Document:

ogande401exhibit.htm

Exhibit 4.01

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL INDENTURE NO. 11

 

FROM

 

OKLAHOMA GAS AND ELECTRIC

COMPANY

 

TO

 

UMB BANK, N.A.

 

TRUSTEE

 

______________

 

DATED AS OF JUNE 1, 2010

 

___________________________

 

SUPPLEMENTAL TO INDENTURE

DATED AS OF OCTOBER 1, 1995

 

  

  

  

TABLE OF CONTENTS

Page 

 

	Parties	 	 1
	Recitals	 	 1

 

ARTICLE ONE

RELATION TO INDENTURE; DEFINITIONS

Page 

 

	Section 1.01	 Integral Part of Indenture	 3

	
Section 1.02

	
(a)

	
Definitions 

	
3

	
  

	
(b)

	
References to Articles and Sections 

	
3

	
  

	
(c)

	
Terms Referring to this Supplemental Indenture 

	
3

ARTICLE TWO

5.85% SENIOR NOTES, SERIES DUE JUNE 1, 2040

 

	Section 2.01	 Designation and Principal Amount 	3
	Section 2.02	 Stated Maturity Date 	3
	Section 2.03	Interest Payment Dates	3
	Section 2.04	Office for Payment	3
	Section 2.05	Redemption Provisions	4
	Section 2.06	Authorized Denominations	5
	Section 2.07	Occurrence of Release Date	5
	Section 2.08	Reopening of Notes	5
	Section 2.09	Form of 5.85% Senior Notes, Series due June 1, 2040	5

 

           

ARTICLE THREE

MISCELLANEOUS

 

	Section 3.01	 Recitals of Fact, Except as Stated, Are Statements of the Company	5
	Section 3.02	Supplemental Indenture to Be Construed as a Part of the Indenture	5

	
Section 3.03

	
(a)

	
Trust Indenture Act to Control

	

5

	
  

	
(b)

	

Severability of Provisions Contained in Supplemental 

	
 

	
  

	
 

	

Indenture and Notes

	
6

	
Section 3.04

	References to Either Party in Supplemental Indenture Include Successors or  	 
	 	Assigns	6

	

Section 3.05

	
(a)

	

Provision for Execution in Counterparts 

	
6

	
  

	

(b)

	

Table of Contents and Descriptive Headings of

	
 

	
  

	 	

Articles Not to Affect Meaning

	
6

 

Exhibit A –  Form of 5.85% Senior Notes, Series due June 1, 2040

  

i

  

SUPPLEMENTAL INDENTURE No. 11, made as of the 1st Day of June, 2010 by and between OKLAHOMA GAS AND ELECTRIC COMPANY, a corporation duly organized and existing under the laws of the State of Oklahoma (the “Company”), and UMB BANK, N.A., a national banking association duly organized and existing under the laws of the United States, as trustee (the “Trustee”):

 

WITNESSETH:

 

WHEREAS, the Company has heretofore executed and delivered its Indenture (hereinafter referred to as the “Indenture”), made as of October 1, 1995; and

 

WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 1 dated as of October 16, 1995, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating two series of Notes designated “7.30% Senior Notes, Series due October 15, 2025” and “6.250% Senior Notes, Series due October 15, 2000”; and

 

WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 2 dated as of July 1, 1997, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating two series of Notes designated “6.65% Senior Notes, Series due October 15, 2027” and “6.50% Senior Notes, Series due July 15, 2017”; and

 

WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 3 dated as of April 1, 1998, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “61⁄2% Senior Notes, Series due April 15, 2028”; and

 

WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 4 dated as of October 15, 2000, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “7.125% Senior Notes, Series due October 15, 2005”; and

 

WHEREAS, the Company, the Trustee and The Bank of New York (the “Prior Trustee”) have heretofore executed and delivered Supplemental Indenture No. 5 dated as of October 24, 2001, providing for the resignation of the Prior Trustee and the acceptance, by the Trustee, of its appointment as trustee and the assumption of all duties and responsibilities of the trustee under the Indenture; and

 

WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 6 dated as of August 1, 2004, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “6.50% Senior Notes, Series due August 1, 2034”; and

 

  

  

  

WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 7 dated as of January 1, 2006, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating two series of Notes designated “5.15% Senior Notes, Series due January 15, 2016” and “5.75% Senior Notes, Series due January 15, 2036”; and

 

WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 8 dated as of January 15, 2008, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “6.45% Senior Notes, Series due February 1, 2038”; and

 

WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 9 dated as of September 1, 2008, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “6.350% Senior Notes, Series due September 1, 2018”; and

 

WHEREAS, the Company has heretofore executed and delivered its Supplemental Indenture No. 10 dated as of December 1, 2008, adding to the covenants, conditions and agreements of the Indenture certain additional covenants, conditions and agreements to be observed by the Company, and creating a series of Notes designated “8.25% Senior Notes, Series due January 15, 2019”; and

 

WHEREAS, Section 2.05 of the Indenture provides that Notes shall be issued in series and that a Company Order shall specify the terms of each series; and

 

WHEREAS, Boatmen’s First National Bank of Oklahoma was formerly the Trustee under the Indenture and NationsBank, N.A. succeeded Boatmen’s First National Bank of Oklahoma as Trustee pursuant to Section 9.13 of the Indenture, The Bank of New York subsequently succeeded Boatmen’s First National Bank of Oklahoma as Trustee pursuant to Section 9.13 of the Indenture and UMB Bank, N.A., has subsequently succeeded The Bank of New York as Trustee pursuant to Section 9.11 of the Indenture; and

 

WHEREAS, the Company has this day delivered a Company Order setting forth the terms of a series of Notes designated “5.85% Senior Notes, Series due June 1, 2040” (hereinafter sometimes referred to as the “Senior Notes due 2040”); and

 

WHEREAS, Section 13.01 of the Indenture provides that the Company and the Trustee may enter into indentures supplemental thereto for the purposes, among others, of establishing the form of Notes or establishing or reflecting any terms of any Note and adding to the covenants of the Company; and

 

WHEREAS, the execution and delivery of this Supplemental Indenture No. 11 (herein, “this Supplemental Indenture”) have been duly authorized by a resolution adopted by the Board of Directors of the Company;

 

  

2

  

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

That in order to set forth the terms and conditions upon which the Senior Notes due 2040 are, and are to be, authenticated, issued and delivered, and in consideration of the premises of the purchase and acceptance of the Senior Notes due 2040 by the Holders thereof and the sum of one dollar duly paid to it by the Trustee at the execution of this Supplemental Indenture, the receipt whereof is hereby acknowledged, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective Holders from time to time of the Senior Notes due 2040, as follows:

 

ARTICLE ONE

RELATION TO INDENTURE; DEFINITIONS

 

Section 1.01   This Supplemental Indenture constitutes an integral part of the Indenture.

