill its tax reporting
      obligations with respect to such Series B Debentures.

     

    
      	
              SECTION
                105.  

            	
              Denominations

            

    

     

    The
      Series B Debentures may be issued in the denominations of $1,000, or any
      integral multiple thereof.

     

    
      	
              SECTION
                106.  

            	
              Global
                Securities

            

    

     

    If
      the
      Series B Debentures are distributed to Holders of the Trust Securities of the
      Trust in liquidation of such Holders’ interests therein, the Series B Debentures
      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 B Debentures represented by the Global Security will not be exchangeable
      for, and will not otherwise be issuable as, Series B Debentures 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 B Debenture 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.

     

    A
      Global
      Security shall be exchangeable for Series B Debentures 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,
      or if at any time the Depositary ceases to be a clearing agency registered
      under
      the Exchange Act 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;
      (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 B Debentures. Any Global Security that is
      exchangeable pursuant to the preceding sentence shall be exchangeable for Series
      B Debentures 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 B Debentures,
      but payment will be required of a sum sufficient to cover any tax or other
      governmental charge that may be imposed in connection therewith.

     

    The
      Company shall not be required (a) to issue, transfer or exchange any Series
      B
      Debentures during a period beginning at the opening of business fifteen (15)
      days before the day of the mailing of a notice of redemption, and ending at
      the
      close of business on the day of the mailing, or (b) to transfer or exchange
      any
      Series B Debentures called for redemption.

     

    
      	
              SECTION
                108.  

            	
              Redemption

            

    

     

    The
      Series B Debentures shall be subject to redemption at the option of the Company,
      in whole, but not in part, without premium or penalty, on the last Interest
      Payment Date relating to the Initial Fixed Rate Period, on such dates with
      respect to any other Fixed Rate Period as the Company and the Trust may
      determine prior to the remarketing establishing such Fixed Rate Period or on
      any
      Interest Payment Date relating to a Floating Rate Period, at a Redemption Price
      equal to 100% of the principal amount to be redeemed plus accrued but unpaid
      interest to the Redemption Date.  In addition, upon the occurrence of
      a Special Event at any time, the Company may, within ninety (90) days following
      the occurrence thereof and subject to the terms and conditions of the Indenture,
      elect to redeem the Series B Debentures, in whole, but not in part, at a price
      equal to 100% of the principal amount to be redeemed plus any accrued but unpaid
      interest to the date of redemption (any date of redemption as provided for
      in
      this paragraph herein called a “Redemption Date”).

     

    The
      Series B Debentures will not have a sinking fund.

     

    Notice
      of
      redemption shall be given as provided in Section 404 of the Original
      Indenture.

     

    ARTICLE
      2

     

    

     

    Interest
      Procedures

     

    Article
      4
      of the Trust Agreement sets forth the procedures to determine the Distribution
      Rate, Distribution Periods and Distribution Payment Dates for the Preferred
      Securities.  While the Preferred Securities are outstanding, the
      Interest Rate, Interest Periods, Interest Payment Dates and associated terms
      relating to the Series B Debentures shall be the same as the Distribution Rate,
      Distribution Periods and Distribution Payment Dates and associated terms
      relating to the Preferred Securities.  If the Trust is terminated and
      the Series B Debentures are distributed to the holders of the Preferred
      Securities, subject to Section 103 herein, the below described procedures will
      be applicable to the Series B Debentures.

     

    
      	
              SECTION
                201.  

            	
              Interest
                Payments

            

    

     

    Interest
      payments shall accrue from the Original Issue Date until the Redemption
      Date.  During the Initial Fixed Rate Period, interest will be payable
      semiannually in arrears on April 1 and October 1 of each year, commencing on
      April 1, 2004.  During any Fixed Rate Period, other than the Initial
      Fixed Rate Period, interest will be payable semiannually in arrears on Interest
      Payment Dates determined based on the Remarketing Date (if the Series B
      Debentures are remarketed for a new Fixed Rate Period that begins on April
      1 or
      October 1, interest will be payable on April 1 and October 1 of each year,
      and
      if the Series B Debentures are remarketed for a new Fixed Rate Period that
      begins on January 1 or July 1, interest will be payable on January 1 and July
      1
      of each year).  During any Floating Rate Period, interest will be
      payable quarterly in arrears on January 1, April 1, July 1 and October 1 of
      each
      year.

     

    If
      any
      Interest Payment Date with respect to a Fixed Rate Period is not a Business
      Day,
      interest will be payable, without additional interest, on the immediately
      succeeding Business Day, with the same force and effect as if payment was made
      on the date such payment was originally payable.  If any Interest
      Payment Date with respect to a Floating Rate Period is not a Business Day,
      then
      interest will be payable on the immediately succeeding Business Day and interest
      shall accrue to the actual payment date (except for an Interest Payment Date
      that coincides with the Redemption Date).

     

    The
      amount of interest payable on each Interest Payment Date relating to a Fixed
      Rate Period will be computed on the basis of a 360-day year of twelve 30-day
      months.  The amount of interest payable on each Interest Payment Date
      in respect of a Floating Rate Period will be computed by multiplying the per
      annum Interest Rate in effect for such Interest Period by a fraction, the
      numerator of which will be the actual number of days in such Interest Period
      (or
      portion thereof) (determined by including the first day thereof and excluding
      the last thereof) and the denominator of which will be 360, and multiplying
      the
      rate so obtained by $1,000.

     

    Interest
      on the Series B Debentures will be deferred during any Extension Period but
      will
      continue to accrue.  The payment of such interest, together with any
      interest thereon, will be distributed to the holders of Series B Debentures
      at
      the end of any Extension Period.

     

    Interest
      on the Series B Debentures on each Interest Payment Date shall be payable to
      the
      Person in whose name the Series B Debentures are registered on the Regular
      Record Date.

     

    Each
      Series B Debenture upon registration of transfer of or in exchange for or in
      lieu of any other Series B Debenture shall carry the rights of interest accrued
      and unpaid, and to accrue, which were carried by such other Series B
      Debenture.

     

    
      	
              SECTION
                202.  

            	
              Interest
                Rate

            

    

     

    During
      the Initial Fixed Rate Period, the Interest Rate shall be the Initial Interest
      Rate.

