Document:

ex4a.htm

Exhibit 4(a)

August 16, 2012

Company Order and Officers' Certificate

Floating Rate Notes, Series D, due 2013

The Bank of New York Mellon Trust Company, N.A.

2 North LaSalle Street

Chicago, Illinois

Ladies and Gentlemen:

Pursuant to Article Two of the Indenture, dated as of January 1, 1998 (as it may be amended or supplemented, the "Indenture"), from Appalachian Power Company (the "Company") to The Bank of New York Mellon Trust Company, N.A., as successor to The Bank of New York, as trustee (the "Trustee"), and the Board Resolutions dated December 13, 2011, a copy of which, as certified by the Secretary or an Assistant Secretary of the Company, is being delivered herewith pursuant to Section 2.01 of the Indenture, and unless otherwise provided in a subsequent Company Order pursuant to Section 2.04 of the Indenture,

	
1.

	
The Company's Floating Rate Notes, Series D, due 2013 (the "Notes") are hereby established. The Notes shall be in substantially the form attached hereto as Exhibit 1.

	
2.

	
The terms and characteristics of the Notes shall be as follows (the numbered clauses set forth below correspond to the numbered subsections of Section 2.01 of the Indenture, with terms used and not defined herein having the meanings specified in the Indenture or in the Notes):

	
  

	
(i)

	
the aggregate principal amount of Notes which may be authenticated and delivered under the Indenture shall be limited to $275,000,000, except as contemplated in Section 2.01(i) of the Indenture;

	
  

	
(ii)

	
the date on which the principal of the Notes shall be payable shall be August 16, 2013 ("Stated Maturity");

	
  

	
(iii)

	
interest on the Notes shall be payable on February 16, May l6, August 16 and November 16 of each year (each, an "Interest Payment Date"), commencing on November 16, 2012 and shall accrue from and including the date of authentication of the Notes to, but excluding, November 16, 2012, and thereafter, from and including each Interest Payment Date to, but excluding, the next succeeding Interest Payment Date or Stated Maturity, as the case may be; the Regular Record Date for the determination of holders to whom interest is payable on any such Interest Payment Date shall be the fifteenth calendar day preceding the relevant Interest Payment Date; provided that interest payable on Stated Maturity shall be paid to the Person to whom principal shall be paid;  If any Interest Payment Date (other than at the Stated Maturity) is not a Business Day, then such Interest Payment Date shall

 

  

  

  

 

	
  

	
 

	
be the next succeeding Business Day, except that if such Business Day is in the next calendar month, such Interest Payment Date shall be the immediately preceding Business Day.  If the Stated Maturity of this Note falls on a day that is not a Business Day, the payment of principal and interest will be made on the next succeeding Business Day, and no interest shall accrue on such amounts for the period from and after such Stated Maturity;

 

	
  

	
(iv)

	
the Notes will bear interest for each quarterly Interest Period at a per annum rate ("Interest Rate") determined by the Calculation Agent, subject to the maximum interest rate permitted by New York or other applicable state law, as such law may be modified by United States law of general application.  The Interest Rate for each Interest Period will be equal to LIBOR on the Interest Determination Date for such Interest Period plus 0.375%; provided, however,  that in certain circumstances described below, the Interest Rate will be determined  by substituting bank quotations for LIBOR or by using LIBOR from the previous Interest Period, in each case plus the applicable spread.

If the following circumstances exist on any Interest Determination Date, the Calculation Agent shall determine the Interest Rate for the Notes as follows:

(1)  If such rate does not appear on the Reuters LIBOR01 Page as of 11:00 a.m. (London time) on the Interest Determination Date for that Interest Period, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars for the Interest Period and in a principal amount of not less than $1,000,000 are offered to prime banks in the London interbank market by four major banks in the London interbank market, which may include affiliates of Citigroup Global Markets Inc. and SunTrust Robinson Humphrey, Inc., selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., London time, on the Interest Determination Date for that Interest Period. The Calculation Agent will request the principal London office of each such bank to provide a quotation of its rate.  If at least two such quotations are provided, LIBOR with respect to that Interest Period will be the arithmetic mean of such quotations, and the Interest Rate on the Notes for that Interest Period shall be equal to LIBOR so calculated plus 0.375%.

