Document:

Exhibit 10.7 (00055537.DOC;1)

EXHIBIT 10.7

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of July 25, 2003, is made by and between Allied Bancshares (the "Bank Holding Company" or the "Employer"), the organizers (the "Organizers") of the Bank and the Bank Holding Company, First National Bank of Forsyth County, which is a proposed national bank (the "Bank"), and RICHARD E. BELL, an individual resident of Georgia (the "Executive").

 

The Employer and the Organizers are in the process of organizing the Bank, and the Executive has agreed to serve as Executive Vice President and Senior Lending Officer.  Upon organization of the Bank, the Employer and the Executive contemplate that this Agreement will be assigned by the Employer to the Bank and that the Bank will assume the duties of the Employer. Following such assignment, the term "Employer" as used herein from time to time shall refer to the Bank.

 

The Employer recognizes that the Executive's contribution to the growth and success of the Bank during its organization and initial years of operations will be a significant factor in the success of the Bank. The Employer desires to provide for the employment of the Executive in a manner which will reinforce and encourage the dedication of the Executive to the Bank and promote the best interests of the Bank and the shareholders of the Bank Holding Company.  The Executive is willing to serve the Employer (and, after assignment of this Agreement, the Bank) on the terms and conditions herein provided. Certain terms used in this Agreement are defined below in Section 16 hereof.

 

In consideration of the foregoing, the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.         Employment. Subject to approval of the Office of the Comptroller of the Currency, the Employer shall employ the Executive and the Executive shall serve the Employer, as Senior Vice President and Chief Financial Officer, upon the terms and conditions set forth herein. The Executive shall have such authority and position as are set forth in the bylaws or assigned by the President/CEO, or by the Bank's Board of Directors (the "Board") from time to time. The Executive shall devote his business time, attention, skill and efforts exclusively to the performance of his duties hereunder, except during periods of illness or periods of vacation and leaves of absence consistent with Bank policy. Notwithstanding the foregoing, the Executive may devote reasonable periods of time to serve as a director or advisor to other organizations, to charitable and community activities, provided that such activities do not materially interfere with his dedication of time to the performance of his duties hereunder and are not in conflict or competitive with, or adverse to, the interests of the Bank or the Bank Holding Company.

 

2.         Term. Unless earlier terminated as provided herein, the Executive's employment under this Agreement shall commence on the 1st day of September, 2003, but no later than the 1st day of October, 2003, and be for a term (the "Term") of five (5) years of the commencement date (the last day of the Term being referred to herein as the "Expiration Date").

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3.         Compensation and Benefits.

 

            (a)        The Employer shall pay the Executive a salary at a rate of not less than $100,000 per annum in accordance with the salary payment practices of the Employer. The Executive's salary shall be paid in pro-rata amounts for any partial year of service. The Board shall review the Executive's salary at least annually and may increase the Executive's base salary if it determines in its sole discretion that an increase is appropriate.

 

(b)        The Executive shall participate in any retirement, welfare, deferred compensation, vacation, life and health insurance and other benefit plans or programs of the Employer now or hereafter applicable to the Executive or applicable generally to employees of the Employer and as established by by-laws or through the exercise of the Board's discretion, to the extent consistent with the terms of such plans or programs. Notwithstanding the foregoing, the Executive shall be entitled to fifteen (15) days "paid" vacation time annually. In the event the Executive does not utilize all fifteen (15) of his paid vacation days during any particular year, he may exercise either of two options: (i) he may request pro-rata payment for any vacation days that remain unused as of December 31 of each year; or (ii) he may elect to roll over the unused days into the following calendar year, but in no event may he roll over more than five (5) such unused vacation days, with the result that he shall never be entitled to more than twenty (20) paid vacation days in any given year.