 

Section 1.02   For all purposes of this Supplemental Indenture:

 

(a)  Capitalized terms used herein without definition shall have the meanings specified in the Indenture;

 

(b)  All references herein to Articles and Sections, unless otherwise specified, refer to the corresponding Articles and Sections of this Supplemental Indenture; and

 

(c)  The terms “hereof,” “herein,” “hereby,” “hereto,” “hereunder” and “herewith” refer to this Supplemental Indenture.

 

ARTICLE TWO

5.85% SENIOR NOTES, SERIES DUE JUNE 1, 2040

 

Section 2.01   There shall be a series of Notes designated the “5.85% Senior Notes, Series due June 1, 2040” (the “Senior Notes due 2040”). The Senior Notes due 2040 shall be limited to $250,000,000 aggregate principal amount except as provided in Section 2.08 hereof.

 

Section 2.02   Except as otherwise provided in Section 2.05 hereof, the principal amount of the Senior Notes due 2040 shall be payable on the stated maturity date of June 1, 2040.

 

Section 2.03   The Senior Notes due 2040 shall be dated their date of authentication as provided in the Indenture and shall bear interest from their date at the rate of 5.85% per annum, payable semi-annually on June 1 and December 1 of each year, commencing December 1, 2010. The Regular Record Dates with respect to such June 1 and December 1 interest payment dates shall be May 15 and November 15, respectively. Principal and interest shall be payable to the persons and in the manner provided in Sections 2.04 and 2.12 of the Indenture.

 

Section 2.04   The Senior Notes due 2040 shall be payable at the corporate trust office of the Trustee and at the offices of such paying agents as the Company may appoint by Company Order in the future.

 

  

3

  

Section 2.05   The Company, at its option, may redeem on any date all or, from time to time, any part of the Senior Notes due 2040, upon notice as provided in the Indenture, at a redemption price equal to the greater of (i) 100% of the principal amount of such Senior Notes due 2040 to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued to the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 25 basis points, plus in each case accrued and unpaid interest thereon to the date of redemption.

 

“Treasury Rate” means, with respect to any redemption date (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life (as defined below), yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.  The Treasury Rate will be calculated on the third business day preceding the date fixed for redemption.

 

“Comparable Treasury Issue” means the U.S. Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term (“Remaining Life”) of the Senior Notes due 2040 to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life of such Senior Notes due 2040.

 

“Comparable Treasury Price” means (1) the average of five Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Independent Investment Banker” means Mizuho Securities USA Inc., RBS Securities Inc., UBS Securities LLC or another independent investment banking institution of national standing appointed by the Company.

 

“Reference Treasury Dealer” means (1) each of Mizuho Securities USA Inc., RBS Securities Inc. and UBS Securities LLC or their respective successors, and any other primary U.S. government securities dealer in the United States (a “Primary Treasury Dealer”) selected by Mizuho Securities USA Inc., RBS Securities Inc. or UBS Securities LLC or their respective successors, provided, however, that if any of the foregoing ceases to be a Primary Treasury 

 

  

4

  

Dealer, the Company will substitute therefor another Primary Treasury Dealer and (2) any other Primary Treasury Dealer selected by the Company after consultation with the Independent Investment Banker.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such redemption date.

 

The Senior Notes due 2040 shall not be subject to any sinking fund.

 

Section 2.06   The Senior Notes due 2040 shall be issued in fully registered form without coupons in a minimum denomination of $2,000 and multiples of $1,000 in excess thereof.

 

Section 2.07   The Release Date (as defined in the Indenture) occurred on April 6, 1998. Accordingly, the Senior Notes due 2040 shall be issued as unsecured general obligations of the Company. The Senior Notes due 2040, and all other Notes issued or to be issued under the Indenture, will not be secured by First Mortgage Bonds of the Company and will not be entitled to the lien of or the benefits provided by the First Mortgage, which has been extinguished.

 

Section 2.08   The Senior Notes due 2040 may be reopened and additional notes of the Senior Notes due 2040 may be issued in excess of the limitation set forth in Section 2.01, provided that such additional notes will contain the same terms (including the maturity date and interest payment terms) as the other Senior Notes due 2040.  Any such additional Senior Notes due 2040, together with the other Senior Notes due 2040, shall constitute a single series for purposes of the Indenture.

 

Section 2.09   The Senior Notes due 2040 shall initially be in the form attached as Exhibit A hereto.

 

ARTICLE THREE

MISCELLANEOUS

 

Section 3.01   The recitals of fact herein and in the Senior Notes due 2040 (except the Trustee’s Certificate) shall be taken as statements of the Company and shall not be construed as made by the Trustee.

 

Section 3.02   This Supplemental Indenture shall be construed in connection with and as a part of the Indenture.

 

Section 3.03 

 

(a)    If any provision of this Supplemental Indenture limits, qualifies or conflicts with another provision of the Indenture required to be included in indentures qualified under the Trust Indenture Act of 1939 (as enacted prior to the date of this Supplemental Indenture) by any of the provisions of Sections 310 to 317, inclusive, of said Act, such required provisions shall control.

 

  

5

  

(b)    In case any one or more of the provisions contained in this Supplemental Indenture or in the notes issued hereunder should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected, impaired, prejudiced or disturbed thereby.

 

Section 3.04   Whenever in this Supplemental Indenture either of the parties hereto is named or referred to, this shall be deemed to include the successors or assigns of such party, and all the covenants and agreements in this Supplemental Indenture contained by or on behalf of the Company or by or on behalf of the Trustee shall bind and inure to the benefit of the respective successors and assigns of such parties, whether so expressed or not.

 

Section 3.05 

 

(a)    This Supplemental Indenture may be simultaneously executed in several counterparts, and all said counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.

 

(b)    The Table of Contents and the descriptive headings of the several Articles of this Supplemental Indenture were formulated, used and inserted in this Supplemental Indenture for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

 

[Signature page follows]

 

  

6

  

IN WITNESS WHEREOF, OKLAHOMA GAS AND ELECTRIC COMPANY has caused this Supplemental Indenture to be signed by its President or a Vice President, and attested by its Secretary or an Assistant Secretary, and UMB BANK, N.A., as Trustee, has caused this Supplemental Indenture to be signed by its President or Vice President, and attested by a Secretary or an Assistant Secretary, all as of the date first above written.