(2)  If fewer than two quotations are provided, LIBOR with respect to that Interest Period will be the arithmetic mean of the rates quoted by three major banks in New York City, which may include affiliates of Citigroup Global Markets Inc. and SunTrust Robinson Humphrey, Inc., selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., New York City time, on the first day of that Interest Period for loans in U.S. dollars to leading European banks for that Interest Period and in a principal amount of not less than $1,000,000. However, if fewer than three banks selected by the Calculation Agent to provide quotations are quoting as described above, LIBOR for that Interest Period will be the same as LIBOR as determined for the previous Interest Period. The establishment of LIBOR by the Calculation Agent shall (in the absence of manifest error) be final and 

 

  

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                        binding.  In this case, the Interest Rate on the Notes for the applicable Interest Period shall be equal to LIBOR so calculated plus 0.375%

(3)  All percentages resulting from any calculation of the interest rate on Notes will be rounded, if necessary, to the nearest one-hundred thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655) and 9.876544% (or .09876544) being rounded to 9.87654% (or .0987654)), and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upwards).

(v)           This Note is not redeemable prior to maturity.

	
  

	
(vi)(a)     the Notes shall be issued in the form of a Global Note;  (b) the Depositary for such Global Note shall be The Depository Trust Company; and (c) the procedures with respect to transfer and exchange of Global Notes shall be as set forth in the form of Note attached hereto;

	
  

	
(vii)

	
the title of the Notes shall be "Floating Rate Notes, Series D, due 2013";

	
  

	
(viii)

	
the form of the Notes shall be as set forth in Paragraph 1, above;

	
  

	
(ix)

	
see item (iv) above;

	
  

	
(x)

	
the Notes shall not be subject to a Periodic Offering;

	
  

	
(xi)

	
not applicable;

	
  

	
(xii)

	
not applicable;

	
  

	
(xiii)

	
not applicable;

	
  

	
(xiv)

	
the Notes shall be issuable in denominations of $1,000 and any integral multiple thereof;

	
  

	
(xv)

	
not applicable;

	
  

	
(xvi)

	
the Notes shall not be issued as Discount Securities;

 

	 	
(xvii)

	
not applicable;

 

	 	
(xviii)

	
see item (iv) above; and

 

	 	
(xix)

	
Limitation on Liens:

So long as any of the Notes are outstanding, the Company will not create or suffer to be created or to exist any additional mortgage, pledge, security interest, or other lien (collectively

 

  

3

  

"Liens") on any of its utility properties or tangible assets now owned or hereafter acquired to secure any indebtedness for borrowed money ("Secured Debt"), without providing that the Notes will be similarly secured.  This restriction does not apply to the Company's subsidiaries, nor will it prevent any of them from creating or permitting to exist Liens on their property or assets to secure any Secured Debt.  In addition, this restriction does not prevent the creation or existence of:

	
  

	
(a)

	
Liens on property existing at the time of acquisition or construction of such property (or created within one year after completion of such acquisition or construction), whether by purchase, merger, construction or otherwise, or to secure the payment of all or any part of the purchase price or construction cost thereof, including the extension of any Liens to repairs, renewals, replacements, substitutions, betterments, additions, extensions and improvements then or thereafter made on the property subject thereto;

	
  

	
(b)

	
Financing of the Company's accounts receivable for electric service;

	
  

	
(c)

	
Any extensions, renewals or replacements (or successive extensions, renewals or replacements), in whole or in part, of liens permitted by the foregoing clauses; and

	
  

	
(d)

	
The pledge of any bonds or other securities at any time issued under any of the Secured Debt permitted by the above clauses.

In addition to the permitted issuances above, Secured Debt not otherwise so permitted may be issued in an amount that does not exceed 15% of Net Tangible Assets as defined below.

"Net Tangible Assets" means the total of all assets (including revaluations thereof as a result of commercial appraisals, price level restatement or otherwise) appearing on the Company's balance sheet, net of applicable reserves and deductions, but excluding goodwill, trade names, trademarks, patents, unamortized debt discount and all other like intangible assets (which term shall not be construed to include such revaluations), less the aggregate of the Company's current liabilities appearing on such balance sheet.  For purposes of this definition, the Company's balance sheet does not include assets and liabilities of its subsidiaries.