     

    Prior
      to
      the expiration of the Initial Fixed Rate Period and any subsequent Fixed Rate
      Period or an Interest Period with respect to a Floating Rate Period or an
      Interest Period in a Fixed Rate Period during a time in which the Series B
      Debentures are redeemable in such Fixed Rate Period, the Company will have
      the
      option to remarket the Series B Debentures to establish a new Fixed Rate for
      a
      new Fixed Rate Period (to be in effect after the expiration of the then current
      Interest Period).  If the Company elects to conduct a Remarketing of
      the Series B Debentures for the purpose of establishing a new Fixed Rate for
      a
      new Fixed Rate Period, the Company shall not less than 20 nor more than 35
      Business Days prior to the related Election Date, notify the Clearing Agency,
      the Calculation Agent, the Indenture Trustee and the Remarketing
      Agent.  If the Series B Debentures are not issued in global, fully
      registered form to the Clearing Agency, such notice shall be delivered to the
      holders of the Series B Debentures instead of the Clearing
      Agency.  Such notice shall indicate the length of the proposed new
      Fixed Rate Period, the proposed Remarketing Date and any redemption provisions
      that apply during such new Fixed Rate Period.  The Company shall have
      the right to terminate a Remarketing at any time prior to the Election Date
      by
      notice of such termination to the Clearing Agency, the Remarketing Agent, the
      Indenture Trustee and the Calculation Agent.

     

    If
      the
      Remarketing Agent has determined that it will be able to remarket all Series
      B
      Debentures tendered or deemed tendered for purchase in the Remarketing at a
      Fixed Rate and at a price of $1,000 per Series B Debenture, on such Remarketing
      Date, the Interest Rate for the new Fixed Rate Period will be the Fixed Rate
      determined by the Remarketing Agent, which will be the rate per annum (rounded
      to the nearest one-thousandth (0.001) of one percent per annum) which the
      Remarketing Agent determines, in its sole judgment, to be the lowest Fixed
      Rate
      per annum, if any, that will enable it to remarket all Series B Debentures
      tendered or deemed tendered for Remarketing at a price of $1,000 per Series
      B
      Debenture.

     

    If
      the
      Company does not elect to remarket the Series B Debentures or has terminated
      a
      Remarketing or the Remarketing Agent is unable to remarket all of the Series
      B
      Debentures tendered or deemed tendered for a purchase price of $1,000 per Series
      B Debenture, the Interest Rate shall be the Floating Rate and the new Interest
      Period shall be a Floating Rate Period.

     

    The
      Calculation Agent shall calculate the Floating Rate as follows:

     

    Except
      as
      provided below, the Floating Rate for any Floating Rate Period for the Series
      B
      Debentures will be equal to the Adjustable Rate (as defined below) plus
      2.375%.  The “Adjustable Rate” for any Interest Period will be equal
      to the highest of the 3-month LIBOR Rate, the 10-year Treasury CMT and the
      30-year Treasury CMT (each as defined below and collectively referred to as
      the
“Benchmark Rates”) for such Interest Period during the Floating Rate
      Period.  In the event that the Calculation Agent determines in good
      faith that for any reason:

     

    (i)  any
      one
      of the Benchmark Rates cannot be determined for any Interest Period, the
      Adjustable Rate for such Interest Period will be equal to the higher of
      whichever two of such rates can be so determined;

     

    (ii)  only
      one
      of the Benchmark Rates can be determined for any Interest Period, the Adjustable
      Rate for such Interest Period will be equal to whichever such rate can be so
      determined; or

     

    (iii)  none
      of
      the Benchmark Rates can be determined for any Interest Period, the Adjustable
      Rate for the preceding Interest Period will be continued for such Interest
      Period.

     

    The
      “3-month LIBOR Rate” means, for each Interest Period, the arithmetic average of
      the two most recent weekly quotes for deposits for U.S. Dollars having a term
      of
      three months, as published on the first Business Day of each week during the
      relevant Calendar Period (as defined below) immediately preceding the Interest
      Period for which the Floating Rate is being determined.  Such quotes
      will be taken from Telerate Page 3750 at approximately 11:00 a.m. London time
      on
      the relevant date.  If such rate does not appear on Telerate Page 3750
      on the relevant date, the 3-month LIBOR Rate will be the arithmetic mean of
      the
      rates quoted by three major banks in New York City selected by the Calculation
      Agent, at approximately 11:00 a.m., New York City time, on the relevant date
      for
      loans in U.S. Dollars to leading European banks for a period of three
      months.

     

    The
      “10-year Treasury CMT” means the rate determined in accordance with the
      following provisions:

     

    (i)  With
      respect to any interest determination date and the Interest Period that begins
      immediately thereafter, the 10-year Treasury CMT means the rate displayed on
      Telerate Page 7051 under the caption “...Treasury Constant Maturities...Federal
      Reserve Board Release H.15...Mondays Approximately 3:45 P.M.”, under the column
      for the Designated CMT Maturity Index (as defined below).

     

    (ii)  If
      such
      rate is no longer displayed on the relevant page, or is not so displayed by
      3:00
      P.M., New York City time, on the applicable interest determination date, then
      the 10-year Treasury CMT for such interest determination date will be such
      treasury constant maturity rate for the Designated CMT Maturity Index as is
      published in H.15(519).

     

    (iii)  If
      such
      rate is no longer displayed on the relevant page, or if not published by 3:00
      P.M., New York City time, on the applicable interest determination date, then
      the 10-year Treasury CMT for such interest determination date will be such
      constant maturity treasury rate for the Designated CMT Maturity Index (or other
      United States Treasury rate for the Designated CMT Maturity Index) for the
      applicable interest determination date with respect to such interest reset
      date
      as may then be published by either the Board of Governors of the Federal Reserve
      System or the United States Department of the Treasury that the Calculation
      Agent determines to be comparable to the rate formerly displayed on the Telerate
      Page 7051 and published in H.15(519).

     

    (iv)  If
      such
      information is not provided by 3:00 P.M., New York City time, on the applicable
      interest determination date, then the 10-year Treasury CMT for such interest
      determination date will be calculated by the Calculation Agent and will be
      a
      yield to maturity, based on the arithmetic mean of the secondary market offered
      rates as of approximately 3:30 P.M., New York City time, on the interest
      determination date reported, according to their written records, by three
      leading primary United States government securities dealers in The City of
      New
      York (each, a “Reference Dealer”) selected by the Calculation Agent (from five
      such Reference Dealers selected by the Calculation Agent and eliminating the
      highest quotation (or, in the event of equality, one of the highest) and the
      lowest quotation (or, in the event of equality, one of the lowest)), for the
      most recently issued direct noncallable fixed rate obligations of the United
      States (“Treasury Debentures”) with an original maturity of approximately the
      Designated CMT Maturity Index and a remaining term to maturity of not less
      than
      such Designated CMT Maturity Index minus one year.