 

                OKLAHOMA GAS AND ELECTRIC 

                COMPANY

	
  

	
By:

	
/s/ Sean Trauschke

	 

	
  

	
Sean Trauschke

	
  

	
Vice President and Chief Financial Officer

ATTEST:

	
By:

	
/s/ Patricia D. Horn

	 

	
  

	
Patricia D. Horn

	
  

	
Corporate Secretary

                UMB BANK, N.A., as Trustee

	
  

	
By:

	
/s/ Anthony P. Hawkins

	 

	
  

	
Anthony P. Hawkins

	
  

	
Vice President

ATTEST:

	
By:

	
/s/ Lara L. Stevens

	 

	
  

	
Lara L. Stevens

	
  

	
Assistant Secretary

  

7

  

EXHIBIT A

 

 

Form of 5.85% Senior Note, Series due June 1, 2040

 

	REGISTERED 	REGISTERED

 

THIS NOTE IS A GLOBAL NOTE REGISTERED IN THE NAME OF THE DEPOSITARY (REFERRED TO HEREIN) OR A NOMINEE THEREOF AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE 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 BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

OKLAHOMA GAS AND ELECTRIC COMPANY

 

5.85% SENIOR NOTE, SERIES DUE JUNE 1, 2040

 

CUSIP/ISIN:  678858BL4/US678858BL42                                                 NUMBER: R-1

 

ORIGINAL ISSUE DATE(S):                                                                      PRINCIPAL AMOUNT(S):

June 8, 2010                                                                             $250,000,000

 

INTEREST RATE: 5.85%                                                                             MATURITY DATE: June 1, 2040

 

OKLAHOMA GAS AND ELECTRIC COMPANY, a corporation of the State of Oklahoma (the “Company”), for value received hereby promises to pay to CEDE & CO. or registered assigns, the principal sum of

 

TWO HUNDRED FIFTY MILLION DOLLARS

 

on the Maturity Date set forth above, and to pay interest thereon from the Original Issue Date (or if this Global Note has two or more Original Issue Dates, interest shall, beginning on each such Original Issue Date, begin to accrue for that part of the principal amount to which that Original Issue Date is applicable) set forth above or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on June 1 and December 1 

 

  

  

  

in each year, commencing on December 1, 2010, at the per annum Interest Rate set forth above, until the principal hereof is paid or made available for payment. No interest shall accrue on the Maturity Date, so long as the principal amount of this Global Note is paid on the Maturity Date. The interest so payable and punctually paid or duly provided for on any such Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note is registered at the close of business on the Regular Record Date for such interest, which shall be the May 15 or the November 15, as the case may be, next preceding such Interest Payment Date, provided that the first Interest Payment Date for any part of this Note, the Original Issue Date of which is after a Regular Record Date but prior to the applicable Interest Payment Date, shall be the Interest Payment Date following the next succeeding Regular Record Date; and provided that interest payable on the Maturity Date set forth above or, if applicable, upon redemption, repayment or acceleration, shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture (as defined below), any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and shall be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Noteholders not more than fifteen days or fewer than ten days prior to such Special Record Date. On or before 10:00 a.m., New York City time, or such other time as shall be agreed upon between the Trustee and the Depositary, of the day on which such payment of interest is due on this Global Note (other than maturity), the Trustee shall pay to the Depositary such interest in same day funds. On or before 10:00 a.m., New York City time, or such other time as shall be agreed upon between the Trustee and the Depositary, of the day on which principal, interest payable at maturity and premium, if any, is due on this Global Note, the Trustee shall deposit with the Depositary the amount equal to the principal, interest payable at maturity and premium, if any, by wire transfer into the account specified by the Depositary. As a condition to the payment, on the Maturity Date or upon redemption, repayment or acceleration, of any part of the principal and applicable premium of this Global Note, the Depositary shall surrender, or cause to be surrendered, this Global Note to the Trustee, whereupon a new Global Note shall be issued to the Depositary.

 

This Global Note is a global security in respect of a duly authorized issue of 5.85% Senior Notes, Series due June 1, 2040 (the “Notes of this Series,” which term includes any Global Notes representing such Notes) of the Company issued and to be issued under an Indenture dated as of October 1, 1995 between the Company and UMB Bank, N.A., as successor trustee (the “Trustee,” which term includes any subsequent successor Trustee under the Indenture) to Boatmen’s First National Bank of Oklahoma, and indentures supplemental thereto (collectively, the “Indenture”). Under the Indenture, one or more series of notes may be issued and, as used herein, the term “Notes” refers to the Notes of this Series and any other outstanding series of Notes. Reference is hereby made to the Indenture for a more complete statement of the respective rights, limitations of rights, duties and immunities under the Indenture of the Company, the Trustee and the Noteholders and of the terms upon which the Notes are and are to be authenticated and delivered. This Global Note has been issued in respect of the series designated on the first page hereof.

 

Each Note of this Series shall be dated and issued as of the date of its authentication by the Trustee and shall bear an Original Issue Date or Dates. Each Note or Global Note issued upon transfer, exchange or substitution of such Note or Global Note shall bear the Original Issue 

 

  

A-2

  

Date or Dates of such transferred, exchanged or substituted Note or Global Note, as the case may be.

 

The Company, at its option, may redeem on any date all or, from time to time, any part of this Global Note, upon notice as provided in the Indenture, at a redemption price equal to the greater of (i) 100% of the principal amount of this Global Note to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued to the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 25 basis points, plus in each case accrued and unpaid interest thereon to the date of redemption.

 

“Treasury Rate” means, with respect to any redemption date (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life (as defined below), yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.  The Treasury Rate will be calculated on the third business day preceding the date fixed for redemption.

 

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

 

“Comparable Treasury Price” means (1) the average of five Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Independent Investment Banker” means Mizuho Securities USA Inc., RBS Securities Inc., UBS Securities LLC or another independent investment banking institution of national standing appointed by the Company.

 

“Reference Treasury Dealer” means (1) each of Mizuho Securities USA Inc., RBS Securities Inc. and UBS Securities LLC or their respective successors, and any other primary 

 

  

A-3

  

U.S. government securities dealer in the United States (a “Primary Treasury Dealer”) selected by Mizuho Securities USA Inc., RBS Securities Inc. or UBS Securities LLC or their respective successors, provided, however, that if any of the foregoing ceases to be a Primary Treasury Dealer, the Company will substitute therefor another Primary Treasury Dealer and (2) any other Primary Treasury Dealer selected by the Company after consultation with the Independent Investment Banker.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such redemption date.

 

Notice of redemption will be given by mail or by electronic communication (including e-mail) to Holders of Notes of this Series not less than 30 or more than 60 days prior to the date fixed for redemption, all as provided in the Indenture. In the event of redemption of this Global Note in part only, a new Global Note or Notes of like tenor and series for the unredeemed interest hereof will be issued in the name of the Noteholder hereof upon the surrender hereof.