This restriction also does not apply to or prevent the creation or existence of leases made, or existing on property acquired, in the ordinary course of business.

3.           You are hereby requested to authenticate $275,000,000 aggregate principal amount of Floating Rate Notes, Series D, due 2013, executed by the Company and delivered to you concurrently with this Company Order and Officers' Certificate, in the manner provided by the Indenture.

4.           You are hereby requested to hold the Notes as custodian for DTC in accordance with the Blanket Issuer Letter of Representations dated June 24, 2004, from the Company to DTC.

 

 

  

4

  

5.           Concurrently with this Company Order and Officers' Certificate, an Opinion of Counsel under Sections 2.04 and 13.06 of the Indenture is being delivered to you.

6.           The undersigned Renee V. Hawkins and Thomas G. Berkemeyer, the Assistant Treasurer and Assistant Secretary, respectively, of the Company do hereby certify that:

	
  

	
(i)

	
the forms and terms of the Notes have been established in conformity with the provisions

	
  

	
(ii)

	
we have read the relevant portions of the Indenture, including without limitation the conditions precedent provided for therein relating to the action proposed to be taken by the Trustee as requested in this Company Order and Officers' Certificate, and the definitions in the Indenture relating thereto;

	
  

	
(iii)

	
we have read the Board Resolutions of the Company and the Opinion of Counsel referred to above;

	
  

	
(iv)

	
we have conferred with other officers of the Company, have examined such records of the Company and have made such other investigation as we deemed relevant for purposes of this Company Order and Officers' Certificate;

	
  

	
(v)

	
in our opinion, we have made such examination or investigation as is necessary to enable us to express an informed opinion as to whether or not such conditions have been complied with; and

	
  

	
(vi)

	
on the basis of the foregoing, we are of the opinion that all conditions precedent provided for in the Indenture relating to the action proposed to be taken by the Trustee as requested herein have been complied with.

  

5

  

Kindly acknowledge receipt of this Company Order and Officers' Certificate, including the documents listed herein, and confirm the arrangements set forth herein by signing and returning the copy of this document attached hereto.

Very truly yours,

APPALACHIAN POWER COMPANY

By:        /s/ Renee V. Hawkins

Assistant Treasurer

And:     /s/ Thomas G. Berkemeyer

Assistant Secretary

Acknowledged by Trustee:

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

By:       /s/ Melonee Young

Authorized Signatory

 

  

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Exhibit 1

Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the issuer or its agent for registration of transfer, exchange or payment, and any certificate to be issued is registered in the name of Cede & Co. or in such other name as is 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 inasmuch as the registered owner hereof, Cede & Co., has an interest herein.  Except as otherwise provided in Section 2.11 of the Indenture, this Security may be transferred, in whole but not in part, only to another nominee of the Depository or to a successor Depository or to a nominee of such successor Depository.

No.   R1

APPALACHIAN POWER COMPANY

Floating Rate Notes, Series D, due 2013

CUSIP:  037735 CS4                                                                                                Original Issue Date:  August 16, 2012

Stated Maturity: August 16, 2013

Principal Amount:  $275,000,000

Redeemable:                 Yes [ ]                                No [X]

In Whole:                      Yes [ ]                                No [X]

In Part:                          Yes [ ]                                No [X]

APPALACHIAN POWER COMPANY, a corporation duly organized and existing under the laws of the Commonwealth of Virginia (herein referred to as the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO. or registered assigns, the Principal Amount specified above on the Stated Maturity specified above, and to pay interest on said Principal Amount on

February 16, May 16, August 16 and November 16 of each year, commencing on November 16, 2012 at the per annum interest rate determined by the Calculation Agent on each Interest Determination Date, as such terms are defined herein, until the Principal Amount shall have been paid or duly provided for.  The amount of interest payable on any Interest Payment Date shall be computed on the basis of the actual number of days for which interest is payable in the relevant Interest Period, divided by 360.

The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date, as provided in the Indenture, as hereinafter defined, shall be paid to the Person in whose name this Note (or one or more Predecessor Securities) shall have been registered at the close of business on the fifteenth calendar day before each Interest Payment Date (the "Regular Record Date") provided that interest payable on the Stated Maturity shall be paid to the Person to whom principal is paid.  Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the registered holder on such Regular Record Date and shall be paid as provided in said Indenture.