     

    (v)  If
      the
      Calculation Agent is unable to obtain three such Treasury Debentures quotations,
      the 10-year Treasury CMT for the applicable interest determination date will
      be
      calculated by the Calculation Agent and will be a yield to maturity based on
      the
      arithmetic mean of the secondary market offered rates as of approximately 3:30
      P.M., New York City time, on the applicable interest determination date of
      three
      Reference Dealers in The City of New York (from five such Reference Dealers
      selected by the Calculation Agent and eliminating the highest quotation (or,
      in
      the event of equality, one of the highest) and the lowest quotation (or, in
      the
      event of equality, one of the lowest)), for Treasury Debentures with an original
      maturity of the number of years that is the next highest to the Designated
      CMT
      Maturity Index and a remaining term to maturity closest to the Designated CMT
      Maturity Index and in an amount of at least $100 million.

     

    (vi)  If
      three
      or four (and not five) of such Reference Dealers are quoting as set forth above,
      then the 10-year Treasury CMT will be based on the arithmetic mean of the
      offered rates obtained and neither the highest nor lowest of such quotes will
      be
      eliminated; provided, however, that if fewer than three Reference Dealers
      selected by the Calculation Agent are quoting as set forth above, the 10-year
      Treasury CMT with respect to the applicable interest determination date will
      remain the 10-year Treasury CMT for the immediately preceding Interest
      Period.  If two Treasury Debentures with an original maturity as
      described in the second preceding sentence have remaining terms to maturity
      equally close to the Designated CMT Maturity Index, then the quotes for the
      Treasury Debentures with the shorter remaining term to maturity will be
      used.

     

    (vii)  “Designated
      CMT Maturity Index” means the original period to maturity of the U.S. Treasury
      securities (10 years) with respect to which the 10-year Treasury CMT will be
      calculated.

     

    (viii)  “Telerate
      Page 3750” means the display designated on page 3750 on MoneyLine Telerate (or
      such other page as may replace the 3750 page on the service or such other
      service as may be nominated by the British Bankers’ Association for the purpose
      of displaying London interbank offered rates for U.S. Dollars
      deposits).

     

    (ix)  “Telerate
      Page 7051” means the display on MoneyLine Telerate (or any successor service),
      on such page (or any other page as may replace such page on that service),
      for
      the purpose of displaying Treasury Constant Maturities as reported in
      H.15(519).

     

    (x)  “30-year
      Treasury CMT” has the meaning specified under the definition of 10-year Treasury
      CMT, except that the Designated CMT Maturity Index for the 30-year Treasury
      CMT
      shall be 30 years.

     

    The
      3-month LIBOR Rate, the 10-year Treasury CMT and the 30-year Treasury CMT shall
      each be rounded to the nearest hundredth of a percent.

     

    The
      Floating Rate with respect to each Floating Rate Period will be calculated
      as
      promptly as practicable by the Calculation Agent according to the appropriate
      method described above.

     

    “Calendar
      Period” means a period of 180 calendar days.

     

    If
      the
      Company elects to defer interest during a Fixed Rate Period, interest will
      continue to accrue at the Fixed Rate until the expiration of the Fixed Rate
      Period.  Prior to the expiration of such Fixed Rate Period and any
      Fixed Rate Period during the Extension Period, the Company will have the option
      to remarket the Series B Debentures for a new Fixed Rate Period (to take effect
      upon expiration of such Fixed Rate Period).  If the Company does not
      remarket the Series B Debentures, the Floating Rate during the Extension Period
      shall be determined as provided herein, but shall not be less than the Fixed
      Rate for the Fixed Rate Period just ended.  If the Company elects to
      defer interest during a Floating Rate Period, interest will continue to accrue
      at the applicable Floating Rate, reset quarterly, subject to the right of the
      Company to remarket the Series B Debentures prior to any Interest Payment Date
      in order to establish a new Fixed Rate for a new Fixed Rate Period in accordance
      with the Remarketing Procedures.

     

    
      	
              SECTION
                203.  

            	
              Interest
                Periods

            

    

     

    In
      accordance with Section 202 and the Remarketing Procedures, the Company may,
      prior to the expiration of the Initial Fixed Rate Period or any subsequent
      Fixed
      Rate Period or prior to any Interest Payment Date during a time in which the
      Series B Debentures are redeemable in any Fixed Rate Period or an Interest
      Payment Date with respect to a Floating Rate Period, elect to remarket the
      Series B Debentures to establish a new Fixed Rate for a new Fixed Rate
      Period.  A Fixed Rate Period must be for a duration of at least six
      months, may not extend beyond the Stated Maturity of the Series B Debentures
      and
      may not end on a day other than a day immediately preceding an Interest Payment
      Date.  If a new Fixed Rate for a new Fixed Rate Period is set in a
      Remarketing, a new Fixed Rate Period shall commence following the expiration
      of
      the then current Fixed Rate Period or Interest Period within the current
      Floating Rate Period, as the case may be.  If a new Fixed Rate for a
      new Fixed Rate Period is not set, for any reason, a Floating Rate Period, and
      the Floating Rate, reset quarterly, shall be in effect until the Company
      remarkets the Series B Debentures and sets a new Fixed Rate for a new Fixed
      Rate
      Period in accordance with the Remarketing Procedures.

     

    ARTICLE
      3

     

    

     

    Remarketing
      Procedures

     

    Article
      10 of the Trust Agreement sets forth the Remarketing Procedures to determine
      the
      applicable Fixed Rate for the Preferred Securities.  If the Trust is
      terminated and the Series B Debentures are distributed to the holders of the
      Preferred Securities subject to Section 103 herein, the below described
      Remarketing Procedures will be applicable to the Series B
      Debentures.

     

    
      	
              SECTION
                301.  

            	
              Election
                to Remarket

            

    

     

    If
      the
      Company elects to conduct a Remarketing, the Company, not less than 20 nor
      more
      than 35 Business Days prior to the related Election Date, is required to give
      the written notice of Remarketing of the Series B Debentures to the Clearing
      Agency, the Indenture Trustee, the Calculation Agent and the Remarketing
      Agent.  If the Series B Debentures are not issued in global, fully
      registered form, such notice shall be delivered to the holders of the Series
      B
      Debentures instead of the Clearing Agency.  Such notice will describe
      the Remarketing and will indicate the length of the proposed new Fixed Rate
      Period, the proposed Remarketing Date and any redemption provisions that apply
      during such new Fixed Rate Period.  At any time prior to the Election
      Date, the Company may elect to terminate a Remarketing by giving the Clearing
      Agency (or the holders as applicable), the Remarketing Agent, the Indenture
      Trustee and the Calculation Agent written notice of such
      termination.

