Document:

gpc2012b-si.htm

Exhibit 4.2(b)

 

GEORGIA POWER COMPANY

TO

THE BANK OF NEW YORK MELLON,

TRUSTEE

FORTY-SEVENTH SUPPLEMENTAL INDENTURE

DATED AS OF MAY 11, 2012

SERIES 2012B 2.85% SENIOR NOTES

DUE MAY 15, 2022

 

 

  

  

  

TABLE OF CONTENTS1

 

 

	 	 	 	 
	
 ARTICLE 1

	 	1	 
	
 Series 2012B Senior Notes

	 	1	 
	 	 SECTION 101.  Establishment	 	1	 
	 	 SECTION 102.  Definitions	 	 2	 
	 	 SECTION 103.  Payment of Principal and Interest	 	 3	 
	 	 SECTION 104.  Denominations	 	 4	 
	 	 SECTION 105.  Global Securities	 	 4	 
	 	 SECTION 106.  Transfer	 	 4	 
	 	 SECTION 107.  Redemption at the Company’s Option	 	 5	 
	
 ARTICLE 2

	 	 5	 
	
 Miscellaneous Provisions

	 	 5	 
	 	 SECTION 201.  Recitals by Company	 	 5	 
	 	 SECTION 202.  Ratification and Incorporation of Original Indenture	 	 5	 
	 	 SECTION 203.  Executed in Counterparts	 	 5	 

 

EXHIBIT A                      Form of Series 2012B Note

 

EXHIBIT B                      Certificate of Authentication

 

  

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

 

 

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THIS FORTY-SEVENTH SUPPLEMENTAL INDENTURE is made as of the 11th day of May, 2012, by and between GEORGIA POWER COMPANY, a Georgia corporation, 241 Ralph McGill Boulevard, N.E., Atlanta, Georgia 30308-3374 (the “Company”), and THE BANK OF NEW YORK MELLON, a New York banking corporation, 101 Barclay Street, Floor 8W, New York, New York  10286 (the “Trustee”).

 

W I T N E S S E T H:

 

WHEREAS, the Company has heretofore entered into a Senior Note Indenture, dated as of January 1, 1998 (the “Original Indenture”), with The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), as heretofore supplemented;

 

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

 

WHEREAS, under the Original Indenture, a new series of Senior Notes may at any time be established by the Board of Directors of the Company in accordance with the provisions of the Original Indenture and the terms of such series may be described by a supplemental indenture executed by the Company and the Trustee;

 

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

 

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

 

WHEREAS, all conditions necessary to authorize the execution and delivery of this Forty-Seventh 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 2012B Senior Notes

 

SECTION 101.  Establishment.  There is hereby established a new series of Senior Notes to be issued under the Indenture, to be designated as the Company’s Series 2012B 2.85% Senior Notes due May 15, 2022 (the “Series 2012B Notes”).

 

There are to be authenticated and delivered $400,000,000 principal amount of Series 2012B Notes, and such principal amount of the Series 2012B Notes may be increased from time to time 

 

 

 

  

  

  

 

pursuant to Section 301 of the Original Indenture.  All Series 2012B Notes need not be issued at the same time and such series may be reopened at any time, without the consent of any Holder, for issuances of additional Series 2012B Notes.  Any such additional Series 2012B Notes will have the same interest rate, maturity and other terms as those initially issued.  No Series 2012B Notes shall be authenticated and delivered in excess of the principal amount as so increased except as provided by Sections 203, 303, 304, 907 or 1107 of the Original Indenture.  The Series 2012B Notes shall be issued in fully registered form.

 

The Series 2012B Notes shall be issued in the form of one or more Global Securities in substantially the form set out in Exhibit A hereto.  The Depositary with respect to the Series 2012B Notes shall be The Depository Trust Company.

 

The form of the Trustee’s Certificate of Authentication for the Series 2012B Notes shall be in substantially the form set forth in Exhibit B hereto.

 

Each Series 2012B Note shall be dated the date of authentication thereof and shall bear interest from the date of original issuance thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for.

 

The Series 2012B Notes will not have a sinking fund.

 

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

 

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Series 2012B Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Series 2012B Notes.