If any Interest Payment Date (other than at the Stated Maturity) is not a Business Day, then such Interest Payment Date shall be the next succeeding Business Day, except that if such Business Day is in the next calendar month, such Interest Payment Date shall be the immediately preceding Business Day.  If the Stated Maturity of this Note falls on a day that is not a Business Day, the payment of principal and interest will be made on the next succeeding Business Day, and no interest shall accrue on such amounts for the period from and after such Stated Maturity.  The principal of and the interest on this Note shall be payable at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest (other than interest payable on the Stated Maturity) may be made at the option of the Company by check mailed to the registered holder at such address as shall appear in the Security Registrar or by wire transfer to the account designated by the person entitled thereto.

This Note is one of a duly authorized series of Notes of the Company (herein sometimes referred to as the "Notes"), specified in the Indenture, all issued or to be issued in one or more series under and pursuant to an Indenture dated as of January 1, 1998 duly executed and delivered between the Company and The Bank of New York Mellon Trust Company, N.A., a national banking association, as successor to The Bank of New York, as Trustee (herein referred to as the "Trustee") (such Indenture, as originally executed and delivered and as thereafter supplemented and amended being hereinafter referred to as the "Indenture"), to which Indenture and all indentures supplemental thereto or Company Orders reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the registered holders of the Notes.  By the terms of the Indenture, the Notes are issuable in series which may vary as to amount, date of maturity, rate of interest and in other respects as in the Indenture provided.  This Note is one of the series of Notes designated on the face hereof.

 This Note may not be redeemed by the Company prior to maturity.

This Note will bear interest for each quarterly Interest Period at a per annum rate ("Interest Rate") determined by the Calculation Agent, subject to the maximum interest rate permitted by New York or other applicable state law, as such law may be modified by United States law of general application.  The Interest Rate for each Interest Period will be equal to LIBOR on the Interest Determination Date for such Interest Period plus 0.375%.  Promptly upon such determination, the Calculation Agent will notify the Trustee for the Notes, if the person serving as the Trustee is not then serving as the Calculation Agent, of the Interest Rate for the new Interest Period.  The Interest Rate determined by the Calculation Agent, absent manifest error, shall be binding and conclusive upon the beneficial owners and registered holders of this Note, the Company and the Trustee.

 

Interest on this Note will accrue from and including the Original Issue Date specified above to, but excluding, November 16, 2012, and thereafter, from and including each Interest Payment Date to, but excluding, the next succeeding Interest Payment Date or Stated Maturity, as the case may be.

"Business Day" means, with respect to this Note, any day that is not a day on which banking institutions in New York City are authorized or required by law or regulation to close.

"Calculation Agent" means The Bank of New York Mellon Trust Company, N.A., or its successor appointed by the Company, acting as calculation agent.

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

"Interest Period" means the period commencing on an Interest Payment Date (or commencing on the Original Issue Date, if no interest has been paid or duly made available for payment since that date) and ending on the day before the next succeeding Interest Payment Date.

"LIBOR" means, with respect to any Interest Period, the rate (expressed as a percentage per annum) for deposits in U.S. dollars for a three-month period commencing on the first day of that Interest Period and ending on the next interest payment date that appears on Reuters LIBOR01 Page as of 11:00 a.m. (London time) on the Interest Determination Date for that Interest Period. If such rate does not appear on the Reuters LIBOR01 Page as of 11:00 a.m. (London time) on the Interest Determination Date for that Interest Period, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars for the Interest Period and in a principal amount of not less than $1,000,000 are offered to prime banks in the London interbank market by four major banks in the London interbank market, which may include affiliates of Citigroup Global Markets Inc. or SunTrust Robinson Humphrey, Inc., selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., London time, on the Interest Determination Date for that Interest Period. The Calculation Agent will request the principal London office of each such bank to provide a quotation of its rate. If at least two such quotations are provided, LIBOR with respect to that Interest Period will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR with respect to that Interest Period will be the arithmetic mean of the rates quoted by three major banks in New York City, which may include affiliates of Citigroup Global Markets Inc. or SunTrust Robinson Humphrey, Inc., selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., New York City time, on the first day of that Interest Period for loans in U.S. dollars to leading European banks for that Interest Period and in a principal amount of not less than $1,000,000. However, if fewer than three banks selected by the Calculation Agent to provide quotations are quoting as described above, LIBOR for that Interest Period will be the same as LIBOR as determined for the previous Interest Period. The establishment of LIBOR by the Calculation Agent shall (in the absence of manifest error) be final and binding.