     

    
      	
              SECTION
                302.  

            	
              Notice
                of Election

            

    

     

    Not
      later
      than 4:00 p.m., New York City time, on an Election Date, each holder of Series
      B
      Debentures may give a written notice to the Indenture Trustee of its election
      (“Notice of Election”) (i) to retain and not to have all or any portion of the
      Series B Debentures owned by it remarketed in the Remarketing, or (ii) to tender
      all or any portion of such Series B Debentures for purchase in the Remarketing
      (such portion, in either case, is required to be in the Liquidation Amount
      of
      $1,000 or any integral multiple thereof).  Any Notice of Election
      given to the Indenture Trustee will be irrevocable and may not be conditioned
      upon the level at which the Fixed Rate is established in the
      Remarketing.  Promptly after 4:30 p.m., New York City time, on such
      Election Date, the Indenture Trustee, based on the Notices of Election received
      by it through the Clearing Agency prior to such time, will notify the Company
      and the Remarketing Agent of the number of Series B Debentures to be retained
      by
      holders of Series B Debentures and the number of Series B Debentures tendered
      for purchase in the Remarketing.

     

    If
      any
      holder of Series B Debentures gives a Notice of Election to tender Series B
      Debentures as described above, the Series B Debentures so subject to such Notice
      of Election will be deemed tendered for purchase in the Remarketing,
      notwithstanding any failure by such holder to deliver or properly deliver such
      Series B Debentures to the Remarketing Agent for purchase.  If any
      holder of Series B Debentures fails timely to deliver a Notice of Election,
      as
      described above, such Series B Debentures will be deemed tendered for purchase
      in such Remarketing, notwithstanding such failure or the failure by such holder
      to deliver or properly deliver such Series B Debentures to the Remarketing
      Agent
      for purchase.

     

    The
      right
      of each holder of Series B Debentures to have Series B Debentures tendered
      for
      purchase in the Remarketing shall be limited to the extent that (i) the
      Remarketing Agent conducts a Remarketing pursuant to the terms of the
      Remarketing Agreement; (ii) Series B Debentures tendered have not been called
      for redemption; (iii) the Remarketing Agent is able to find a purchaser or
      purchasers for tendered Series B Debentures at a Fixed Rate; and (iv) such
      purchaser or purchasers deliver the purchase price therefor to the Remarketing
      Agent.

     

    Any
      holder of Series B Debentures that desires to continue to retain a number of
      Series B Debentures, but only if the Fixed Rate is not less than a specified
      rate per annum, shall submit a Notice of Election to tender such Series B
      Debentures and separately notify the Remarketing Agent of its interest at the
      telephone number set forth in the notice of Remarketing.  If such
      holder so notifies the Remarketing Agent, the Remarketing Agent will give
      priority to such holder’s purchase of such number of Series B Debentures in the
      Remarketing, providing that the Fixed Rate is not less than such specified
      rate.

     

    
      	
              SECTION
                303.  

            	
              Determination
                of Interest Rate

            

    

     

    If
      holders submit Notices of Election to retain all of the Series B Debentures
      then
      outstanding, the Fixed Rate will be the rate determined by the Remarketing
      Agent, in its sole discretion, as the rate that would have been established
      had
      a Remarketing been held on the related Remarketing Date.

     

    On
      any
      Remarketing Date on which the remarketing is to be conducted, the Remarketing
      Agent will use commercially reasonable efforts to remarket, at a price equal
      to
      100% of the Liquidation Amount thereof, Series B Debentures tendered or deemed
      tendered for purchase.  Except as provided in the previous paragraph
      of this Section 303, if, as a result of such efforts, on any Remarketing Date,
      the Remarketing Agent has determined that it will be able to remarket all Series
      B Debentures tendered or deemed tendered for purchase in the Remarketing at
      a
      Fixed Rate and at a price of $1,000 per Series B Debenture, prior to 4:00 p.m.,
      New York City time, on such Remarketing Date, the Remarketing Agent will
      determine the Fixed Rate, which will be the rate per annum (rounded to the
      nearest one-thousandth (0.001) of one percent per annum) which the Remarketing
      Agent determines, in its sole judgment, to be the lowest Fixed Rate per annum,
      if any, that will enable it to remarket all Series B Debentures tendered or
      deemed tendered for Remarketing at a price of $1,000 per Series B
      Debenture.

     

    If
      the
      Remarketing Agent is unable to remarket by 4:00 p.m., New York City time on
      the
      third Business Day prior to the Remarketing Settlement Date, all Series B
      Debentures tendered or deemed tendered for a purchase at a price of $1,000
      per
      Series B Debenture, the Interest Rate for the next Interest Period shall be
      the
      Floating Rate and the new Interest Period shall be a Floating Rate
      Period.  In such case, no Series B Debentures will be sold in the
      Remarketing and each holder will continue to hold its Series B Debentures at
      the
      Floating Rate during such Floating Rate Period.

     

    All
      Series B Debentures tendered or deemed tendered in the Remarketing will be
      automatically delivered to the account of the Remarketing Agent through the
      facilities of the Clearing Agency against payment of the purchase price therefor
      on the Remarketing Settlement Date.  The Remarketing Agent will make
      payment to the Clearing Agency Participant of each tendering holder of Series
      B
      Debentures in the Remarketing through the facilities of the Clearing Agency
      by
      the close of business on the Remarketing Settlement Date.

     

    In
      accordance with the Clearing Agency’s normal procedures, on the Remarketing
      Settlement Date, the transaction described above with respect to each Series
      B
      Debenture tendered for purchase and sold in the Remarketing, will be executed
      through the Clearing Agency Participants, will be debited and credited and
      such
      Series B Debentures delivered by book entry as necessary to effect purchases
      and
      sales of such Series B Debentures.  The Clearing Agency is expected to
      make payment in accordance with its normal procedures.

     

    If
      any
      holder selling Series B Debentures in the Remarketing fails to deliver such
      Series B Debentures, the Clearing Agency Participant of such selling holder
      and
      of any other person that was to have purchased Series B Debentures in the
      Remarketing may deliver to any such other person a number of Series B Debentures
      that is less than the number of Series B Debentures that otherwise was to be
      purchased by such person.  In such event, the number of Series B
      Debentures to be so delivered will be determined by such Clearing Agency
      Participant and delivery of such lesser number of Series B Debentures will
      constitute good delivery.