 

(c)        The Executive shall participate in the Bank's long-term equity incentive program, if such a plan is established, and be eligible for the grant of stock options, restricted stock, and other awards thereunder or under any similar plan adopted by the Bank, to the extent allowable under state and federal laws and subject to shareholder approval, if necessary. On the date of the closing of the stock offering for the initial capitalization of the Bank, or as soon thereafter as an appropriate stock option plan is adopted at the discretion of the Board, the Bank shall grant to the Executive an option (the "Performance Option") to purchase 20,000 shares of Common Stock of the Bank Holding Company.  The award agreement for the Performance Option shall provide that one-fifth of the shares subject to the Performance Option will vest on the last day of each of the first five fiscal years of the Bank Holding Company beginning with the fiscal year which includes the Opening Date, but only if the Executive remains employed by the Bank and the Bank Holding Company on such date.

 

In addition, the award agreement for the Performance Option will provide that: (i) the Executive's option shall be qualified as an incentive stock option under the Internal Revenue Code of 1986, as amended (the "Code"); (ii) all options shall be exercisable at any time during the ten years following the date of initial public offering at a price per share equal to the public offering price in the offering (subject to standard antidilution adjustments in the event of stock splits, dividends or combinations), which the parties agree is the fair market value of the Common Stock as of the date of Grant; and (iii) all options shall be nontransferable and nonassignable by the Executive or by any other person entitled hereunder to exercise any such rights; provided, however, that upon the death of the Executive any rights granted hereunder shall be transferable by the Executive's will or by the applicable laws of descent and distribution. Nothing herein shall be deemed to preclude the granting to the Executive of warrants or options under a director option plan, if such a plan is established, in addition to the options granted hereunder.

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The Performance Option shall become immediately exercisable and shall become 100% vested upon a Change in Control.

 

(d)        The Executive may be eligible to receive a cash bonus in an amount determined at the sole discretion of the CEO and/or Board.  The Executive may receive a cash bonus of up to 20% of his base salary. The bonuses will be based upon certain performance levels or criteria.

 

(e)        Beginning on the first day of the term of employment set forth in this Agreement, the Employer shall reimburse the Executive for reasonable travel and other expenses related to the Executive's duties which are reasonably incurred and accounted for in accordance with the normal accounting and record keeping practices of the Employer.

 

            4.         Termination.

 

            (a)       The Executive's employment under this Agreement may be terminated prior to the end of the Term only as follows:

 
(i)on the death of the Executive;

 

(ii)upon the disability of the Executive for a period of 90 days in any consecutive 120 day period which, in the opinion of the Board of Directors, renders him unable to perform the essential functions of his job and for which reasonable accommodation is unavailable.  For purposes of this Agreement a "disability" is defined as a physical or mental impairment that substantially limits one or more major life activities, and a "reasonable accommodation" is one that does not impose an undue hardship on the Employer;

 

(iii)by the Employer for Cause upon delivery of a Notice of Termination to the Executive;

 

(iv)by the Executive for Good Reason upon delivery of a Notice of Resignation to the Employer within a 90-day period beginning on the 30th day after the occurrence of a Change in Control or within a 90-day period beginning on the one year anniversary after the occurrence of a Change in Control;

 

 (v)by the Employer if its effort to organize the Bank is abandoned; 

 

(vi)by the Executive effective upon the 30th day after delivery of a Notice of Resignation. If this occurs, all bonuses not yet paid shall be forfeited by Executive. The Board shall retain the discretion and have the authority to dismiss Executive immediately upon receipt of the Executive's resignation, and pay will cease immediately; or

(vii)by the Employer without cause effective upon the 10th day after delivery of a notice of termination.

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(b)        If the Executive's employment is terminated because of the Executive's death pursuant to clause (i) of Section 4(a), the Executive's estate shall receive any sums due him as base salary and/or reimbursement of expenses through the end of the month during which death occurred, plus any bonus earned or accrued under the Bonus Plan through the date of death and a pro-rata share of any bonus with respect to the current fiscal year which had been earned as of the date of the Executive's death.