 

Interest payments for this Global Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months. If any Interest Payment Date or date on which the principal of this Global Note is required to be paid is not a Business Day, then payment of principal, premium or interest need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date or date on which the principal of this Global Note is required to be paid and, in the case of timely payment thereof, no interest shall accrue for the period from and after such Interest Payment Date or the date on which the principal of this Global Note is required to be paid.

 

The Company, at its option, and subject to the terms and conditions provided in the Indenture, will be discharged from any and all obligations in respect of the Notes (except for certain obligations including obligations to register the transfer or exchange of Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and hold monies for payment in trust, all as set forth in the Indenture) if the Company deposits with the Trustee money, U.S. Government Obligations which through the payment of interest thereon and principal thereof in accordance with their terms will provide money, or a combination of money and U.S. Government Obligations, in any event in an amount sufficient, without reinvestment, to pay all the principal of and any premium and interest on the Notes on the dates such payments are due in accordance with the terms of the Notes.

 

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

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modifications of the rights and obligations of the Company and the rights of the Noteholders 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 outstanding Notes. Any such consent or waiver by the Holder of this Global Note shall be conclusive and binding upon such 

 

  

A-4

  

Holder and upon all future Holders of this Global Note and of any Note issued upon the registration of transfer hereof or in exchange therefor or in lieu thereof whether or not notation of such consent or waiver is made upon the Note.

 

As set forth in and subject to the provisions of the Indenture, no Holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to such Notes, the Holders of not less than a majority in principal amount of the outstanding Notes affected by such Event of Default shall have made written request and offered reasonable indemnity to the Trustee to institute such proceeding as Trustee and the Trustee shall have failed to institute such proceeding within 60 days; provided that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of and any premium or interest on this Note on or after the respective due dates expressed here.

 

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

 

As provided in the Indenture and subject to certain limitations therein set forth, this Global Note may be transferred only as permitted by the legend hereto.

 

If at any time the Depositary for this Global Note notifies the Company that it is unwilling or unable to continue as Depositary for this Global Note or if at any time the Depositary for this Global Note shall no longer be eligible or in good standing under the Securities Exchange Act of 1934, as amended, or other applicable statute or regulation, the Company shall appoint a successor Depositary with respect to this Global Note. If a successor Depositary for this Global Note is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company’s election to issue this Note in global form shall no longer be effective with respect to this Global Note and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Notes of this Series in exchange for this Global Note, will authenticate and deliver individual Notes of this Series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of this Global Note.

 

The Company may at any time and in its sole discretion determine that all Notes of this Series (but not less than all) issued or issuable in the form of one or more Global Notes shall no longer be represented by such Global Note or Notes. In such event, the Company shall execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Notes of this Series in exchange for such Global Note, shall authenticate and deliver, individual Notes of this Series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of such Global Note or Notes in exchange for such Global Note or Notes.

 

Under certain circumstances specified in the Indenture, the Depositary may be required to surrender any two or more Global Notes which have identical terms (but which may have 

 

  

A-5

  

differing Original Issue Dates) to the Trustee, and the Company shall execute and the Trustee shall authenticate and deliver to, or at the direction of, the Depositary a Global Note in principal amount equal to the aggregate principal amount of, and with all terms identical to, the Global Notes surrendered thereto and that shall indicate all Original Issue Dates and the principal amount applicable to each such Original Issue Date.

 

The Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of Oklahoma.

 

Unless the certificate of authentication hereon has been executed by the Trustee, directly or through an Authenticating Agent by manual signature of an authorized signatory, this Global Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

All terms used in this Global Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture unless otherwise indicated herein.

 

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

 

 

	
  

	
OKLAHOMA GAS AND ELECTRIC 

COMPANY

               By:                                                                                                

Dated:                                                                         Attest:                                                                                                                               

TRUSTEE’S CERTIFICATE

OF AUTHENTICATION

 

This Note is one of the Notes of the series 

herein designated, described or provided for in 

the within-mentioned Indenture.

 

UMB BANK, N.A., as Trustee

By:                                                                   

Authorized Signatory

 

  

A-6

  

ABBREVIATIONS

 

 

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

 

	
TEN COM - as tenants in common

	
UNIF GIFT

	  	
MIN ACT - _______Custodian____________

	  	  	
                      (Cust)                         (Minor)

	
TEN ENT - as tenants by the entireties

	
Under Uniform Gifts to Minors

	
JT TEN - as joint tenants with right of survivor-

	
ship and not as tenants in common

	  
	  	
State

	
Additional abbreviations may also be used

	
though not in the above list.

	
__________________

	
FOR VALUE RECEIVED the undersigned hereby sell(s),

	
assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

 

	
 

 

	
 

 

	
 

 

 

 

	
Please print or typewrite name and address

	
including postal zip code of assignee

	 	 
	
the within note and all rights thereunder, hereby

irrevocably constituting and appointing attorney

to transfer said note on the books of the

Company, with full power of substitution in the

premises.

	
Dated

	 	 

	  	  
	  	
NOTICE: The signature to this assignment must 

correspond with the name as written upon the 

face of the within instrument in every particular, 

without alteration or enlargement or any change 

whatever.

 

 

  

A-7

  

 

	  	Signature Guaranteed By:
	  	
 

 

	  	  
	  	

(Name of Eligible Guarantor Institution as 

defined by SEC Rule 17 Ad-15 (17 CFR 240.17 

Ad-15))

 

 

	 	By:	
 

	  	Name:  
	 	Title: 

 

 

	A-8EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of June 12, 2010 by and among Presidential Life Insurance Company ("Employer"), 69 Lydecker Street, Nyack, New York 10960, Presidential Life Corp. ("PLC"), 69 Lydecker Street, Nyack, New York 10960, and Paul B. Pheffer (“Officer"), 4105 Southern Pine Court, Columbia, Missouri 65203. 

WITNESSETH:

WHEREAS, Employer and PLC desire to retain the benefit of the services of Officer; and

WHEREAS, Officer desires to be employed by Employer and PLC; and 

WHEREAS, Employer and Officer desire to set forth the terms and conditions of Officer's employment with Employer and PLC in this Agreement. 

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows: 

1.

Term.  (a) Employer and PLC agree to employ Officer and Officer agrees to serve Employer and PLC in accordance with the terms hereof, for a term beginning on June 12, 2010 and ending on December 31, 2012, unless extended to December 31, 2013 or earlier terminated in accordance with the provisions of this Agreement (the “Employment Term"). 

(b)

If Officer is still employed by Employer on December 31, 2012, this Agreement shall automatically renew for an additional term of one year from January 1, 2013 to December 31, 2013, unless written notice of non-renewal is provided by either Employer or Officer on or prior to October 1, 2012. Unless extended thereafter by written mutual agreement, the Employment Term shall end on December 31, 2013. 

2.