 

“Comparable Treasury Price” means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Company obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Independent Investment Banker” means an independent investment banking institution of national standing appointed by the Company.

 

“Interest Payment Dates” means May 15 and November 15 of each year, commencing November 15, 2012.

 

“Original Issue Date” means May 11, 2012.

 

“Reference Treasury Dealer” means a primary U.S. Government securities dealer in the United States appointed by the Company.

 

 

 

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“Reference Treasury Dealer Quotation” means, with respect to a Reference Treasury Dealer and any Redemption Date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day in New York City preceding such Redemption Date).

 

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

 

“Stated Maturity” means May 15, 2022.

 

“Treasury Yield” means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

 

SECTION 103.  Payment of Principal and Interest.  The principal of the Series 2012B Notes shall be due at Stated Maturity (unless earlier redeemed).  The unpaid principal amount of the Series 2012B Notes shall bear interest at the rate of 2.85% per annum until paid or duly provided for.  Interest shall be paid semiannually in arrears on each Interest Payment Date to the Person in whose name the Series 2012B Notes are registered at the close of business on the Regular Record Date for such Interest Payment Date, provided that interest payable at the Stated Maturity or on a Redemption Date as provided herein will be paid to the Person to whom principal is payable.  Any such interest that is not so punctually paid or duly provided for will forthwith cease to be payable to the Holders on such Regular Record Date and may either be paid to the Person or Persons in whose name the Series 2012B Notes are registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Holders of the Series 2012B Notes not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Series 2012B Notes shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Original Indenture.

 

Payments of interest on the Series 2012B Notes will include interest accrued to but excluding the respective Interest Payment Dates.  Interest payments for the Series 2012B Notes shall be computed and paid on the basis of a 360-day year of twelve 30-day months.  In the event that any date on which interest is payable on the Series 2012B Notes is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), with the same force and effect as if made on the date the payment was originally payable.

 

Payment of the principal and interest due at the Stated Maturity or earlier redemption of the Series 2012B Notes shall be made upon surrender of the Series 2012B Notes at the Corporate Trust Office of the Trustee.  The principal of and interest on the Series 2012B Notes shall be paid in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payments of interest (including interest on any Interest Payment Date) will be made, subject to such surrender where applicable, at the option of the 

 

 

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Company, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer or other electronic transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least sixteen (16) days prior to the date for payment by the Person entitled thereto.

 

SECTION 104.  Denominations.  The Series 2012B Notes may be issued in denominations of $1,000, or any integral multiple thereof.

 

SECTION 105.  Global Securities.  The Series 2012B Notes will be issued in the form of one or more Global Securities registered in the name of the Depositary (which shall be The Depository Trust Company) or its nominee.  Except under the limited circumstances described below, Series 2012B Notes represented by one or more Global Securities will not be exchangeable for, and will not otherwise be issuable as, Series 2012B Notes in definitive form.  The Global Securities described above may not be transferred except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or to a successor Depositary or its nominee.

 

Owners of beneficial interests in such a Global Security will not be considered the Holders thereof for any purpose under the Indenture, and no Global Security representing a Series 2012B Note shall be exchangeable, except for another Global Security of like denomination and tenor to be registered in the name of the Depositary or its nominee or to a successor Depositary or its nominee.  The rights of Holders of such Global Security shall be exercised only through the Depositary.

 

Subject to the procedures of the Depositary, a Global Security shall be exchangeable for Series 2012B Notes registered in the names of persons other than the Depositary or its nominee only if (i) the Depositary notifies the Company that it is unwilling or unable to continue as a Depositary for such Global Security and no successor Depositary shall have been appointed by the Company, or if at any time the Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, at a time when the Depositary is required to be so registered to act as such Depositary and no successor Depositary shall have been appointed by the Company, in each case within 90 days after the Company receives such notice or becomes aware of such cessation, (ii) the Company in its sole discretion determines that such Global Security shall be so exchangeable, or (iii) there shall have occurred an Event of Default with respect to the Series 2012B Notes.  Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Series 2012B Notes registered in such names as the Depositary shall direct.

 

Neither the Company, the Trustee nor any agent of the Company or the Trustee shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

 

SECTION 106.  Transfer.  No service charge will be made for any transfer or exchange of Series 2012B Notes, but payment will be required of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.