     

    The
      Remarketing Agent is not obligated to purchase any Series B Debentures that
      would otherwise remain unsold in a Remarketing.  Neither the Indenture
      Trustee, the Company nor the Remarketing Agent shall be obligated in any case
      to
      provide funds to make payment upon tender of Series B Debentures for
      Remarketing.

     

    
      	
              SECTION
                304.  

            	
              Remarketing
                Agent

            

    

     

    Prior
      to
      the issuance of the Series B Debentures, the Company and the Trust will enter
      into the Remarketing Agreement with the Remarketing Agent, providing, among
      other things, that the Remarketing Agent will follow the Remarketing Procedures
      for the purposes of determining the applicable Fixed Rate.  The
      Company will pay the Remarketing Agent compensation for its services under
      the
      Remarketing Agreement.

     

    ARTICLE
      4

     

    

     

    Miscellaneous
      Provisions

     

    
      	
              SECTION
                401.  

            	
              Recitals
                by Company

            

    

     

    The
      recitals in this First 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 B Debentures and of this
      First Supplemental Indenture as fully and with like effect as if set forth
      herein in full.

     

    
      	
              SECTION
                402.  

            	
              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 further supplemented by this First Supplemental Indenture
      shall be read, taken and construed as one and the same instrument.

     

    
      	
              SECTION
                403.  

            	
              Trust
                Costs and Expenses

            

    

     

    The
      Company, as borrower, has agreed to pay all debts and obligations (other than
      with respect to the Trust Securities) and all costs and expenses of the Trust
      (including, but not limited to, all costs and expenses relating to the
      organization of the Trust, the fees and expenses of the Trustees and all costs
      and expenses relating to the operation of the Trust (other than with respect
      to
      the Trust Securities)) and to pay any and all taxes, duties, assessments or
      other governmental charges of whatever nature (other than United States federal
      withholding taxes) imposed by the United States or any other taxing authority,
      so that the net amounts received and retained by the Trust after paying such
      debts, obligations, costs, expenses, taxes, duties, assessments or other
      governmental charges will be equal to the amounts the Trust would have received
      had no such debts, obligations, costs, expenses, taxes, duties, assessments
      or
      other governmental charges been incurred by or imposed on the
      Trust.  The foregoing obligations of the Company are for the benefit
      of, and shall be enforceable by, any person to whom any such debts, obligations,
      costs, expenses, taxes, duties, assessments or other governmental charges are
      owed (each a “Creditor”) whether or not such Creditor has received notice
      thereof.  Any such Creditor may enforce such obligations of the
      Company directly against the Company, and the Company irrevocably waives any
      right or remedy to require that such Creditor take any action against the Trust
      or any other person before proceeding against the Company.  The
      Company shall execute such additional agreements as may be necessary or
      desirable to give full effect to the foregoing.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              SECTION
                404.  

            	
              Executed
                in Counterparts

            

    

     

    This
      First 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.

     

    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.

     

    ATTEST:                                                                           SOUTHWESTERN
      ELECTRIC

    POWER
      COMPANY

    

    

    By:       /s/
      Thomas G.
      Berkemeyer                                                                         By:   /s/
      Wendy G. Hargus

    Thomas
      G.
      Berkemeyer                                                                                     Wendy
      G. Hargus

    Assistant
      Secretary                                                                                            Assistant
      Treasurer

    

    

    ATTEST:                                                                           THE
      BANK OF NEW YORK

    

    

    By:       /s/
      Mary LaGumina  
                                                                By:       /s/
      Joseph A. Lloret

    Mary
      LaGumina                                                                                               
Joseph A. Lloret

    Trust
      Officer                                                                                                    
Vice President

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    EXHIBIT
      A

     

    NO.
      1                                                                                                           CUSIP
      NO. 845437 BF8

     

    THE
      INDEBTEDNESS EVIDENCED BY THIS SECURITY IS, TO THE EXTENT PROVIDED IN THE
      INDENTURE, SUBORDINATE AND SUBJECT IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT
      IN
      FULL OF ALL SENIOR INDEBTEDNESS AND THIS SECURITY IS ISSUED SUBJECT TO THE
      PROVISIONS OF THE INDENTURE WITH RESPECT THERETO.

     

    SOUTHWESTERN
      ELECTRIC POWER COMPANY

     

    SERIES
      B
      JUNIOR SUBORDINATED DEBENTURE

     

    DUE
      OCTOBER 1, 2043

     

    Principal
      Amount:                                             $________________

    
      	
              Regular
                Record Date:

            	
              The
                opening of business on the Business Day immediately preceding the
                relevant
                Interest Payment Date

            

      	Orignal
              Issue Date:	October
              1, 2003

      	Stated
              Maturity: 	October
              1, 2043

      	Interest
              Rate: 	Determined
              by procedures set forth in the Indenture

      	Interest
              Payment Dates:	Determined
              by procedures set forth in the Indenture

      	Authorized
              Denomination:	$1,000

      	 	 

      	 	 

    

     

     

    Southwestern
      Electric Power 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 _______________________($__________)
      on the Stated Maturity shown above (or upon earlier redemption), 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, on each Interest Payment Date commencing on the Interest Payment Date
      next
      succeeding the Original Issue Date shown above and on the Stated Maturity (or
      upon earlier redemption) at the prevailing Interest Rate until the principal
      hereof is paid or made available for payment and 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 or on a Redemption Date) will, as
      provided in such Indenture, be paid to the Person in whose name this Debenture
      (the “Debenture”) is registered on the Regular Record Date as specified above
      next preceding such Interest Payment Date, provided that any interest payable
      at
      Stated Maturity or on any Redemption Date 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 Debenture 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 Debentures 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 Debentures 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.

     

    Payments
      of interest on this Debenture in respect of a Floating Rate Period (or a portion
      thereof) will be computed by multiplying the per annum Interest Rate in effect
      for such Floating Rate Period by a fraction, the numerator of which will be
      the
      actual number of days in such Floating Rate Period (or portion thereof)
      (determined by including the first day thereof and excluding the last thereof)
      and the denominator of which will be 360, and multiplying the rate so obtained
      by the principal amount hereof.  The amount of interest on this
      Debenture payable on each Interest Payment Date in respect of a Fixed Rate
      Period will be computed on the basis of a 360-day year consisting of twelve
      30-day months.

     

    The
      Company has the right to defer payments of interest on this Debenture by
      extending the interest payment period from time to time on this Debenture (an
      “Extension Period”).