Effective Date of Agreement. This Agreement will be presented to the Boards of Directors of Employer and PLC and will not be effective until it shall first have been approved by said Boards (both Boards of Directors being hereinafter referred to singly as the “Board” and jointly as the “Boards”; it being understood that with respect to a compensation or benefit plan or policy maintained by PLC, “Board” shall refer to the PLC Board, and with respect to a compensation or benefit plan or policy maintained by Employer, “Board” shall refer to the Employer Board). 

 

3.

Position, Duties and Responsibilities. Employer and Officer hereby agree that, subject to the provisions of this Agreement, Officer shall serve as Senior Vice President, Chief Financial Officer, and Treasurer of Employer and PLC.  Employer agrees that Officer shall have the authority and duties customary for the position of Senior Vice President, Chief Financial Officer, and Treasurer and generally consistent with the authority and duties of persons holding his positions in similarly situated entities.   Officer shall have such executive power and authority 

as shall reasonably be required to enable him to discharge his duties in the offices which he may hold. The Employer shall pay all compensation paid to the Officer.  

4.

Scope of This Agreement and Outside Affiliations.  During the term of this Agreement, Officer shall devote his full business time and energy, except as expressly provided below, to the business, affairs and interests of Employer and PLC, and matters related thereto. Officer shall report and be subject only to the President and Chief Executive Officer of Employer and PLC.  Officer shall be indemnified and covered by directors' and officers' liability insurance of PLC with regard to his service as an officer of Employer and PLC.  Officer may make and manage personal business investments of his choice and serve in any capacity with any civic, educational or charitable organization, or any governmental entity or trade association, without seeking or obtaining approval of either the Board of PLC or Employer, provided such activities and services do not materially interfere or conflict with the performance of his duties hereunder and are consistent with PLC’s Code of Conduct and Code of Ethics.  Officer may serve as a director (or on the advisory committee) of corporations or other business enterprises with the prior written approval of the President of PLC, which shall not be unreasonably withheld, provided such activities or services do not materially interfere or conflict with the performance of the Officer's duties hereunder.

5.

Compensation and Benefits.  (a) Base Salary. During the Employment Term, Employer shall pay to Officer a base salary at the annual rate of $350,000 (the "Base Salary"), payable in accordance with Employer’s regular payroll practices.  The Board may provide annual increases (but not decreases) in the Officer’s Base Salary in line with those received by management of Employer and reflective of the Officer’s performance, as such performance is determined by the Board.  

(b)

Incentive Compensation. Officer will participate in any Employer’s and/or PLC’s incentive plan(s), if such a plan(s) is in effect and implemented, or any other incentive or bonus provisions approved by the Board for the Officer.  The parties acknowledge that except as set forth in Section 5(c) there is not currently in existence such an incentive plan. The Board will determine performance goals and criteria in good faith for evaluating the Officer’s annual performance, as well as assess the Officer’s achievement of such performance goals and criteria, for any such annual incentive or bonus opportunity.  However, notwithstanding the foregoing, Officer shall be eligible for a minimum bonus each year equal to thirty five percent (35%) of his Base Salary, pro-rated for any partial year, with the period June 12, 2010 through December 31, 2010 counting as half a year so Officer is eligible for a bonus of $61,250 ($350,000 x 35% = $122,500/12 x 6).  Officer’s bonus may be greater if certain targets are established and exceeded. 

(c)

Equity Compensation. Officer will participate in any grants of stock options, restricted stock, or other equity-based grants under the PLC’s 2006 Stock Incentive Plan, if the Board makes such grants during the Employment Term, applying performance criteria it determines appropriate for determining the number of shares for any equity related grant. 

(d)

Additional Benefits. (i) Officer shall also be entitled to participate, at a level commensurate with other executives of Employer, in the Employer’s and/or PLC’s retirement income plan(s) and other plans and benefits, including medical, vision, executive physicals, 

prescription, dental, employee and group life, accidental death and travel accident insurance.  However, such benefits shall not be duplicative of the incentive compensation arrangements that may be paid to Officer under Sections 5(b) and 5(c) of this Agreement during the Employment Term as well as any benefits or rights specifically provided for Officer (collectively, "Additional Benefits").  With respect to the Employer's 401K plan, Officer shall be entitled to a contribution from the Company for the second half of 2010 (to the extent allowable under the plan), subject, however, to the normal vesting requirements of such plan.

(ii)

Officer shall be entitled to paid vacation in accordance with Employer's vacation policy, but in no event less than four (4) weeks per annum.  Vacation time may be accrued in accordance with the policy of Employer, but at least three weeks of the vacation time shall be used annually.  Attendance at meetings of approved professional and community organizations will not be considered vacation or other paid time off.

(iii)

This Agreement shall not affect the provisions of any other compensation, retirement income or other benefit program or plan provided to Officer by either Employer or PLC, except as explicitly provided herein.

(e)

Other Benefits. Officer will be provided with other employee benefits as determined by the Boards of Employer and/or PLC from time to time.

(f)

Relocation Expense.

Officer shall be reimbursed for up to $75,000 in moving expenses to re-locate from Missouri upon submission of receipts for such expenses.  

6.

Termination. The compensation and benefits provided for herein and the employment of Officer shall be terminated only as provided for below in this Section 6.  For purposes of this Agreement, a termination shall be deemed to occur only upon the termination of Officer’s employment.

(a)

Disability. In the event that Officer shall fail, because of physical or mental infirmity or similar incapacity, to render for one hundred eighty consecutive days, or for shorter periods aggregating one hundred eighty or more days in any twelve month period, the material services contemplated by this Agreement ("Disability"), Officer's employment hereunder may be terminated, by written Notice of Termination (as defined in Section 6(h)) from Employer to Officer.  Upon Officer's termination from employment: 

(i)

Employer shall pay Officer his Base Salary for two years, less amounts, if any, paid from short-term and long-term disability coverage (self-insured or otherwise) provided by Employer or PLC,

(ii)

Employer shall pay Officer any pro-rated awards under any annual incentive plan or provision, if in effect and implemented, in accordance with the provisions of such plan or provision as approved by the Board,

(iii)

Any of Officer's outstanding unvested options, restricted stock grants, and any other equity grants shall become immediately vested, and any vested options shall remain exercisable in accordance with the terms of the grant, 

(iv)

To the full extent permitted by law, so long as either Employer or PLC (or a successor) maintains directors' and officers' liability insurance for its executives or directors, Employer shall continue to provide Officer following the Termination Date (as defined in Section 6(h)) with directors' and officers' liability insurance coverage (“D&O Coverage”).  The D&O Coverage (the "Coverage Protection") will continue to insure Officer against insurable events which occur or have occurred while Officer was a director or officer of Employer or PLC to the extent it had done so in the past.  The Coverage Protection shall be under the same terms and conditions as that enjoyed by the then current directors and officers of PLC.  In addition, Officer's rights of indemnification under any other agreement or under the by-laws or certificate of incorporation of both PLC and Employer (the “Rights of Indemnification”) prior to such termination shall continue pursuant  to the terms of such agreements, by-law or certificate of incorporation as the case may be, and 

(v)

Officer shall be entitled to his accrued rights, including but not limited to earned but unpaid Base Salary, accrued but unused vacations, and any earned but unpaid Additional Benefits pursuant to the applicable plan or program in accordance with the terms of such plan or program.