 

(c)        During the period of any incapacity leading up to the termination of the Executive's employment pursuant to clause (ii) of Section 4(a), the Employer shall continue to pay the Executive his full base salary at the rate then in effect and all other benefits (with the exception of any bonus). Payment of all such salary and benefits shall cease on the earlier of: (i) the date of Executive's termination; or (ii) the date Executive becomes eligible for benefits under any long-term disability plan, insurance plan, or pension or retirement plan maintained by the Employer or any other source (e.g., Social Security); or (iii) a period of time not to exceed 90 days.  Moreover, the amount of any such payments to the Executive shall be reduced by the sum of the amounts, if any, payable to the Executive for the same period under any disability benefit, insurance plan, or pension or retirement plan of the Employer or any other source (e.g., Social Security). The Executive shall receive any bonus earned or accrued under the Bonus Plan prior to the date of incapacity.

 

(d)        If the Executive's employment is terminated for Cause pursuant to clause (iii) of Section 4(a), or if the Executive resigns pursuant to clause (vi) of Section 4(a), the Executive shall receive any sums due him as base salary and/or reimbursement of expenses through the date of such termination/resignation, subject to any reasonable offsets that may be appropriate under the circumstances. In such an event, all vested stock options must be exercised within 90 days of termination or be forfeited.

 

(e)        If the Executive's employment is terminated due to the Executive's resignation based on a Change in Control pursuant to clause (iv) of Section 4(a), in addition to other rights and remedies available in law or equity, the Executive shall be entitled to the following:

 
(i)the Employer shall pay the Executive severance compensation in an amount equal to 100% of his then current monthly base salary for a period of three months from the Termination Date.  At the sole discretion of the Board, the above-described severance compensation may be paid to the Executive in lump sum fashion within fifteen (15) days after the Termination Date, or alternatively, the Board may elect to make such payments on the first day of each month for three (3) months following the Termination Date. 

 
(ii)All stock options and stock appreciation rights granted to the Executive shall become immediately exercisable and shall become 100% vested. All options shall be exercisable at any time during the ten years following the date of initial public offering at a price per share equal to the public offering price in the offering (subject to standard antidilution adjustments in the event of stock splits, dividends or combinations), which the parties agree is the fair market value of the Common Stock as of the date of grant.

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(f)If the Executive's employment is terminated pursuant to clause (vii) of Section 4(a), the Employer shall pay to the Executive severance compensation in an amount equal to 100% of his then current monthly base salary for a period of six (6) months from the Date of Termination, plus any bonus earned or accrued under the Bonus Plan through the Date of Termination. At the sole discretion of the Board, the above-described severance compensation may be paid to the Executive in lump sum fashion within fifteen (15) days after the Termination Date, or alternatively, the Board may elect to make such payments on the first day of each month for six (6) months following the Termination Date.

(g)        With the exceptions of the provisions of this Section 4, and the express terms of any benefit plan under which the Executive is a participant, it is agreed that upon termination of the Executive's employment, the Employer shall owe no further obligations to the Executive, and the Executive expressly waives and relinquishes any rights to any further compensation or benefits (exclusive of COBRA benefits).

 

 (h)         The parties intend that the severance payments and other compensation provided for herein are reasonable compensation for the Executive's services to the Employer and shall not constitute "excess parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986 and any regulations thereunder

 

5.         Ownership of Work Product. The Employer shall own all Work Product created during the course of the Executive's employment (prior, present or future). For purposes hereof, "Work Product" shall mean all intellectual property rights, including all Trade Secrets, U. S. and international copyrights, patentable inventions, and other intellectual property rights in any programming documentation, technology or other work product that relates to the Employer, its business or its customers and that Executive conceives, develops, or delivers to the Employer at any time during his employment, during or outside normal working hours, in or away from the facilities of the Employer, and whether or not requested by the Employer. If the Work Product contains any materials, programming or intellectual property rights that the Executive conceived or developed prior to, and independent of, the Executive's work for the Employer, the Executive agrees to point out the pre-existing items to the Employer and the Executive grants the Employer a worldwide, unrestricted, royalty-free right, including the right to sublicense such items. The Executive agrees to take such actions and execute such further acknowledgments and assignments as the Employer may reasonably request to give effect to this provision.