 

 

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The Company shall not be required (a) to issue, register the transfer of or exchange any Series 2012B Notes during a period beginning at the opening of business fifteen (15) days before the day of the mailing of a notice pursuant to Section 1104 of the Original Indenture identifying the serial numbers of the Series 2012B Notes to be called for redemption, and ending at the close of business on the day of the mailing, or (b) to register the transfer of or exchange any Series 2012B Notes theretofore selected for redemption in whole or in part, except the unredeemed portion of any Series 2012B Notes redeemed in part.

 

SECTION 107.  Redemption at the Company’s Option.  The Series 2012B Notes will be subject to redemption at the option of the Company, in whole or in part, at any time and from time to time, upon not less than 30 nor more than 60 days’ notice, at redemption prices equal to the greater of (1) 100% of the principal amount of the Series 2012B Notes being redeemed and (2) the sum of the present values of the remaining scheduled payments of principal of and interest on the Series 2012B Notes being redeemed (not including any portion of such payments of interest accrued to the Redemption Date) discounted (for purposes of determining present value) to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 15 basis points (each, a “Redemption Price”), plus, in each case, accrued interest thereon to the Redemption Date.

 

In the event of redemption of the Series 2012B Notes in part only, a new Series 2012B Note or Notes for the unredeemed portion will be issued in the name or names of the Holders thereof upon the surrender thereof.

 

Notice of redemption shall be given as provided in Section 1104 of the Original Indenture except that any such notice of redemption shall not specify the Redemption Price but only the manner of calculation thereof.  The Trustee shall not be responsible for the calculation of the Redemption Price.  The Company shall calculate the Redemption Price and promptly notify the Trustee thereof.

 

Any redemption of less than all of the Series 2012B Notes shall, with respect to the principal thereof, be divisible by $1,000.

 

ARTICLE 2

 

Miscellaneous Provisions

 

SECTION 201.  Recitals by Company.  The recitals in this Forty-Seventh 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 2012B Notes and of this Forty-Seventh Supplemental Indenture as fully and with like effect as if set forth herein in full.

 

SECTION 202.  Ratification and Incorporation of Original Indenture.  As supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture as 

 

 

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supplemented by this Forty-Seventh Supplemental Indenture shall be read, taken and construed as one and the same instrument.

 

SECTION 203.  Executed in Counterparts.  This Forty-Seventh 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.

 

 

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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:

 

 

By:    /s/Melissa K. Caen                                                 

Melissa K. Caen

Assistant Secretary

 

 

 

 

 

	
GEORGIA POWER COMPANY

 

 

By:     /s/Ronnie R. Labrato                                                           

Ronnie R. Labrato

Executive Vice President,

Chief Financial Officer and Treasurer

 

 

 

 

	
ATTEST:

 

 

By:      /s/Timothy W. Casey                                                

Timothy W. Casey

Vice President

 

	
THE BANK OF NEW YORK MELLON, as Trustee

 

 

By:   /s/Laurence J. O'Brien                                                             

Laurence J. O’Brien

Vice President

 

 

 

  

  

  

EXHIBIT A

FORM OF SERIES 2012B NOTE

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	 NO. ___ 	 CUSIP NO. 373334JX0

 

GEORGIA POWER COMPANY

SERIES 2012B 2.85% SENIOR NOTE

DUE MAY 15, 2022

 

	
Principal Amount:

	
$__________________

	
Regular Record Date:

	
15th calendar day prior to the applicable Interest Payment Date (whether or not a Business Day)

	
Original Issue Date:

	
May 11, 2012

	
Stated Maturity:

	
May 15, 2022

	
Interest Payment Dates:

	
May 15 and November 15

	
Interest Rate:

	
2.85% per annum

	
Authorized Denominations:

	
$1,000 or any integral multiple thereof

 

Georgia Power Company, a Georgia corporation (the “Company”, which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to ______________, or registered assigns, the principal sum of ______________ DOLLARS ($_________) on the Stated Maturity shown above (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, semiannually in arrears on each Interest Payment Date as specified above, commencing on November 15, 2012, and on the Stated Maturity (or upon earlier redemption) at the rate per annum shown above until the principal hereof is paid or made available for payment and at such rate 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 Note (the “Note”) is registered at the close of business on the Regular Record Date as specified above next preceding such Interest Payment Date, provided that any interest payable at the 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 Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not 

 

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inconsistent with the requirements of any securities exchange, if any, on which the Notes of this series shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Indenture.