     

    If
      the
      Company decides to defer interest payments on this Debenture, the Extension
      Period shall not exceed five consecutive years.  An Extension Period
      shall not extend beyond the Stated Maturity of this Debenture.  Prior
      to the termination of any Extension Period, the Company may further defer
      payments of interest provided that the Extension Period, together with all
      such
      previous and further extensions thereof, may not exceed five consecutive
      years.  Upon the termination of any Extension Period and the payment
      of all amounts then due, the Company may select a new Extension Period, subject
      to the above requirements.  There could be multiple Extension Periods
      of varying lengths throughout the term of this Debenture.

     

    During
      an
      Extension Period, unpaid interest (together with interest thereon) will compound
      on each Interest Payment Date at the prevailing Interest Rate (“Deferred
      Interest”).  Upon the termination of each Extension Period, which
      shall be an Interest Payment Date, the Company shall pay all Deferred Interest
      on the next succeeding Interest Payment Date to the Person in whose name this
      Debenture is registered at the close of business on the Regular Record Date
      for
      such Interest Payment Date, provided that any Deferred Interest payable at
      Stated Maturity or on any Redemption Date will be paid to the Person to whom
      principal is payable.

     

    If
      the
      Company shall have given notice of its election to select any Extension Period,
      the Company shall not (1) declare or pay any dividends or distributions on,
      or
      redeem, purchase, acquire or make a liquidation payment with respect to, any
      of
      its capital stock, (2) make any payment of principal of or interest or premium,
      if any, on or repay, repurchase or redeem any of its debt securities of ours
      that rank equally with, or junior to, the Series B Debentures, or (3) make
      any
      guarantee payments with respect to any guarantee issued by the Company if such
      guarantee ranks equally with, or junior to, the Series B Debentures, other
      than,
      in each case, repurchases, redemptions or other acquisitions of shares of
      its:

     

    
      	
              -  

            	
              capital
                stock in connection with any employment contract, benefit plan or
                other
                similar arrangement with or for the benefit of any one or more employees,
                officers, directors or consultants or in connection with a dividend
                reinvestment or shareholder stock purchase
                plan;

            

    

    
      	
              -  

            	
              as
                a result of an exchange or conversion of any class or series of the
                Company’s capital stock, or any capital stock of a subsidiary of the
                Company, for any class or series of the Company’s capital stock or of any
                class or series of the Company’s then outstanding indebtedness for any
                class or series of the Company’s capital
                stock;

            

    

    
      	
              -  

            	
              the
                purchase of fractional interests in shares of the Company’s capital stock
                pursuant to the conversion or exchange provisions of the capital
                stock or
                the security being converted or
                exchanged;

            

    

    
      	
              -  

            	
              payments
                under any Guarantee executed and delivered by the Company concurrently
                with the issuance of any Preferred
                Securities;

            

    

    
      	
              -  

            	
              any
                declaration of a dividend in the form of capital stock in connection
                with
                any shareholders’ rights plan, or the issuance of rights to capital stock
                under any shareholders’ rights plan, or the redemption or repurchase of
                rights pursuant to any such plan;
                or

            

    

    
      	
              -  

            	
              any
                dividend in the form of stock, warrants, options or other rights
                where the
                dividend stock or the stock issuable upon exercise of the warrants,
                options or other rights is the same stock as that on which the dividend
                is
                being paid or ranks on a parity with or junior to the
                stock,

            

    

     

    if
      at
      such time

     

    
      	
              -  

            	
              the
                Company has actual knowledge of any event that (a) with the giving
                of
                notice or the lapse of time, or both, would constitute an Event of
                Default
                under the Indenture, and (b) the Company has not taken reasonable
                steps to
                cure the same;

            

    

    
      	
              -  

            	
              the
                Company is in default with respect to payment of any obligations
                under any
                Guarantee executed and delivered concurrently with the issuance of
                any
                Preferred Securities; or

            

    

    
      	
              -  

            	
              an
                extension period is continuing.

            

    

     

    The
      Company shall give the Holder of this Debenture, the Trustee, the Remarketing
      Agent and the Calculation Agent notice of its selection or extension of an
      Extension Period at least one Business Day prior to the earlier of (i) the
      Regular Record Date relating to the Interest Payment Date on which the Extension
      Period is to commence or relating to the Interest Payment Date on which an
      Extension Period that is being extended would otherwise terminate or (ii) the
      date the Company or Trust is required to give notice to any applicable
      self-regulatory organization of the record date or the date distributions are
      payable.

     

    The
      Company also shall be obligated to pay when due and without extension all
      additional amounts as may be required so that the net amount received and
      retained by the Holder of this Debenture (if the Holder is a Trust) after paying
      taxes, duties, assessments or governmental charges of whatever nature (other
      than withholding taxes) imposed by the United States or any other taxing
      authority will not be less than the amounts such Holder would have received
      had
      no such taxes, duties, assessments, or other governmental charges been
      imposed.

     

    Payment
      of the principal of and interest due at the Stated Maturity or earlier
      redemption of the Series B Debentures shall be made upon surrender of the Series
      B Debentures at the Corporate Trust Office of the Trustee, 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 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.

     

    The
      indebtedness evidenced by this Debenture is, to the extent provided in the
      Indenture, subordinate and subject in right of payment to the prior payment
      in
      full of all Senior Indebtedness (as defined in the Indenture), and this
      Debenture is issued subject to the provisions of the Indenture with respect
      thereto.  Each Holder of this Debenture, by accepting the same, (a)
      agrees to and shall be bound by such provisions, (b) authorizes and directs
      the
      Trustee on his behalf to take such action as may be necessary or appropriate
      to
      effectuate the subordination so provided, and (c) appoints the Trustee his
      attorney-in-fact for any and all such purposes.  Each Holder hereof,
      by his acceptance hereof, waives all notice of the acceptance of the
      subordination provisions contained herein and in the Indenture by each holder
      of
      Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
      reliance by each such holder upon said provisions.

     

    Each
      Holder hereof, by his acceptance hereof, agrees to treat this Debenture as
      indebtedness for all United States tax purposes.

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the Company has caused this instrument to be duly executed
      under its corporate seal.

     

    Dated:
      ______ __, ____.