 

6.         Protection of Trade Secrets. The Executive shall keep secret and retain in the strictest confidence, and shall not disclose, publish, disseminate, or otherwise reveal or use, for the benefit of himself or others, any Trade Secrets of the Employer, during his employment and following termination of the Executive's employment, so long as he is receiving compensation from the Employer, or for a period of 12 months following termination of the Executive's employment pursuant to clause (vi) of Section 4(a), whichever period is longer. As provided by Georgia statutes, "Trade Secret" means information, including a formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list, that: (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality.

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7.         Protection of Other Confidential Information. In addition to the foregoing, the Executive agrees to maintain in strict confidence and, except as necessary to perform his duties for the Employer, not to disclose, publish, disseminate, or otherwise reveal or use, for the benefit of himself or others, any Confidential Business Information of the Employer, during his employment and following termination of the Executive's employment, so long as he is receiving compensation from the Employer, or for a period of 12 months following termination of the Executive's employment pursuant to clause (vi) of Section 4(a), whichever period is longer. By way of illustration, "Confidential Business Information" shall include but not be limited to any internal, non-public information (in addition to the Trade Secrets already addressed above) concerning the Employer's financial position and results of operations (including revenues, assets, net income, etc.); annual and long-range business plans; product or service plans; marketing plans and methods; training, educational and administrative manuals; customer and supplier information and transaction histories; and employee lists. The above-described provisions of Sections 6 and 7 of this Agreement shall also apply to protect Trade Secrets and Confidential Business Information of third parties which were provided to the Employer under an obligation of secrecy or confidentiality.

 

8.         Return of Materials. The Executive shall surrender to the Employer, promptly upon its request, and in any event upon any termination of the Executive's employment, all media, documents, notebooks, computer programs, handbooks, data files, models, samples, price lists, manuals, drawings, customer lists and transaction histories, prospect data, financial data, business plans, product plans, marketing plans, employee lists, or other material of any nature whatsoever (in tangible or electronic form) in the Executive's possession, custody, or control, including all copies thereof, relating to the Employer, its business, its employees, or its customers. Upon the request of the Employer, the Executive shall certify in writing his compliance with the foregoing requirement.

 

            9.         Restrictive Covenants.

 

(a)        No Solicitation of Customers. During the Executive's employment with the Employer, and after termination of the Executive's employment, so long as he is receiving compensation from the Employer, or for a period of 12 months (but in no event beyond the Expiration Date) following termination of the Executive's employment pursuant to clause (vi) of Section 4(a), the Executive shall not (except on behalf of or with the prior written consent of the Employer), either directly or indirectly, on the Executive's own behalf, or in the service of or on behalf of others: (A) solicit, divert, or appropriate to or for a Competing Business; or (B) attempt to solicit, divert, or appropriate to or for a Competing Business, any person or entity that: (i) was a customer of the Employer on Executive's Date of Termination; and (ii) is either located in the Territory (as defined below), or is a person or entity with whom the Executive had material contact while working for Employer (irrespective of that customer's geographic location).

 

(b)        No Recruitment of Personnel. During the Executive's employment with the Employer and after termination of the Executive's employment, so long as he is receiving compensation from the Employer, or for a period of 12 months (but in no event beyond the Expiration Date) following termination of the Executive's employment pursuant to clause (vi) of Section 4(a), the Executive shall not, either directly or indirectly, on the Executive's own behalf, or in the service of or on behalf of others: (A) solicit, divert, or hire away; or (B) attempt to solicit, divert or hire away, to any Competing Business located in the Territory, any employee of or consultant to the Employer, engaged or experienced in the Business, regardless of whether: (i) the employee or consultant is full-time or temporary; (ii) the employment or engagement is pursuant to written agreement; or (iii) the employment is for a determined period or is at will.