 

Payments of interest on this Note will include interest accrued to but excluding the respective Interest Payment Dates.  Interest payments for this Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months.  In the event that any date on which interest is payable on this Note is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), with the same force and effect as if made on the date the payment was originally payable.  A “Business Day” shall mean any day other than a Saturday or a Sunday or a day on which banking institutions in New York City are authorized or required by law or executive order to remain closed or a day on which the Corporate Trust Office of the Trustee is closed for business.

 

Payment of the principal of and interest due at the Stated Maturity or earlier redemption of the Series 2012B Notes shall be made upon surrender of the Series 2012B Notes at the Corporate Trust Office of the Trustee.  The principal of and interest on the Series 2012B Notes shall be paid in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payment of interest (including interest on an Interest Payment Date) will be made, subject to such surrender where applicable, at the option of the Company, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer or other electronic transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least 16 days prior to the date for payment by the Person entitled thereto.

 

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

 

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

 

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

Dated:

	  	
GEORGIA POWER COMPANY

 

 

 

By:                                                                         

Title:

 

Attest:

                                                                    

Title:

{Seal of GEORGIA POWER COMPANY appears here}

  

  

  

CERTIFICATE OF AUTHENTICATION

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

	  	
THE BANK OF NEW YORK MELLON,

as Trustee

 

 

By:                                                                 

Authorized Signatory

 

 

 

 

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(Reverse Side of Note)

 

This Note is one of a duly authorized issue of Senior Notes of the Company (the “Notes”), issued and issuable in one or more series under a Senior Note Indenture, dated as of January 1, 1998, as supplemented (the “Indenture”), between the Company and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), as Trustee (the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures incidental thereto reference is hereby made for a statement of the respective rights, limitation of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes issued thereunder and of the terms upon which said Notes are, and are to be, authenticated and delivered.  This Note is one of the series designated on the face hereof as Series 2012B 2.85% Senior Notes due May 15, 2022 (the “Series 2012B Notes”) which is unlimited in aggregate principal amount.  Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Indenture.

 

The Series 2012B Notes will be subject to redemption at the option of the Company in whole or in part, at any time and from time to time, upon not less than 30 nor more than 60 days’ notice at redemption prices equal to the greater of (i) 100% of the principal amount of the Series 2012B Notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Series 2012B Notes being redeemed (not including any portion of such payments of interest accrued to the Redemption Date) discounted (for purposes of determining present value) to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Yield plus 15 basis points (each, a “Redemption Price”), plus, in each case, accrued interest thereon to the Redemption Date.

 

“Treasury Yield” means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

 

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Series 2012B Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Series 2012B Notes.

 

“Comparable Treasury Price” means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Company obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Independent Investment Banker” means an independent investment banking institution of national standing appointed by the Company.

 

 

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“Reference Treasury Dealer” means a primary U.S. Government securities dealer in the United States appointed by the Company.

 

“Reference Treasury Dealer Quotation” means, with respect to a Reference Treasury Dealer and any Redemption Date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount and quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day in New York City preceding such Redemption Date).

 

The Trustee shall not be responsible for the calculation of the Redemption Price.  The Company shall calculate the Redemption Price and promptly notify the Trustee thereof.

 

In the event of redemption of this Note in part only, a new Note or Notes of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the surrender hereof.

 

The Series 2012B Notes will not have a sinking fund.

 

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

 

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

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and 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 Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar and duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series, of authorized denominations and of like tenor and for the same aggregate principal amount, will be issued to the designated transferee or transferees.  No service charge shall be made for any such registration of transfer or exchange, but the Company 

 

 

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may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

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

 

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

 

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

 

 

 

 

 

 

 

 

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ABBREVIATIONS

 

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

 

	
TEN COM-     as tenants in

common

	
UNIF GIFT MIN ACT- _______ Custodian ________

(Cust)                             (Minor)

	
TEN ENT-      as tenants by the

entireties

	  
	
JT TEN-          as joint tenants

with right of

survivorship and

not as tenants

in common

 

	
under Uniform Gifts to

Minors Act

 

________________________

(State)

Additional abbreviations may also be used

though not on the above list.