"London Business Day" means a day other than a Saturday or Sunday that is not a day on which banking institutions in London, England and New York, New York are authorized or obligated by law or executive order to be closed and a day on which dealings in deposits in U. S. dollars are transacted, or with respect to any future date are expected to be transacted, in the London interbank market.

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

Upon request, the Calculation Agent will provide the current Interest Rate and, if determined, the Interest Rate which will become effective for the next Interest Period.

All percentages resulting from any calculation of the Interest Rate will be rounded, if necessary, to the nearest one-hundred thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards, and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upwards).

The Company will pay the principal of the Notes and interest payable at maturity in immediately available funds at the office of The Bank of New York Mellon Trust Company, N.A., 2 North LaSalle Street, Chicago, Illinois.

In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Notes may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture.

The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Note upon compliance by the Company with certain conditions set forth therein.

The Indenture contains provisions permitting the Company and the Trustee, with the consent of the registered holders of not less than a majority in aggregate principal amount of the Notes of each series affected at the time outstanding, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the registered holders of the Notes; provided, however, that no such supplemental indenture shall (i) extend the fixed maturity of any Notes of any series, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, or reduce the amount of the principal of a Discount Security that would be due and payable upon a declaration of acceleration of the maturity thereof pursuant to the Indenture, without the consent of the registered holder of each Note then outstanding and affected; (ii) reduce the aforesaid percentage of Notes, the registered holders of which are required to consent to any such supplemental indenture, or reduce the percentage of Notes, the registered holders of which are required to waive any default and its consequences, without the consent of the registered holder of each Note then outstanding and affected thereby; or (iii) modify any provision of Section 6.01(c) of the Indenture (except to increase the percentage of principal amount of securities required to rescind and annul any declaration of amounts due and payable under the Notes), without the consent of the registered holder of each Note then outstanding and affected thereby.  The Indenture also contains provisions permitting the registered holders of a majority in aggregate principal amount of the Notes of all series at the time outstanding affected thereby, on behalf of the registered holders of the Notes of such series, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture with respect to such series, and its consequences, except a default in the payment of the principal of or premium, if any, or interest on any of the Notes of such series.  Any such consent or waiver by the registered holder of this Note (unless revoked as pro­vided in the Indenture) shall be conclusive and binding upon such registered holder and upon all future registered holders and owners of this Note and of any Note issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Note.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Note at the time and place and at the rate and in the money herein prescribed.

As provided in the Indenture and subject to certain limitations therein set forth, this Note is transferable by the registered holder hereof on the Security Registrar of the Company, upon surrender of this Note for registration of transfer at the office or agency of the Company as may be designated by the Company accompanied by a written instrument or instruments of transfer in form satisfactory to the Company or the Security Registrar duly executed by the registered holder hereof or his or her attorney duly authorized in writing, and thereupon one or more new Notes of authorized denominations and for the same aggregate principal amount and series will be issued to the designated transferee or transferees.  No service charge will be made for any such trans­fer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto.

Prior to due presentment for registration of transfer of this Note, the Company, the Trustee, any paying agent and any Security Registrar may deem and treat the registered holder hereof as the absolute owner hereof (whether or not this Note shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Security Registrar) for the purpose of receiving payment of or on account of the principal hereof and premium, if any, and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any paying agent nor any Security Registrar shall be affected by any notice to the contrary.

No recourse shall be had for the payment of the principal of or the interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released.

The Notes of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof.  As provided in the Indenture and subject to certain limitations, Notes of this series are exchangeable for a like aggregate principal amount of Notes of this series of the same authorized denomination, as requested by the registered holder surrendering the same.

All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

This Note shall not be entitled to any benefit under the Indenture hereinafter referred to, be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee.