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(c)        Non-Competition Agreement. During the Executive's employment with the Employer, and after termination of the Executive's employment, so long as he is receiving compensation from the Employer, or for a period of 12 months (but in no event beyond the Expiration Date) following termination of the Executive's employment pursuant to clause (vi) of Section 4(a), the Executive shall not (without the prior written consent of the Employer) compete with the Employer in the Territory by, directly or indirectly, forming, serving as an organizer, director or officer of, or advisor to, or acquiring or maintaining any interest in, a depository financial institution or holding company therefore, which is engaged in the Business within the Territory.

 

10.       Independent Provisions and Saving Clause.  Should any of the provisions of this Agreement, or any subpart thereof, hereafter be construed to be invalid or unenforceable, the same shall not effect the validity of the remainder of the provisions, paragraphs, or subparagraphs, which will be given full effect without regard to the invalid portions. Each provision, paragraph, or subparagraph of the Agreement is severable from all others and constitutes a separate and distinct covenant.

 

11.       Successors; Binding Agreement. The rights and obligations of this Agreement shall be binding on and inure to the benefit of the surviving corporation or entity in any merger or consolidation in which the Employer is a party, or any assignee of all or substantially all of the Employer's business and properties, including but not limited to the Bank. The Executive's rights and obligations under this Agreement may not be assigned by him, except that his right to receive accrued but unpaid compensation, unreimbursed expenses and other rights, if any, provided under this Agreement, which survive termination of this Agreement, shall pass after death to the personal representatives of his estate, consistent with the terms of Section 4(b) above.

 

12.       Notice.  For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other; provided however that all notices to the Employer shall be directed to the attention of the Employer with a copy to the Corporate Secretary of the Employer. All notices and communications shall be deemed to have been received on the date of delivery thereof.

 

13.       Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Georgia, without giving effect to the conflict of laws principles thereof.  Any action brought by any party to this Agreement shall be brought and maintained in a court of competent jurisdiction in the State of Georgia.

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14.       Non-Waiver. Failure of the Employer to enforce any of the provisions of this Agreement or any rights with respect thereto shall in no way be considered to be a waiver of such provisions or rights, or in any way affect the validity of this Agreement. Any waiver of any provision or part thereof shall be unenforceable unless documented in writing and signed by both parties.

 

15.       Enforcement. Executive acknowledges that the Restrictive Covenants contained in Section 9(a), 9(b), and 9(c) have been called to Executive's attention and have been explained to him. Executive understands that they are material covenants of this Agreement and without his agreement to the provisions herein, the Employer would not agree to hire or continue to employ Executive in the capacity described in this Agreement. Executive recognizes that the restrictions contained herein are reasonable restraints upon the Executive and that compliance with the above covenants is necessary to protect the business and goodwill of the Employer, and that any breach or threatened breach of any of the above covenants will cause irreparable harm and continual injury to the Employer, for which money damages may not be adequate. Without limiting other possible remedies to the Employer for breach of this Agreement, the Executive agrees that in the event of any breach of any covenant contained in Section 9(a), 9(b), or 9(c), the Employer shall be entitled to obtain from a court of competent jurisdiction an injunction to restrain the breach or anticipated breach of any such covenant, and to obtain any other available legal, equitable, statutory, or contractual relief, including but not limited to monetary damages. Should the Employer have cause to seek such relief, no bond shall be required from the Employer, and the Executive shall pay all attorneys' fees and court costs which the Employer may incur to the extent the Employer prevails in its enforcement action.

 

            16.       Certain Definitions.

 

(a)        "Business" shall mean the operation of a depository financial institution, including, without limitation, the solicitation and acceptance of deposits of money and commercial paper, the solicitation and funding of loans and the provision of other banking services, and any other related business engaged in by the Employer as of Executive's Date of Termination or any other conduct or action by a lending institution as permitted by Federal or State law now or in the future.