(b)

Death. In the event of Officer's death during the term of this Agreement, the Officer's employment shall be deemed terminated as of the date of Officer's death.  Officer's estate shall be entitled to the following: 

(i)

Officer’s Base Salary until the date of death

(ii)

Pro-rated awards under any annual incentive plan or provision, if in effect and implemented, in accordance with the provisions of such plan or provision as approved by the Board,

(iii)

Any of Officer's outstanding unvested options, restricted stock grants, and any other equity grants shall become immediately vested, and any vested options shall remain exercisable in accordance with the terms of the grant,

(iv)

Officer’s Coverage Protection and Rights of Indemnification shall continue pursuant to their terms, and

(v)

Officer accrued rights, including but not limited to earned but unpaid Base Salary, accrued but unused vacation pay, and any earned but unpaid Additional Benefits pursuant to the applicable plan or program in accordance with the terms of such plan or program.

(c)

Cause. Employer and/or PLC may terminate Officer's employment under this Agreement for "Cause." A termination for Cause is a termination from employment by reason of (i) Officer's conviction by a court of competent jurisdiction of a felony (or entry of a plea of 

guilty or nolo contendere) involving acts of theft, fraud, embezzlement, dishonesty or moral turpitude, (ii) entry of a final order duly issued by any federal or state regulatory agency having jurisdiction in the matter removing Officer from serving as an officer of Employer or permanently prohibiting him from participating in a material portion of the affairs of Employer, (iii) embezzlement or diversion of Employer’s or PLC’s funds or other similar actions unequivocally demonstrating untrustworthiness, or (iv) material neglect of duties or material misconduct which, if curable, is not cured by Officer within fourteen (14) days after written notice thereof is given to Officer by Employer, unless such neglect resulted from Officer’s incapacity due to physical or mental illness.

Upon termination for Cause, Officer shall receive his Base Salary through the Termination Date, accrued vacation pay and other Additional Benefits pursuant to the applicable plan or program in accordance with the terms of such plan or program.  Officer's Coverage Protection and Rights of Indemnification shall continue subject, however, to their terms.  Officer shall not be entitled to any severance or bonus and all options shall expire and unvested restricted stock be forfeited on the Termination Date. Anything herein to the contrary notwithstanding, termination for Cause shall not include termination by reason of Officer's job performance or a job performance rating given to Officer for his job performance or the financial performance of either Employer or PLC.

(d)

Other Than For Disability, Cause, or in Connection With a Change in Control. If during the term of this Agreement, Employer shall cause Officer to be terminated from employment other than for Disability, Cause or in connection with a Change in Control as provided in Section 6(g), then:

(i)

Subject to the provisions of Section 6(j), Employer shall pay Officer a lump sum amount equal to his Base Salary for that number of months equal to the number of months remaining in the Employment Term (as determined immediately prior to the Termination Date), but for not more than eighteen (18) months or less than twelve (12) months. 

(ii)

Officer shall be paid his annual incentive award, if in effect and implemented, based on the prorated results of the annual incentive amount as determined by the Board for the year of termination if at least three calendar months have elapsed within that year prior to termination. This payment shall apply only to the year of termination and any payment made to Officer shall be made in the year after the year of termination, subject to compliance with the provisions of Section 6(j).

(iii)

Officer shall receive all other Additional Benefits for a two-year period from the Termination Date pursuant to the applicable plan or program in effect and implemented in accordance with the terms of such plan or program.  Notwithstanding the preceding sentence, the right to coverage under any plan or program referred to in such sentence, in connection with a separation from service described in the first sentence of this Section 6(d) or in any other provision of this Agreement referring to payments and benefits described in this clause (iii) of Section 6(d), or in connection with a termination of employment described in either Sections  6(e) or 6(g), shall be limited to such period of time, if any, as would be permitted to be provided under Treasury Reg. §1.409A-1(b)(9)(v) without constituting a “deferral of compensation” 

within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).  In particular (but without limitation), (x) any medical insurance or benefit shall be continued only for such period of time during which Officer would be entitled to continuation coverage under COBRA, and (y) any reimbursement, not otherwise excludible from gross income, of expenses that Officer could otherwise deduct under Section 162 or Section 167 as business expenses, shall not include reimbursement for expenses incurred in periods after the last day of the second calendar year following the calendar year during which the separation from service occurred, and any such reimbursement shall be paid by the end of the third calendar year following the calendar year in which the separation from service occurred. 

 

(iv)

Officer's Coverage Protection and Rights of Indemnification shall continue subject, however, to their terms.

(v)

Any of Officer's outstanding unvested options, restricted stock grants, and any other equity grants shall become immediately vested, and any vested options shall remain exercisable in accordance with the terms of the grant.

(vi)

Officer shall be entitled to his accrued rights, including but not limited to earned but unpaid Base Salary, accrued but unused vacations, and any earned but unpaid Additional Benefits pursuant to the applicable plan or program in accordance with the terms of such plan or program.

(e)

Good Reason. Officer may terminate Officer's employment at any time for "Good Reason." "Good Reason" means that any one or more of the following have occurred without Officer's written consent (other than as a result of Officer's Disability or termination of Officer's employment for Cause) which is not cured by Employer within fourteen (14) days after written notice thereof is given to Employer by Officer: 

(i)

Any material diminution in Officer's duties and/or authorities, 

(ii)

Any material diminution in Officer’s Base Salary,

(iii)

A material relocation of Officer’s office from its current location, or

(iv)

Any other action or inaction that constitutes a material breach of this Agreement by Employer or PLC.

If during the term of this Agreement, Officer is separated from employment on account of Officer's resignation for Good Reason (other than in connection with a Change in Control as provided in Section 6(g)), Officer shall receive the payments and benefits described in Section 6(d).

(f)

Voluntary Resignation. If during the term of this Agreement, Officer shall resign other than for Good Reason, then upon such termination from employment Officer shall be entitled to receive the payments and benefits described in Section 6(c).