     

    SOUTHWESTERN
      ELECTRIC POWER
      COMPANY

     

    

     

    

     

    By:                   ______________________________                                             

     

    Assistant
      Treasurer

     

    Attest:

     

    

     

    

     

    

    ________________________________

    Assistant
      Secretary

     

    {Seal
      of
      SOUTHWESTERN ELECTRIC POWER COMPANY appears here}

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    CERTIFICATE
      OF AUTHENTICATION

     

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

     

    THE
      BANK OF NEW YORK,

     

    as
      Trustee

     

    By:       _____________________________                                                         

     

    Authorized
      Officer

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (Reverse
      Side of Debenture)

     

    This
      Debenture is one of a duly authorized issue of Junior Subordinated Debentures
      of
      the Company (the “Debentures”), issued and issuable in one or more series under
      a Subordinated Indenture, dated as of September 1, 2003 as supplemented by
      the
      First Supplemental Indenture (the “First Supplemental Indenture”) dated as of
      October 1, 2003 (collectively, the “Indenture”) between the Company and The Bank
      of New York, 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 Debentures issued thereunder and of the terms
      upon which said Debentures are, and are to be, authenticated and
      delivered.  This Debenture is one of the series designated on the face
      hereof as Series B Junior Subordinated Debentures due October 1, 2043 (the
      “Series B Debentures”) in the aggregate principal amount of up to
      $113,403,000.  Capitalized terms used herein for which no definition
      is provided herein shall have the meanings set forth in the
      Indenture.

     

    While
      the
      Preferred Securities are outstanding, (i) the Interest Rate, Interest Periods,
      Interest Payment Dates and associated terms and redemption provisions with
      respect to the Fixed Rate Periods relating to this Debenture shall be the same
      as the Distribution Rate, Distribution Periods, Distribution Payment Dates
      and
      associated terms and redemption provisions with respect to Fixed Rate Periods
      relating to the Preferred Securities, established in Article 2 of the First
      Supplemental Indenture and (ii) the Remarketing Procedures relating to this
      Debenture shall be the same as those procedures relating to the Preferred
      Securities, established in Article 3 of the First Supplemental
      Indenture.

     

    If
      the
      Trust is terminated and this Debenture is distributed to holders of Preferred
      Securities, subject to Section 103 of the First Supplemental Indenture, the
      terms and procedures relating to the Preferred Securities as established in
      Articles 2 and 3 of the First Supplemental Indenture shall be applicable to
      this
      Debenture.

     

    The
      Company shall have the right, subject to the terms and conditions of the
      Indenture, to redeem this Debenture on the last Interest Payment Date relating
      to the Initial Fixed Rate Period, on such dates with respect to any other Fixed
      Rate Period as the Company and the Trust may determine prior to the Remarketing
      establishing such Fixed Rate Period or on any Interest Payment Date relating
      to
      a Floating Rate Period at the option of the Company, without premium or penalty,
      in whole, but not in part, at a Redemption Price equal to 100% of the principal
      amount to be redeemed plus accrued but unpaid interest  to the
      Redemption Date.  Upon the occurrence of a Special Event (as defined
      below) at any time, the Company may, within 90 days following the occurrence
      thereof and subject to the terms and conditions of the Indenture, redeem this
      Debenture without premium or penalty, in whole, but not in part, at a Redemption
      Price equal to 100% of the principal amount thereof plus accrued but unpaid
      interest to the Redemption Date.  A Special Event may be a Tax Event
      or an Investment Company Event.  “Tax Event” means that the Company
      and, if applicable, the Administrative Trustees shall have received an opinion
      from independent tax counsel experienced in such matters (which may be counsel
      to the Company) to the effect that, as a result of (a) any amendment to, or
      change (including any announced proposed change) in, the laws (or any
      regulations thereunder) of the United States or any political subdivision or
      taxing authority thereof or therein or (b) any amendment to, or change in,
      an
      interpretation or application of such laws or regulations, there is more than
      an
      insubstantial risk that (i) the Trust would be subject to United States federal
      income tax with respect to income accrued or received on the Series B
      Debentures; (ii) interest payable on the Series B Debentures would not be
      deductible, in whole or in part, by the Company for United States federal income
      tax purposes; or (iii) the Trust would be subject to more than a de minimis
      amount of other taxes, duties or other governmental charges, which change or
      amendment becomes effective on or after the date of issuance by the Trust of
      the
      Preferred Securities.

     

    “Investment
      Company Event” means the receipt by the Administrative Trustees of an Opinion of
      Counsel to the Company experienced in these matters to the effect that, as
      a
      result of the occurrence of a change in law or regulation or a written
      change--including any announced prospective change--in interpretation or
      application of law or regulation by any legislative body, court, governmental
      agency or regulatory authority, there is more than an insubstantial risk that
      the Trust is or will be considered an “investment company” that is required to
      be registered under the 1940 Act, which change or prospective change becomes
      effective or would become effective, as the case may be, on or after the date
      of
      the issuance by the Trust of the Preferred Securities.

     

    If
      an
      Event of Default with respect to the Debentures of this series shall occur
      and
      be continuing, the principal of the Debentures 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 Debentures 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 Debentures 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 Debentures of each series at the time Outstanding, on behalf
      of
      the Holders of all Debentures 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 Debenture shall be conclusive and binding upon such Holder and
      upon all future Holders of this Debenture and of any Debenture 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
      Debenture.

     

    No
      reference herein to the Indenture and no provision of this Debenture 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 Debenture at
      the
      times, place and rate, 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 Debenture is registrable in the Security Register, upon
      surrender of this Debenture for registration of transfer at the office or agency
      of the Company for such purpose, duly endorsed by, or accompanied 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 Debentures 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 Debenture 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 Debenture is registered as the owner hereof for all purposes,
      whether or not this Debenture be overdue, and neither the Company, the Trustee
      nor any such agent shall be affected by notice to the contrary.

     

    The
      Debentures 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,
      Debentures of this series are exchangeable for a like aggregate principal amount
      of Debentures of this series of a different authorized denomination, as
      requested by the Holder surrendering the same upon surrender of the Debenture
      or
      Debentures to be exchanged at the office or agency of the Company.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    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

            	
              Under
                Uniform Gifts to Minors Act

               

               

               

            
	
              JT
                TEN -         as joints
                tenants with

              right
                of
                survivorship

              and
                not as tenants
                in

              common

               

               

            	
              _____________________

              (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 Debenture and all rights thereunder, hereby irrevocably constituting
      and
      appointing

    ______________________________________________________________________

    ______________________________________________________________________

    

    

     

    agent
      to
      transfer said Debenture 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.ex4b5expenseliabagree.htm

    Exhibit
      4(b)5

    
 

    AGREEMENT
      AS TO EXPENSES AND LIABILITIES

    

    

    THIS
      AGREEMENT AS TO EXPENSES AND
      LIABILITIES (this “Agreement”) is made as of September 1, 2003, between
      Southwestern Electric Power Company, a Delaware corporation (the “Company”), and
      SWEPCo Capital Trust I, a Delaware statutory trust (the “Trust”).