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

_______________________________________________________________________________

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

_______________________________________________________________________________

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

_______________________________________________________________________________

_______________________________________________________________________________

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

_______________________________________________________________________________

_______________________________________________________________________________

agent to transfer said Note on the books of the Company, with full power of substitution in the premises.

Dated: ____________                          ________________________________________________

________________________________________________

NOTICE:  The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular without alteration or enlargement, or any change whatever.

 

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EXHIBIT B

CERTIFICATE OF AUTHENTICATION

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

	  	
THE BANK OF NEW YORK MELLON,

as Trustee

 

 

By:                                                                           

Authorized Signatory

 

 

 

 

 

 

 

B-1CSX Long-Term Incentive Plan - 01

Draft
CSX Long Term Incentive Plan 

2012-2014 Cycle 

Purpose and Objective

The CSX Long Term Incentive Plan (“LTIP” or “the “Plan”) is the vehicle under which CSX Corporation (“CSX”) issues Performance Grants, as described in the CSX Stock and Incentive Award Plan, known herein as Performance Units.  Under the LTIP, a Performance Unit represents a share of CSX common stock. The purpose of the LTIP is to reward eligible employees for their contribution to the attainment of improved operating performance which is intended to result in CSX share price appreciation. As described below in the Plan Design section, grants of Performance Units are approved by the Compensation Committee of CSX's Board of Directors (the “Committee”). 

The Plan seeks to motivate and reward employees through the issuance of Performance Units. Performance Units are payable upon achievement of predetermined levels of Operating Ratio (as defined herein) during the given performance period described below as the Cycle. The payments are referred to as Performance Awards at the time of payment, and are payable in the form of CSX common stock.

Effective Date and Term

The 2012-2014 LTIP Cycle (the “2012-2014 Cycle” or “Cycle”) is the period during which performance is measured.  The Cycle commences May 8, 2012 (“the Effective Date”) and ends December 26, 2014.  

Eligibility and Participation

Active employees of CSX or a participating affiliate (the “Company” or collectively, the “Companies”) in salary Band 06 and above as of the Effective Date shall participate in the Plan for the 2012-2014 LTIP Cycle (“Participants”) and shall receive Performance Units in accordance with the dollar value schedule approved by the Committee. The Performance Unit schedule is maintained by the Plan Administrator.  

Employees hired or promoted into Band 06 and above after the Effective Date and before the end of the 2012-2014 Cycle will receive a pro rata allocation of Performance Units based on their participation (and status as full time or part-time).  Participants who are moved to a higher or lower Band during the Cycle will receive a pro rata reallocation of Performance Units pertaining to each applicable Band based upon the number of months of participation in each Band relative to the number of months in the Cycle.  The same pro rata method will be used for employees who transfer between union and non-union employment. For purposes of the pro rata calculation, participation begins on the first day of the month following the date the Participant was hired or promoted.  

Pro-rata adjustment for “covered individuals”:  Notwithstanding the preceding sentence, any Participant who is hired at or promoted to a salary level making such Participant a “covered employee” under Internal Revenue Code Section 162(m)-generally the top 5 highest paid employees-must have a period of service of 3 months before qualifying for Performance Units at that level. Consequently, if a Participant is promoted or hired and becomes a “covered employee” within the last three months of the Cycle, no pro-rata adjustment of Performance Units shall apply.  Participation shall begin on the first day of the month following the completion of the 3-month waiting period.

Plan Design 

Under CSX's long-term incentive compensation program design, the Committee approves the annual competitive dollar value of long-term incentive compensation for Participants primarily based upon Band1.  For the 2012-2014 Cycle, the value of Performance Units comprise 75% of the value of long-term incentive compensation, and restricted stock units comprise the other 25% which is provided in a separate grant.

The number of Performance Units an employee receives is calculated by dividing 75% of the dollar value of long-term incentive compensation mentioned above by the average closing price of CSX common stock during the most recent three months preceding the Effective Date.  For the 2012-2014 Cycle, the average stock price equaled $21.67, representing the months of February, March and April 2012.  This price is used solely to determine the number of Performance Units granted to each Participant at the commencement of the Cycle.  