 

(b)        "Cause" shall consist of any of (A) the commission by the Executive of a willful act (including, without limitation, a dishonest or fraudulent act) or a grossly negligent act, or the willful or grossly negligent omission to act by the Executive, which is intended to cause, causes or is reasonably likely to cause material harm to the Employer (including harm to its business reputation), (B) the conviction of the Executive for the commission or perpetration by the Executive of any felony or any crime involving dishonesty, moral turpitude or fraud, (C) the material breach by the Executive of this Agreement that, if susceptible of cure, remains uncured ten days following written notice to the Executive of such breach, (D) the receipt of any form of notice, written or otherwise, that any regulatory agency having jurisdiction over the Employer, intends to institute any form of formal or informal (e.g., a memorandum of understanding which relates to the Executive's performance) regulatory action against the Executive or the Employer that the Board of Directors determines in good faith, with the Executive abstaining from participating in the consideration of and vote on the matter, that the subject matter of such action involves acts or omissions by or under the supervision of the Executive or that termination of the Executive would materially advance the Employer's compliance with the purpose of the action or would materially assist the Employer in avoiding or reducing the restrictions or adverse effects to the Employer related to the regulatory action; (E) the exhibition by the Executive of a standard of behavior within the scope of his employment that is materially disruptive to the orderly conduct of the Employer's business operations (including, without limitation, substance abuse or sexual misconduct) to a level which, in the Board of Directors' good faith and reasonable judgment is materially detrimental to the Employer's best interest, that, if susceptible of cure remains uncured ten days following written notice to the Executive of such specific inappropriate behavior; (F) the Executive is adjudicated bankrupt or the Executive files for voluntary bankruptcy; or (G) the failure of the Executive to devote his full business time and attention to his employment as provided under this Agreement.

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(c)        "Change in Control" shall mean the occurrence during the Term of any of the following events, unless such event is a result of a Non-Control Transaction:

 
(i)The individuals who, as of the date of this Agreement, are members of the Board of Directors of the Employer (the "Incumbent Board") cease for any reason to constitute at least two-thirds of the Board of Directors of the Employer, provided however that if the election, or nomination for election by the Employer's shareholders, of any new director was approved in advance by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Agreement be considered as a member of the Incumbent Board, provided further that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest", as described in Rule 14a-11 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), or other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board of Directors of the Employer (a "Proxy Contest"), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest.

 
(ii)An acquisition (other than directly from the Employer) of any voting securities of the Employer (the "Voting Securities") by any "Person" (as the term "person" is used for purposes of Section 13(d) or 14(d) of the Exchange Act) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule l3d-3 promulgated under the Exchange Act) of 20% or more of the combined voting power of the Employer's then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a Non-Control Acquisition shall not constitute an acquisition which would cause a Change in Control.

 
(iii)Approval by the shareholders of the Employer of:  (A) a merger, consolidation, or reorganization involving the Employer; (B) a complete liquidation or dissolution of the Employer; or (C) an agreement for the sale or other disposition of all or substantially all of the assets of the Employer to any Person (other than a transfer to a Subsidiary).

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(iv)A notice of an application is filed with the Federal Reserve Board (the "FRB") pursuant to Regulation "Y" of the FRB under the Change in Bank Control Act or the Bank Holding Company Act or any other bank regulatory approval (or notice of no disapproval) is granted by the Federal Reserve, the OCC, the Federal Deposit Insurance Corporation, or any other regulatory authority for permission to acquire control of the Employer or any of its banking subsidiaries.

 

(d)        "Competing Business" shall mean any business that, in whole or in part, is the same or similar, or substantially the same or similar as the Business.