    

    WHEREAS,
      the Trust intends to issue its
      Common Securities (the “Common Securities”) to and receive Junior Subordinated
      Debentures from the Company and to issue and sell SWEPCo Capital Trust I
      Flexible Trust Preferred Securities (the “Preferred Securities”) with such
      powers, preferences and special rights and restrictions as are set forth in
      the
      Amended and Restated Trust Agreement of the Trust dated as of September 1,
      2003
      as the same may be amended from time to time (the “Trust Agreement”);
      and

    

    WHEREAS,
      the Company is the issuer of
      the Junior Subordinated Debentures.

    

    NOW,
      THEREFORE, in consideration of the
      purchase by each holder of the Preferred Securities, which purchase the Company
      hereby agrees shall benefit the Company and which purchase the Company
      acknowledges will be made in reliance upon the execution and delivery of this
      Agreement, the Company and the Trust hereby agree as follows:

    

    

    ARTICLE
      I

    

    Section
      1.01.   
Guarantee by the Company.  Subject to the terms and conditions
      hereof, the Company, as obligor of the Junior Subordinated Debentures, hereby
      irrevocably and unconditionally guarantees to each person or entity to whom
      the
      Trust is now or hereafter becomes indebted or liable (the “Beneficiaries”) the
      full payment, when and as due, of any and all Obligations (as hereinafter
      defined) to such Beneficiaries.  As used herein, “Obligations” means
      any indebtedness, expenses or liabilities of the Trust, other than obligations
      of the Trust to pay to holders of any Preferred Securities or other similar
      interests in the Trust the amounts due such holders pursuant to the terms of
      the
      Preferred Securities or such other similar interests, as the case may
      be.  This Agreement is intended to be for the benefit of, and to be
      enforceable by, all such Beneficiaries, whether or not such Beneficiaries have
      received notice hereof.

    

    Section
      1.02.    Term of Agreement.  This Agreement
      shall terminate and be of no further force and effect upon the date on which
      there are no Beneficiaries remaining; provided, however, that this Agreement
      shall continue to be effective or shall be reinstated, as the case may be,
      if at
      any time any holder of Preferred Securities or any Beneficiary must restore
      payment of any sums paid under the Preferred Securities, under any Obligation,
      under the Guarantee Agreement dated the date hereof by the Company and The
      Bank
      of New York, as guarantee trustee, or under this Agreement for any reason
      whatsoever.  This Agreement is continuing, irrevocable, unconditional
      and absolute.

    

    Section
      1.03.    Waiver of Notice.  The Company
      hereby waives notice of acceptance of this Agreement and of any Obligation
      to
      which it applies or may apply, and the Company hereby waives presentment, demand
      for payment, protest, notice of nonpayment, notice of dishonor, notice of
      redemption and all other notices and demands.

    

    Section
      1.04.    No Impairment.  The obligations,
      covenants, agreements and duties of the Company under this Agreement shall
      in no
      way be affected or impaired by reason of the happening from time to time of
      any
      of the following:

    

    
      	
                      (a)    
                

            	
              the
                extension of time for the payment by the Trust of all or any portion
                of
                the Obligations or for the performance of any other obligation under,
                arising out of, or in connection with, the
                Obligations;

            

    

    

    
      	
                      (b)    

            	
              any
                failure, omission, delay or lack of diligence on the part of the
                Beneficiaries to enforce, assert or exercise any right, privilege,
                power
                or remedy conferred on the Beneficiaries with respect to the Obligations
                or any action on the part of the Trust granting indulgence or extension
                of
                any kind; or

            

    

    

    
      	
                      (c)    

            	
              the
                voluntary or involuntary liquidation, dissolution, sale of any collateral,
                receivership, insolvency, bankruptcy, assignment for the benefit
                of
                creditors, reorganization, arrangement, composition or readjustment
                of
                debt of, or other similar proceedings affecting, the Trust or any
                of the
                assets of the Trust.

            

    

    

    There
      shall be no obligation of the Beneficiaries to give notice to, or obtain the
      consent of, the Company with respect to the happening of any of the
      foregoing.

    

    Section
      1.05.    Enforcement.  A Beneficiary may
      enforce this Agreement directly against the Company and the Company waives
      any
      right or remedy to require that any action be brought against the Trust or
      any
      other person or entity before proceeding against the Company.

    

    ARTICLE
      II

    

    Section
      2.01.    Binding Effect.  All guarantees
      and agreements contained in this Agreement shall bind the successors, assigns,
      receivers, trustees and representatives of the Company and shall inure to the
      benefit of the Beneficiaries.

    

    Section
      2.02.    Amendment.  So long as there
      remains any Beneficiary or any Preferred Securities of any series are
      outstanding, this Agreement shall not be modified or amended in any manner
      adverse to such Beneficiary or to the holders of the Preferred
      Securities.

    

    Section
      2.03.    Notices.  Any notice, request or
      other communication required or permitted to be given hereunder shall be given
      in writing by delivering the same against receipt therefor by facsimile
      transmission (confirmed by mail), telex or by registered or certified mail,
      addressed as follows (and if so given, shall be deemed given when mailed or
      upon
      receipt of an answer-back, if sent by telex), to-wit:

    

    
      	
               

            	
              SWEPCo
                Capital Trust I

            

    

    
      	
               

            	
              c/o
                The Bank of New York

            

    

    
      	
               

            	
              101
                Barclay Street, 8W

            

    

    
      	
               

            	
              New
                York, New York  10286

            

    

    
      	
               

            	
              Facsimile
                No.: (212) 815-5707

            

    

    
      	
               

            	
              Attention:  Corporate
                Trust Administration

            

    

    

    
      	
               

            	
              Southwestern
                Electric Power Company

            

    

    
      	
               

            	
              1
                Riverside Plaza

            

    

    
      	
               

            	
              Columbus,
                Ohio 43215

            

    

    
      	
               

            	
              Facsimile
                No.: (614) 716-1687

            

    

    
      	
               

            	
              Attention:   Treasurer

            

    

    

    Section
      2.04.  THIS AGREEMENT
      SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
      OF THE STATE OF NEW YORK.

    

    THIS
      AGREEMENT is executed as of the
      date and year first above written.

    

    SOUTHWESTERN
      ELECTRIC POWER
      COMPANY

    

    

    By:        /s/
      Wendy G. Hargus

                                                                             Wendy
      G. Hargus

     Assistant
      Treasurer

     

                            SWEPCO
      CAPITAL TRUST
      I

    

                            By:       /s/
      Jeffrey D. Cross

                        
      Jeffrey D. Cross

                         as
      Administrative Trustee

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