Performance Measure

Operating Ratio is the single performance measure used in the 2012-2014 Cycle and is defined as consolidated CSX Corporation operating expenses divided by operating revenue. It is calculated excluding nonrecurring items as disclosed in the financial statements.  Performance achievement for the Cycle is based on Operating Ratio as measured in the final fiscal year of the Cycle (2014).

Using this measure to determine payout levels reinforces the correlation between an improving Operating Ratio and an increasing stock price.  Efforts to improve the Operating Ratio align CSX's business objectives in a way that allows individuals to equate personal actions to desired performance outcomes.  Each Plan Participant should be motivated to grow revenue, reduce expense, improve service, increase productivity, improve safety, and increase asset utilization and rationalization.  

As the price of fuel has a significant impact on this particular performance measure, the Operating Ratio targets vary based on the average cost of oil per barrel outside of a pre-determined range (“fuel collar”) established at the beginning of the Cycle based on the West Texas Intermediate (WTI) average price per barrel of oil as measured in the final fiscal year of the Cycle (2014).  The charts in Exhibit A reflect the Operating Ratio targets and related Performance Awards at various WTI per barrel oil prices and provide payout examples.  

Performance Awards 

As shown in the Performance Measure Table in Exhibit A, Performance Awards are paid as a percentage of a Participant's Performance Units based upon the applicable CSX 2014 Operating Ratio discussed above.  All Performance Awards will be paid in CSX common stock. 

A Participant who commits an act involving moral turpitude that adversely affects the reputation or business of the Companies shall forfeit any Performance Units.  Examples of acts of moral turpitude include dishonesty or fraud involving the Companies, their employees, vendors, or customers or a violation of the CSX Code of Ethics. 

Participants subject to the Claw Back Provision contained herein, who violate the conditions (i) through (v) of the Claw Back Provision below, shall forfeit any Performance Units.  

No Performance Award is earned under the Plan until the Compensation Committee approves the Operating Ratio level of achievement for the Cycle and approves the payment of the Performance Awards.  

1 The Committee, at its sole discretion, may grant to a Participant a different long term compensation dollar value than to other Participants within the same Band.

Impact of Change in Employment Status

Performance Awards will be paid only to Participants who are actively employed by the Companies at the end of the applicable three-year performance cycle. Except as provided below, all other Participants whose employment terminates prior to the end of the Cycle shall forfeit any and all Performance Units and thus receive no Performance Award. All Performance Awards will be payable no later than March 15 following the end of the Cycle.

A Participant whose employment terminates due to death, disability, or retirement shall be eligible to receive a pro rata Performance Award under the LTIP if the Participant would have received a Performance Award had there been no death, disability or retirement.  The pro rata Performance Award will be determined based upon the number of months of participation relative to the number of months in the Cycle.  Retirement shall mean (i) the attainment of age 55 and 10 years of Company service, or (ii) the attainment of age 65. Disability shall mean long-term disability as defined in the CSX Corporation Long-Term Disability Plan.  In the case of death, such Performance Awards shall be paid to the Participant's estate, or as otherwise required by law.   

Participants whose hours are reduced so that they are no longer full time active employees during the 2012-2014 LTIP Cycle, as a result of a phased retirement or similar program at the request of or with the consent of CSX, shall be entitled to a pro rata Performance Award to the date of such change, and a pro rata reduced Performance Award for the remaining portion of such 2012-2014 Cycle worked based on the reduced hours.    

Taxation of Performance Awards

Performance Awards will be paid in shares of CSX common stock.  The value received by the Participant is taxable income; therefore CSX is required to withhold income taxes at the prescribed rates for both supplemental income and employment taxes at the time the Performance Awards are paid.  CSX will withhold the minimum number of shares (in whole shares) equal in value to such required amount.  No additional voluntary withholding amount is permitted.  Participants in the CSX Executive Deferred Compensation Plan may defer receipt of Performance Awards in accordance with the terms of that plan.