  

  

  

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

APPALACHIAN POWER COMPANY

By:___________________________

Name:  Renee V. Hawkins

Title:    Assistant Treasurer

Attest:

By:___________________________

Name:  Thomas G. Berkemeyer

Title:    Assistant Secretary

  

  

  

CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the series of Notes designated in accordance with, and referred to in, the within-mentioned Indenture.

Dated:  August 16, 2012

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

By:___________________________

   Authorized Signatory

 

  

  

  

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 TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF

________________________________________________________________

ASSIGNEE) the within Note and all rights thereunder, hereby

________________________________________________________________

irrevocably constituting and appointing such person attorney to

________________________________________________________________

transfer such Note on the books of the Issuer, 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 Note in every particular, without alteration or enlargement or any change whatever and NOTICE:  Signature(s) must be guaranteed by a financial institution that is a member of the Securities Transfer Agents Medallion Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP") or the New York Stock Exchange, Inc. Medallion Signature Program ("MSP").SUG First Amendment to Credit Agreement

FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST Amendment to revolving Credit Agreement (this “Amendment”), effective as of the 10th day of August, 2012, is entered into by and among SOUTHERN UNION COMPANY, a Delaware corporation (the “Borrower”), the Banks party hereto (the “Banks”), JPMorgan Chase Bank, N.A., as Administrative Agent (the “Agent”) and as Issuing Bank (the “Issuing Bank”).
RECITALS
WHEREAS, the Borrower, the Banks and the Agent entered into that certain Eighth Amended and Restated Revolving Credit Agreement dated as of March 26, 2012 (as amended hereby and as otherwise amended or restated from time to time, the “Credit Agreement”); and
WHEREAS, the Borrower has requested the Banks, the Agent, and the Issuing Bank to amend certain provisions of the Credit Agreement; and
WHEREAS, the Banks, the Agent and the Issuing Bank are willing to so amend the Credit Agreement subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set forth in this Amendment, the Borrower, the Banks, the Agent, and the Issuing Bank agree as follows:
1.Defined Terms.  Unless otherwise defined herein, capitalized terms used herein have the meanings assigned to them in the Credit Agreement.

2.Amendments to Section 1.01.  Section 1.01 of the Credit Agreement is hereby amended to delete the definition of Change of Control and replace it in its entirety with the following:
“Change of Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the Closing Date), other than ETE, ETP, or any direct or indirect Subsidiaries of ETE and/or ETP or a Permitted Investor, of Equity Interests representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower or (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of ETE by Persons who were neither (i) nominated, approved or appointed by the board of directors of ETE nor (ii) appointed by directors so nominated, approved or appointed.  As used herein, “Permitted Investor” means any of (A) Ray C. Davis, Kelcy L. Warren, the heirs at law of such individuals, entities or trusts owned by or established for the benefit of such individuals or their respective heirs at law (such as entities or trusts established for estate planning purposes), or (B) National Gas Partners VF, L.P.
3. Condition to Effectiveness.  This Amendment shall be effective as of the date first above written upon the receipt by the Agent of counterparts of this Amendment duly executed by the Borrower, the Majority Banks and the Issuing Bank.

4.Limited Waiver.  The Banks party hereto waive any Default caused by a Change of Control as defined prior to giving effect to this Amendment but only to the extent any such Default may result from the transactions described in that certain Transaction Agreement by and among ETP., Energy Transfer Partners GP, L.P., Heritage Holdings, Inc., ETE Sigma Holdco, LLC, ETE Holdco Corporation and ETE, dated as of June 15, 2012.

5.Ratification.  The Borrower hereby ratifies all of its Obligations under the Credit Agreement and each of the Loan Documents to which it is a party, and agrees and acknowledges that the Credit Agreement and each of the Loan Documents to which it is a party are and shall continue to be in full force and effect as amended and modified by this Amendment.  Nothing in this Amendment extinguishes, novates or releases any right, claim, lien, security interest or entitlement of any of the Banks or the Agent created by or contained in any of such documents nor is the Borrower released from any covenant, warranty or obligation created by or contained herein or therein.