(g)

Change in Control. Notwithstanding anything to the contrary, during the term of this Agreement, if within twenty four months after a Change in Control, as defined in Exhibit A annexed hereto, Officer is terminated from employment by either (x) Employer other than for Death, Cause or Disability or (y) Officer for Good Reason, then: 

(i)

Subject to the provisions of Section 6(j), Employer shall pay Officer a lump sum amount equal to two times his Base Salary.

(ii)

Employer shall provide Officer medical insurance for the shorter of the following periods:  (x) for three years following termination, or (y) the period that Officer would be entitled to coverage under COBRA.

(iii)

Officer shall receive all other Additional Benefits pursuant to the applicable plan or program in effect and implemented in accordance with the terms of such plan or program.

(iv)

Officer shall be entitled to the Coverage Protection and Rights of Indemnification.

(v)

Any of Officer's outstanding unvested options, restricted stock grants, and any other equity grants shall become immediately vested, and any vested options shall remain exercisable in accordance with the terms of the grant.

(vi)

Officer shall be entitled to his accrued rights, including but not limited to earned but unpaid Base Salary, accrued but unused vacations, and any earned but unpaid Additional Benefits pursuant to the applicable plan or program in accordance with the terms of such plan or program.

(vii)

If there is an action relating, directly or indirectly, to Officer's rights under Section 6(g) of this Agreement, Officer shall be entitled to recover from Employer his expenses in such action including reasonable attorney's fees.

(viii)

Anything in this Agreement to the contrary notwithstanding, if it shall be determined that any payment or distribution to Officer or for Officer's benefit (whether paid or payable or distributed or distributable) pursuant to any of the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option, stock appreciation right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (the "Payments") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code by reason of being "contingent on a change in the ownership or control" of Employer, within the meaning of Section 280G of the Internal Revenue Code or to any similar tax imposed by state or local law, or any interest or penalties with respect to such excise tax (such tax or taxes, together with any such interest or penalties, are collectively referred to as the "Excise Tax"), then the Payments shall be reduced such that the aggregate present value of the payments in the nature of compensation to or for the benefit of Officer which are contingent on such change (as determined in the manner set forth in Treasury Regulations under Section 280G) 

equals 299% of the "base amount" as defined in Section 280G(b)(3).  In making the reduction described in the preceding sentence, the first Payments to be reduced shall be the payments made as a continuation of Base Salary.  If the Payment is a lump sum, the amount shall be reduced.  If the Payments are to be made over time, then by shortening the period after termination of employment during which such Payments would otherwise be made.

(h)

Notice of Termination. Any purported termination of employment by Employer or by Officer shall be communicated by a written Notice of Termination to the other party hereto which indicates the specific termination provision in this Agreement, if any, relied upon.  The written Notice of Termination shall set forth in reasonable detail the facts and circumstances, if any, claimed to provide a basis for termination of Officer's employment under the provision so indicated. For purposes of this Agreement, no such purported termination shall be effective without such Notice of Termination.  The "Termination Date" shall mean the date of termination or separation from employment, as the case may be, which shall be specified in the Notice of Termination.

(i) 

Termination of Employment.  For all purposes under this Agreement, and notwithstanding any provision in Section 6(h) or elsewhere in this Agreement to the contrary, the phrases "termination of employment", "date of termination”, “separation from employment", "Termination Date", and any phrase of similar meaning, shall mean the date on which there is a "separation from service" of Officer from Employer and PLC within the meaning of Treasury Reg. §1.409A-1(h)(1).

(j) 

Six-Month Delay for Payments to Specified Employee.  If Officer is a Specified Employee (as defined below) as of the date of his termination of employment under this Agreement, notwithstanding any other provision of this Agreement, any payment to Officer upon a termination of employment described in Sections 6(a), 6(c), 6(d), 6(e), 6(f), or 6(g) (including, without limitation, any payment under Section 8(c)) will be accumulated (the "Accumulated Amount") and Officer's right to receive payment or distribution of such Accumulated Amount will be delayed until the earlier of Officer's death or the first day of the seventh month following the Termination Date (the "Termination Payment Date"), whereupon the Accumulated Amount will be paid or distributed to Officer and the normal payment or distribution schedule for any remaining payments or distributions will resume.  During the period during which the payment of the Accumulated Amount is delayed pursuant to Code Section 409A, such amount will be set aside in a "rabbi trust" (within the meaning of Internal Revenue Service Revenue Procedure 92-64) established by Employer for purposes of holding the funds constituting the Accumulated Amount.  Such funds shall be invested in short-term United States Government obligations until the Termination Payment Date, and an amount equal to the interest earned on obligations held by the rabbi trust shall be paid to Officer on the Termination Payment Date or, if later, the date the Termination Payment is actually paid to Officer.

For purposes of this Agreement, the term “Specified Employee” has the meaning given such term in Section 409A and the Treasury Regulations thereunder, provided, however, that, as permitted in said regulations, Employer’s Specified Employees and its application of the six-month delay rule of Section 409A(a)(2)(B)(i) shall be determined in accordance with rules, if any, adopted by the Board of Employer or a committee thereof, which shall be applied 

consistently with respect to all nonqualified deferred compensation arrangements of Employer, including this Agreement.

(k)

In all places in Section 6 or in Section 8 where Officer is to be paid his Base Salary, it shall be paid in accordance with Employer’s regular payroll practices, unless otherwise specified, subject to the provisions of Section 6(j).

7.

Reimbursement of Business Expenses. During the term of this Agreement, Employer shall reimburse Officer promptly for all reasonable and appropriate business expenditures to the extent that such expenditures are substantiated by Officer as required by the Internal Revenue Service and rules and policies of Employer.  Employer will make any payments required under this Section 7 within thirty days after delivery of Officer's written requests for payment, accompanied by such evidence of expenses incurred as the Employer may reasonably require, but in no event later than December 31 of the year following the year in which the expense was incurred. The amount reimbursable for any one year shall not affect the amount reimbursable in any other year.  Officer's right to reimbursement pursuant to this Section 6 shall not be subject to liquidation or exchange for another benefit. 

8.

No Solicitation and Non-Compete. 

(a)

No Solicitation.  Officer agrees that during employment and for a period of twelve (12) months following the Termination Date, Officer shall not: (i) solicit, or cause to be solicited, any customers of Employer, PLC or their affiliates if it is for the purposes of promoting or selling any products or services competitive with those of Employer or PLC, (ii) solicit business from, or perform services for, any company or other business entity which at any time during the two year period immediately preceding Officer's termination of employment was a customer of Employer, PLC or their affiliates, or (iii) solicit for employment, offer, or cause to be offered, employment, either on a full time, part time, or consulting basis, to any person who was employed by Employer, PLC or their affiliates on the date Officer's employment terminated, unless Officer shall have received the prior written consent of Employer or PLC, or such person has ceased for six months to be employed by Employer, PLC or their affiliates and Officer was not involved, directly or indirectly, in the termination of such person's employment with Employer, PLC or their affiliates.  The foregoing clauses (i) through (iii) shall be violated only by the personal solicitation or personally directed and targeted solicitation by Officer and not by (A) general marketing or solicitation, (B) solicitation by other employees of entities employing Officer, if those solicited are not specifically identified by Officer, or (C) the providing of services by Officer's new employer to companies or other business entities not so solicited by Officer.