Plan Administration

The CSX Senior Vice President and Chief Administrative Officer shall be the Plan Administrator and shall interpret and construe the provisions of the Plan subject to the terms of the CSX Stock and Incentive Award Plan and the Compensation Committee's authority and responsibility thereunder.

Plan Amendments and Termination 

The Compensation Committee reserves the right to terminate, adjust, amend or suspend the Plan at any time at its sole discretion. 

Claw Back Provision

The Claw Back Provision discussed herein applies only to Participants in Band 10 and above.

If such Participant receives a Performance Award, the following terms and conditions shall apply for the subsequent two-year period from the payout of the Performance Award (whether or not such Participant continues to be employed by the Company). 

Noncompetition:  Such Participant shall not

		
	(i)
	without written Company consent, work for a Class I railroad in a capacity similar to the function performed over the 5 years prior to termination; or for a customer or supplier for whom the Participant has had direct work responsibility in the prior 12 months in a capacity similar to the functions performed over the 5 years prior to termination; 

		
	(ii)
	without written Company consent, solicit employees to work for a competitor in a capacity similar to such solicited employee's capacity; 

		
	(iii)
	without written Company consent, solicit the Companies' customers on behalf of a competitor; 

		
	(iv)
	without written Company consent, act in a manner adversarial or in any way contrary to the best interests 

of the Company; (for example, testifying as an expert witness or becoming associated with a union or law firm that takes positions adverse to the Companies);
		
	(v)
	fail to provide the Company with information or documentation showing compliance with conditions (i), (ii), (iii) and (iv) stated above, if requested by the Plan Administrator.

If a Participant breaches any of the conditions set forth above in this Claw Back Provision, the Participant shall repay to the Company an amount equal to the value of the Performance Award.  The value of the Performance Award is measured by the amount reported on Form W-2 for tax purposes.  Any amount due hereunder shall be paid by the Participant within thirty (30) days of notice by the Company to the Participant that the Participant has breached a condition stated above. 

The Claw Back provision for noncompetition shall not survive any change in control event as defined in the CSX Stock Incentive Award Plan occurring during the Cycle.

Company Financial Irregularities:  In the event of Company accounting irregularities discovered within two years after receipt of payment in connection with a Performance Award, which requires the Company to restate its financial statements due to material noncompliance with any financial reporting requirements under applicable securities laws, the Participant shall repay all amounts in excess of the proper Award as determined under the restated financial statements.  

In cases where all or part of the Performance Award is deferred under the CSX Executive Deferred Compensation Plan, breach of these conditions shall result in an immediate forfeiture of the portion deferred, in the amount needed to equal the applicable clawback amount, including any earnings thereon from the date of deferral. 

Consideration for Noncompete Agreement

In consideration for eligibility under this 2012-2014 LTIP Cycle, Employees in Band 10 and above  must enter into a noncompete agreement, if not already in effect, as prescribed and agreed to by CSX.  Eligibility in the 2012-2014 LTIP Cycle for Employees in Band 10 and above is conditioned upon the existence of such noncompete agreement.     

Miscellaneous

By accepting a Performance Award, the Participant authorizes the Company to withhold, to the extent permitted by law, any amount the Participant may otherwise owe to the Company in any other capacity whatsoever. 

The adoption of the 2012-2014 Cycle of the LTIP does not imply any commitment to continue the Plan or any other long-term incentive compensation plan or program for any succeeding year or period. Neither the Plan, nor any Performance Unit, or Performance Award made under the Plan shall create any employment contract or relationship between the Companies and any Participant.

Committee Discretion

The Compensation Committee, in its sole discretion, may also reduce any payout otherwise earned by Executive Team Participants by up to 30% based upon accomplishment of certain Company initiatives set forth in Exhibit B.      

Exhibit A

Exhibit A contains specific quantitative or qualitative performance-related factors considered by the Compensation Committee of the Board of Directors, or other factors or criteria involving confidential trade secrets or confidential commercial or financial information, the disclosure of which would result in competitive harm for CSX. 

Exhibit B

Exhibit B contains specific quantitative or qualitative performance-related factors considered by the Compensation Committee of the Board of Directors, or other factors or criteria involving confidential trade secrets or confidential commercial or financial information, the disclosure of which would result in competitive harm for CSX.

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