 

(e) "Good Reason" shall mean the occurrence after a Change in Control of any of the events or conditions described below: 

 
(i)a negative change in the Executive's status, title, position or responsibilities;

 

(ii)a reduction in the Executive's base salary or any failure to pay the Executive any compensation or benefits to which he is entitled within thirty days of the date due;

 

(iii)the Employer's requiring the Executive to be based at any place outside a 10-mile radius from the executive offices occupied by the Executive immediately prior to the Change in Control, except for reasonably required travel on the Employer's business which is not materially greater than such travel requirements prior to the Change in Control;

 

(iv)the failure by the Employer to continue in effect (without reduction in benefit level and/or reward opportunities) any material compensation or employee benefit plan in which the Executive was participating at any time within ninety days preceding the date of a Change in Control;

 

(v)Any material breach by the Employer of any material provision of this Agreement.

 

            (f)         "Territory" shall mean Forsyth County, Georgia.

 

            17.       Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements, if any, oral or written, between the parties hereto with respect to the subject matter hereof. There have been no other representations made, express or implied, as to the subject matter hereof.  This Agreement may be modified only by written instrument duly executed by each of the parties hereto prior to the effective date of any such amendment or modification.

 

            18.       Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed and its seal to be affixed hereunto by its officers thereunto duly authorized, and the Executive has signed and sealed this Agreement, effective as of the date first above written.

 

	
EMPLOYEE

 

s/Richard E. Bell                                                     

Richard E. Bell
	
ALLIED BANCSHARES, INC.

 

s/Andrew K. Walker                                                      

Andrew K. Walker, President/CEO

	
 
	
 

	
Signed, sealed and delivered in the presence of:                                                                             

  

                                                                                           

Unofficial Witness

 

                                                                                           

Notary Public

 

My Commission Expires:                                                     

                             (NOTARY SEAL)                                          
	
 

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<PAGE>Exhibit 4(c)(i)

================================================================================

                      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

================================================================================

<PAGE>

                                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

                                       -i-
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       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:

<PAGE>

                                    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

                                       2
<PAGE>

                     (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.

                                       3
<PAGE>

       "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.

                                       4
<PAGE>

       "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.

                                       5
<PAGE>

       "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.

                                       6
<PAGE>

       "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

                                       7
<PAGE>

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

                                       8
<PAGE>

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;

                                       9
<PAGE>

              (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.

                                       10
<PAGE>

       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.

                                       11
<PAGE>

       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

                                       12
<PAGE>

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.

                                       13
<PAGE>

       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.

                                       14
<PAGE>

       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

                                       15
<PAGE>

              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.

                                       16
<PAGE>

       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.

                                       17
<PAGE>

       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.

                                       18
<PAGE>

       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

                                       19
<PAGE>

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.

                                       20
<PAGE>

       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.

                                       21
<PAGE>

       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:                                       By:
    -----------------------------------        ---------------------------------
           Assistant Secretary                      Assistant Treasurer

ATTEST:                                   THE BANK OF NEW YORK

By:                                       By:
     ----------------------------------        ---------------------------------
           Trust Officer                             Vice President

                                       22
<PAGE>

                                    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
Original 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

                                      A-1
<PAGE>

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;

                                      A-2
<PAGE>

   -   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

                                      A-3
<PAGE>

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.

                                      A-4
<PAGE>

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

Dated: ______ __, ____.

                                     SOUTHWESTERN ELECTRIC POWER COMPANY

                                     By:
                                        ----------------------------------------
                                                  ssistant Treasurer

Attest:

----------------------------------------
Assistant Secretary

           {Seal of SOUTHWESTERN ELECTRIC POWER COMPANY appears here}

                                      A-5
<PAGE>

                          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

                                      A-6
<PAGE>

                           (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

                                      A-7
<PAGE>

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

                                      A-8
<PAGE>

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.

                                      A-9
<PAGE>

                                  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            UNIF GIFT MIN ACT -  ______ Custodian ______
          Common                                        (Cust)           (Minor)

TEN ENT - as tenants by the        Under Uniform Gifts to Minors Act
          Entireties

JT TEN -  as joints tenants with
                                   ---------------------------
          right of survivorship             (State)
          and not as tenants in
          common

                    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:
       -----------------                      ----------------------------------

                                              ----------------------------------

                                      A-10
<PAGE>

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

                                      A-11

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