(b)

Non-Compete.  Officer agrees that while employed and for a period of twelve (12) months after his employment ends for whatever reason, Officer shall not, directly or indirectly, own, manage, operate, control, be employed by, participate in or be connected in any manner with the ownership, management, operation or control of any business similar to the type of business conducted by Employer or PLC.  The area covered by this restrictive covenant is in any state in which Employer does business. 

(c)

Continuation of Base Salary and Injunctive Relief.  Employer shall continue to pay Officer his Base Salary for twelve (12) months after the Termination Date (provided the termination is pursuant to either Sections 6(d), (e), (f) or (g)) so long as Officer complies with both the no solicitation and non-compete provisions of Sections 8(a) and (b) of this Agreement.  The payments provided for in this Section 8(c) are in addition to the payments upon termination of employment provided for in Section 6 of this Agreement.  Officer’s violation of any of the provisions of Sections 8(a) or (b) of this Agreement shall result in forfeiture of all payments scheduled to be made under this Section 8(c) after the date of the first violation. In addition, Employer shall be entitled to injunctive relief if Officer violates any of the provisions of Sections 8(a) or (b).

9.

Miscellaneous.

(a)

Successorship. 

(i)  The Officer. This Agreement is personal to the Officer and shall not be assignable by the Officer, except that the Officer’s rights to receive any compensation or benefits under this Agreement may be transferred or disposed of pursuant to testamentary disposition, intestate succession or pursuant to a domestic relations order of a court of competent jurisdiction. This Agreement shall inure to the benefit of and be enforceable by the Officer’s heirs, beneficiaries and/or legal representatives.

(ii) The Employer. This Agreement shall inure to the benefit of and shall be binding upon Employer and PLC and their successors and assigns.  The failure of any successor to or assignee of Employer's business and/or assets in such transaction to expressly assume all obligations of Employer hereunder in a writing promptly delivered to Officer shall be deemed a material breach of this Agreement by Employer.

(b)

Notices. Any notices provided for in this Agreement shall be sent to Employer at its corporate headquarters, Attention: Chief Executive Officer, with a copy to the Chairman of the Board of Directors of PLC at his home address or to such other address as Employer may from time to time in writing designate.  Notices to Officer shall be sent to the address set forth above or such address as he may from time to time in writing designate (or an additional copy to his business address of record in the absence of such designation).  Copies of all notices to Employer shall be given to Aronauer, Re & Yudell, LLP, 444 Madison Avenue, 17th Floor, New York, New York 10022, Attention: Joseph Aronauer, Esq. Copies of all notices to Officer shall be given to [INSERT NAME AND ADDRESS OF OFFICER’S ATTORNEY].  All notices shall be deemed to have been given on the same day they are personally delivered or one (1) business day after they have been sent by overnight delivery service.  Notices and copies of all notices shall be delivered either personally or by overnight delivery service.  Any party to this Agreement may change the person to whom or the address where notice shall be sent.

(c)

Entire Agreement. This instrument contains the entire agreement of the parties relating to the subject matter hereof, and it replaces and supersedes any prior agreements between the parties relating to said subject matter.  Notwithstanding anything to the contrary, this Agreement does not supersede any existing or future indemnity agreement, outstanding equity 

grants or awards or existing rights under any plan or program except as specifically provided herein. No modifications or amendments of this Agreement shall be valid unless made in writing and signed by the parties hereto. 

(d)

Waiver. The waiver of the breach of any term or of any condition of this Agreement shall not be deemed to constitute the waiver of any other breach of the same or any other term or condition.

(e)

New York Law. This Agreement shall be construed and interpreted in accordance with the laws of the state of New York without reference to principles of conflict of laws.

(f)

Severability. If any provision of this Agreement is held invalid or unenforceable, the remainder of this Agreement shall nevertheless remain in full force and effect, and if any provision is held invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstance. 

(g)

No Obligation to Mitigate. Officer shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise.  No payment hereunder shall be offset or reduced by the amount of any compensation or benefits provided to Officer in any subsequent employment except as may be expressly otherwise provided by Section 6.  Employer's obligation to make any payment provided for in this Agreement shall not be subject to set-off, counterclaim or recoupment.

(h) 

Withholding.  Employer may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes (including, without limitation, social security taxes and other impositions of a similar nature) as shall be required to be withheld pursuant to any applicable law or regulation.

(i) 

Interpretation.  This Agreement is intended to comply with the provisions of Section 409A and the Treasury Regulations thereunder and shall be interpreted in a manner consistent with such intent.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written. 

PRESIDENTIAL LIFE INSURANCE COMPANY

By:    /s/ Donald L. Barnes

Donald L. Barnes

President and Chief Executive Officer

PRESIDENTIAL LIFE CORP.

By:    /s/ Donald L. Barnes                                                      /s/ Paul B. Pheffer

     

Donald L. Barnes

Paul B. Pheffer

President and Chief Executive Officer

EXHIBIT A

A "Change in Control" shall mean the occurrence during the term of the Agreement, of any one of the following events: 

A.

The date a majority of PLC’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of PLC’s board of directors before the date of the appointment or election; or 

B.

The date a change in the ownership of either PLC or Employer occurs.  For purposes of this paragraph, a change in ownership occurs (except as provided in Treasury Regulation §1.409A-3(i)(5)(vi)(C)) on the date that any one person or more than one person acting as a group (as defined in Treasury Regulation §1.409A-3 (i)(5)(v)(B)) acquires ownership of the stock of either PLC or Employer that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value of the stock of PLC or Employer, as the case may be; or

C.

The date a change in the ownership of a substantial portion of Employer’s assets occurs.  For purposes of this paragraph, a change in the ownership of a substantial portion of assets occurs on the date that any one person, or more than one person acting as a group (as defined in Treasury Regulation §1.409A-3(i)(5)(v)(B)), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from Employer that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of Employer (as the case may be) immediately before such acquisition or acquisitions.  For the purposes of this paragraph, gross fair market value has the meaning set forth in Treasury Regulation §1.409A-3(i)(5)(vii)(A). Notwithstanding the above provisions of this paragraph C, no change in ownership shall be deemed to have occurred by reason of a transfer of assets to a related entity as described in Treasury Regulation §1.409A-3(i)(5)(vii)(B).

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}]]