6.Representations and Warranties.  The Borrower hereby represents and warrants to the Banks, the Agent and the Issuing Bank that (a) this Amendment has been duly executed and delivered on behalf of Borrower, (b) this Amendment constitutes a valid and legally binding agreement enforceable against the Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law, (c) the representations and warranties contained in the Credit Agreement and the Loan Documents are true and correct on and as of the date hereof in all material respects as though made as of the date hereof, except for such representations and warranties as are by their express terms limited to a specific date, in which case such representations and warranties were true and correct in all material respects as of such specific date, (d) no Default exists under the Credit Agreement or under any Loan Document and (e) the execution, delivery and performance of this Amendment has been duly authorized by the Borrower.

7.Release and Indemnity.  
(a)The Borrower hereby releases and forever discharges the Agent and each of the Banks and each affiliate thereof and each of their respective employees, officers, directors, trustees, agents, attorneys, successors, assigns or other representatives (“Released Parties”) from any and all claims, demands, damages, actions, cross-actions, causes of action, costs and expenses (including  legal expenses), of any kind or nature whatsoever, whether based on law or equity, which Borrower has held or may now own or hold, whether known or unknown, for or because of any matter or thing done, omitted or suffered to be done on or before the actual date upon which this Amendment is signed (i) arising directly or indirectly out of the Loan Documents, or any other documents, instruments or any other transactions relating thereto and/or (ii) relating directly or indirectly to all transactions by and between the Borrower or its representatives and the Agent, and each Bank or any of their respective directors, officers, agents, employees, attorneys or other representatives.  Such release, waiver, acquittal and discharge shall and does include, without limitation, any claims of usury, fraud, duress, misrepresentation, lender liability, control, exercise of remedies and all similar items and claims, which may, or could be, asserted by the Borrower including any such caused by the actions or negligence of the Released Party (other than as a result of or related to gross negligence, bad faith  and/or willful misconduct on the part of any such Released Party).  This release does not relate to or include any claims, demands, damages, actions, cross-actions, causes of action, costs and expenses (including  legal expenses), of any kind or nature whatsoever which may arise after the date of this Amendment.

(b)The Borrower hereby ratifies the indemnification provisions contained in the Loan Documents, including, without limitation, Section 13.16 of the Credit Agreement, and agrees that this Amendment and losses, claims, damages and expenses related thereto shall be covered by such indemnities.

8.Counterparts.  This Amendment may be signed in any number of counterparts, which may be delivered in original, facsimile or other electronic form (i.e., “PDF”) each of which shall be construed as an original, but all of which together shall constitute one and the same instrument.

9.Governing Law.  This Amendment shall be construed, and the rights of the parties hereto determined, in accordance with and governed by the law of the State of New York without reference to conflicts of laws (other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law).

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the date first above written.
SOUTHERN UNION COMPANY, a Delaware corporation 
            By: /s/ Michael J. Doss
                  Michael J. Doss      
                  Vice President, Finance and Treasurer 

JPMORGAN CHASE BANK, N.A., as Agent Issuing Bank and a Bank 
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

WELLS FARGO BANK, NA, as Co-Syndication Agent and a Bank 
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

PNC BANK, NATIONAL ASSOCIATION, as Co-Syndication Agent and a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

U.S. BANK NATIONAL ASSOCIATION, as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

THE ROYAL BANK OF SCOTLAND plc, as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

ROYAL BANK OF CANADA, as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

MORGAN STANLEY BANK, N.A., as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

BANK OF AMERICA, N.A., as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

MIZUHO CORPORATE BANK, LTD., as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

BRANCH BANKING & TRUST COMPANY, as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

UBS LOAN FINANCE LLC, as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

COMPASS BANK, as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

SOVEREIGN BANK, N.A., as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

UMB BANK, n.a., as a Bank
By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

GOLDMAN SACHS BANK USA, as a Bank

By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________
    

FIRST COMMERCIAL BANK, NEW YORK BRANCH, as a Bank

By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________
    

COMERICA BANK, as a Bank

By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

CHANG HWA COMMERCIAL BANK, LTD., NEW YORK BRANCH, as a Bank

By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

BANK OF TAIWAN, NEW YORK BRANCH, as a Bank

By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

BANK OF COMMUNICATIONS CO., LTD., NEW YORK BRANCH, as a Bank

By:    _________________________________________    
Name:  ____________________________    
Title:     __________________________________

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